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    Industrial All Risk Policy and Changes To Be Done

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    Ravi Kiran
    The document discusses an industrial all risk policy which provides comprehensive coverage for damage to assets from unforeseen circumstances except exclusions. It covers material damage under Section I and business interruption under Section II. It describes various standard and optional coverage extensions that can be added to the policy.

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    © All Rights Reserved
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    Industrial All Risk Policy and Changes To Be Done

    Uploaded by

    Ravi Kiran
    458 views22 pages
    The document discusses an industrial all risk policy which provides comprehensive coverage for damage to assets from unforeseen circumstances except exclusions. It covers material damage under Section I and business interruption under Section II. It describes various standard and optional coverage extensions that can be added to the policy.

    Original Description:

    What is IAR policy and what are the changes need to be done to the IAR policy.

    Original Title

    Industrial all risk policy and changes to be done

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    The document discusses an industrial all risk policy which provides comprehensive coverage for damage to assets from unforeseen circumstances except exclusions. It covers material damage under Section I and business interruption under Section II. It describes various standard and optional coverage extensions that can be added to the policy.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    458 views22 pages

    Industrial All Risk Policy and Changes To Be Done

    Uploaded by

    Ravi Kiran
    The document discusses an industrial all risk policy which provides comprehensive coverage for damage to assets from unforeseen circumstances except exclusions. It covers material damage under Section I and business interruption under Section II. It describes various standard and optional coverage extensions that can be added to the policy.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 22

    INDUSTRIAL ALL RISK

    POLICY
    DOYEL TRIPATHI
    SOWJANYA S.
    V.V. RAVIKIRAN
    BALMEEK TIWARI
    AMIT SUNKARWAR
    MAYANK VERMA

    Industrial All Risks Policy


    Industrial all risk policy is a comprehensive policy to
    cover damage to assets from all unforeseen
    circumstances except defined exclusions .
    Policy form consists of
    Section I : Material Damage
    Section II : Business Interruption
    Overall Sum insured of Rs. 1 billion (100 Crores) and
    above in one or more locations in India

    Scope of Cover
    Industrial all risk policy is a comprehensive policy to cover
    damage to assets from all unforeseen circumstances
    except defined exclusions .
    Policy form consists of
    Section I : Material Damage
    Section II : Business Interruption

    Section I : MATERIAL DAMAGE


    SECTION
    The Policy will pay if Insured Property be accidentally,
    physically lost, destroyed or damaged other than by
    excluded causes.
    In widest form IAR cover all perils/covers under 1.

    Standard Fire & Special Perils Policy

    2.

    Machinery Insurance Policy

    3.

    Boiler & Pressure Plant Insurance Policy

    4.

    Electronic Equipment Insurance Policy

    5.

    Burglary (other than larceny)

    6.

    Transit Risk inside Insureds premises

    EXCLUSIONS :

    Excluded causes :

    1.

    Faulty designed material or workmanship, inherent vice, gradual


    deterioration or wear and tear.

    Interruption of water supply, gas electricity or fuel system or


    failure of affluent disposal system to and from the premises.

    Collapse or cracking of building

    Corrosion, rust, contamination or scratching etc.

    Larceny, acts of fraud or dishonesty, unexplained or inventory


    shortage.

    Coastal or River erosion

    Exclusions (contd.) :

    Any willful act or negligence of Insured or his representatives

    Cessation of work, delay or loss of market or any other


    consequential or indirect loss

    War and Kindred risk

    Dispossession resulting from nationalisation or requisition by


    authority or due to unlawful occupation of such building by any
    person

    Destruction of property by order of any public authority

    Exclusions (contd.) :

    2.

    Excluded property :

    Money, Cheques, Stamps, Securities, Works of art, Documents,


    Manuscript, Computer system records, Plans, Explosives

    Goods held in trust or Commission


    (unless specifically mentioned as insured by the Policy)

    Vehicles licenses for Road use, Locomotives, Aircraft, Watercraft


    or like

    Property in transit other than within the premises specified in


    Schedule.

    Exclusions (contd.) :

    Property /structures in course of construction / demolition /


    erection and materials connected therewith.

    Land, Railway lines, Dams, Pipelines, Bridges, Docks,


    Underground, offshore property unless specified.

    Livestock, Growing crops or trees

    Property damaged as a result of its undergoing any process

    Property removed from the premises except machinery for


    temporary repairs for 60 days

    General Conditions
    1.

    Misrepresentation, Non-disclosure of any material fact


    Policy voidable

    2.

    The Policy ceases on expiry of 7 days from date of fall or


    displacement of building or part thereof

    3.

    Insurance ceases unless sanction of company obtained : (a)


    alteration of trade (b) building unoccupied for more than 30
    days Insured interest passes not by will or operation of
    law

    4.

    Cancellation Clause

    5.

    Insureds duty : (a) intimation of loss (b) submission of all


    documents.
    Limitation of 12 months

    General Conditions (contd.)


    6.

    Insurers right on happening of loss

    7.

    Fraudulent claims

    8.

    Option of company for mode of settlement of claims

    9.

    Average clause not applicable if less than 15%

    10.

    Contribution clause

    11.

    Reinstatement of Sum Insured Clause

    Special Conditions to Sec.I


    1.

    Sum Insured :

    Building, Plant & Machinery- Reinstatement value


    and other fixed assets Stocks - Market value

    Special Conditions to Sec.I


    2.

    Basis of Loss Settlement :


    If property lost or destroyed Rebuilding of building or Replacement of property by similar property
    If property damaged Repair of the damage or Restoration of damaged portion
    To a condition equal to but not better or more extensive than its
    condition when new.
    Special Provisions of Reinstatement

    3.

    Debris Removal Expenses Of Insured Property limited to the amount entered in the
    Schedule

    Section II : BUSINESS
    INTERRUPTION
    1.

    Loss of Gross Profit following loss and / or Damage


    indemnifiable under Standard Fire & Special Perils
    Policy and Burglary

    2.

    Loss of Gross Profit following loss and / or Damage


    indemnifiable under Machinery Insurance, Boiler &
    Pressure Plant Insurance or Electronic Equipment
    (optional cover)

    Section II : BUSINESS
    INTERRUPTION
    Exclusions :

    Any restriction on reconstruction or operation imposed by any


    public authority

    Lack of sufficient capital for timely restoration or replacement of


    lost property

    Suspension, Lapse or Cancellation of a lease licence or order

    Damage to Boiler, Economizers, Turbine or other vessels resulting


    from their explosion / implosion

    Damage to Electronic equipment, computer

    Mechanical or Electrical breakdown or derangement of machinery

    Deductibles as stated in the schedule

    Section II : BUSINESS
    INTERRUPTION
    Basis of Settlement

    : The amount payable as indemnity will be

    (a) Reduction in Turnover and


    (b) Increase in cost of working
    Less : any saving in Insured standing charges
    subject to adequacy of sum insured

    Section II : BUSINESS
    INTERRUPTION
    Definitions :
    1.

    Gross Profit : (Turnover + Closing stock and WIP) (Opening stock


    + WIP + Uninsured working expenses)

    2.

    Uninsured Working Expenses : (a) Turnover and purchase tax


    (b) Purchase (less discounts received) & (c ) carriage, packing and
    freight

    3.

    Turnover :

    4.

    Indemnity Period : (Net of time excess)

    Section II : BUSINESS INTERRUPTION


    Definitions (contd.):
    5.

    Rate of Gross Profit

    6.

    Annual Turnover Over

    7.

    Standard Turnover (adjustment for trend or business and for


    variation and for variation)

    IMPORTANT PROVISIONS :

    Memo I Benefits from Other Premises

    Memo II Return of Premium

    Add on Clauses :1) Growing crops, plants & trees :- This add-on covers accidental physical
    loss destruction and damage to plants crops and trees being grown within
    the premises for non-commercial purposes.

    Though it is exclusion under the IAR policy but certain private companies
    are covering it as an add-on.

    2) Vehicles :- licensed for road vehicles can be covered in the own damage &
    property damage part by charging additional premium and desirable excess.
    3) Account receivable clause :- Individual, firm, corporation or joint
    ventures will be named as additional insured with the insured in the
    schedule when required by the contract. In the event if there is any violation
    of the terms and conditions of one insured, it shall not affect the rights of
    the other insured.

    Add on clauses (continued).


    4) Costs of rewriting records clause :- Here the insured will indemnify
    the insured cost, charges and expenses incurring in replacing or
    restoring documents at value of the materials.
    5) Additional insured :- Individual, firm, corporation or joint ventures
    will be named as additional insured with the insured in the schedule
    when required by the contract.
    6) De-contamination and cost of cleanup :- The policy covers the
    cost of decontamination or cleanup cost of insured property
    contaminated. This coverage is applicable to only that part of insured
    property contaminated as a direct result of insured physical damage.

    Add on clauses (continued)..


    7) Employee and personal property cover :- Damages of employees
    personal property at the insured premises is covered for which insured
    is responsible provided that the insurer is not responsible to pay more
    than what limit per employee per event set by the insured.
    8) Non-vitiation clause:- Under this policy interests of various parties is
    covered without additional rate of excess. Breach of conditions by any
    one party will not affect the interest of other parties.
    9) Incompatibility expenses:- The cost of replacement to mitigate the
    incompatibility between the replaced equipment and undamaged
    ancillary equipment or computer records.

    Add on clauses (continued)..


    10) Shut down-Start up clause: It covers the actual shutdown or startup
    costs for power and other utilities namely water, electricity, steam ,gas and
    necessary as well as fuels and combustibles to reestablish the plant it was at
    the time of damage subject to limit specified.
    11) Pair or set clause: Provisions found in commercial property forms like
    hotels dealing with losses involving part of a set or one of a pair. In this case,
    the insurer can either

    Repair or replace any part to restore the pair or set to its value prior to the
    loss, (or)

    Pay the difference between the actual cash value of the property before and
    after the loss.

    12) .) Loss-payee clause : Insurer will pay the loss directly to the parties as
    directed by the insured. Rate chargeable and excess is NIL

    13) .) Property In off-site storage:


    This clause covers the property at Manufacturers, fabricators,
    distributors or suppliers premises.
    15.) Expense for loss-minimization:
    This policy includes expenses for loss-minimization necessarily
    included by the insured to prevent aggravation of an insured loss
    following a loss or damage at any insureds premises specified in the
    schedule, including moving/ shifting of property if this contributes to
    loss minimization, subject to a limit per loss as per schedule.

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