In the ever-evolving landscape of business and industry, risk management is a paramount concern for organizations across various sectors. Amidst the complexities of today's industrial world, having the right insurance coverage can make all the difference. Enter the IAR policy, the full form of IAR policy is Industrial All Risk Policy. It offers a wider range of coverage than the traditional fire and special peril policy, covering a wide range of perils like fire, burglary, accidental damage, breakdown, as well as business interruptions.

Understanding IAR Policy

An industrial all-risk policy is an insurance policy that provides comprehensive coverage for industrial assets against unforeseen events. It is a type of property insurance that covers all risks except for those that are specifically excluded from the policy. This policy is designed to protect businesses from financial losses that may arise from damage to their assets due to accidents, natural disasters, theft, or other unforeseen events. This type of policy is particularly important for businesses that operate in high-risk industries such as manufacturing, construction, and transportation.

An industrial all-risk policy typically includes coverage for property damage, business interruption, liability, and other related risks. Property damage coverage protects against damage to buildings, equipment, and other property owned by the business. Business interruption coverage provides compensation for lost income and other expenses incurred as a result of a covered event that causes the business to shut down temporarily. Liability coverage protects the business against claims made by third parties for injuries or damages caused by the business or its products.

In addition to these basic coverages, an industrial all-risk policy can be tailored to meet the specific needs of a particular business. For example, a business that operates in a flood-prone area may require additional coverage for flood damage, while a business that relies heavily on technology may require coverage for cyber risks. Overall, an industrial all-risk policy is a valuable tool for businesses looking to protect themselves against a wide range of risks and uncertainties.

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Industrial all-risk policy typically covers the following:

  • Buildings and structures
  • Machinery and equipment
  • Stock and inventory
  • Raw materials and finished goods
  • Loss of profits due to business interruption
  • Liability for third-party injury or property damage

Benefits of IAR Policy for Businesses

An Industrial All-Risk Insurance (IAR) policy can offer several benefits for businesses. Some of the key advantages include:

1. Comprehensive Coverage: IAR insurance provides all-encompassing coverage against a wide range of risks, including property damage, third-party liability, business interruption, equipment and machinery damage, and more. This comprehensive protection minimizes the need for multiple policies and simplifies risk management.

2. Risk Mitigation: It helps businesses mitigate financial risks associated with unforeseen events, such as natural disasters, fires, theft, vandalism, and accidents. This, in turn, safeguards the company's assets, operations, and continuity.

3. Business Continuity: In the event of property damage or business interruption, IAR insurance can provide financial support to help the business quickly recover and resume operations. This ensures minimal disruption and loss of revenue.

4. Third-Party Liability Protection: IAR insurance covers legal liabilities arising from bodily injury or property damage to third parties caused by the insured business's operations. It protects against potential lawsuits and the associated legal and compensation costs.

5. Equipment and Machinery Coverage: Businesses heavily reliant on machinery and equipment benefit from IAR insurance, which covers damage, breakdown, or theft of these assets. This ensures the continuity of production and minimizes downtime.

6. Construction Project Protection: For construction companies, IAR insurance is crucial as it provides protection for construction projects, equipment, materials, and the liability that may arise during the construction process. It helps mitigate project-related risks.

7. Flexibility and Customization: IAR policies can be tailored to the specific needs of the business, allowing for a customized approach that addresses the unique risks and requirements of the industry or company.

8. Cost-Efficiency: By bundling multiple coverages into a single policy, businesses often find that IAR insurance is a cost-effective way to manage risks compared to purchasing separate policies for different aspects of their operations.

9. Confidence and Investment Attraction: Having robust insurance coverage can instill confidence in investors, lenders, and business partners, making it easier to secure funding and grow the business.

10. Compliance with Contractual Obligations: In many cases, business contracts or agreements may require the parties involved to have specific insurance coverage, including IAR insurance. Having such coverage ensures compliance with contractual obligations.

11. Peace of Mind: IAR insurance offers peace of mind to business owners and stakeholders, knowing that they are financially protected against various risks that could otherwise jeopardize the company's future.

Exclusions in IAR Policy

While industrial all-risk policies offer broad coverage for a wide range of risks, there are some exclusions that policyholders should be aware of.

  • War and Terrorism: Damage caused by war, invasion, acts of foreign enemies, civil war, rebellion, revolution, insurrection, or terrorism is generally excluded from coverage.
  • Nuclear Risks: Damage caused by nuclear weapons or nuclear accidents is typically excluded from coverage.
  • Intentional Acts: Damage caused by intentional acts, such as arson or vandalism, is usually not covered by the policy.
  • Wear and Tear: Damage caused by normal wear and tear, corrosion, rust, decay, or gradual deterioration is generally excluded from coverage.
  • Pollution: Damage caused by pollution or contamination is typically not covered by the policy.
  • Loss of Income: Loss of income resulting from a covered loss is usually not covered by the policy.
  • Employee Dishonesty: Losses resulting from the dishonest or criminal acts of employees are typically excluded from coverage.

It is important for policyholders to carefully review their policies to understand the specific limitations and exclusions that apply. In some cases, additional coverage may be available through endorsements or separate policies.

How to Choose the Right IAR Policy?

When it comes to choosing the right industrial all-risk policy, there are a few things to keep in mind. Here are some tips to help you make the best decision for your business.

Assessing Business Risk

Before selecting an industrial all-risk policy, it's important to assess the risks your business faces. This includes identifying potential hazards, such as fire, theft, and natural disasters, and evaluating the likelihood of these risks occurring. Additionally, consider the potential financial impact of these risks on your business.

It's also important to consider any regulations or legal requirements that may affect your business. For example, some industries may be required to have specific types of insurance coverage.

Understanding Policy Terms

When evaluating industrial all-risk policies, it's important to understand the terms of the policy. This includes the coverage limits, deductibles, and exclusions. Coverage limits refer to the maximum amount the policy will pay out in the event of a covered loss. Deductibles refer to the proportion of loss that the insured bears in respect of any claim.

Exclusions refer to specific situations or events that are not covered by the policy.

It's important to carefully review the policy terms and ask questions if anything is unclear. Additionally, consider working with an insurance broker or agent who can help you navigate the policy options and select the best coverage for your business. By carefully assessing your business risks and understanding policy terms, you can select an industrial all-risk policy that provides the right level of protection for your business.


Industrial All-Risk Policy (IAR) is a versatile and comprehensive insurance solution designed to protect businesses, particularly those in industries like construction and manufacturing, from a wide array of risks. This type of policy provides businesses with financial security, continuity, and peace of mind, allowing them to focus on their operations and growth while knowing they are shielded from unforeseen events. In a world filled with uncertainties, an IAR policy serves as a valuable safeguard for businesses, ensuring their resilience and ability to thrive in the face of adversity.

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Frequently Asked Questions

  1. Who needs industrial all risk?

An Industrial All Risk (IAR) Policy can be beneficial for a wide range of businesses and industries, particularly those that possess valuable assets, properties, and equipment that are susceptible to various risks. Here are some of them:

  • Industrial and manufacturing companies
  • Energy and power plants
  • Paper mills
  • Sugar factories
  • Oil & gas exploration companies
  • Transmission line and substations

2. Does the industrial all-risk policy cover burglary?

Certainly. An industrial all-risk policy covers burglary. In the event of a burglary or theft at an industrial property, the policy may cover the loss of property, such as machinery, equipment, tools, and other assets that have been stolen or damaged as a result. The insurance policy can also cover the cost of replacing or repairing damaged property, such as broken windows, doors, and other structures if there was damage caused during the burglary.

3. What is the deductible in an industrial all-risk policy?

The deductible in an industrial all-risk policy is the amount that the insured agrees to pay toward any claim. The deductible is typically set at a fixed amount and is designed to encourage the insured to take steps to reduce the risk of loss or damage.

4. Give an example of an industrial all-risk policy.

Incident - A boiler explosion occurred in Unchahar, Raebareli district, Uttar Pradesh, India, around 3:30 p.m. local time (GMT +5:30) on 1 November 2017, killing 43 people and injuring 100 others at the 1,550-megawatt Feroze Gandhi Unchahar Thermal Power Station operated by the government-owned a thermal power company.

Resolution - To save your losses from such situations, it is ideal to have an Industrial All Risk policy. Once the claim is raised after such an incident, the insurer will assess the extent of the damage, the repairs needed, and the estimated cost of putting the insured property in its pre-loss condition. After the assessment, the insurance company will approve the claim and provide the necessary funds to cover the expenses incurred due to the damage. It will also cover the legal liability for non-fatal and fatal injuries caused to a third person due to such incidents.

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