All Risk Insurance Explained: Why High-Value Businesses Cannot Afford to Ignore It

If your business owns assets worth crores, uncertainty is not just a risk, it is a threat. Fire, flood, theft, machinery failure, riots, or accidents can strike without warning and the financial impact can be devastating. This is exactly where All Risk Insurance , also known as Industrial All Risk Insurance , becomes a critical shield for businesses.

Unlike basic property insurance that covers only named perils, All Risk Insurance offers broad protection against almost every unforeseen event, unless specifically excluded in the policy wording. For businesses operating in today’s volatile environment, this comprehensive cover is no longer optional.

What Is All Risk Insurance

All Risk Insurance is a type of property insurance that covers physical loss or damage to insured assets caused by any sudden and accidental event that is not expressly excluded in the policy.

In simple terms, instead of listing what is covered, the policy lists what is not covered. Everything else is insured.

This makes it one of the most powerful risk management tools for industries, large commercial establishments and infrastructure projects.

What Does All Risk Insurance Cover

An Industrial All Risk Insurance policy typically covers a wide range of risks, including:

• Fire, explosion and lightning
• Riot, strike, malicious damage and terrorism
• Theft, burglary, and accidental damage
• Flood, storm, earthquake and other natural calamities
• Damage during transit or handling if opted
• Sudden and unforeseen physical damage to property

This wide coverage ensures that businesses are protected against both common and uncommon risks that could otherwise disrupt operations and finances.

Important Extensions Available Under All Risk Insurance

One of the biggest advantages of All Risk Insurance is the flexibility to enhance protection through extensions. Businesses can customise their policy by adding:

• Electrical and mechanical breakdown cover
• Machinery breakdown insurance
• Business interruption due to fire or machinery loss
• Burglary and explosion cover
• Additional location or transit coverage

These extensions help bridge gaps that standard property policies often leave uncovered.

Key Exclusions You Must Know

While All Risk Insurance is comprehensive, it does not cover everything. Understanding exclusions is crucial to avoid surprises during claims. Common exclusions include:

• War and war-like operations
• Normal wear and tear
• Willful negligence or fraud
• Loss or damage by order of public authority
• Consequential loss unless business interruption cover is taken

Knowing these exclusions helps businesses plan additional coverage where required.

Deductible and Excess Explained

All Risk Insurance policies come with a compulsory excess. This is usually:

1 percent of the claim amount subject to a maximum of ₹5,000

Businesses can opt for a higher voluntary excess, which often results in lower premium costs. This balance helps control premium expenses while maintaining strong protection.

How Sum Insured and Premium Are Decided

The sum insured under an All Risk Insurance policy is based on the market value of the property and assets . Underinsurance can lead to reduced claim payouts, so accurate valuation is critical.

The premium depends on several factors, including:

• Nature of the insured assets
• Location and territorial limits
• Claims history
• Risk exposure and safety measures

A well-structured policy ensures optimal coverage without unnecessary premium burden.

Who Should Buy All Risk Insurance

All Risk Insurance is ideal for:

• Manufacturing units
• Large commercial establishments
• Infrastructure and industrial facilities
• Warehouses and logistics hubs
• Businesses with high-value assets across multiple locations

If your business cannot afford downtime or major financial loss, this policy is essential.

Why All Risk Insurance Is a Smart Business Decision

Unexpected events do not come with warnings. A single incident can halt operations, damage reputation and drain financial reserves. All Risk Insurance provides peace of mind by ensuring that when something goes wrong, your business is financially protected and operationally resilient.

It is not just insurance. It is business continuity planning.

Final Thoughts

All Risk Insurance is designed for businesses that think ahead. It protects assets, stabilises cash flow and ensures survival during crises. The real value of this policy is realised not when everything goes right, but when something goes wrong.

Because when assets are worth crores, guessing risks is never an option.