Commercial Property All Risks (PAR) Insurance Malaysia
Property All Risks (PAR) insurance provides broad physical asset protection for manufacturers, logistics operators, wholesalers, and corporate building owners in Malaysia. Unlike a standard Fire policy that only covers named perils, a PAR policy operates on an open-peril basis: all sudden and accidental physical damage is covered unless specifically excluded.
Who requires Property All Risks coverage?
Operations with high capital expenditure in cleanrooms, automated machinery, cold-storage warehousing, or multi-location inventory benefit from PAR underwriting. Standard fire policies leave gaps around accidental physical impact, water damage from burst internal pipes, and localized electrical or mechanical mishaps.
Coverage & Technical Matrix
| Coverage Component / Parameter | Status / Basis | Underwriting Notes |
|---|---|---|
| Fire, Lightning & Domestic Explosion | Covered under standard base wording | Full reinstatement or indemnity basis |
| Accidental Physical Damage | Covered | Subject to policy excess per occurrence |
| Theft Following Forcible & Violent Entry | Covered | First-loss or full-value limits available |
| Flood, Windstorm & Tempest | Covered via endorsement | Subject to site topography and loss history |
Standard Policy Exclusions
- Wear and tear, gradual deterioration, rust, corrosion, or oxidation
- Mechanical or electrical breakdown internal to specific machinery (insurable separately under Machinery Breakdown)
- Unexplained inventory shortage or disappearance discovered only during stocktaking
- War, terrorism, nuclear hazards, and willful negligence by management
Underwriting & Quotation Requirements
- Full risk location address and GPS coordinates
- Construction classification (brick walls, metal deck or reinforced concrete roof)
- Fire protection systems installed (bomba certificate, sprinklers, hydrants, break-glass alarms)
- Sum insured breakdown: Building, Plant & Machinery, Furniture/Fittings, and Stock-in-Trade
- Past 36-month claims experience and site survey photos
Frequently Asked Technical Questions
What is the main difference between Fire Insurance and Property All Risks (PAR)?
Fire Insurance is a named-perils policy that only pays out if loss is caused by fire, lightning, or specific added perils. Property All Risks covers any sudden and unforeseen physical loss or damage unless the cause is explicitly listed in the exclusions.
How should we declare the Sum Insured for machinery and buildings?
Buildings and machinery should be insured on a Reinstatement Value basis (the cost to replace with new equivalent assets) rather than depreciated book value to prevent underinsurance penalties under the Average Clause.
Key Underwriting Clauses Defined
First Loss Insurance Basis
A policy arrangement where the insured selects a coverage limit lower than the total value at risk (typically for burglary or theft) without being penalized by the Condition of Average.
Reinstatement Value Clause
A property insurance basis that pays the full cost of replacing damaged buildings or machinery with new items of the same kind and capacity, without deducting for depreciation.