Everything you should know about IAR Policy
Industries are considered the backbone of our economy, as they are the ones responsible for meeting the actual demands of products and services. Customers only concern themselves with the end products, but what goes on inside the industries is far more complex and risky and can directly or indirectly affect the end product. These industrial units, consisting of sophisticated machinery and mechanisms constantly face risks of damage to assets, unforeseen breakdowns and consequential losses, which can negatively affect their daily operations.
An Industrial All Risk Policy is designed to protect an industry from unforeseen risks such as fire, burglary, unforeseen breakdowns, consequential losses unfolding during the policy period. Any industrial manufacturing unit (excluding petrochemical) with a sum assured of Rs 100 crores or above at one or multiple locations are eligible to take an IAR policy.
What does an IAR Policy cover?
An IAR policy covers wider risks than the ‘Standard Fire and Special Peril Insurance Policy’ and offers an all-in-one industrial risk protection policy. A typical IAR policy provides cover against:
❖ Material Damage:
An All Industrial Risk policy covers the industry against the reinstatement cost of any material damage occurring to the Asset. The perils covered can be any of the following: fire damage, AOG Perils, burglary, theft machinery breakdown, electronic equipment breakdown, boiler explosion etc. After assessing the damage, the payout from the insurer is made.
❖ Business Interruptions:
Under business interruptions, the policy covers loss of business and income due to any material damage to the Assets. Typically, Gross profit (Net Profit + Standing Charges) is taken as the Basis of Sum Insured. Once the material damage occurs and the business is interrupted, the loss of income is accessed by the insurance company and the payout is duly paid.
Why should you invest in an IAR policy?
Owning or managing an industry and looking over every small process can be a strenuous task. You can try to plan and execute every small task but unforeseen events like fire or breakdown can destroy months of efforts. An IAR policy is a perfect plan to cut the complexity of the industrial process by shifting the risks to a well-planned protection mechanism.
You should invest in an IAR policy for the following reasons:
This policy is a unique combination that protects the insured against losses due to damage to assets as well as impact on balance sheet post a loss.
Unlike a Fire Insurance Policy which is a named peril policy, an IAR policy is an All Risk cover. This is an exclusion driven policy. If a claim does not fall in the exclusions, the insurer shall be liable to pay the claims subject to other terms and conditions as agreed at the time of placement. The Policy also offers a Waiver of Underinsurance Cover upto 15% as an inbuilt cover.
The IAR policy can be tailored to match the specifics of any manufacturing industry. The facility to utilize add-ons such as removal of debris including foreign debris, customers suppliers extension, Departmental Clause, is also available to offer further customization.
A comprehensive IAR policy provides coverage for all the stages an industry or a project is undertaking. Any financial loss during stages such as manufacturing, storage, is covered.
Exclusions under the IAR Policy
Most IAR Policies come with some general expectations. Some of the common exceptions are:
- Normal wear and tear
- Fraud or larceny
- Damage due to faulty infrastructure
- Willful negligence and loss of market
- Damage or destruction by order of public authority
- Damage due to pollution and contamination
Majorly driven by the industrial output, India is on the path of becoming a 5 trillion economy. Even if a single industry suffers on the hands of unforeseen perils, the chain reaction caused could be negative and ultimately affect the economy. An All Industrial Risk Policy is the ideal way to financially protect the interests by offering comprehensive coverage and peace of mind.
At PINC Insurance, we have the most ideal insurance policies, to meet all your business requirements. You can visit PINC Insurance to buy an IAR policy and safeguard your industry.