When Industrial Special Risks Insurance Comes into Play

Industrial special risks (ISR) insurance works for businesses that typically have physical assets valued at $5 million collectively or higher. However, insurers may vary on this figure with $10 million the minimum. Usually, it offers coverage for the broad categories of material damage and business interruption.

ISR insurance can protect your high-value assets in these circumstances:

• Loss of profits, rentals, revenue, or increased costs due to damage to the insured asset
• As above, but resulting from ‘contingent’ damage to property at your suppliers’, customers,’ and utilities’ premises
• Loss and/or damage to plant and machinery, buildings, raw materials, stock, and unregistered vehicles
• Accidental damage
• Glass breakage
• Employee dishonesty
• Burglary and money theft.

While those diverse risks make it sound like an ‘all risks policy’, that isn’t the case, there are exclusions and conditions.

What is commercial insurance?

Commercial insurance, also commonly known as SME insurance, provides cover for small to medium enterprises. The benefit of this type of policy is that it contains different types of insurance cover included as a ‘section’ of the policy. There are some mandatory sections however you can also add extra sections to suit your business needs.

Sections include:

• Business Building and Contents
• Business Interruption
• Portable Items
• Theft
• Money
• Glass
• Machinery Breakdown
• public and products liability
• Tax Audit.

Your suite of policies will depend on your unique business and its risk profile.

Comparing the two

As mentioned above, an industrial special risks policy is broader than a commercial insurance policy. The former will cover all except what’s excluded; the latter offers coverage for damage, loss or liability due to specific events.

ISR insurance generally suits larger or more complex businesses with physical assets of more than $10 million. SME insurance is designed for small to medium enterprises.

Be sure to check with us on the fine print for exclusions and coverage for each policy. Many clauses have been added to industrial special risks policies over the past two decades. They’re called ‘endorsements’ and help extend or restrict the coverage.

Knowing when you need ISR

Your business would already have a package of commercial insurance policies, but you may be unsure if industrial special risks coverage is essential.

These factors may mean ISR is suitable:

• Typically, your business assets are worth $5 million (or $10 million).
• There are gaps in your current package of insurance policies that you’re not easily able to bridge, and
• Insurers have begun to see your business as more complex, so need more detailed information about your risk profile and operations. For example, they may ask for business interruption assessments, risk engineering survey reports, even thermographic scans of your electrical switchboards, etc.

If your business includes any of these, talk to us to tap into our broad and deep advice about insurance coverage and risk management.