WHAT IS INSURANCE?
Risk Transfer mechanism
Economic Concept of Insurance: 1. Insurer offers offers policy to cover specified risks 2. Insurer collects policy premium from customers 3. Insurer invests premium 4. Insurer pays money to insured customers in the event of losses covered by policy.
COMMON TERMS IN INSURANCE
Proposal P roposal Form Form Premium Premium Policy Policy Intermediary Intermediary
IInsurance nsurance Claim Claim :
: : : :
Basis o Basis off o offer f f er Consideration Consideration Acceptance Acceptance Interface Interface between the Insurers & the Insured Claim for Claim for reimbursement reimbursement from the insurance company when the insured has suffered a loss that is covered under an insurance policy
INSURANCE
LIFE INSURANCE INSURANCE
GENERAL IINSURANCE NSURANCE
GENERAL INSURANCE
Property Insurance
Marine Insurance
Motor Insurance
Miscellaneous Insurance
Liability Insurance
Health Insurance
PROPERTY
INSURANCE
Fire Insurance
Engineering Insurance
FLOP
MLOP
Tariff
Policies:
Tariff
Advisory Committee is a part of the IRDA TAC was entrusted in formulating form ulating the rules & regulations governing certain class of business in India Prior to detariffing, Companies could charge the premium as per the tariff only. cov er and Tariff gives the strict guidelines to what to cover what not to cover. The tariff specifies the minimum rate for a risk to be covered
Fire is now a non tariff product
FIRE INSURANCE
What is Fire?
Fire would mean a combustion which is rapid enough to produce a flame or glow.
A fire, for purposes of Property Insurance, mustt be "hostile," mus ie, it should not be in a place in which it is intended to be
Why
is there a need for Fire Insurance?
1. The existence of property susceptible to damage by fire or allied perils. 2. The fact that this property has certain intrinsic value in terms of money. 3. Due to fire there may be a damage/loss of property and this loss of property may cause other losses like loss of profit.
Subject matter of Fire Insurance: The subject matter of fire insurance may be any kind of movable or immovable property having pecuniary value, like:
Building
Plant
& Machinery Furniture, Fixtures & Fittings Stock etc
Who can take a Fire Policy?
Any person or organisation that has an insurable interest in the subject matter of insurance can take the policy
SECTIONS UNDER A FIRE POLICY
Section I Section II Section III
Section IV Section V
Section VI
Section VII
Section VIII
General Rules & Regulations Standard fire & Special Perils policy Dwellings, Offices, Hotels, Shops located outside the compounds of Industrial/Manufacturing Risk Industrial/Manufacturing Risk Utilities outside the compound of industrial / manufacturing risk Storage Risk located outside the compound of Industrial / manufacturing risk Tank Farm/Gas Holders located outside the compound of Industrial / manufacturing risk Add on covers
SECTION I GENERAL RULES®ULATIONS
These are certain rules and regulations which are applicable to all sections of the Fire Policy:
K utcha utcha
Construction
Buildings having walls/Roofs of
wooden planks/thatched leaves, grass or hay shall be treated as Kutcha construction for for rating
Pucca Construction
Walls, Roofs made of concrete, RCC and bricks will be pucca construction
Minimum premium
Minimum premium is Rs. 50/50/ - for for risks riskss rated risk rated rat ed under Section III & tiny sectors under Section IV For all other sections it is Rs 100 Sections
Min Premium Rates
Section III & IV
50
All sections except III & IV
100
Types
of policies
Valued Policy A valued policy can be issued for properties whose Market values cannot be ascertained eg. Curios, Manuscripts, work of art subject to the valuation certificate being submitted and found acceptable by the insurers. For e.g. The world famous picture of ³Mona Lisa´ would be covered under a valued policy
Long Term Policies
Most policies are issued for a period of 1 year (Annual)
A long term policy is the exception since it is issued for a period exceeding 12 months.
This happens only in the case of ³Dwellings´
Long Term Policies (Contd)
Long Term policies can be issued for a minim minimum um of 3 years Refund for mid term cancellation of policy is allowed (Subject to minimum premium retention) No refund shall be allowed if there has been a claim under the policy Mid term inclusion of perils is not allowed Premium for entire policy period has to be collected in advance.
Long Term Policies (Contd)
Long Term Policies shall be issued based on either of the following 2 methods A) No discount is offered and sum insured will automatically increase by 10% for every completed 12 months. Or B) Discounts given as per chart below on fire rate only. In this case basic sum insured will be same throughout the policy period. Discounts ranging from 15% to 50% are allowed allow ed on the premium for the respective periods.
Long Term Policies (Contd)
3 yearsyears- minimum mini nim mum 3yrs--15% 3yrs -15% discount 4yrs--20% 4yrs -20% discount 5yrs--25% 5yrs -25% discount 6yrs--30% 6yrs -30% discount 7yrs--35% 7yrs -35% discount 8 yrsyrs-40% -40% discount 9 YrsYrs-45% -45% discount 10yrs or moremore-50% -50% discount No long term discount can be given on EQ
Floater Policy
Floater policy can be issued for stocks at various locations under one Sum Insured.
Unspecified locations shall not be allowed.
The rate shall be the highest rate applicable to insured¶s stock with a loading of 10%.
If rate chargeable is different for different locations then highest rate will be charged on total sum insured
Examples ± ± Floater Floater Policy
Imagine if Bajaj Auto has 2 manufacturing plants one in Pune and other in Chennai.
Under this policy both the plants can be covered for stock under one Sum Insured.
The premium is calculated by taking the combined value of both the plants along with with a 10 % loading charge
Declaration policy
If the insured¶s quantity or value of stock fluctuates frequently then he can opt for a declaration policy.
It is a policy where the insured declares the sum insured and he has to provide monthly declarations.
The policy is applicable only to stocks
Declaration policy (Contd)
Sum insured is decided by the insured based on the average stock or highest value of stock in the month.
The minimum SI is Rs 1 crore is one or more locations and the sum insured shall not be less than 25 lakhs in at least one of these locations
Declaration policy (Contd)
Declaration policies cannot be issued in respect of: ± St ± Stoc Stock ock k in in pro p process roce cess ss ± Sto ± Stocks cks at railwa rai railway lway y siding siding sidin g ± Insur ± Insurance ance requir required ed for a short short period period
Declaration Policy (Contd)
Reduction of sum insured is not allowed
Refund of premium at the time of adjustment adjustm ent cannot exceed 50% of premium charged on the policy
Examples ± ± D Declaration ecla ec larrat atio ion n John owns a fabrication factory in Sholapur & Kolhapur. The steel rates per kg keeps changing every week according to demand & supply. Hence John would like like to opt for a Declaration policy which is more convenient for him.
a) John declares that his average value of the stock over both the locations is 2 crores and specifically at Kolhapur it is 22 lakhs. Can he get a Declaration policy?
Examples ± ± Declaration Decl claarati tio on Policy
b) Can he insure steel pipes which are undergoing welding in the factory? c) John wants a short term cover for his stock? Will he get it?
Floater Declaration Policy
It is a combination of Floater and Declaration policy which needs to have a minim minimum um sum insured of Rs 2 crores. c rores. The maximum premium premium refund is 20 % and the minimum retention should should be 80% of the total premium. There is a 10% loading charge here Floater Policy + Declaration Policy = Floater Declaration Policy
Examples ± ± Fl Floa Floater oate terr Decl De Declaration clar arat atio ion n Let us look at how Amul insures their iceice-cream. -cream.
Amul operates out of multiple locations across India. Here they face two problems. First of all iceice-cream -cream is highly seasonal Hence at different locations the stock would vary but more importantly the value of the stock differs. Also Amul would find it difficult to find out the exact value of their stock at any given day. day . This is where the policy has an a n advantage over the other policies
Example--Floater Example -Floater Declaration Policy
With this policy now Amul can
Cover all locations under a single sum insured
Takes care of his SI through a monthly declaration
It will take care of fluctuations
SUM INSURED
What
is the basis of Sum Insured?
Market Value
Under the Standard Fire policy, the basis of selecting Sum Sum Insured and the basis of valuation for loss assessment is 'Market Value'.
The Sum Insured should be selected so that it is adequate or equal to the Market Value at any time during the policy period.
At the time of loss assessment, the the applicable value for reference is the Market Value immediately immedi ately prior to the occurrence of loss.
Reinstatement Value
The Sum Insured for Buildings, Machinery and FFF can also be selected / opted on basis of 'Reinstatement Value'.
The Reinstatement Reinstatement Value is i s the value required to 'Replace' or 'Reinstate' the property to its condition prior to the loss.
This option cannot be exercised for insurance of 'Stocks'.
Underinsurance = Underinsurance (Sum Insured/Actual Value)*100
Market value basis - both both bot h depreciation deprec dep reciati iation on and under insurance are applicable
Reinstatement value basis - on Reinstatement only ly under unde un der r insurance is applicable
Rules of Cancellation
Policy
can be cancelled by either the insured or the company. If the company opts for cancellation of the policy then they should give 15 days notice
Conditions:
Insurer--Premium refund on proInsurer pro -rata -rata basis for the unexpired period
Insured--Premium retention on shortInsured short -period - period period basis for period which the policy was in force
Table
for Short period Insurance
Short period means any insurance policy that is less than 12 months For a period not exceeding 15 days 10% of the annual rate For a period not exceeding 1 month 15% of the Annual rate For a period not exceeding 2 months 30% of the Annual rate For a period not exceeding 3 months 40% of the Annual rate For a period not exceeding 4 months 50% of the Annual rate For a period not exceeding 5 months 60% of the Annual rate For a period not exceeding 6 months 70% of the Annual rate For a period not exceeding 7 months 75% of the Annual rate For a period not exceeding 8 months 80% of the Annual rate For a period not exceeding 9 months 85% of the Annual rate For a period exceeding 9 months The full Annual rate
Mid Term Cover
Generally it is not permissible to grant mid term cover for STFI or RSMD.
The following provisions shall apply where such covers are granted midmid -term -term a) Insurers must receive specific advice from the insured accompanied accompanied by payment of the required additional premium premium in cash or by draft b) Cover shall commence 15 days after receipt of premium and rates will be applicable on short period scale covering the entire interest of the insured up to the expiry period c) Cover will be granted for entire property with no option for selection.
Partial Insurance
It is not permissible permissible to issue a policy covering only certain portions of building. Plinth & foundation of a building maybe excluded
It is not permissible to insure parts of a machinery
This is done to ensure that selection of risk (which is against the basics of insurance) is not carried out
Section II
Standard Fire & Special Perils covered in a Fire policy
1. Fire
Ignition under accidental or fortuitous circumstances.
Spontaneous combustion, combustion, fermen fermentation tation or heating or scorching without ignition is not a fire.
Fire (contd) According to insurance Parlance, a Fire as covered under a Fire policy is said to have occurred when the following conditions are satisfied
There is actual ignition The property is one which ought not to have been on fire The fire is purely accidental or or fortuitous in origin, as far as the insured is concerned
What
other Losses are parts of a Fire Policy?
Damage during or immediately following a fire caused by smoke, scorching walls
Damage caused by the Fire brigade in the discharge of their duties.
Damage to property by exposure to weather caused as a result of removal of property from a burning building building in effort to mitigate the loss
2. Lightning - A AOG OG P Peril er i l
Flash of light in the sky caused by the discharge of atmospheric electricity from one cloud to the other or to the Earth.
Excludes breakdown damage damage to t o electrical equipments
3. Explosion/Implosion -µ³a sudden violent bursting with Explosion -µ³a a loud report´ Technical definition -³sudden -³sudden increase in pressure in the surrounding air, or gases, from sudden and violent expansion of any substance in their neighbourhood´ Explosion results in; Fire damage Concussion Damage
3.Explosion/Implosion
Implosion is diametrically opposite to the explosion.
It is the bursting inward or collapse due to external atmospheric pressure.
4. Air Craft Damage
Damage or destruction to the property Damage insured (by fire or otherwise) caused by aircraft or aerial or space devices such as balloons, artificial satellites etc. or articles dropped there from
5. Riot, Strike & Malicious Damage
Loss of or visible physical damage/destructi damage/destruction on by external & violent means to insured property by rioters, strikers or any person acting with malicious intentions
Riotous situation - disturbance distur dis turban bance ce of of peace by an unlawful assembly
Malicious act - a deliberate deliberate intention intention & plan plan of one or more individuals to do something unlawful to cause loss or damage to other¶s property
6. Storm, Typhoon, Flood & Inundation ± ±A AOG OG Peril
These are natural perils
Also known as ³weather perils´
These perils have a low frequency of occurrence
But
are generally catastrophic & devastating when they strike
7. Impact Damage
Loss of or damage to the property due to physical impact impact by any animal or rail or road vehicle (not belonging to or owned by the insured or any occupier of the premises or their employees employees while acting in the course of their employm employment) ent)
8. Subsidence, Landslide & Rockslide ± ±A AOG OG Peril
Damage by fire or otherwise to the insured property directly caused by natural calamity resulting in subsidence or landslide including rockslide.
9. Bursting/Overflowing Water Tanks & Pipes
Damage to property by bursting or Damage overflowing of water tanks, apparatus or pipes
10. Missile Testing Operations
Damage by fire or otherwise directly caused Damage by Missile Testing Operations carried out by the Defence Department of the Government Governm ent of India.
11. Leakage from Automatic Sprinkler Installations
Loss of or damage to the property insured i nsured directly caused by water discharged or leaking from the automatic sprinkler installations in the premises
Such discharge or leakage of water should be accidental
12. Bush Fire A bushfire is a fire that occurs in the bush (collective term term for scrub, woodland or grassland of Australia, New Zealand, New Caledonia)
Loss or damage to insured property directly caused by burning of bush
Coverages
Any loss/Damage loss/Damage to property due to these 12 perils will be covered under this policy
Architects, Surveyors & consulting Engineers up to 3 % of claim amount.
Debris removal removal expenses up to 1% of Claim amount.
Perils covered ±± E Easy asy to to Remember Fire Fire Lightning Aircraft Damage Malicious Damage, Riots Explosion/Implosion Storm, Flood, Tempest
F L A M E S B O L
Bush B ush ffire ire Over Flowing/Bursting Leakage from sprinklers Testing Missiles Subsidence, Landslide
The
T
S
last peril is Impact Damage which can be remembered as ³ID´
Section II ± ±E Exclusions xclu xc lussio ion ns
5% of each& every claim subject to a minimum of Rs 10000/10000/- in respect respe res pect ct of of each each eac h and every loss arising out of ³Act of God Perils´ .(not applicable to dwellings)
First Rs 10000/10000/- fo forr each each and and every every loss losss los arising out of other perils.(not applicable to dwellings)
Exclusions - Contd Contd
War or WarWar -like -like Operations
Ionizing Radiation, Radioactivity, Nuclear material
Pollution
Leakage of Electricity or ShortShort -circuiting -circuiting (Only the particular machine or apparatus that undergoes the leakage/shortleakage/short -circuiting -circuiting is excluded, and other affected property is covered)
or contamination unless this is caused by the action of an insured peril
Exclusions - Contd Contd
Fees of Architects, Surveyors and Consulting Engineers exceeding 3% of Claim (Insuran (Insurance ce for higher amounts can be taken as an AddAdd -On) -On)
Expenses for removal of Debris exceeding 1% of claim (Insur (Insurance ance for f or higher amounts can be taken as an AddAdd -On) -On)
Retardation or Cessation of any process
Exclusions - Contd Contd
Theft Earthquake or volcanic eruption (Insurance for this can be taken as an AddAdd -On -On cover)
Exclusions - Contd Contd
Bullion,
curios, works of Art, cheques, currency etc (unless specified)
Consequential losses of any kind
Exclusions - Contd Contd
Property
undergoing any heating or drying
process
Burning
of property insured by order of any Public authority
Its own fermentation, fermentation, natural heating or spontaneous combustion
Exclusions - Contd Contd
Explosion/Implosion : Excludes those Explosion/Implosion apparatus or boilers damaged by centrifugal forces
Aircraft Damage Damage :Loss or destruction caused by pressure waves, Loss L oss or damage caused by an aircraft to which permiss permission ion to land had been extended by the insured.
Exclusions - Contd Contd
STFI STFI : Excludes Excludes those those resulting resulting from from earthquake, volcanic eruptions or other convulsions of nature.
Any loss / damage caused only by rain water is not covered
Exclusions ± ± Contd Contd
Impact Damage Is an exclusion if it is the insured¶s vehicle or any occupier of the premise
Belongs
to an employee during the course of their employment
Exclusions ± ± Contd Contd
Subsidence, Landslide & Rock slide : Excludes normal cracking, settlement, coastal erosion, demolition or defective design
Exclusions - Contd Contd
Leakage from Automatic Sprinkler Installations Excludes Repairs, Removals or Alterations of the sprinkler installation
Defects in construction known to the insured
Exclusions - Contd Contd
Bush
Fire
Excludes damage caused by Forest Fire, War & Nuclear Perils
Section II ± ± General Gene Ge neral ral Conditions Cond Co ndit ition ionss under the Standard Fire Policy
Policy
is voidable in case of mismisrepresentation, mismis-description -description or non non-disclosure of material facts
General ConditionsConditions-Contd -Contd
Insurance ceases under the following conditions ± On expiry ± expiry of 7 days days from from the date of fall/displacement fall/displacemen fall/displ acementt of the building except for insured perils ± Wh ± When en there there is a change change in the Trade, Trade, Manufacture Manufact Manuf acture ure or or Occupation Contract Stands Void ± ± IInsured nsured Property becomes unoccupied for more than 30 days (Except Dwellings) ± --If ± If the interest in the property passes from the insured otherwise than by will or operation of law
General ConditionsConditions-Contd -Contd
An immediate immediate notice/ claim registration is required and detailed written report to be submitted subm itted within 15 days Fraudulent or false declaration will forfeit all benefits If the value of the property is higher than the sum insured at the time of loss, insured will bear the rate able portion. The principle of underunder -insurance -insurance will be applicable.
General Conditions - Contd Contd
If some some other insurance is also in force on the same property then the principle of contribution will apply
Details of all other insurance policies covering same same property against same perils should be provided by the insured
Section III
Hotels, Dwellings, Shops & Offices
Section III ± ± Ho Hote Hotels, tels ls,, Dwell Dwe Dwellings, llin ings gs,, Shops & Offices The Rules & regulations for this particular parti cular section are: Buildings and contents under this sections shall be rated µper se¶ Stock outside insured¶s premises premises which is adjacent is held covered. Grinding of lenses in optical frame shop, polishing / varnishing in furniture shop, occasional repair are permitted
Section III - Contd Contd A loading of 10% on the rates applicable to the contents for seasonal storage of crackers in a shop dealing in goods otherwise not provided. Storage of hazardous goods up to 5 % of total value of the stock is ignored. Reduction in premium for deletion of the STFI( .15 per mille) & RSMD(.10 per mille)
Section IV
Rules & Regulations pertaining to Industrial/Manufacturing Industrial/Man ufacturing Risks
Section IV Rules & Regulations pertaining to Industrial/Manufacturing Risks
Operations incidental to the main process shall be rated as par with the main process if it is carried out within the compound walls
Dwelling houses located inside the factory compound compou nd maybe rated ³per se´
In case where more than one product is manufactured manuf actured in the t he same block the highest rate applicable shall be charged overall.
Section V
Utilities located outside the industrial/manufacturing industrial/man ufacturing risks
Section V Utilities located outside the industrial/manufacturing risks For both these sections the reduction in premium rates for deletion of STFI and /or RSMD perils at the inception of the policy is as follows
STFI Re 0.25%
RSMD Re 0.10%
Section VI
Storage Risk
Section VI --Storage Storage Risk Rules & Regulations pertaining to Storage Risk outside the compound of Industrial/Manufacturing Risk Operations such as packaging/assorting/stitching/ battery charging which do not materially alter the nature of the risk are allowed to be carried out in premises. Presence of hazardous goods of higher category not exceeding 5% 5% of the total value of the stocks maybe ignored
Section VI - Contd Contd
Utilities and miscellaneous blocks shall be rated at Re 1.00 per mille
Rates shown in this section shall apply to Buildings/Areas used for storage of materials.
Section VIVI-Contd -Contd
Reduction in premium rates for deletion of STFI/RSMD at inception is as follows: Godown Godown
O Open pen
Re 0.25%
Re 1.5%
STFI
RSMD Re 0.10%
Re 0.10%
Section VII
Tank
Farms/Gas Holders outside compound
Section VII Tank Farms/Gas Holders outside compound Rules & Regulations pertaining to Tank Farms/Gas Holders outside the compound of Industrial/Manufacturing Risk
Reduction in premium rates for deletion of STFI Reduction and/or RSMD STFI
Re 0.25%
RSMD
Re 0.10%
Section VIIVII-Contd -Contd
All tanks located in the same dyke shall carry the highest rate applicable to any one tank overall Utilities and miscellaneous blocks shall be rated at Re 1.00 per mille Associated properties such as pumping stations, compressor compressor house, blower houses shall be rated at par with the rate applicable to respective gas holders/spheres/tanks etc
Section VIII
Add on Covers
Section VIIIVIII-Add -Add on Covers Standard Fire and Special Perils Policy (Policy) can be extended to include the following µAdd on¶ covers:
Removal of Debris in excess of 1% claim amount
Forest fire
Add on CoversCovers-Contd -Contd
Deterioration of stocks in cold storage due to machinery damage or due to insured peril.
Impact Damage due to insured¶s own vehicle.
Start--up Start -up Expenses
Add on CoversCovers-Contd -Contd
Spontaneous Combustion
Omission to insure additions, a dditions, alterations or extensions
Earthquake (Fire & Shock)
Spoilage Material Damage cover
Add on Covers - Contd Contd
Leakage & Contamination cover
Loss of Rent Clause
Architect, Surveyors and Consulting Engineers in excess of 3% claim amount
Insurance of additional expenses of rent for alternative accomm accommodation odation
Temporary Removal of stock
How to calculate the premium
Premium
Policy
rate is in per mille(1000)
is issued generally for 1 year.
Premium
Calculation - Examples Examples
House & Contents (how to calculate c alculate premium) premium)
Fire policy rate ± ± 0. 0.50 50 per per mil m mille ille le
Earth quake rate ±0.10 ± 0.10 per mille
Value of buildingbuilding-Rs. -Rs. 10,00,000/10,00,000/-. -.
Premium
10,00,000 X 0.50/1000 = 500/500/ -
10,00,000 X 0.10/1000 = 100/100/ -
Total premium = Rs 600/600/- + T Tax ax
for the building
Premium
Calculation - Examples Examples
Shop (Buiding¶s Rate ± ± 1. 1.8+ 1.8+0.1, 8+0. 0.1, 1, Stock/Contents ± ± 2. 2.8 8 + 0.1) 0.1)) 0.1
Building Premium
including EQ Rs 500000/500000/- X 1.9/1000= 1.9/1000= 1.9/100 0= Rs 950/950/950/
Contents Premium Rs 1000000X2.9/1000 =Rs 2900/2900/ -
Total =3850/=3850/- + tax tax
Fire Insurance Insurance--Clauses -Clauses Important Clauses
Designation of Property Clause
Insurers agree to accept acce pt the designation under under which the property has been entered in the insured¶s books. If there is a property which is named differently differently or insured has given some name to it, we will accept the nomenclature of the same property as given in the insured¶s books.
Fire Insurance ± ± Cl Clau Clauses ause sess (C (Con (Contd) ontd td))
Example-- Designation Example Design Des ignati ation on of Property Clause An air conditioner is named as Plant & Machinery in the books of insured when generally it is a part of appliances. In such cases there will be some confusion at the time of loss & claim settlement. To avoid such confusions and disputes, if insured has opted for designation of property clause, we will accept the name he has given to it as per his books.
Fire Insurance ± ± Cl Clau Clauses ause sess (C (Con (Contd) ontd td))
Agreed Bank Clause
If insured property is financed or hypothecated by / to a financial institution institution an agreed bank clause is taken. The policy is taken in the name of the Bank and all information provided to the bank will be considered as delivered to the insured. At the time of claim, bank will receive the claim amount.
Fire Insurance ± ± Cl Clau Clauses ause sess (C (Con (Contd) ontd td))
Reinstatement Value Clause
If the sum insured is fixed on the basis b asis of reinstatement value, this clause is to be taken. Under this the sum insured is based on reinstatement value/ replacement cost. No depreciation is deducted from assessed loss at the time of the claim Under--insurance -insurance will however be applicable Under Only fixed assets can be insured on reinstatement value
Clauses ± ± Contd Contd
ARCHITECTS, SURVEYORS AND CONSULTING CONSULTIN G ENGINEER¶S FEES (upto 3% of the claim amount)
REMOVAL OF DEBRIS CLAUSE (upto 1% of the claim amount)
FLOA FL FLOATER OATE TER R CLAUSE CLAU CL AUSE SE
DECLAR DEC DECLARATION LARAT ATION ION CLAUSE CLAUSE
VOLUNTARY DEDUCTIBLE CLAUSE
Escalation clause The
escalation clause allows the client for regular automatic increase in the Sum insured throughout the period of the policy provided certain conditions are met by the insured: Automatic increase in Sum insured against advance Maximum increase should not exceed 25% of the sum insured 50% premium of the final rate should be paid in advance av ailable for a policy covering building, This clause is available machinery and accessories only and not for stock cover cove r
Underwriting Considerations
Nature/Type of Risk Manufacturing, Godowns, Godowns, Shops etc
Location of Risk Earthquake zone, Geographical, Social Hazards etc
Underwriting Considerations (Contd)
Age of the Risk How old is the machinery, building and all other o ther property
Past Claim Record What amount against premium paid, type of accidents etc
Frequency of Loss At what interval and how often the claim is taken?
ey K ey
points of the Fire Policy
Full premium premium to be paid in advance
Minimum premium of Rs 100 except Section III risks and tiny sector industries where the minimum premium is Rs 50
Full property is to be insuredinsured-partial - partial partial insurance is not allowed
Policies
are usually issued for 12 months
ey K ey
pointspoints-Contd -Contd
In case of policy cancelled by by the; Insurer--Premium refund on proInsurer pro -rata -rata basis for the unexpired period Insured--Premium refund on shortInsured short -period - period period basis for the unexpired period
Mid Term revision of Sum Insured is allowed a) Increase in Sum InsuredInsured-On -On pro pro--rata -rata basis. b) Decrease in Sum InsuredInsured -Refund -Refund on short period basis..
Key Points - Contd Contd
Silent RiskRisk -where -where there is no manufacturing/sto manufactu ring/storage rage activities are not carried out continuously for 30 days or more. The premium for a silent risk rate is Re 1.00 mille. Rating of risk in multiple occupancy occupancy industrial estate shall be rated ´per se´. In terms of Long term policy for Dwellings, the long term discount is not applicable on earthearth quake rate. Terrorism is not an automatic cover, it is now an add on cover.
Claim Process
Intimation of claim with estimate of loss to be given to the insurance company
Claim form duly Filled
Appointment Appointm ent of Surveyor
Photographs,
Surveyor Report, Fire Brigade Report, Police Report and Meteorological Report
Claims Process - Contd Contd
Detailed Claim Bills with supporting documents
Copy of Internal Enquiry report on the cause of the loss
Final file scrutiny is done
If claim is admissible, cheque is dispatched to the custom customer er
