Industrial All Risk Insurance

  •  About Policy 
  •    Benefits 
  •    Scope of Cover 
  •    Exclusions 
  •    Sum Insured 

About Policy

A comprehensive coverage for the industrial risks, the Industrial All Risk (IAR) Policy has an overall sum insured of Rs. 100 crore and above in one or more locations in India. The policy covers not only the physical losses or damage but also consequential losses arising out of the business interruption due to accidental or unforeseen physical loss or damage to property.

Policy Structure


Industrial Units - both manufacturing as well as Storage Units. (Excluding Petroleum Refineries, Petrochemical and Fertiliser Plants)

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  1. Umbrella cover
  2. Economical rate of premium
  3. Option for higher than standard deductible in return of liberal discounts in premium rate
  4. Grey area claims eliminated altogether
  5. Insulation against all possible aspects of risk exposure which may have been overlooked inadvertently
  6. Covers eventualities which cannot be taken care of by any of the present operational policies

1.Better coverage

  • Transit risk cover with compound available
  • Cover provided for equipments and machinery send for repairs outside the premises for a limit of 60 days
  • No deduction on account of depreciation from claim amount for damage, whether total or partial
  • 15% underinsurance has been allowed without affecting the claim amount
  • Loss of property due to burglary and other accidental damage cover
  • Standard time excess under MLOP reduced

2.Administrative control

  • The cover is in widest form
  • Single policy document
  • Risk located in various places can be covered under a single policy

Scope of Cover

The IAR policy is a true "All Risks" operational policy as compared to the present named perils operational policies which have a limited scope of cover. In an "All Risks" cover, all fortuitous mishaps are insured barring a few named exclusions. The possible perils insured against are as follows:

A) Material Damager Section

1) Fire & Allied Perils

  • Fire
  • Lightning
  • Riot, strike, malicious damager
  • Terrorism
  • Explosion/ implosion
  • Impact damage
  • Aircraft damage
  • Storm, typhoon, hurricane, tornado, flood and inundation
  • Subsidence and landslide including rock slide.
  • Bursting and overflowing of water tanks, apparatus and pipes
  • Missile testing operations
  • Leakage from automatic sprinkler installation
  • Bush fire
  • Earthquake, fire & shoc
  • Leakage and contamination
  • Spoilage material damage following operation of insured peril
  • Subterranean fire
  • Spontaneous combustion
  • Forest fire
  • Deterioration of stock following FOES
  • Sprinkler leakage

2) Theft & Burglary (other than Larceny)

3) Transit Risk inside insured premises

4) Boiler & Pressure plant insurance

  • Explosion/implosion due to its own working
  • Explosion due to smelt water reaction for waste heat boiler
  • Flue gas explosion

5) Machinery Insurance

  • Mechanical & electrical breakdown

B) Business interruption section

1) Loss of profit following fire and allied perils

2) Loss of profit following claims under machinery insurance, boiler & pressure plant insurance or electronic equipment insurance (optional)



The intangible but more correct way of viewing such a policy is through its exclusions. In effect, save the few listed exclusions all accidental or damages are covered.

1. Material Damage Section

A) Excluded causes

  • Faulty or defective design or workmanship
  • Inherent vice, latent defect
  • Gradual deterioration, wear and tear
  • Interruption of water supply, gas, electricity or fuel systems
  • Failure of effluent disposal systems
  • Collapse or cracking of building
  • Corrosion, rust, fungus, shrinkage, pollution
  • Action of light, vermin, insects
  • Larceny
  • Acts of fraud and dishonesty
  • Inventory losses
  • Coastal and river erosion
  • Wilful act or wilful negligence
  • Cessation of work
  • War, invasion, mutiny, civil commotion
  • Permanent or temporary dispossession resulting from requisition by lawful authority
  • Destruction by order of public authority
  • Nuclear weapons material, ionising radiations

B) Excluded property

  • Money, cheques and other valuable documents unless specifically mentioned in the policy
  • Goods held in trust or on commission unless specifically mentioned in the policy
  • Vehicles licensed for road use
  • Property in transit other than that within the insured
  • Property in course of demolition, construction or erection
  • Land (including top soil) back fill, drainage or culverts, roads, runways, railway lines,reservoir, canals, tunnels, bridges, piers unless specially covered
  • Property damaged as a result of its undergoing any process
  • Property undergoing alteration, repair, testing, or servicing if damage thereto directly attributable to the operations of work performed thereon

However, if any damage ensures from these reasons it may be covered subject to policy conditions.

2. Interruption Insurance Section

The policy does not cover loss resulting from interruption of or interference with the business directly or indirectly from

  • Any restriction or reconstruction or operation imposed by any public authority
  • Lack of sufficient capital to ensure timely restriction of normalcy
  • Suspension, lapse or cancellation of a lease license or order
  • Damage to boilers, economisers, turbines or other vessels where pressure is used resulting from their explosion implosion
  • Damage to electronic equipments, computers
  • Mechanical breakdown or derangement of machinery

These exclusions are to be deleted in case MLOP cover is opted for.


Sum Insured

1. Material Damage Section

  • Building, plant, machinery and other fixed assets - at reinstatement value basis
  • Stock and other current assets - at Market Value

2. Business Interruption Section

  • Turnover less variable charges

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