An Industrial All Risk Insurance Policy has 2 Sections:
1. Material Damage Section: The material damage section of the IAR Insurance Policy provides coverage against any material damage event to the Insured Property during the Policy Period. It provides coverage for Fire Damage Event (same coverages as a Fire Insurance Policy) and Machinery Breakdown Event.
Machinery Breakdown (MBD) Section under Industrial All Risk includes not only your conventional Machinery Breakdown, that is, electrical breakdown or mechanical breakdown, but it also includes your Electronic Breakdown (Electronic Equipment Insurance Policy) and Boiler explosion (Boiler Pressure Plant Policy).
Additionally, Theft and Burglary are Inbuilt covers in an IAR Policy, and Transit Risk within the Premises is also covered under an IAR Policy. These are big advantages of an IAR Policy over a SFSP Insurance Policy
So, the Material Damage Section of an Industrial All Risk Insurance Policy is a combination of Fire Insurance Policy, Machinery Breakdown Insurance Policy, Electronic Equipment Insurance Policy, Boiler and Pressure Plant Insurance Policy, and Theft and Burglary Insurance Policy.
2. Business Interruption Section: The Business Interruption Section of IAR Policy covers the loss of gross profits faced by the business due to business interruption because of a material damage event faced by the Insured Property.
The Business Interruption Section of the IAR Policy covers both forms of business interruption: Business Interruption arising out of Fire Damage (Fire Loss of Profits) and Business Interruption arising out of Machinery Breakdown (Machinery Loss of Profits). Fire Loss of Profit Insurance is mandatory while Machinery Loss of Profit Insurance is optional under the Industrial All Risk Insurance Policy.