Industrial Special Risks (ISR) Insurance:
Comprehensive Protection for Your Business
Industrial Special Risks (ISR) insurance, or Industrial Property Insurance, provides Property and Business Interruption (or Consequential Loss) coverage for businesses with assets typically exceeding $5,000,000 or those operating across multiple locations.
This policy is widely used by medium to large businesses due to its flexibility and ability to be tailored to specific business needs. Unlike standard business policies, ISR insurance is more complex, incorporating technical clauses and endorsements that require careful structuring to ensure appropriate coverage.
An ISR policy is highly customisable, often including multiple endorsements and modifications to address the unique risks different industries face. A broad range of sectors in Australia rely on ISR insurance, including Mining, Energy and Infrastructure, Major Retail, Office Towers, Strata Title, Shopping Centres, and businesses with multiple locations nationwide.
What does an Industrial Special Risks policy cover?
An Industrial Special Risks (ISR) insurance policy provides high-value asset coverage, protecting the Declared Assets listed in the Policy Schedule. Commercial property risk insurance is designed for businesses and commercial property owners with substantial assets, ensuring protection against potential losses, including property damage and financial disruption.
ISR insurance is divided into two key sections:
Section 1: Material Loss or Damage
This section provides coverage for physical property, ensuring that businesses can recover from unexpected events such as fire, storms, malicious damage, theft, or accidental damage. The insured assets typically include:
- Buildings – Covers structural damage to business premises.
- Contents – Includes machinery, equipment, and office furnishings.
- Stock – Protects raw materials and finished goods from loss or damage.
- Removal of Debris – Covers the cost of clearing damaged property after an insured event.
Section 2: Consequential Loss
This section is critical for businesses that rely on ongoing operations to generate revenue. It helps companies to recover financially from interruptions caused by insured events. Coverage includes:
- Gross Revenue / Profit / Rent – Compensates for lost income due to business disruptions.
- Additional Increased Cost of Working (AICW) – Covers extra expenses incurred to maintain operations, such as relocating to a temporary site or expediting repairs.
What are the various sections of an ISR policy and how is it structured?
An Industrial Special Risks (ISR) insurance policy is structured to provide high-value asset coverage and business interruption coverage, ensuring businesses are protected against a wide range of industrial hazards. The policy is divided into key sections, each outlining specific terms, conditions, and coverage details.
1. Policy Schedule
The Policy Schedule outlines the key details of the insurance agreement, including:
- Insured Legal Entity Name – Specifies the business or organisation covered.
- Policy Period – Defines the start and end dates of coverage.
- Maximum Policy Limits – Sets the total financial limit of the insurance policy.
- Sub-limits – Specifies coverage limits for specific risks or items.
- Declared Value Amounts – States the insured values of the business’s assets.
- Deductibles – Details the excess payable by the insured in the event of a claim.
- Endorsement Headings – Lists additional policy modifications tailored to the insured’s needs.
2. Preamble
This section introduces the policy, explaining its purpose and scope. It typically outlines the insurer's commitment to provide high-value asset coverage and the insured’s responsibility to comply with policy terms.
3. Operative Insurance Clause (Insuring Clause)
This is the core of the policy, stating the insurer’s obligation to cover losses due to insured events, subject to the policy’s terms and conditions.
4. Section 1: Material Damage
This section provides coverage for physical assets of the insured business in the event of damage caused by fire, storms, theft, accidental damage, and other insured perils. It includes:
- The Indemnity – Defines how the insurer compensates for loss or damage.
- The Property Insured – Specifies covered assets, including buildings, contents, and stock.
- Basis of Settlement – Details how claims will be assessed and paid, ensuring businesses receive fair compensation.
- Memoranda – Lists additional provisions related to material damage coverage.
5. Section 2: Business Interruption
This section provides business interruption coverage, helping businesses recover financially from operational disruptions due to insured events. It includes:
- The Indemnity – Covers financial losses resulting from business downtime.
- The Property Insured – Defines the assets and revenue streams protected under this section.
- Basis of Settlement – Outlines how lost revenue, profit, and additional costs are calculated and compensated.
- Memoranda – Provides further details on specific terms related to business interruption claims.
6. All Sections
Certain clauses apply to both Material Damage and Business Interruption sections. These include:
- Peril Exclusions – Lists events not covered by the policy, such as war or nuclear risks.
- Property Exclusions – Specifies property types that may be excluded, such as land or certain electronic data.
- Memoranda – Additional provisions applicable to multiple sections.
- Endorsements – Customised amendments to extend or limit coverage.
- Conditions – General policy terms and compliance with Australian regulations.
What are benefits of an ISR policy?
An Industrial Special Risks (ISR) policy provides comprehensive coverage for any physical loss or damage except for specific exclusions. Due to the large material and financial losses that can occur, it is highly recommended to engage an experienced insurance broker to tailor coverage to your business needs.
Key Benefits of an ISR Policy:
- Extensive Property and Asset Protection – Covers buildings, contents, and stock against fire, theft, storms, accidental damage, and other insured risks, ensuring business asset protection insurance for high-value assets.
- Business Continuity and Financial Stability – Provides business interruption coverage, compensating for lost revenue or extra costs due to damage affecting operations, including disruptions at supplier or customer premises.
- Extra Cost of Reinstatement – Covers additional costs to bring damaged sections of a building up to current building codes, ensuring compliance with updated regulations.
- Additional Extra Cost of Reinstatement – Covers additional costs to bring undamaged sections of a building up to current building codes, ensuring compliance with updated regulations.
- Flexible and Tailored Coverage – Unlike standard policies, ISR insurance is highly customisable with endorsements and extensions to match specific industry and operational needs.
What exclusions does an ISR policy have?
The standard exclusions in an Industrial Special Risks (ISR) policy fall under two main categories: Property Exclusions and Peril Exclusions.
Examples of Standard Property Exclusions:
- Railway Rolling Stock
- Live Animals
- Property in Open Air
- Growing Crops
Examples of Standard Peril Exclusions:
- Machinery Breakdown
- Flood
These exclusions can be amended or written back, meaning they may be removed from the policy upon the insurer’s approval. This flexibility allows businesses to tailor their coverage to specific operational risks, enhancing coverage and supporting risk mitigation for industries.
Claims Experience of ISR Policies
Some of the largest property and consequential loss claims in Australia have been settled under Industrial Special Risks (ISR) Policies. For instance, in the mining sector—where operations are expansive and high-value—incidents like floods filling mine pits have led to losses in the hundreds of millions of dollars.
As part of our commitment to providing business asset protection insurance and comprehensive industrial liability coverage, we support our clients throughout the entire claims process. Leveraging both in-house and external experts, we assist in handling and negotiating ISR claim settlements with insurers—ensuring your business receives fair and timely compensation.
History of ISR Insurance Policies
Industrial Special Risks (ISR) Insurance was developed in Australia in the late 1980s and has since undergone several revisions to adapt to the changing needs of businesses. The industry commonly uses what is known as the Mark IV wording, but over time, this has often been amended into manuscript or bespoke wordings tailored to the unique needs of individual businesses.
Certain industries face peculiar risks and exposures, making it essential to customise ISR wording to ensure adequate protection. This is where comprehensive industrial insurance and business asset protection insurance play a vital role—by adapting policy terms to address the specific operational risks of each sector.
Protect Your Business with Industrial Special Risks Insurance Today
Don’t leave your business exposed to unnecessary risks. With Industrial Special Risks (ISR) Insurance, you can be confident that your property and operations are protected by a broad policy designed specifically for your unique industry needs.
At Business Insurance Specialists, our expert team is ready to guide you through the complexities of ISR policies, ensuring comprehensive coverage that safeguards your business from unforeseen disruptions. Whether you need advice, a new policy, or a review of your existing coverage, we’re here to help.
ISR Insurance plays a vital role in commercial property risk insurance and risk mitigation for industries, offering peace of mind that your assets are secure, even in the face of major events.
Explore Our Other Offerings for Additional Protection:
- Cyber Insurance
- Corporate Travel Insurance
- Directors and Officers Insurance
- Public and Products Liability Insurance
- Marine Transit Insurance
- Commercial Motor Fleet Insurance
- Trade Credit Insurance
- Key Person Insurance
- Employee Assistance Programme
Contact Business Insurance Specialists today to speak with one of our insurance specialists or fill out our online form for a no-obligation consultation. Let’s create a policy that works as hard as you do to protect your business.
Call us at (07) 3139 3900 or click the links above to get started.