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fire insurance fire insurance Presentation Transcript

  • FIRE INSURANCE By: SUNIT MATHUR RO-1, NEW DELHI
  • OVERVIEW• No. of Sections : 8• No. of Perils ( In built ) : 12• No. of Exclusions : 13• No. of General Conditions: 15• No. of Add On Covers : 15+6• No. of Clauses : 11 ( A to K )
  • SECTIONSSECTION I : GENERAL RULES & REGULATION.SECTION II : POLICY WORDINGSECTION III : DWELLINGS, OFFICES ETC.SECTION IV : INDUSTRIAL & MANU. RISKSSECTION V: UTILITIES OUSIDE MANU. RISKSECTION VI: STORAGE OUTSIDE MANU. RISKSECTION VII: TANKS FARMS / GAS HOLDERS OUTSIDE MANU. RISKSECTION VIII: ADD ON COVERS
  • COVERAGES1. FIRE2. LIGHTENING3. EXPLOSION/ IMPLOSION4. AIRCRAFT DAMAGE5. RIOT, STRIKE & MALICIOUS DAMAGE.6. STORM, CYCLONE, TYPHOON, TEMPEST, HURRICANE, TOR NADO, FLOOD & INUNDATION,7. IMPACT DAMAGE8. SUBSIDENCE & LANDSLIDE INCLUDING ROCK SLIDE9. BURSTING & /OR OVERFLOWING OF WATER TANKS, APPARATUS & PIPES10. MISSILE TESTING OPERATIONS11. LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS12. BUSH FIRE
  • 1. FIRE : Excluding (i) own fermentation, natural heating or spontaneous combustion (ii) Its undergoing heating & drying process (iii) Burning by order of Govt.FIRE IN INSURANCE :• Actual ignition under accidental circumstances for insured – Ignition means burning – presence of flames, thus loss by smoke, heating, charring without burning is not considered “fire”• The property should not be on fire
  • • FIRE IN INSURACE POLICY :• Fire lighted for definite purpose is not considered Fire for Insurance unless broken its limits – like sugar processing• No difference if fire comes to property or property comes to the fire – like unlighted grate ( both the above cases fire breaks its limits & causes ignition or property breaks its proper limits & comes into contact with fire, there is an accidental loss by fire )
  • • FIRE IN INSURACE POLICY :• Once there is a fire within the meaning of the policy – other losses becomes payable like:• Smoke & heat• Scorching• Falling Walls• Damage of Fire brigade water, chemical etc.• Damage to property removed from burning caused by weather provided removal made for LCM.
  • LIGHTNING ( AOG )• An electricity for clouds – Loss with or without actual ignition covered3. EXPLOSION / IMPLOSION• Only domestic boilers are covered for explosion / implosion ( for other perils the commercial boilers can be covered )4.AIRCRAFT DAMAGE• Damage by Aircraft or other aerial or space devices and articles dropping therefrom except damage caused by pressure waves
  • . RIOT, STRIKE & MALICIOUS DAMAGE• Only visible physical damage by external, violent means – Except (i) Permanent or temporary dispossession by the order of Govt. (ii) Permanent or temporary dispossession resulting from the unlawful occupation by any person (iii) Burglary, housebreaking, theft ( whether or not committed in course of disturbance of public peace)
  • 6. STROM, CYCLONE, FLOOD….ETC. (AOG)( Excluding resulting from Earthquake or other convulsions of nature – If Earthquake if covered through add on than this exclusion is not applicable)• Storm: violent disturbance of atmosphere with thunder or strong wind or heavy rainfall• Tempest : A violent Storm• Cyclone & Hurricane : Storm of greater intensity• Flood : Escape of water from its normal confines ( except water from tanks or apparatus or pipe)
  • - Overflowing of lakes, rivers, canals, sea by high tides etc. - Bursting of street water mains, overflowing of sewage pipes• Inundation : Synonymous of Flood7. IMPACT DAMAGE – Direct physical visible loss by impact of rail / road vehicle or animal not belonging to : - Insured or occupier of the premises - The employees of the insured
  • 8. SUBSIDENCE & LANDSLIDE INCLUDING ROCKSLIDE - EXCEPT - Normal cracking, bedding down of new bldg. - Settlement or movement of made up ground - Coastal or river erosion - Defective design or workmanship or use of defective material - Demolition, construction, alteration, repair, ex cavation of the property
  • 9. BURSTING & / OR OVERFLOWING OF WATER TANKS, APPARATUS & PIPES - Largely applicable to cold regions where bursting of pipes takes place10. MISSILE TESTING OPERATIONS: - Carried out by Defence Deptt., Govt. of India11. LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS – EXCEPT - Repair or alternation of the bldg. - Repair, removal or extension of sprinkler - Defects in construction known to insured
  • 12. BUSH FIRE : Excluding loss of damage by Forest Fire GENERAL EXCLUSIONS1. EXCESS ( NOT FOR DWELLINGS ) W.E.F. POLICIES ON OR AFTER 01.04.2010: - PER EVENT PER INSURED• Policies having SI of Rs.10 Crores Per location (i) For AOG perils : 5% of claim amount subject to Minimum of Rs.10,000/-. Each & every loss (ii) For other perils : Rs.10,000 each & every loss
  • • Policies having SI above Rs.10 Crores Per location (i) For AOG perils : 5% of claim amount subject to Minimum of Rs.25,000/-. Each & every loss (ii) For other perils : 5% of claim amount subject to Minimum of Rs.10,000/-. Each & every loss2. War and kindred Perils3. Radioactive Contamination4. Pollution or Contamination Except :(i) Pollution or contamination caused by the insured peril or,(ii) The insured peril which did the loss is caused by the pollution or contamination
  • 5. Loss to any bullion, curios, work of art, antique exceeding Rs.10,000/-, stamps, coins, cash etc. Unless expressly stated in the policy6. Stocks of cold storage due to temperature change7. Loss to any electrical machine, apparatus, fitting by over-running, short circuiting, self heating, electricity leakage from whatever cause – exclusion applicable for particular machine8. (a ) Architects, Engineer’s fee in excess of 3% of claim amount (b) Debris Removal expenses in excess of 1% of claim amount
  • 9. Any Consequential loss – like profit, market etc.10. Loss of spoilage due to retardation or interruption of any process caused by insured perils11. Loss by theft during or after occurrence except as provided in RSMD ( burglary or theft due to riots, strikes are covered under Fire Policy)12. Earthquake Damage13. Loss to any property in the place other than which stated in the policy except machinery or equipment temporarily removed for repairs, renovation etc. for not more than 60 days.
  • GENERAL CONDITIONS1. Misrepresentation, non-disclosure etc.2. Bldg. Fall and displacement : ( part or whole) (i) All Insurance under this policy cease on expiry of 7 days from the date of such fall if occurred other than insured peril. ( ii ) If Fall by insured perils the Co. should be notified within 7 days for continuance of insurance on revised rates, terms & conditions
  • 3. Alternation :Policy becomes void unless notify to the Company(i) If the Trade, Manu. Or occupation changes(ii) If bldg. is unoccupied for more than 30 days(iii) If interest passes from the insured except automatically by will or law ( in case of death of insured)4. Marine Clause : If the same property is covered under the Marine Policy the loss will not payable in Fire Policy except any excess amount over the marine policy
  • 5. CANCELLATION : By either Party – giving 15 days notice and refund of premium6.DUTIES OF THE INSURED : (i) For any claim give notice in writing and a claim statement item wise within 15 days of loss at his own expense without any profit (ii) Details of all other insurances, if any (iii) Co. not liable for loss after expiry of 12 months from the date of loss unless claim is subject to pending action or arbitration . (iv ) If claim is repudiated by the Co., & the insured has not filed a suit within 12 months of date of repudiation, it is not recoverable thereafter
  • 7. RIGHTS OF INSURER :After a loss the Co. without admitting liability can:(i) Enter, take possession, examine, sorting and can do salvaging operations(ii) If the insured do not co-operate or hinders the benefits of the Policy forfeits(iii) The insured cannot abandon the property after loss whether possessed by the Co. or not8. FRAUD : If any fraudulent means used for claiming, the benefits of policy forfeits.
  • 9. OPTION OF THE INSURER: (i) If Co. feels the claim amount is exaggerated then has option of reinstate or replace the damaged property subject to S.I. (ii) If due to municipal regulations Co. cannot reinstate then Co. will pay such amount requisite to reinstate to its former condition.10. CONDITION OF AVERAGE ( UNDERINSURANCE)11. CONTRIBUTION
  • 12. SUBROGATION : Company take rights & remedies even before payment of claim13. ARBITRATION ( only in case of quantum of claim, loss otherwise admitted under the Policy)14. ALL NOTICE / CORRESPONDENCE MUST BE IN WRITING15. REINSTATEMENT OF SUM INSURED AFTER A LOSS :(i) By deducting pro-rata premium from the net claim amount(ii) If insured notify the Co. immediately after the loss for not reinstating the SI, then the SI will be reduced by the amount of claim paid
  • S.NO. ADD ON COVER RATE APPLICABLE VALUE TO BE INSURED1. Architects, consulting Engineers fees Policy Rate Specified SI not in excess of 3% of claim amount exceeding 7.5% of claim amount2. Removal of Debris ( in excess of 1% Policy Rate Specified SI upto of Claim Amount) maximum 10% of S.I.3. (a) Deterioration of Stock in Cold Policy Rate Sum Insured of the Storage by to change of Stocks temperature due to power failure at Power Station by insured perils (a) Deterioration of Stock in Cold Policy Rate Sum Insured of the Storage by to change of Stocks temperature due to loss to machinery at premises by insured perils4. Forest Fire Minimum 3.75%o Specified SI
  • 5. Impact Damage due to Insured’s 5% of Policy Rate Policy Sum Insured own Rail/road vehicle, lifts, cranes6. Spontaneous Combustion Category I : 0.20%0 SI of relative Category I Category I : 0.45%0 commodity Category II7. Omission to Insure additions, Policy Rate 5% of SI of BMA alterations or extensions8. Earthquake ( Fire & Shock ) Zone I : 0.75%o Policy S .I. ( Dwellings, Zone I Zone II : 0.40%o offices ratable under Zone II Zone III : 0.15%o Section III will be Zone III Zone IV: 0.075%o charged as Zone IV Zone IV rate regardless the Zone9. Spoilage Damage Material Cover (i) 5 times of policy rate (i) Value of stocks in (i) Stocks in specified blocks (ii) 2.5 times of policy rate specified blocks (ii) Machinery in specified blocks (ii) Value of M/A in specified blocks
  • 10. Leakage & Contamination Only Leakage & Specified Sum a. Where tanks located in insured’s leakage Contamination Insured premises a. 3.75%o a.7.5%o b. Where tanks are located b. 4.5%o b. 9.00%o elsewhere11. Temporary removal of Stocks 10% of Policy Rate Policy S.I.12. Loss of Rent Clause ( For Owner of Policy Rate Specified SI Bldg.)13. Addl. Expenses of rent for an Policy rate Specified SI alternative accommodation ( For Tenant )14. Start up expenses Policy rate Specified SI15. Terrorism ( Only with RSMD ) Rates as per the Terrorism Policy Sum Pool Insured
  • CLAUSESA. AGREED BANK CLAUSE : To protect the interest of a banker or financer whose interest is in the insured propertyB. CONTRACT PRICE INSURANCE CLAUSE For imported goods only where the prices are fixed as per contract – little deviation of indemnityC. DESIGNATION OF PROPERTY CLAUSE Co. accept the designation under which the property entered in the insured’s book
  • D. REINSTATEMENT VALUE POLICIES• Only for Bldg., P & M, FFF & not to stocks• Reinstatement must commence and complete within 12 months of date of loss• Underinsurance will also apply• If need extension of time notify the Company• If insured fail to intimate the intention of reinstatement within 6 months than the this clause will not apply• If insured unwilling to replace the property than on market value basis• Reinstatement can carry out at another site also
  • E. LOCAL AUTHORITY CLAUSE• Reinstatement Value policies can be extended for this clause• Some extra expenses can be allowed to comply the local by laws but subject to S.I.F. ESCALATION CLAUSE• Maximum 10% if allowed ( IGT )• 50% of full rate on selected percentage• Only for Bldg., P & M & not for stocks & FFF
  • G. ARCHITECTS FEE ( upto 3% of claim amount)H. REMOVAL OF DEBRIS ( upto 1% of claim amt.)I. FLOATER CLAUSE• One, more or all locations as specified• Should have good internal audit & account• Change of location must be intimatedJ. DECLARATION CLAUSE• Basis of declaration (i) Average of value on each day of the month or (ii) Highest Value during the month• Declaration must be latest by the last day of next month
  • J. DECLARATION CLAUSE• On expiry subject to adjustment by taking average of 12 declarations – Maximum refund 35% only• Basis of valuation – Market Value basis• If stock is covered by any other insurance than this policy will be used only for the excess amount, if anyK. VOLUNTARY DEDUCTIBLE CLAUSE
  • GENERAL RULES AND REGULATIONS• All India Fire Tariff effective from 31.03.2001• Detariff from 01.01.2007 ( IGT from 01.01.2008 )• Only SFSP with permitted add on covers is allowed• Only land based properties are allowed• Policy covering Bldg. & Contents shall show all block- wise separate amount on (i) Bldg. (ii) Machinery & Accessories (iii) Stock & Stock in Process & (iv) Furniture & other contents• Deletion of STFI & RSMD is allowed• Rates shown are minimum rates & higher rates can be charged
  • • Valued Policies : For property whose market value cannot be ascertained like works of art, obsolete machinery etc. subject to valuation certificate• Long Term Policies : No policy exceeding 12 months can be issued except “Dwellings”• Mid Term Cover: Generally not permissible to grant STFI & RSMD perils mid term. If allowed with certain conditions : (i) Must receive specific advice from insured with payment in Cash or draft. No adjustment from existing CD or Bank Guarantee (ii) Should be for entire property covering entire interest
  • • Cover shall commence after 15 days of receipt of premium • Premium rates as under shall be on Short Period ScaleMid-term SECTION SECTION VI SECTIONInclusion III IV, V & Material in Material in VIIof Godown OpenSTFI 0.20%o 0.35%o 2.00%o 0.35%oRSMD 0.15%o 0.15%o 0.15%o 0.15%o
  • • Payment of Premium : Shall be paid in full & no installment is allowed – not permissible to split SI of same property in various policies to take advantage of deferred payments. However various policies of stock can be issued where necessitate.• Minimum Premium : Minimum Premium shall be Rs.200. ( IGT )
  • • Partial Insurance a. Not to issue certain part of Bldg. However Plinth & Foundation or only foundation can be excluded b. Not to issue covering specified machinery ( except boilers ) or part of the machinery c. Where portions of a bldg. or machinery is under different ownership, in such cases it is permissible for each owner to insure his own portion but full extent of his interest.• SHORT PERIOD RATES
  • Not Exceeding 15 days 10% of Annual RatesNot Exceeding 1 Month 15% of Annual RatesNot Exceeding 2 Months 30% of Annual RatesNot Exceeding 3 Months 40% of Annual RatesNot Exceeding 4 Months 50% of Annual RatesNot Exceeding 5 Months 60% of Annual RatesNot Exceeding 6 Months 70% of Annual RatesNot Exceeding 7 Months 75% of Annual RatesNot Exceeding 8 Months 80% of Annual RatesNot Exceeding 9 Months 85% of Annual RatesExceeding 9 Months The Full Annual RatesExtension of Short Period Policy shall not be permitted
  • • Rules for CancellationAt the Option of Insured : (i) Retention of SP Rates(ii) During Currency if the policy replaced by same Co. by new annual policy for same property then Pro-rata refund is allowed(iii) For the SI not replaced refund after retaining premium on SP Rates for such S.I.(iv) In Case of S.P. policies premium retained as per S.P. Rates(v) In case Policy cancelled by Govt. Orders or on completion of a Bldg. in course of construction or where bldg. is demolished, pro-rata refund be allowedAt the Option of Insurer : Pro-rata refund is allowed
  • • Mid Term Revision in S.I. Increase in S.I. : On Pro-rata Basis Decrease in S.I.: On Short Period Scale• Escalation Clause a. Only upto 10% of the S.I. b. 50% of Full Rate to be charged on selected %age c. Only for Bldg., Machinery & Accessories & not for stocks d. Average condition will also apply
  • • Floater Policy : Can be issued for stocks at various locations under one Sum Insured ( unspecified locations are not allowed ) - Rate Shall be highest rate applicable at any location with 10% loading - In case stock in process block is covered under Floater Policy & the rate of process block is higher than the storage rate, the process block rate plus 10% loading shall apply - If stock situated within godown / process block in the same compound are covered under floater policy, no floater extra is chargeable
  • • Declaration Policies : For frequent fluctuations in Stock / Stock Values- Minimum SI shall be Rs. 1 Crore in one or more locations & the SI shall not be less than 25 lacs in atleast one of these locations. Declared value should approximate to this figure at sometime during the policy year- Monthly declaration based on (a) average of the values at risk on each day of month or (b) highest value at risk during the month. If declaration not received within specified time the full SI shall be deemed to have been declared- Reduction of SI is not allowed- Refund of premium on adjustment shall not exceed 35% of the total premium
  • - Basis of Valuation will be Market Value- Not Permissible for (a) on Short Period Basis (b) Stocks undergoing process © Stocks at Railway sidings- If at the time of loss it is found that the last decl. previous to the loss is less than the amt. ought to have been declared, the claim amt. shall be reduced in such proportion as the amt. of said last decl. bears to the amt. that ought to have been declared.
  • • Floater Declaration Policies :- Minimum S.I should be 2 Crores- Both Floater & Declaration policy rules will apply- Minimum retention of premium shall be 80%• Rating of Multiple Occupancy Industrial Estate- Shall be rated ‘per se’- If the Entire Bldg. of Industrial Estate is insured under one S.I. a rate of 1.80%o be charged- The Contents will be rated ‘per se’
  • • Silent Risk : Under Section IV & V Only- Factories where no manufacturing & Storage work is carried out for continuously 30 or more days- Retention of premium shall be based on appropriate storage rate or silent risk rate of Rs. 1.00%o whichever is higher- The Silent risk rates are not applicable if risk is silent due to a claim / loss.
  • VOLUNTARY DEDUCTIBLES – both SFSP plus add onsDeductible Amount (Rs. In Lacs) DiscountAOG Perils Other Perils (%)5% of claim amt. subject tominimum to Rs.10 Lakhs 5 Lakhs 420 Lakhs 10 Lakhs 830 Lakhs 15 Lakhs 1060 Lakhs 30 Lakhs 12100 Lakhs 40 Lakhs 14>100 Lakhs >50 Lakhs Refer to HO
  • SECTION III• Dwellings, Officers, Hotels, Shops Etc. Located outside the compound of a Factory• Long Terms Policy for ‘Dwellings’ only- Minimum for 3 yrs.- Refund : Subject of Circular dt.03.03.2009 i.e.- (i) If cancelled within 3 years – retain premium with normal rates with no discount- (ii) If cancelled after 3 years – rework premium as per discounted slabs – For fraction of year, rounded of to next higher year – Subject to retention of minimum premium- No inclusion of perils mid-term- Method : A- Method : B ( Discount upto 50 % for 10 yrs. & above)
  • SECTION IV• INDUSTRIAL / MANUFACTURING RISK- One rate for entire property in one compound i.e. process area, storage, office, utilities etc.- If more than one product is manufactured in the same block the highest rate will be applicable- If 2 or more factories are there or independent products are manufactured in the same compound the manu. Block shall be rated ‘per se’ if located detached. Misc. Blocks / utilities / godowns / tank farms etc. in such cases shall carry lowest rate of all such manu. Blocks.- Dwelling located inside the factory may be rated ‘per se’
  • SECTION V• Utilities outside the Manufacturing Risks- Rates given for various utilities
  • SECTION VI• Storage outside Indl./ Manu. Risk- Two Rates – Within Godown & Open- 4 Categories – NH, I, II, & III- Rates will apply for bldg./ storage area and stocks- Operation like packing/selecting/mending /stitching etc. are covered if do not materially alter nature of risk- Presence of hazardous goods of higher category not exceeding 5% to total S.I. are also covered- Utilities / Misc. Blocks shall be rated Re. 1.00%o- Open Storage of 2% of S.I. is allowed when the risk is rated within godown
  • SECTION VII• Tanks Farms / Gas Holders outside the Factory• All tanks in same area shall carry highest rate- Tanks of hazardous chemicals / liquid are covered- Utilities & Misc. Blocks shall be rated at Re.1.00%o- Associated properties like pumping station, compressor house, blower house etc. will rated at par with Gas holder
  • CLAIMS• While Deputing Surveyor the nature of subject matter involved should be kept in mind and appropriate Surveyor should be appointed• A Company official should visit to site as early as possible• If there is a doubt in admissibility of claim – an investigator should also be appointed• For disposal of salvage the general guidelines laid down should be followed – but salvage disposal be undertaken on priority basis because the salvage due to Fire deteriorate faster.
  • • Processing of Claims – documents requiredA. Common1. Claim Intimation2. Policy3. Claim Form4. Survey ReportB. SpecificIn case of Fire & Explosion : (i) FIR & Fire Brigade ReportIn case of AOG:(i) Meteorological Report or in absence (a) Local Bodies certificate or (b) cutting of newspaper
  • In case of RSMD & Impact damage : Police ReportDOS due to Power Failure :(i) Log Book Maintained by the insured for maintaining temperature(ii) Certificate from Electricity Deptt.In Addition to the above the U/W may insist any other document / evidence to establish loss
  • NON-STANDARD / COMPROMISE• When breach is not material or of tech. nature or beyond the control or knowledge of insured : (i) Policy is rectified after collecting addl. Premium if due (ii) A deduction is made from assessed amt. equivalent to 3 years premium – which would have come had correct information available
  • • If breach is material to loss or insured or his agent contributed to loss and has not consciously committed the breach :- Payment can be considered on merits of each case upto a maximum of 75% of the Assessed Loss
  • STEPS INVOLVED IN LOSS ASSESSMENT1. Gross Loss Assessed Less : Depreciation = A2. Less : Salvage = B3. Less : Under Insurance = C4. Less : Excess = D5. Net Claim Payable = A-B-C-D
  • THANK YOU