§ 10.3 Types of Property Insurance: All-risk Versus Named-peril Policies

• Library: Insurance Law in Oregon (OSBar) (2020 Ed.)

§ 10.3 TYPES OF PROPERTY INSURANCE: ALL-RISK VERSUS NAMED-PERIL POLICIES

Property casualty insurance—that is, insurance on real or personal property against loss or damage from any and all hazards or causes—may be contained in many different types of policies, including homeowners' policies, commercial-property policies, special multi-peril policies, boiler and machinery policies, and inland marine policies. See generally ORS 731.182 (property insurance defined); Susan J. Miller, Miller's Standard Insurance Policies Annotated (7th ed 2013). The Oregon Revised Statutes governing casualty and property policies, generally, are found in ORS chapter 742.

Although each insurance policy can differ from the next, property insurance typically falls into two general categories: (1) the all-risk or open-peril form and (2) the named-peril form. See generally Steven Plitt et al., Couch on Insurance §§ 148:48, 148:50, 148:51, Westlaw (database updated Dec 2019) [hereinafter Couch on Insurance]; James L. Knoll & Randy L. Arthur, Property Insurance: No Solution for Pollution, 17 BC Envtl Aff L Rev 231, 236-52 (1990), available at < http://lawdigitalcommons.bc.edu/ealr/vol17/iss2/2 >.

A loss is covered under an all-risk policy if the insured can show that there was a direct physical loss that was not expressly excluded by the policy. See § 10.3-1(a) to § 10.3-1(c) (all-risk policies). To obtain coverage under a named-peril policy, the insured is required to show that the loss or damage was the result of a specified named peril. See, e.g., Lewis v. Aetna Ins. Co., 264 Or 314, 316, 505 P2d 914 (1973) ("the insured has the burden of proving that the loss was caused by a peril insured against"). See § 10.3-2 (named-peril policies).

PRACTICE TIP: "Insurance policies are construed as ordinary business contracts," and, thus, argument based on "a characterization, rather than a reading of the policy," can be of limited use. Great N. Ins. Co. v. Benjamin Franklin Fed. Sav. &_Loan Ass'n, 793 F Supp 259, 262-63 (D Or 1990), aff'd, 953 F2d 1387 (9th Cir 1992). See also ORS 742.016(1) ("every contract of insurance shall be construed according to the terms and conditions of the policy"). Therefore, it is recommended that the specific policy language in any particular case be analyzed as it appears. Cases interpreting specific policy language that is not identical or substantially similar to the policy at issue may be of limited use.

Even though insurance policies "are construed as ordinary business contracts," an ambiguous insurance policy "is construed most favorably to the insured." GreatN. Ins. Co., 793 F Supp at 262.

PRACTICE TIP: Marine insurance policies are interpreted consistent with Federal Maritime law, which may differ in material respects from this general discussion of Oregon law regarding property insurance policies. See ZRZ Realty Co. v. Beneficial Fire & Cas. Ins. Co.,

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