Over the years the term ISR policy has become a more common reference when talking about the main part of a dealer house account. But what does it mean?
Simply ISR means Industrial Special Risks.
In a standard ISR type policy, the limit of Indemnity is the total amount that the insurer would be liable for, should a total loss occur. But as is the custom, these policies come with a Sub Limit of Liability, which further limits the insurers exposure. In simple terms the more “sub limits” a policy contains, the more restricted is the cover. This is not uncommon, but you need to review each of the sub limits to ensure that they don’t render the policy meaningless when a loss occurs. Such is the case with Accidental Damage.
In the past, the standard dealer house account policy came as a defined events policy. This meant that the events that the policy covered were defined in the policy, if the event was not listed, then no cover existed. During transition from Business Packs to ISR’s, in order to overcome this situation, some insurers introduced the event of accidental damage. This was meant to be a “catch all”, in case an unusual event occurred that wasn’t defined, so because of this, a small limit was attached to it typically somewhere in the region of $20,000.
Take the example from many years ago a building lost its roof as a part of a failure of the structure. The building was years old and the failure was sudden and unexpected. It wasn’t caused by a storm or fire etc. so it obviously suffered accidental damage. The limit set under the policy was $100,000, the roof costs $2.5 million to replace. Clearly the loss was covered under the policy but only to $100,000 – that’s a big shortfall.
So when you are looking at the sub limits your dealer house account policy, apart from the burglary / crime limits, money, extra costs etc. you will also need to set a limit for accidental damage. In order to set a limit that is effective you will need to determine how your policy works, because without an understanding of how it works you can’t set an appropriate set of sub limits.
Unfortunately, not all ISR policies are born equal so they don’t all work exactly the same way. So what I have said earlier is in general how they work. But, have you looked at your sub limits? Do you know how they respond with your business requirements?
This is why you need a broker who specialises in setting cover on dealer house accounts with an eye on what is in your interest for your business and not the insurers. Someone who has a knowledge as to how your business runs and how the policies work, someone with 40 years’ experience. Do you want to know come ask us we’re here to assist you.
