Last week, I began a brief history of the all-risk policy. I left off at the point where insurance companies were beginning to add more perils to their policies. Originally, these perils were added by underwriters, many times at the consumer’s request. In an effort to simplify the underwriting process and increase profits insurance companies began packaging perils together.

According to Murphy, Downs, and Levin in Property Insurance Litigator’s Handbook:

An Extended Coverage Endorsement added coverage for windstorm, hail explosion, riot, civil commotion, aircraft, vehicles, and smoke. Yet another, the Additional Extended Coverage Endorsement, which carried a fifty-dollar deductible, could be purchased to add coverage for accidental discharge of water, vandalism, ice, snow, freezing, fall of trees, and collapse.

Around the same time, consumers were finally able to purchase coverage for contents of their homes and additional living expenses. Perhaps the most important changes, however, were yet to come. Murphy, Downs, and Levin wrote,

The 1950’s brought two very important developments: the multi-line dwelling policy and the “all risk” policy. New legislation permitted insurers to underwrite risks for both property and liability exposures. Consequently, insurers began experimenting with multiple line policies that provided “all risk” coverage for dwellings and “comprehensive personal liability coverage.” These early all risk policies typically excluded loss by war, earthquake, flood, faulty workmanship, and wear and tear type losses.

The next round of significant changes came in the late 1970’s with the advent of the ‘Easy to Read Policy.’ Consumer activists, regulators, and legislators sought a change from the standard fire policy. They argued that the standard policy’s print was too small, that the format was confusing, and that the language was stilted, archaic, and ambiguous….In response, underwriters developed Easy to Read policies. These policies packaged everything neatly into the basic layout and format still in use today.

While these developments helped make policies easier to understand, as many of you know all to well, ambiguities still occur.

In the coming weeks, I will break down some of the most common exclusions to all risk policies. Tune in next week.