Industrial All Risk
Industrial all risk insurance is the policy that covers not only the Physical Losses or damage but also consequential losses arising out of the business interruption due to accidental unforeseen physical loss or damage to property.
- IAR policy is Exclusion driven policy i.e. it covers all the risk except exclusions. It is divided into two sections:
- Material Damage Section
- Business Interruption Section
- Scope of cover:
The cover in its widest form will include the following perils/covers:
- Fire and all Special Perils
- Burglary
- Machinery Breakdown/Boiler Explosion/Electronic Equipment Insurance
- Business Interruption
- Fire Loss of profit
- Machinery Loss of profit (optional)
- Sum Insured:
The policy in so far as it relates to Buildings, Machinery, Furniture, Fixtures, Fittings & Electrical Installations shall be on Reinstatement Value basis only, while the Stocks shall be covered on Market Value basis. However, the facility of declarations for stocks shall not be available under the IAR Policy.
- Excess:
Material Damage Claims-Deductibles shall be 5% of the claim amount subject to minimum of Rs.10 Lakhs for sum insured up to —–
Business Interruption Claims- Deductibles shall be
– 7 days Standard Gross Profit.
Benefit of IAR over Fire and MB policy:
| ITEM | IAR | CONVENTIONAL FIRE & MB |
| Perils | All risk | Named peril |
| Excess | Minimum Rs.10 lacs |
10 cr to 100 cr 5 % of claim amount sub to a min of 25000 for AOG and NON AOG Above 100 cr 5% of claim amount sub to a min of 5 lacs |
| Time Excess. (Business Interruption) | Minimum 7 days | 7 days |
| Under insurance | Up to 15% ignored | No such provision |
| Burglary | Covered w/o extra premium | Not covered |
| Transit | Within premises covered | No such cover |
| Depreciation for M.B. | No deduction either for partial or total loss | Being deducted |
| Non metallic parts | Will be paid for M.B. claims | Not being paid in M.B. claims |
| Boilers, Electronic equipment’s, mobile machinery. | Policy covers these items | Separate policies to be availed |
| Selection | Each & every machine has to be covered. No selection available. | Selected machines prone to breakdowns can be insured. |