Businesses with assets of more than $2 million may benefit from special risks insurance,

rather than conventional policies.

Special risks insurance brokers can help you assess whether the move is appropriate for your

business.

The prime advantage to special risks insurance – sometimes also known as industrial special

risks insurance – is that it is“umbrella” insurance. That means it covers any risk which hasn’t

been specifically excluded.

In contrast, conventional insurance only covers you for risks that are explicitly listed as being

included in a policy.

Special risks insurance is particularly useful in a situation where a claim is unclear and the

onus is on the insurer to prove why you shouldn’t be covered rather than up to you to prove

why you should.

Opinions vary on how large a business needs to be before a move to special risks insurance is

warranted.

The minimum asset value insurable with special risks is usually $2 to $3 million, but some

believe it is unlikely to offer better value until you reach $5 million in insurable assets.

For businesses of this size, special risks insurance offers not only better covers but,

sometimes, lower premiums too. However, it is worth noting that excesses are also higher,

typically starting at about $1000.

Special risks insurance usually replaces separate insurance for fire and perils/property

damage, debris removal, business interruption, prevention of access and theft.

Businesses with high value assets such as property, equipment or machinery can benefit from

special risks insurance, which is frequently used in the manufacturing, resource and

construction industries, as well as by large universities and councils.

Special risks insurance is a complex area. In addition, it’s worth being aware that the most

common special risks base policy wording was created in the 1980s, so it doesn’t take into

account more recent risks such as cyber exposures.

Common exclusions include flood, machinery breakdown and electrical equipment

breakdown – all of which can be covered separately, either by extending the special risks

policy or with separate insurance.

Your broker may be able to negotiate “endorsements” so that exclusion doesn’t apply to you

– or advise you on extra insurance you need to take out to cover any exclusion.

Factors insurers examine when calculating the premium for special risks insurance include:

the type of activities the business undertakes;

construction materials of the business premises;

value of the assets to be insured; and

Previous insurance and claims history.

Under special risks insurance, the insured party is also required to do their bit by taking all

reasonable precautions to prevent loss, destruction, or damage to the property insured.

As with all insurance, it is vital to keep special risks insurance up to date with accurate

valuations so that you’re never unknowingly underinsured.

If your business has grown to a size where special risks insurance could come into play,

congratulations – and don’t forget to call in special risks insurance brokers to help you on

your way.

The above advice is general advice and has not taken into account your personal

circumstances.

Here the author, James, writes this content about special risks insurance brokers. If you

have any query about services, visit our website http://www.ebminsurance.com.au/ or feel

free to call us on 1300 467 873