Industrial Special Risks & Business Interruption
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What is industrial special risks insurance?
An ISR programme covers the physical assets — buildings, plant, machinery, stock, tooling — and the earnings those assets produce. It's written on an all-risks basis, responding to loss that isn't specifically excluded rather than to a named list of events. For a business whose entire operation sits under one roof, that distinction decides claims.
The exposure isn't theoretical in Queensland. Extreme weather generated $4.8 billion in insured losses nationally in 2025, more than $4.1 billion of it in Queensland alone, against a total economic cost estimated above $8.6 billion.
Material damage is rarely where these programmes fail. The gap is in the second section — an indemnity period set at twelve months for plant that takes eighteen to build, ship and commission; declared values fixed before replacement costs moved. Business interruption is the harder half to specify, and the half that determines whether the business is still trading at the end of it.
What's covered by industrial special risks insurance
An Industrial Specials Risk (ISR) policy is written in two sections. Section 1 covers the physical assets — what follows below. Section 2 covers the earnings those assets produce, set out in the next panel. The wording is negotiated far more than a standard business pack, so your broker can confirm what applies to a specific policy and what else can be added to your cover.
Cover for physical loss or damage to the premises, including fixtures, fittings, external structures and improvements at the insured locations.
Cover for production equipment, fixed and mobile plant, jigs, dies and tooling — including items with long replacement lead times.
Cover for raw materials, work in progress, finished goods and general contents, on a basis that reflects how stock levels move through the year.
Cover for the cost of clearing the site and demolishing damaged structures so rebuilding and reinstatement can begin.
Cover for architects', engineers' and surveyors' fees necessarily incurred in reinstating what was damaged.
Cover for sudden mechanical or electrical failure of plant and machinery, where added to the policy.
Cover for goods and equipment temporarily away from the insured premises, at a customer's site or in transit between locations.
What's covered by business interruption insurance
Business interruption cover attaches to a material damage policy and responds to the financial consequences of a loss rather than the physical damage itself. What's insured depends on how the business earns, so the wording is shaped around gross profit, payroll and the time reinstatement realistically takes. Your broker can confirm what applies to a specific policy and what else can be added to your cover.
Cover for the profit the business would have earned had the loss not occurred, for as long as the interruption continues, up to the indemnity period selected.
Cover for the additional costs of keeping the business trading after a loss — leasing alternative premises, hiring temporary plant, outsourcing production, expedited freight.
Cover for costs incurred to protect the business beyond what can be justified by the profit saved, such as holding a customer contract or maintaining a market position.
Cover for wages and salaries during the interruption period, allowing the business to retain the skilled staff it will need when production resumes.
Cover for interruption caused by damage to neighbouring property or by an authority restricting access to your site, where the business itself is undamaged.
Cover for interruption caused by loss of electricity, gas, water or telecommunications supply at the point specified in the policy.
Cover for interruption caused by damage at a key supplier's or customer's premises, where their loss stops your production or removes your market.
Cover for the cost of assembling and substantiating the claim, including accountants' fees for calculating the loss of profit.
Why you might need industrial special risks insurance
Industrial special risks policy types
ISR cover is generally written on one of the industry standard wordings, then amended to suit the business. Section 1 covers material damage and Section 2 covers consequential loss, and a business can take both or, less commonly, one on its own. Policies can cover a single site or a schedule of locations under one limit, and are usually written on a declared values basis with a policy limit set by reference to the largest loss the business could realistically suffer. Smaller operations may be better served by a business package policy, and part of a broker's job is knowing where that line sits.
Industrial special risks key considerations
The indemnity period is the single most important number in the policy and the one most often set too short. It needs to run from the date of the loss until the business is back to the trading position it would have reached, which for a manufacturer waiting on custom plant can be well beyond twelve months. It's also worth confirming how declared values have been calculated, whether flood is included or optional, and how the policy treats stock at varying values through the year. Reviewing this with your broker before a loss is what determines whether a claim is settled in full.
The machine is replaceable. The year without it isn't.
When a roof fails in a storm, the damage that gets photographed is the machinery. The damage that decides whether the business recovers is the twelve or eighteen months that follow — production stopped, orders going elsewhere, staff to be kept on, and a replacement machine somewhere in a manufacturing queue overseas. Material damage cover buys the equipment back. Business interruption cover buys the time.
Getting that second half right is detailed work. It means understanding how gross profit is actually earned in the business, how long reinstatement will genuinely take, and what it will cost to keep trading in the meantime. It's the part of a property programme most likely to be under-specified, and the part your broker should be able to walk you through line by line.
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