INDUSTRIAL ALL RISK POLICY

INDUSTRIAL ALL RISK POLICYDoyel tripathiSowjanya s.v.v. ravikiranBalmeek TiwariAmit sunkarwarMayank verma

1

Industrial All Risks PolicyIndustrial 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 DamageSection 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 DamageSection 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 -Standard Fire & Special Perils PolicyMachinery Insurance PolicyBoiler & Pressure Plant Insurance PolicyElectronic Equipment Insurance PolicyBurglary (other than larceny)Transit Risk inside Insureds premises

EXCLUSIONS :

Excluded causes : 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 representativesCessation of work, delay or loss of market or any other consequential or indirect loss War and Kindred riskDispossession resulting from nationalisation or requisition by authority or due to unlawful occupation of such building by any personDestruction 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, ExplosivesGoods held in trust or Commission (unless specifically mentioned as insured by the Policy)Vehicles licenses for Road use, Locomotives, Aircraft, Watercraft or likeProperty 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 treesProperty damaged as a result of its undergoing any processProperty removed from the premises except machinery for temporary repairs for 60 days

General ConditionsMisrepresentation, Non-disclosure of any material fact Policy voidableThe Policy ceases on expiry of 7 days from date of fall or displacement of building or part thereofInsurance 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 lawCancellation Clause Insureds duty : (a) intimation of loss (b) submission of all documents. Limitation of 12 months

General Conditions (contd.)Insurers right on happening of lossFraudulent claimsOption of company for mode of settlement of claims Average clause not applicable if less than 15% Contribution clause Reinstatement of Sum Insured Clause

Special Conditions to Sec.ISum Insured :

Building, Plant & Machinery- Reinstatement valueand other fixed assets Stocks - Market value

Special Conditions to Sec.IBasis of Loss Settlement : If property lost or destroyed -Rebuilding of building or Replacement of property by similar propertyIf property damaged - Repair of the damage or Restoration of damaged portionTo a condition equal to but not better or more extensive than its condition when new.Special Provisions of Reinstatement Debris Removal Expenses -Of Insured Property limited to the amount entered in the Schedule

Section II : BUSINESS INTERRUPTIONLoss of Gross Profit following loss and / or Damage indemnifiable under Standard Fire & Special Perils Policy and Burglary

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 INTERRUPTIONExclusions :Any restriction on reconstruction or operation imposed by any public authorityLack of sufficient capital for timely restoration or replacement of lost propertySuspension, Lapse or Cancellation of a lease licence or orderDamage to Boiler, Economizers, Turbine or other vessels resulting from their explosion / implosionDamage to Electronic equipment, computerMechanical or Electrical breakdown or derangement of machineryDeductibles as stated in the schedule

Section II : BUSINESS INTERRUPTIONBasis 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 INTERRUPTIONDefinitions : Gross Profit : (Turnover + Closing stock and WIP) (Opening stock + WIP + Uninsured working expenses) Uninsured Working Expenses : (a) Turnover and purchase tax (b) Purchase (less discounts received) & (c ) carriage, packing and freightTurnover : Indemnity Period : (Net of time excess)

Section II : BUSINESS INTERRUPTIONDefinitions (contd.): Rate of Gross ProfitAnnual Turnover OverStandard Turnover (adjustment for trend or business and for variation and for variation)IMPORTANT PROVISIONS : Memo I Benefits from Other PremisesMemo 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.