What Is Industrial Special Risks Insurance In Australia?

Industrial special risks insurance in Australia is tailored commercial property cover for larger or more complex businesses. It combines material damage and business interruption protection for buildings, stock, plant and equipment. Cover is shaped by the policy schedule, stated values, what's excluded and any agreed changes to the wording.

ISR policies are often arranged using broad "all-risks" wording. That means physical loss or damage is covered unless the policy excludes it. This is broader than the property sections of many packaged policies, which work through defined sections, listed events and set benefits. But "all risks" doesn't mean every loss is covered. The schedule determines what is actually protected.

The name says "industrial," but the product isn't just for factories. It may suit any business where the assets, sites or downtime risk are too large or complex for a standard business pack.

At a glance

• ISR is often taken by larger, asset-heavy or complex businesses
• It usually has a material-damage section and a business-interruption section
• Policies use broad all-risks wording as a starting point
• Each policy is generally shaped around the specific risk rather than offered as a fixed package
• Public liability is usually arranged on its own
• Cover depends on listed sites, limits, what's excluded and the wording

What does "industrial special risks" mean?

The name is misleading. "Industrial" doesn't limit it to heavy industry. "Special risks" refers to tailored property cover, not a single unusual event. It's a form of business property and downtime cover for larger or more complex risks.

The product may suit factories, warehouses, logistics firms, wholesalers, food makers, large retailers, building owners, hotels and multi-site businesses. Many Australian policies use Mark IV or modified Mark IV wording. That's a widely used base form, with agreed changes adjusting the cover for each risk.

How does an ISR policy work?

The policy is split into two main sections. Each one covers a different type of loss.

Section 1: material loss or damage

This covers insured physical assets: buildings, contents, stock, raw materials, plant and machinery. The policy may respond to fire, storm, impact, theft and accidental damage, subject to what's excluded. Values should reflect the assets at each site using the basis of settlement the policy requires.

If values are too low, a claim shortfall may result where average or co-insurance clauses apply. Review them at each renewal.

Section 2: consequential loss and business interruption

This covers financial losses that flow from insured material damage. It can include lost gross profit, extra cost of working, lost rent and other chosen items. It generally responds following insured physical damage, subject to the selected basis of cover and any extensions. Chosen extras can also address damage at suppliers, customers, utilities or access to the insured site.

The indemnity period is the window over which an eligible downtime loss may be assessed. It must match a realistic recovery timeline. Too short, and the policy stops paying before the business recovers.

How do the schedule and agreed changes work?

The final cover comes from the base wording, schedule and any agreed changes read together. The schedule records the insured entities, sites, values, limits and excesses. Changes can add, restrict or alter cover for the specific risk.

If a site, asset or activity isn't on the schedule, it may not be covered. Check before you assume.

What does "all risks" actually mean?

Rather than relying on a list of named events, the wording starts with broad cover for physical loss or damage and then applies what the policy excludes and its limits. This is broader than packaged policies that work through defined sections and listed events.

But it doesn't cover everything. What's excluded, sub-limits and conditions still matter.

Who may need ISR insurance?

Is there a minimum asset value?

There is no fixed national threshold. Some insurers may consider ISR from around $5 million to $10 million in total insured value, while others use higher thresholds or assess suitability primarily on complexity. Use, building type and interruption exposure can matter as much as the total value.

The right question isn't "are my assets above $5 million?" It's whether your property and downtime risk needs cover built for your specific setup.

Common signals it may be worth looking at

• Standard business pack insurers cannot accommodate the asset values, occupancy, locations or required policy structure
• The site has complex tenants or high-risk use (food making, mechanical workshops, hospitality)
• The site is in a flood or cyclone zone where standard cover is restricted

A business may be ready for a review when asset values exceed packaged-policy limits, several sites need cover or the interruption risk needs terms that are negotiated rather than preset.

ISR insurance vs business pack insurance

If you already hold a business pack, you may wonder how ISR differs. Business pack insurance uses a more standard, section-based structure for eligible small and medium businesses. ISR is generally shaped around each risk, aimed at higher-value or more complex property and interruption needs.

The right choice depends on asset values, complexity and the flexibility needed. For a full comparison including a decision matrix, see ISR insurance vs business pack insurance.

What may ISR insurance cover?

Across both sections, the policy may include cover for:

• Buildings, fit-out and contents
• Raw materials, work in progress and finished stock
• Plant, machinery and fixed equipment
• Temporary repairs and protection
• Debris removal and reinstatement costs, where included
• Professional fees
• Lost gross profit or revenue
• Extra cost of working (e.g. temporary premises, faster repairs)
• Payroll or rent where chosen
• Claim-preparation costs where included

The policy is usually focused on property and business interruption. Public and products liability is arranged on its own. For a full breakdown of each section, see what does ISR insurance cover.

What does ISR insurance not usually cover?

Common items that fall outside the policy include:

• Wear and tear, gradual decay and corrosion
• Faulty design or work (where faulty work causes a fire, the cost of fixing the defective work may be excluded, but the resulting fire damage may still be covered under some wordings)
• Pollution, site clean-up and disposal costs, except where limited resulting-damage cover applies
• Flood where excluded or restricted for the site
• Machinery or equipment breakdown without the relevant section or extension
• Road-registered vehicles
• Cyber incidents and data loss
• Worker injury (workers compensation is separate)
• Building projects outside agreed cover

What are common ISR insurance claims?

These scenarios are for illustration only. All claims are subject to the policy terms, limits and what's excluded.

Factory fire damages the plant, stock and the building. Section 1 may respond to the physical damage. Section 2 may respond to lost profit and extra costs during the repair period, subject to the indemnity period and the values on the schedule.

Burst pipe damages warehouse stock and equipment. Section 1 may cover damaged stock and contents. Debris removal and reinstatement costs may also apply, subject to limits. The wording may distinguish between escaped water and flood.

Storm removes roof sheeting and stops production. The property section may cover building repairs. The interruption section may cover income loss during the recovery period, subject to upkeep terms and the values on the schedule.

What affects ISR insurance cost?

Property and interruption values are major pricing inputs. But insurers also assess the site, building type, use, fire protection, claims history, excesses and any extras chosen.

1. Site and natural-hazard risk. A warehouse in a mapped flood zone or a factory in a cyclone-prone region will attract higher rates than the same building in a low-hazard area. Flood, storm and bushfire exposure are often the largest single pricing factors.
2. Building type, age and condition. Older buildings, timber construction or sites with known maintenance issues may cost more to insure. Insurers look at how the building would perform in a fire or storm, not just its replacement value.
3. Property, stock and plant values. Higher values mean higher premiums. But understating values to save on cost creates underinsurance risk, which can reduce a claim payout through average or co-insurance clauses.
4. Industry, use and activities on site. A cold-storage facility with ammonia refrigeration is a different risk from a clean office. The type of work happening inside the building matters as much as the building itself.
5. Hot works, flammable goods or hazardous processes. Welding, spray painting, chemical storage or food processing with open flame all increase the fire risk. Insurers may apply specific conditions or higher excesses.
6. Fire protection, sprinkler systems and security. Better protection usually means lower rates. A fully sprinklered warehouse with monitored alarms is cheaper to insure than an unprotected one.
7. Claims history. A clean record helps. Frequent or large claims may lead to higher premiums, higher excesses or restricted terms at renewal.
8. Excess levels and sub-limits. A higher excess reduces the premium but increases what the business pays out of pocket on each claim. Sub-limits cap the insurer's payout for specific events like theft or removal of debris.
9. Interruption values and indemnity period. The declared gross profit and the length of the indemnity period directly affect the Section 2 premium. A longer period costs more but protects against extended rebuilds.
10. Extras chosen. Adding machinery breakdown, flood cover or employee dishonesty increases the premium. Each extra is priced based on the specific risk it covers.
11. Reliance on key suppliers, customers or utilities. If the business depends on a single supplier or power source, the interruption exposure is higher. Extensions covering those dependencies add to the cost.

ISR excesses vary by insurer, risk, location and cause of loss, and may differ substantially from business pack excesses.

How to arrange ISR insurance

This type of cover isn't off the shelf. Each policy is shaped around the specific risk, so the insurer needs detailed information upfront. The more complete the submission, the more accurate the quote.

• Entities and structure. List every entity to be insured (ABN, trust, company). If a group has several entities, each one may need to be named.
• Sites. All owned, leased and managed locations. A site left off the schedule may not be covered if a claim arises there.
• Building details. Construction type, age, floor area and current replacement values. These drive the Section 1 pricing and the basis of settlement at claim time.
• Occupancy and use. Tenant details, activities on site and any high-risk processes. This shapes the insurer's view of fire, liability and interruption exposure.
• Asset values. Property, plant, machinery and stock values, including seasonal peaks. Understating values to reduce premium creates underinsurance risk, as noted in the cost section above.
• Revenue and profit. Annual turnover and gross profit. These feed directly into the Section 2 business interruption calculation.
• Business-interruption workup. A completed worksheet or financial calculation showing how gross profit, fixed costs and recovery time have been assessed. This is one of the most overlooked items in ISR submissions.
• Indemnity period. The maximum recovery window the policy should cover. A 12-month period won't protect a business that takes 18 months to rebuild.
• Critical dependencies. Key plant, suppliers, customers or utilities that could trigger an interruption claim if they fail or are damaged.
• Fire protection and risk surveys. Sprinkler systems, fire alarms, extinguishers, hydrants and any recent risk-engineering reports. Better protection supports better terms.
• Hazardous processes or materials. Welding, spray painting, chemical storage, flammable goods. Insurers need to know what's on site to price the risk and set conditions.
• Claims history. Past claims, open matters and any loss-prevention steps taken since. A clean history or clear improvement plan helps at placement.
• Lender and lease needs. Any requirements from financiers, landlords or head lessors that the policy must satisfy.
• Existing wording. The current policy schedule and any endorsements. This gives the new insurer a starting point and shows what the business has been covered for previously.

What should you check before accepting an ISR insurance quote?

Once a quote arrives, these are the questions that prevent gaps from showing up at claim time.

Are all entities and sites included? A missed entity or location can leave an entire building or operation uninsured. Cross-check the quote schedule against the submission.

How is insured property defined? Some wordings define property broadly. Others are narrow. Check whether tenants' improvements, external signage, landscaping or property in the open air are included or excluded.

Which flood and natural-peril restrictions apply? Flood may be excluded entirely, included with a sub-limit, or subject to a higher excess for specific sites. The same applies to earthquake, cyclone or storm surge. Read the endorsements, not just the summary.

Is machinery or equipment breakdown included or separate? Standard ISR wording may not cover internal mechanical or electrical failure. If the business relies on specialist plant, confirm whether breakdown cover is part of the policy or needs a separate section.

What is the interruption basis and indemnity period? Is the business interruption section based on gross profit, gross revenue, rent or another item? Does the indemnity period match the realistic time to rebuild and recover? These two details control how much Section 2 will pay.

Are supplier, customer or access extras included? If the business depends on a key supplier, customer or utility, check whether damage at their premises could trigger a claim under the policy. These extensions aren't automatic.

Do limits apply across the policy, per site or per event? A single policy limit shared across five sites means one large loss could consume the capacity for all of them. Understand how the limits are structured.

Are the values on the schedule current? Replacement costs move with construction prices, not purchase prices. If the schedule shows values from two years ago, the business may be underinsured today.

How upcover can help

upcover arranges industrial special risks insurance for eligible Australian businesses. Options can be compared using the same sites, values, downtime needs and requested extras so differences in cover are easier to spot.

• 70,000+ businesses covered across Australia
• 4.9/5 customer rating
• 80+ insurance partners

Get an ISR insurance quote through upcover

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently asked questions

What is ISR insurance?

Industrial special risks insurance is tailored business property cover for larger or more complex businesses. It uses broad all-risks wording to cover physical loss or damage to buildings, stock, plant and machinery, plus business interruption losses that flow from insured damage.

What does ISR stand for?

It stands for industrial special risks. Despite the name, it isn't limited to heavy industry. It may suit any business where the assets, sites or downtime risk are too large or complex for a standard packaged policy.

Is ISR insurance compulsory?

No. It isn't required by law. However, lenders, landlords or leases may require specified property or downtime cover as a condition of the deal.

What asset value normally requires ISR?

There is no fixed rule. Some insurers may consider ISR from around $5 million to $10 million in total insured value, while others use higher thresholds or assess suitability primarily on complexity.

Does ISR include business interruption?

It commonly does. Section 2 may cover lost gross profit, extra cost of working and other chosen items following insured material damage. The indemnity period and values on the schedule must be enough.

Does ISR include public liability?

Usually no. The policy is focused on property and business interruption. Public and products liability is arranged as a separate policy.

What is Mark IV wording?

Mark IV is a widely used Australian base wording that sets out terms for material damage and business interruption. It's changed through schedules and agreed extras to match each business. Not every policy uses Mark IV, but it is one of the most recognised standards.

Is ISR suitable for multiple sites?

Yes. It is well suited to multi-site businesses. Each insured site should be listed with the right values. Limits, sub-limits and terms may apply across the policy or to specific sites.

Is ISR suitable for commercial property owners?

Yes. Landlords and property investors are common users. The policy may cover the building, landlord fit-out, common areas and lost rent following insured damage.

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_{The information in this article has been prepared without taking into account your individual needs, objectives or financial situation. It should not be relied upon as personal advice. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. Before deciding whether a particular insurance product is right for you, please read the relevant PDS and consider your personal circumstances. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}