Industrial special risks (ISR) insurance is a type of property insurance suitable for businesses with a combination of more than $5,000,000 of physical assets. The policy is broad in scope and can include costs of business interruption. Unlike property cover in standard business pack insurance, which is created based on selected inclusions, an industrial special risks policy covers key events, unless they are specifically excluded under its terms.
The standard inclusions usually are
• losses arising from natural disasters, fires, weather events
• theft, malicious and accidental damage
• business interruption due to physical damage, prevention of access or failure of public utilities
• removal of debris and more.
Any excluded risks can be added as extensions or as standalone policies.
This flexibility combined with the wide range of endorsements available makes it highly adaptable to individual business’s requirements, especially those with high value assets, supply chain relationships and critical business partnerships or more complex needs.
Typically employed by enterprises that have invested substantially in operational assets – the threshold is usually $5 million – an industrial special risks policy provides cover for property damage and business interruption costs or other consequential losses.
How is the premium of industrial special risks insurance calculated?
The cost of the premium is directly linked to the declared value of your assets and revenue or profit and while your risk profile is taken into account, most cover extensions such as theft, theft of money and glass breakage (external and internal) are often included gratis.
What types of losses are covered by industrial risks insurance?
In terms of property loss, industrial special risks insurance typically covers
• replacement of assets – buildings, stock, contents, machinery, theft, money, glass
• payment of related fees to architects, engineers, surveyors and other reinstatement services
• fees imposed by authorities for rebuilding approvals and necessary statutory compliance costs
• customs fees, excise and other duties
• temporary protection of the property in the interim prior to repair or replacement
• replacement of locks, alarms, keys and combinations if damaged or stolen
• removal of debris, reinforcement of damaged structures, interim repairs
• repair or replacement of staff valuables left on the premises
• costs of suppressing a fire and/or restocking fire protection equipment
• other related losses that are not specified under the policy.
Other benefits available under industrial special risks cover
Industrial special risks cover can also recompense a business for increased costs of working and reduction in turnover as results of a loss event.
Care should be taken with ensuring the applicable terms are met. Reduction in output (sales turnover) should reflect turnover before the damage or interruption occurred, during the same period of time as the nominated indemnity period (eg: 12 months).
Affected businesses can also claim for increased costs of working during the indemnity period to avoid loss of output due to the incurred damage or interruption – as long as these don’t exceed the value of production saved.
Find out what industrial special risks insurance could do for your business
Talk to one of our experts about how industrial special risks cover could provide umbrella protection for your business exposures.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective.