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Industrial Special Risks

Industrial Special Risks (ISR) provides cover for property damage and business interruption. It is a very broad type of wording that covers everything except that which is specifically excluded. The basic wording is standard across Australia and insurers.

Important Points to Note

The Industrial Special Risks policy has evolved over the last twenty years and it is now accepted practice to add numerous clauses to the basic wording to provide clarification, remove certain exclusions or to generally enhance the level of cover. If you have an Industrial Special Risks policy that does not have any additional clauses (called Endorsements) added to or incorporated into your level of cover is well below the commonly accepted standard of cover.

Your policy schedule may indicate certain sub-limits, however it is essential that these sub-limits are backed up by the relevant Endorsement. The sub-limit merely dictates what benefit you are entitled to in the event of a claim – it is the presence of the appropriate Endorsement that will determine whether you actually can make a claim.

Common Exclusions

What is excluded on an Industrial Special Risks will depend on what Endorsements have been added. Below is a simplified list of some of the standard exclusions. If cover is required for any of these, then your policy needs to have the appropriate Endorsement to add cover:

Property Exclusions

  • Property in transit
  • Theft of money in certain circumstances
  • Jewellery, furs, bullions, precious metals etc
  • Locomotives, rolling stock, watercraft, aircraft and vehicles
  • Livestock, animals, birds & fish
  • Standing timber, growing crops and pastures
  • Land and anything therein
  • Bridges, canals, roadways, tunnels, dams, reservoirs and railway tracks
  • Docks, wharves and piers
  • Mining property located beneath the surface
  • Property during the course of its processing
  • Gates, awnings, fences, blinds, retaining walls and property in the open air caused by wind, rainwater or hail
  • Property in the course of construction/alteration etc (over 10% of policy limit or $500,000 whichever is lesser)
  • Empty premises undergoing demolition
  • Oil and gas drilling and offshore production rigs
  • Machinery and electronic breakdown of any machinery or electronic equipment
  • Boilers or pressure vessels

Perils exclusions

  • War, invasion, act of foreign enemy, civil war, rebellion etc
  • Confiscation of or damage to property by or under the order of any Government or Public or Local Authority
  • Radiation or radioactivity from nuclear waste
  • Nuclear weapons
  • Flood, water from or action of the sea, tidal wave or high water
  • Moths, termites and other insects or vermin
  • Rust, oxidisation, corrosion, mildew, mould, wet or dry rot, dampness of atmosphere
  • Contamination or pollution
  • Evaporation, disease, inherent vice or latent defects, loss of weight, change in flavour texture or finish, smut or smoke from industrial operations
  • Wear and tear, fading, scratching or marring, gradual deterioration, developing flaws, normal upkeep or making good
  • Error or omission in design, plan or specification or failure in design
  • Normal settling, seepage, shrinkage or expansion in buildings or foundations, walls, pavements, roads and other structural improvements, creeping, heaving and vibration
  • Faulty materials or workmanship
  • Incorrect siting of building
  • Demolition ordered relevant Authorities due to the failure to obtain necessary permits
  • Theft of property in open air
  • Unexplained or inventory shortage, disappearance resulting from clerical or accounting errors, shortage in the supply or delivery of materials to the Insured
  • Spontaneous combustion or fermentation or heating or any process involving the direct application of heat
  • Fraudulent or dishonest acts, data corruption, unauthorised amendment of data
  • Access by any person other than the Insured to the Insured’s computer system
  • Cessation of work or interruption of any process or operation due to strikes, labour disturbances or locked out workers
  • Erosion, subsidence and earth movement
  • Kidnapping, bomb threat, threat of contamination, hoax, extortion

Learn more about the difference between an Industrial Special Risks policy and a Business Pack here