UNDERSTANDING THE ISR POLICY - LMI Group

1 UNDERSTANDING THE ISR POLICY A Comprehensive Guide on the cover afforded by the Industrial Special Risks POLICY for Insurance Brokers and Advisers, Underwriters and Claims Officers, Loss Adjusters, and Risk Managers Volume 1: The Mark IV This volume contains Comprehensive Analysis of Mark IV Advisory & Modified Wordings Schedule of Available Endorsements with Commentary Allan Manning To my wife, Helen For whom nothing is too much me! Writing a book is an adventure: it begins as an amusement, then it becomes a mistress, then a master, and finally a tyrant. Winston Churchill Other titles by this Author UNDERSTANDING the ISR POLICY : A Comprehensive Guide - Volume 2: The Mark V UNDERSTANDING the ISR POLICY : A Comprehensive Guide - Volume 3: Aids to UNDERSTANDING Business Interruption Insurance & Claims: A Practical Guide Fidelity, Theft & Money Insurance & Claims: A Practical Guide The Closure of the Bougainville Copper Mine: Anatomy of a Major Claim It Will Never Happen to Me!

2 The Strategic Management of Crises in Business National Library of Australia Cataloguing-in-Publication entry Manning, Allan. UNDERSTANDING the ISR POLICY : A Comprehensive Guide on the cover afforded by the Industrial Special Risks POLICY for insurance brokers and advisers, underwriters and claims officers, loss adjusters, and risk managers. Bibliography. Includes index. ISBN 0 9580948 3 7 (set). 1. Risk (Insurance) - Australia. 2. Risk Management - Australia. I. Title. Allan Manning, Author Layout and design by Secretaries on the Move Pty Ltd, Camberwell, Victoria, Australia Printing by Q-Print, Albion, Queensland, Australia Published by Mannings of Melbourne Pty Ltd, Camberwell, Victoria, Australia First published December 2005 Copyright 2005 Mannings of Melbourne Pty Ltd FOREWORD By Keith Till Of the many interesting individuals that I have met over my 40-plus years in the insurance industry, Allan Manning stands out as one of the most remarkable.

3 A quiet achiever, Allan also happens to be one of the most qualified practitioners in his field, with a swag of letters to his name including, most recently, a Doctor of Business Administration from Victoria University, following his extensive research into business survival following a major insured loss. But what s even more impressive is the contribution that he has made to broker education over the past decade, sharing his in-depth knowledge of the nuances of various insurance products via an excellent range of training books and courses. In a small way, I can lay claim to contributing to this Guide s inception.

4 You see, at my behest, Allan had been conducting a series of workshops over the previous 12 months for brokers in the Zurich network - to help further their knowledge of Business Interruption and ISR insurance. The overwhelming feedback from the hundreds of brokers from across Australia who attended the workshops, held as far afield as Cairns to Perth, was that Allan had helped them gain a more thorough UNDERSTANDING of these products. While Allan had already produced the definitive Australian guide to Business Interruption insurance ( Business Interruption Insurance & Claims: A Practical Guide , now in its fourth edition), there was nothing comparable on the market about ISR.

5 So I suggested to Allan that maybe he should put pen to paper again. Nine months on, it s with great pleasure that I recommend Allan s ISR guide to you a practical and comprehensive book based on the insights that he has gained from his many years at the coal face, dealing with ISR claims. True to form, the end result is very thorough, spanning three volumes essential reading for anyone who wants to gain a comprehensive UNDERSTANDING of the various ISR wordings and endorsements available in the marketplace. UNDERSTANDING the ISR POLICY is the kind of book that you ll refer to time and time again in the day-to-day running of your business a must-have for every practitioner.

6 Keith Till National Broker Manager Zurich Financial Services Australia Limited North Sydney, 21 September 2005 Contents UNDERSTANDING the ISR POLICY Page Volume 1: Mark IV Advisory & Mark IV Modified i CONTENTS INTRODUCTION 1 PART A 6 Chapter 1 Preamble, Operative & Attestation 7 Preamble 7 Mark IV Advisory and Mark IV 7 Operative Clause 8 Mark IV Advisory and Mark IV 8 Insurer s Maximum Liability 9 Mark IV Advisory and Mark IV 9 Attestation Clause & Panel of Insurers 10 Mark IV Advisory and Mark IV 10 Chapter 2 The 11 The Insured 11 Mark IV Advisory and Mark IV 11 The Business 13 Mark IV Advisory and Mark IV 13 Situation and/or Premises 14 Mark IV Advisory and Mark IV 14 Period of Insurance 15 Mark IV Advisory and Mark IV 15 The Premium 25 Mark IV Advisory and Mark IV 25 Declared

7 Values 25 Mark IV Advisory and Mark IV 25 Limit(s) of Liability 29 Mark IV Advisory and Mark IV 29 Sub-Limit(s) of Liability 32 Mark IV Advisory and Mark IV 32 Deductibles 39 Mark IV Advisory and Mark IV 39 Indemnity Period 42 Mark IV Advisory and Mark IV 42 Pay-Roll Limits 47 Mark IV Advisory and Mark IV 47 Uninsured Working Expense 47 Mark IV Advisory and Mark IV 47 Contents Page UNDERSTANDING the ISR POLICY ii Volume 1: Mark IV Advisory & Mark IV Modified Chapter 3 - Section 1: Material Loss or Damage - The Indemnity ..50 The Indemnity 50 Mark IV Advisory and Mark IV Modified.

8 50 Trigger for Cover 50 Mark IV Advisory .. 50 Mark IV 54 Additional Benefits 55 Mark IV Advisory and Mark IV Modified .. 55 (a) Architects, Surveyors & Similar Fees 55 Mark IV Advisory and Mark IV Modified .. 55 (b) Government & Statutory Fees 56 Mark IV Advisory and Mark IV Modified .. 56 (c) Fire Extinguishment & Mitigation Costs 57 Mark IV Advisory and Mark IV Modified .. 57 (d) Temporary Protection 58 Mark IV Advisory and Mark IV Modified .. 58 (e) Replacing Locks & Keys 59 Mark IV Advisory .. 59 Mark IV Modified .. 59 (f)(i) Removal of Debris, Dismantling & Temporary Repairs 60 Mark IV Advisory and Mark IV Modified.

9 60 (f)(ii) Removal of Debris from Premises of Others 67 Mark IV Advisory and Mark IV Modified .. 67 (f)(iii) Removal of Debris, Property No Longer Useful 68 Mark IV Advisory .. 68 (g) Directors & Employees Clothing & Tools of Trade 69 Mark IV Advisory and Mark IV Modified .. 69 Additional Benefits which are not Subject to Co-insurance 70 Mark IV Advisory and Mark IV Modified .. 70 Chapter 4 Section 1: Material Damage - The Property Insured ..71 The Property Insured 71 Mark IV Advisory and Mark IV Modified .. 71 Definition of What is Insured other than Money 71 Mark IV Advisory .. 71 Mark IV 74 The Extent of Money Cover 74 Mark IV Advisory and Mark IV Modified.

10 74 Chapter 5 Section 1: Material Damage - Basis of Settlement ..76 Basis of Settlement 76 Mark IV Advisory and Mark IV Modified .. 76 Designation of Property using Insured s Records 76 Mark IV Modified Only .. 76 (a) Buildings, Machinery, Plant etc 77 Mark IV Advisory and Mark IV Modified .. 77 Contents UNDERSTANDING the ISR POLICY Page Volume 1: Mark IV Advisory & Mark IV Modified iii (a)(i) Cover if Insured Elects to Accept Indemnity 77 Mark IV Advisory Only .. 77 (b) Raw Materials Supplies and Other Merchandise not Manufactured by the Insured etc 78 Mark IV Advisory Only .. 78 Mark IV Modified Only .. 80 (c) Material in Process 81 Mark IV Advisory Only.