When you own or manage a business in Florida, your building, equipment, and inventory are often among your most valuable assets. Fire, burst pipes, vandalism, and hurricanes can disrupt operations overnight, and the way your commercial property policy is written will decide whether the insurance company pays for the damage or denies the claim. All risk commercial property insurance is often marketed as “special form” coverage, leading many business owners to assume that everything is covered at all times. That assumption is incorrect.

This guide explains what all-risk commercial property insurance really is. It also shows how it differs from named perils coverage. You will learn what it typically covers and excludes. It also explains how it works with business interruption and other key protections. This will help you decide whether it makes sense for your business.

What Is All-Risk Commercial Property Insurance?

Definition

In modern commercial property insurance, “all-risk” describes what insurers call “open perils” or “special form” coverage. Instead of listing each covered cause of loss, an all-risk policy begins with a broad promise. It covers direct physical loss or damage from any fortuitous cause. Coverage applies unless the policy specifically excludes that cause. 

Put more simply, a named perils policy tells you what is covered, while an all-risk policy tells you what is not covered and assumes everything else is included. The word “all” is still misleading. These policies do not cover every possible event. They are limited to accidental, physical losses, and they contain pages of exclusions, conditions, and limitations.

The idea of “direct physical loss or damage” is central. Courts and commentators have long recognized that all-risk and business interruption coverage usually require some physical alteration, injury, or contamination of the insured property, not just a loss of use or a drop in revenue by itself. 

Key Features

An all-risk commercial property policy usually shares several features:

• It is written on an “open perils” basis for the covered property. That means any accidental cause of physical loss is covered unless the policy says otherwise. 
• It is still subject to exclusions. Commercial property policies, including all-risk forms, contain several common exclusions. These exclusions often include normal wear and tear, gradual deterioration, and poor maintenance. They may also exclude flood, earth movement, war, nuclear hazards, pollution, and intentional acts.
• It applies to specific categories of property. The policy declarations and forms describe the covered locations and buildings. They also identify covered business personal property and, in some cases, outdoor property. The policy sets separate limits or sublimits for different categories.
• It typically requires that the loss be fortuitous and occur during the policy period. A fortuitous loss is one that is accidental and beyond the control of the parties, not a deliberate act or an inevitable result of long-term neglect. 

Differences Between All-Risk and Named Perils Insurance

Coverage Scope

The key difference between all-risk and named perils commercial property insurance is how they define what is covered. A named perils policy covers only the causes of loss that are specifically listed in the policy, such as fire, lightning, explosion, windstorm, hail, vandalism, or theft. If a cause of loss is not named, there is no coverage. 

An all-risk or open-perils policy flips that structure. It generally states that it covers all risks of direct physical loss or damage. Coverage applies unless the policy expressly excludes those risks. If a cause of loss is not mentioned, it is usually treated as covered. For that reason, these policies are considered more comprehensive. They often carry higher premiums than named perils policies.

That said, a named perils policy may add coverage for flood, earthquake, or other high-risk hazards. These hazards are often excluded under an all-risk form. In some circumstances, this structure can provide broader protection for those specific risks. The label on the front of the policy is less important than the actual list of exclusions and endorsements. 

Claims Process

The different coverage structures also change how claims are evaluated. Under an all-risk commercial property policy, the business owner’s initial burden is generally to show that there was a direct physical loss to covered property during the policy period. Once that showing is made, the burden typically shifts to the insurer to prove that an exclusion applies. 

Under a named perils policy, the business owner has to show more. The insured must prove not only that there was direct physical loss but also that the loss was caused by one of the specific perils listed in the policy. If the cause of loss is unusual or involves multiple contributing factors, that can be significantly harder.

This difference in burdens of proof is one reason many Florida businesses prefer all-risk forms. When there is a dispute, it is often more favorable for the policyholder to have the insurer explain why an exclusion supposedly applies, rather than having to prove that a particular peril was named and active. Avoiding common mistakes during an insurance claim can also affect the outcome of a dispute.

Benefits of All Risk Commercial Property Insurance in Florida

Comprehensive Business Insurance

From a practical standpoint, an all-risk commercial property policy offers broader day-to-day protection. It protects your building and business personal property more comprehensively than a named perils form. Coverage begins with a wide grant and then carves out specific exclusions. Because of this structure, it may respond to unexpected or unusual causes of loss. A named perils schedule might not anticipate those events.

For a Florida business, this can be especially important. Between hurricanes, severe thunderstorms, plumbing failures, electrical fires, vandalism, and vehicle impacts, the range of realistic risks is broad. An all-risk form cannot eliminate exclusions for flood, earth movement, or wear and tear unless you buy endorsements or separate policies, but for many other accidental physical losses it can provide a more seamless safety net than a narrow named perils list.

The broader starting point of an all-risk policy also tends to simplify claim presentation. When a loss happens, you do not need to fit the cause neatly into one of a few named categories. As long as you can show accidental physical damage to covered property during the policy period, you have at least cleared the first coverage hurdle, and the focus shifts to whether the insurer can justify limiting or denying payment based on an exclusion or limitation. 

Liability Insurance for Businesses

“All-risk commercial property insurance” protects your property, not your liability to others. Liability coverage for bodily injury, property damage, and personal injury claims from third parties is usually provided by separate commercial general liability, professional liability, or specialty policies, or through a business owner’s policy that bundles property and liability coverages together.

The benefit of an all-risk property form in this context is that it complements your liability program. Property coverage restores your physical assets after a covered event. Liability coverage responds when someone sues your business for injury or damage. For many Florida businesses, the most practical approach is to combine property and liability coverage. An all-risk commercial property policy often works best as part of a broader insurance package. This structure addresses both first-party and third-party risks in a coordinated way.

When you review your insurance program, it is important not to assume that the “all-risk” label extends to lawsuits or claims from customers, tenants, or vendors. Those exposures require separate liability coverage with its own limits, exclusions, and conditions.

Considerations When Choosing Coverage

Business Interruption Insurance

For many Florida businesses, business interruption coverage is a critical add-on, but it is not the same as basic property coverage. Unlike standard property insurance, this protection is designed to replace lost income and cover certain continuing expenses when operations are suspended due to direct physical loss or damage caused by a covered peril.

In most policies, business interruption is written as a separate coverage part or endorsement tied to the underlying property form, whether all-risk or named perils. That means you generally must first have a covered property loss under the policy before business interruption benefits become available. The coverage will define the “period of restoration” during which income loss and extra expense are covered, and may include additional features such as coverage for losses caused by civil authority orders or damage to key suppliers or customers.

When you are evaluating an all-risk commercial property policy, you should pay close attention to whether business interruption coverage is included, what limit applies, whether there is a waiting period before coverage begins, and whether there are specific exclusions or limitations that might affect your industry.

Commercial Real Estate Insurance

If you own commercial real estate in Florida, an all-risk property form is often the starting point for satisfying lender requirements and protecting your investment. Many mortgage lenders require comprehensive property coverage that insures the building against most accidental causes of loss, along with appropriate limits for replacement cost or agreed value.

All-risk coverage can be especially valuable for multi-tenant properties, shopping centers, and office buildings. These properties often involve many tenants and different uses. That variety increases the risk of accidental damage. Standard all-risk commercial property policies usually exclude flood and earth movement. This remains true even in coastal states. Florida properties exposed to storm surge, heavy rain, or sinkholes require special attention. Business owners should consider separate flood coverage or specific endorsements.

Commercial landlords also need to coordinate their all-risk property coverage with tenant lease requirements, including who is responsible for insuring tenant improvements, glass, signage, and business personal property, and how deductibles and uncovered losses will be allocated.

Common Misconceptions

What All-Risk Does Not Cover

Perhaps the most dangerous misconception is that an “all-risk” label means you do not have to worry about exclusions. In reality, all-risk commercial property policies share many of the same exclusions as named perils policies. Common exclusions include damage from normal wear and tear, gradual deterioration, inadequate maintenance, and defects that are not the result of a covered event. Insurance is designed to address sudden and accidental losses, not long-term upkeep. 

Standard all-risk policies also almost always exclude flood, surface water, storm surge, and earth movement, unless you purchase specific endorsements or separate policies. Other frequent exclusions involve war and military action, nuclear hazards, many forms of pollution or contamination, and intentional acts by the insured.

The exact wording of these exclusions and any exceptions to them can vary significantly between insurers and policy forms. For example, some policies include limited coverage for certain code-required upgrades or for resulting damage when an excluded cause (such as wear and tear) leads to a covered event (such as a sudden collapse). The only way to know what your policy does not cover is to read the actual forms and discuss them with a knowledgeable advisor.

Claims and Exclusions

Another common misconception is that if an insurer mentions an exclusion in a denial letter, that is the end of the discussion. Under Florida law and general insurance principles, once an insured under an all-risk policy shows a direct physical loss during the policy period, the insurer usually bears the burden of proving that an exclusion applies to bar coverage. 

In practice, disputes often arise when a single loss has multiple causes. For example, a worn roof that has leaked slowly for years (an excluded maintenance problem) might be worsened or brought to light by a severe storm (a potentially covered event). Modern policies frequently contain “anti-concurrent causation” language that tries to address these mixed-cause scenarios. Those provisions and the case law interpreting them can be complex, which is why many businesses turn to counsel when a significant claim is denied.

The important point is that all-risk does not mean automatic payment, and exclusions are not always as clear as they first appear. Careful documentation, expert evaluation of the cause and extent of damage, and an informed understanding of how exclusions operate are all part of protecting your rights under an all-risk commercial property policy.

Conclusion: Is All-Risk Right for Your Business?

All-risk commercial property insurance can be a strong option for many Florida businesses. It begins with broad protection and then focuses on specific exclusions. This approach avoids limiting coverage to a short list of named perils. For commercial real estate owners and asset-heavy businesses, that broader starting point offers added protection. It can also provide peace of mind when unexpected damage occurs.

At the same time, “all-risk” does not mean “all possible loss.” These policies require direct physical damage from a fortuitous event. They also contain important exclusions for flood, earth movement, wear and tear, and other hazards. In most cases, they must be paired with separate liability and business interruption coverage. Together, these coverages create a more complete risk management program.

If your commercial property claim has been denied or underpaid, you may need experienced representation in business and commercial disputes.

Contact our firm today for a free case evaluation.

The right choice for your business will depend on your locations, your industry, your contracts, and your tolerance for risk. This article is for general information only and is not legal advice. The best way to evaluate whether an all-risk commercial property policy is appropriate for your situation is to review your options with a qualified insurance professional and, when disputes or complex questions arise, to consult directly with an experienced Florida attorney who can interpret your policy in light of Florida law and your specific facts.

©2025 The Hernandez Legal Group wrote and published this article. All rights reserved.