Shipping Business Practice Test

All Risks insurance is meant to cover losses from nearly any cause of physical loss or damage to the insured property, with the important caveat that the policy lists specific exclusions. That makes the coverage broad by default—you’re protected for most causes of loss unless something is explicitly carved out in the policy. That’s why the statement describing All Risks as covering broad losses unless excluded is the best description.

Think of it as the opposite of a Named Perils policy, where only the listed perils are covered and everything else is excluded. In practice, common exclusions you’ll see are issues like wear and tear, gradual deterioration, inherent vice, improper packaging, or intentional damage; weather-related events may be covered or excluded depending on the policy and endorsements, but the default principle is broad protection with listed exclusions.

So the correct idea isn’t that All Risks only covers listed perils, nor that it excludes all weather-related losses by default, nor that it’s identical to Named Perils. It’s broader coverage with specific exclusions.