What is the difference between All Risks and Named Perils in marine cargo insurance?

• A. All Risks covers broad losses unless excluded; Named Perils covers only listed risks.
• B. All Risks covers only listed risks; Named Perils covers broad losses unless excluded.
• C. All Risks covers theft only; Named Perils covers fire and collision.
• D. All Risks and Named Perils are identical.

Answer: (A)

In marine cargo insurance, the breadth of coverage is the key idea. All Risks provides broad coverage for losses unless the policy specifically excludes something. Named Perils covers only the perils that are listed in the policy.

So, an All Risks policy will typically respond to a wide range of causes of loss—such as damage during transit, theft, or other unforeseen events—except where a particular risk is excluded by the policy. A Named Perils policy will only respond if the damage results from a peril that is explicitly named in the policy; if the peril isn’t listed, that loss isn’t covered.

That’s why the statement describing All Risks as covering broad losses unless excluded and Named Perils as covering only listed risks is the best description. The other descriptions either invert the coverage or claim the two are identical, which isn’t correct.