Single line to ground fault (SLGF) in MV ungrounded networks is often accompanied by arcing. Most of these arcing faults are unstable and cause transient overvoltages that can exceed the insulation withstand limits of grid equipment. This problem has become especially troublesome in industrial grids widely using power electronics devices, which tend to have lower insulation margins than other power equipment. Typically an arc suppression coil is used to compensate the SLGF capacitive current and reduce the likelihood of arcing in this case. However, as the operating experience shows, arcing ground faults were also recorded in compensated industrial cable grids. This article proposes an original algorithm based on known arc burn theories to simulate the maximum overvoltage values during arcing SLGF. The purpose of this article is to examine the effect of an arc suppression coil on the nature and magnitude of transient overvoltage. The study of transient overvoltages is carried out on the example of an industrial cable grid containing AC adjustable speed drives under arcing SLGF caused by cable insulation breakdown. Simulation results for various grid operating configurations show that the suppression coil can reduce the transient voltage rise intensity but cannot affect the initial voltage pulse during an SLGF. The presented model allows sizing the minimum insulation margins and selecting thresholds of overvoltage protection triggering for grid equipment to ensure its reliable operation.