Industrial All Risk Policy is a comprehensive Insurance which covers damage to all types of fixed assets from all unforeseen circumstances except for those defined in “Exclusions”. It is not a named Perils Policy rather an all risk policy covering a wide range of perils such as fire and allied perils, burglary, accidental damage, damage during transit within the Premises, breakdown as well as business interruption. IAR policy can be issued only for industries having Sum Insured above Rs. 50 crores fixed assets.
Scope of Cover
Section - I: Material Damage - It covers accidental physical loss or damage including machinery breakdown of the property insured due to any cause other than excluded & excluded Property.
Section - II: Business Interruption –. It covers loss due to business interruption following a Physical loss or damage to the property covered under material damage section of the policy. It happens normally due to two Insured Perils i.e Fire and allied perils and Machinery Break down
1. Fire Loss of Profits (FLOP): It is a Mandatory Cover & cannot be Opted Out
2. Machinery Loss of Profits (MLOP): An Optional Cover. Insured can choose/omit depending upon his risk Profile. Unlike Machinery Breakdown ( MBD) Policy the insured is not permitted to select the specific machines, all the machines should be covered.
Key Features:
It is a Reinstatement value policy.
Rate for machinery breakdown is low compared to MBD Policy and there is no depreciation deducted in the event of breakdown claim like MBD or Electronic Equipment Insurance (EEI) Policy.
The facility of declaration of stock is not available & there is no refund provision.
Under Insurance is not applicable if Sum insured is not less than 85% of value at Risk. Petroleum industries can also take IAR policy.
Extensions
architects, surveyors and consulting engineers fees;
omission to insure additions, alterations and extensions; and
Terrorism damage.
1. Excluded Causes:
Faulty or defective design materials or workmanship inherent vice latent.
Interruption of the water supply, gas, electricity or fuel systems.
Collapse or cracking of buildings; Corrosion, rust extremes or changes in temperature, dampness, dryness, wet or dry rot fungus, shrinkage, evaporation, loss of weight pollution;
Acts of fraud or dishonesty; disappearance, unexplained or inventory shortage
Coastal or river erosion;
Willful act/negligence;
Cessation of work delay or loss of market or any other consequential or indirect loss;
War and nuclear perils.
Any loss destruction or damage is not covered by this insurance, the burden of proving that such loss destruction or damage is covered shall be upon the Insured.
2. Excluded Property
Money cheque, stamps, bonds, credit cards, securities of any description, Jewelry, precious stones unless specifically mentioned as insured by this Policy.
Vehicles licensed for road use;
Property in transit other than within the premises specified in the Schedule;
Property or structures in course of demolition, construction or erection and materials or supplies in connection therewith;
Land, driveways, pavements, roads, runways, railway, etc.
Livestock, growing crops or trees;
Property undergoing alteration/repair/testing, installation or servicing, undergoing any process;
Damage to property being insured by any marine policy.
Property damaged as a result of its undergoing any process
3. Special Exclusions to Section II( Business Interruption)
This Policy does not cover loss resulting from interruption of or interference with the business directly or indirectly attributable to any restrictions on reconstruction or operation imposed by any public authority, the Insured’s lack of sufficient capital for timely restoration or replacement of property lost destroyed or damaged
Loss of business due to causes such as suspension lapse or cancellation of a lease license or order etc. which occurs after the date when the items lost destroyed or damaged are again in operating condition and the business could have been resumed, if said lease license order etc. had not lapsed or had not been suspended or cancelled.
Damage to boilers economizers, turbines or other vessels machinery or apparatus in which pressure is used or their contents resulting from their explosion or rupture.
Electronic installations, computers and data processing equipment
Damage resulting from:
Deliberate erasure loss distortion or corruption of information on computer systems or other records programs or software. other erasure loss distortion or corruption of information on computer systems or other records programs or software unless resulting from fire, lightning, explosion, aircraft, impact by any road vehicle or animals, earthquake, hurricane, windstorm, flood, bursting overflowing discharging or leaking of water tanks apparatus or pipes in so far as it is not otherwise excluded
Compulsory Excess
This is the first amount of any claim that Insured have to bear:
Section I (Material Damage) - 5% of the claim amount subject to minimum of Rs 5 lakhs
Section II (Business Interruption) – Fire loss of profits - 3 days gross profit subject to minimum of Rs 5 lakhs and maximum of Rs 50 lakhs.