Broad Coverage for Assets and Machinery with Business Interruption Options
Industrial All Risk Insurance covers all industrial assets, including buildings, plant and machinery, equipment, and utilities. Unlike named-peril policies, IAR covers all sudden and unforeseen physical loss or damage, subject to policy exclusions.
Section – 1: Material Damage
Fire
Machinery Breakdown
Section 2: Business Interruption / Consequential Loss / Loss of Profits
Fire Loss of Profits
Machinery Loss of Profits
What is Generally Excluded?
Normal Wear & Tear
Gradual Deterioration
Willful Negligence
Consequential Losses
Industrial All Risk (IAR) vs Standard Fire & Special Perils Policy
| Parameter | Industrial All Risk (IAR) Policy | Standard Fire & Special Perils Policy |
|---|---|---|
| Basis of Cover | All‑risk basis: covers all abrupt and unforeseen bodily loss, except excluded | Named‑peril basis – only listed perils are covered |
| Overall Coverage | Very broad and comprehensive | Limited and restrictive |
| Fire & Allied Perils | Covered | Covered |
| Machinery Breakdown | Integrated within the policy | Not covered (separate policy required) |
| Electrical / Mechanical Failure | Covered if sudden & accidental | Generally excluded |
| Accidental Damage | Covered | Not covered |
| Natural Catastrophes | Covered (earthquake optional) | Covered, but narrower scope |
| Policy Structure | Single, integrated policy | Multiple policies needed |
| Coverage Gaps | Minimal | High risk of gaps |
| Claims Interpretation | Wider, insured‑friendly | Peril‑based, higher disputes |
| Suitability | Large & complex industrial risks | Small to mid‑size risks |
| Premium | Higher than Fire, but value‑efficient | Lower premium, limited protection |
| Bank / Lender Preference | Strongly preferred | Accepted for simpler risks |
Frequently Asked
Questions
What does Industrial All Risk insurance cover?
All sudden and unforeseen physical loss or damage to insured assets, unless specifically excluded.
Is IAR better than a standard Fire policy?
Yes. IAR offers much broader coverage and fewer gaps for industrial risks.
Does IAR include machinery breakdown?
Yes. Machinery breakdown is typically integrated into IAR policies.
Are natural catastrophes covered?
Yes. Flood, storm and other natural perils are covered; earthquake is optional.
Is Loss of Profit covered under IAR?
No. Business interruption requires a separate Loss of Profit policy.
How is sum insured decided?
Based on reinstatement (replacement) value of assets.
What happens if assets are underinsured?
Claims may be reduced under the average clause. However, Waiver of Underinsurance of up to 15% is an in-built coverage.
