2.IC-34 Abridged Version

Summary of Chapters
Sr 1 Chapter Introduction to Insurance Short Summary Purpose & Need for Insurance Insurance Pooling of Risks & Resources Insurance A Social Security Tool Role of Insurance in Economic Development Commercial Contract Vs. Insurance Contract Four (4) Fundamental Principles of Insurance o UG (Utmost Goodfaith)
2 Fundamental Principles of Insurance
o o o
II (Insurable Interest) Indemnity Subrogation & Contribution PC (Proximate Cause)
Insurance Documents
Theory of Rating
Legislative & Regulatory Matters
Fire Insurance
Underwriting Documents Proposal Form Cover Note Policy Certificate of Insurance (Motor & Marine) Endorsement Renewal Notice The Fundamentals behind Rate Making: o Degree of Hazard o Classification of Risks o Past Loss Experience Withdrawal of Tariff Motor TP Rates Filing of Products Insurance related Acts & Agencies Acts: Insurance Act, 1938; GIBNA,2002; IRDA Act,1999; Marine Insurance Act,1963 etc. Agencies: IRDA, Consumer Forum (National / State / District commissions), Ombudsmen IRDA Regulations relating to 1)Insurers; 2)Agents; 3)Corporate Agents; 4)Broker; 5)Surveyor; 6)TPA; 7)Policyholders Standard Fire Special Perils Policy Perils covered Standard Fire Special Perils Policy Add on Covers Standard Fire Special Perils Policy Exclusions Standard Fire Special Perils Policy Conditions Special Policies: o Floater o Declaration o Floater Declaration o Reinstatement Policy o IAR (Industrial All Risks) Policy o FLOP (Fire Loss of Profits) 1) Introduction to Marine Insurance 2) Contract of Marine Insurance = Policy + Clauses
3)
7 Marine Insurance 4)
Various Marine Clauses : I. Institute Cargo Clauses (ICC) II. Institute Cargo Clauses (Air) III. Inland Transit (Rail/Road) Clauses Rating & Underwriting Various Marine Policies : a) Specific Policy b) Open Policy c) Open Cover d) Special Declaration Policy Claims Introduction to Motor Insurance MV (Motor Vehicles) Act, 1988 IMT (India Motor Tariff) Various Sections GR (General Rules & Regulations) Types of Policies Page 1 of 43
5)
Motor Insurance
6)
Compiled by: Kamalakar. T
Rating Claims o o o o o
PA & JPA
10
Health Insurance
11
Liability Insurance
12
Engineering Insurance
13
Miscellaneous Insurance
Mediclaim: Who can take the Policy? (Individual, Family, Group) What are the requirements for taking the Policy? Basic Coverage Additional Benefits Exclusions Premium Computation Claims Procedure Types of Policies: Individual & Group Cancer Policy (CPAA): Critical Illness: OMP: Introduction Eligibility Premium depends on (Age, Duration of Stay, Plan) Period of Insurance Types of Policies: (B&H, E&S, CFT) Scope of Coverage Claims Introduction to Liability Insurance Various Liability Policies: o PLI (Public Liability) Act Policy o PLI Policy (Industrial/Non-Industrial Risks) o Products Liability o Lift Third Party Insurance o Professional Indemnity o D&O (Directors & Officers) Liability Policy o WC (Workmens Compensation) or Employers Liability Policy Introduction to Engineering Insurance Various Engineering Policies: o CAR Vs. EAR (Contractor All Risks & Erection All Risks) o MCE Marine-cum-Erection o MB/MI Machinery Breakdown/Machinery Insurance o CPM Contractors Plant & Machinery o BPP Boiler & Pressure Plant Insurance o DOS (Deterioration of Stocks (Other than Potatoes)) o DOS (P) (Deterioration of Stocks (Potatoes)) o EEI (Electronic Equipment Insurance) Burglary (All Property is covered against Theft by actual, forcible & violent entry into the premises) All Risks (Covers Jewellery, valuables & antiques) Baggage (Only accompanied baggage covered) Money (Money moving between specified places) Fidelity Guarantee (Loss caused by the acts of dishonesty of employees against Employer) TV (TV apparatus & antenna) Pedal Cycle (Loss of cycle) Plate Glass (Fixed Plain Glass against breakage) Neon Sign (Neon sign boards) Householders (10 sections provided for various coverages) Shopkeepers (10 sections provided for various coverages) Bankers Blanket (Money & Securities of Banks) Page 2 of 43
Object: Benefit Policy rather than a Reimbursement Policy Types of Disablement: PTD; PPD; TTD Scope of Cover: Table of Benefits Additional Benefits Extensions Exclusions Conditions Rating Types of Policies: a) Individual and b) Group JPA (Janata Personal Accident) Policy
14
Rural Insurance
15
Claims
Jewelers Block (4 sections covering various risks) Blood Stock (Covers Race Horses) Cattle Sheep & Goat Poultry Dog Silk Worm Honey Bee Horticulture/Plantation Agricultural Pump Set Salt Works Cycle Rickshaw Animal driven Cart Gobar Gas Hut Insurance JPA GPA Farmers Package Tribal Package Introduction Claim settlement requires (Knowledge of Law, Principles of Insurance etc) How much is payable? (The DSUE Rule) Types of Claims: Standard, Non-standard, Ex-gratia General Claims Procedure: Preliminary, Investigation & Assessment & Settlement General Claims Documents: Claim Form, Surveyor/Investigation Report, Arbitration and Limitation Post Settlement action: Loss Minimization, Salvage, Recoveries
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INDEX Chapter No 1. 2. 3. 6. 7. 8. 9. 10. 11. 12. 13. 15. Chapter Introduction to Insurance Fundamentals/Principles of Insurance Insurance Documents Fire Insurance Marine Insurance Motor Insurance Personal Accident Insurance Health Insurance Liability Insurance Engineering Insurance Miscellaneous Insurance Claims Page No. 5 7 9 10 15 19 24 26 31 35 39 40
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Chapter Summary: 1 Purpose & Need of Insurance 2 Insurance Pooling of Risks & Resources 3 Insurance A Social Security Tool 4 Role of Insurance in Economic Development
Chapter: 1
Introduction to Insurance
1. Purpose & Need of Insurance An Asset is a property which has an intrinsic value. It can be sold or
bought in the Market. The Two important Features of an Asset are
1. 2.
Monitory Value (Money) Expected Lifetime (Time)
Examples of Assets: 1. A House 2. House hold goods (like TVs, Refrigerators & other electrical/electronic items) 3. A Motor Vehicle (like Car, Two Wheeler, Bus etc.) 4. Jewellery 5. A Factory
Purpose & Need of Insurance Asset Peril 1. Loss of Monitary Value & 2.Reduction in Life Time Hence, Insurance is required to protect the Assets. Peril: Peril is the Cause of Loss Examples of Perils: Fire, lightening, explosion, storm, tempest, hurricane, tornado, flood, inundation (water damage perils), earthquake, subsidence, landslide, rockslide, burglary, theft etc. Different Meanings of Risk: An accidental event which results in financial loss. Exposure to danger Loss producing event (like fire, explosion, flood etc)
Subject matter of Insurance or property covered by insurance (eg. A timber construction is considered to be a bad risk for fire insurance
purpose. Here, the term risk refers to the subject matter of insurance)
How Insurance Works? People who are exposed to the same kind of risk come together & agree that if one of the members suffers a loss, the loss would be shared among the group members. Example: In a village, there are 400 houses, each costing Rs. 20,000/-. Every year 4 houses get burnt resulting in a total loss of Rs. 80,000 (4 x 20,000 = 80,000). Since there are 400 houses in the village, each owner has to contribute Rs. 200/- to generate a common fund (ie. 400 x 200 = 80,000). From this fund, the 4 people who suffered losses can be reimbursed. Insurance cannot protect the assets nor can it prevent the losses due to perils. The peril cannot be avoided through insurance. Insurance can compensate the financial losses to the extent possible. 2. Insurance Pooling of Risks & Resources o Insurer : The Company which offers insurance protection to the public is known as Insurer or Insurance Company. The business of insurance is done by these companies. They collect small amounts (premium) from the public & make a Common Fund. Insurer acts as a Trustee of this Common Fund. Whenever the insured suffers a loss, the Insurer makes payments from this common fund. That is how, Insurance company pools the risks & resources. o Insured : The one who is offered insurance protection is known as Insured. He is a customer to Insurer.
o Premium : Small amount of contribution paid by the Insured to Insurer for insurance protection is known as Premium o Claims : The amounts paid by the Insurer to Insured who suffered a financial loss due to an accident is known as Claims.
3. Insurance Social Security Tool As per Article 41 of Directive Principles of State Policy, it is the responsibility of the Govt. to provide for Social Security through Insurance. Hence, Govt. passed many Acts like ESI (Employee State Insurance) Act, WC (Workmen Compensation) Act to provide insurance protection as a tool of social security. Insurance Companies offer many policies as Social Security Schemes like JPA (Janata Personal Accident) Jan Arogya Bhavishya Arogya Compiled by: Kamalakar. T Page 5 of 43
Raja Rajeshwari Mahila Kalyan Yojna Crop Insurance Hut Insurance. 4. Role of Insurance in Economic Development Insurance provides numerous direct & indirect benefits to individuals, families, companies, industries, commerce & economy of the Nation. Insurance protects the capital of the industry against accidents Insurance removes fear & anxiety & encourages free investment of capital in business. Thus insurance encourages commercial & industrial development Insurance Policies act as a Collateral Security to Banks & Financial Institutions to advance loans Insurance earns foreign exchange to the country by assisting exports & imports Insurance provides support to rural economy by protecting cattle, livestock, pump sets etc.
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Chapter: 2
Fundamentals/Principles of Insurance
Chapter Summary: 1 Commercial Contract Vs. Insurance Contract 2 Four (4) Fundamental Principles of Insurance Definition of Insurance: Insurance is a Contract between the Insurer and the Insured whereby in consideration of payment of premium by the Insured, the Insurer promises to indemnify any financial loss the insured may suffer due to the operation of a peril insured. Definition of a Contract: A contract is an agreement between two parties binding at law. Conditions for a Contract: Sr Conditions 1 Two parties: Insurer & Insured. 2 Offer & Acceptance: Offer by Proposer (Proposal Form). Acceptance by Insurer - (Cover Note/Policy) 3 Consideration: Premium from Insured. Promise to indemnify from Insurer. 4 Consensus ad idem: Same thing in the same sense. 5 Capacity of the parties: Not eligible to enter into a contract - a)minors; b)persons of unsound mind; c)persons disqualified from contracting by any law. 6 Legality: a)subject matter shouldnt be forbidden by law; b)subject matter shouldnt be fraudulent; c)subject matter shouldnt cause injury-person/property; d)subject matter shouldnt be immoral or against public policy. Special Conditions of an Insurance Contract:
Principles of Insurance 1. Utmost Goodfaith 2. Insurable Interest 3. Indemnity 4. Proximate Cause
3.a) Subrogation
3.b) Contribution
1. Utmost Good Faith: Good faith means absence of fraud or deceit. Utmost Good faith is good faith in the highest degree. Material Facts: Facts which help insurer to make an underwriting decision like whether to accept the risk, if so at what rate of premium. Examples of Material Facts: Fire: Construction, Occupancy etc. Marine: Method of packing, nature of goods etc. Motor: CC, year of manufacture, purpose of use etc. Excepted Material Facts: o Facts which diminish risk o Facts which are known or presumed to be known o Facts that could be ascertained from the proposal o Matters of law Breaches of Utmost Goodfaith: 1. Non-disclosure: It may arise out of silence on the part of the insured. Contract becomes voidable (can be accepted or avoided at the option of the insurer) 2. Concealment: Intentional suppression of material facts. Contract becomes void. 3. Mis-representation: Statements made by the proposer at the time of negotiations. 3.1 Innocent Misrepresentation: Contract becomes voidable 3.2 Fraudulent Misrepresentation: Contract becomes void 2. Insurable Interest: Legal right to Insure. Examples of Insurable Interest: Compiled by: Kamalakar. T Page 7 of 43
Interest arising from Ownership Interest arising from Joint ownership Interest arising from Mortgaging Interest arising from Law Interest arising from contract Interest arising from Legal Liability Interest in life Interest arising from Insurance
When Insurable Interest must Exist?
Marine Cargo: At the time of the loss All other Insurances: Throughout the currency of the policy
Assignment: Transfer of rights & liabilities of an insured to another person who has acquired insurable interest. Only Marine Cargo Policies are freely assignable whereas other type of policies are assigned with the consent of the insurer. 3. Indemnity: Make good the loss/compensation for loss Objects: To place the insured in the same financial position as he was before the loss To prevent the insured from making a profit out of loss 3.1 Subrogation: Transfer of rights & remedies of the Insured to the Insurer. 3.2 Contribution: The right of an insurer to recover a proportionate amount from other insurers who are liable for the loss. 4. Proximate Cause: (Nearest Cause) If the loss or damage is brought about by a single event, there would be no problem in deciding the liability. If there are more than one cause at the time of the loss, then it becomes necessary to identify the most powerful & effective cause. That cause is termed as Proximate Cause & others are Remote Causes.
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Chapter: 3
Chapter Summary: 1) 2) Sr Document 3) 1 4) 1 Proposal 5) 6)
Insurance Documents
Proposal Policy Cover Note Description Certificate of designed to Proposal Form is Insurance elicit all material information pertaining to a risk. Endorsement Proposal Forms are used in all classes of Insurance except Marine Cargo. Renewal Notice The questions asked in one class of Insurance Proposal Form might be different from another. Some of the Common Questions relate to Customer Details, Details of the Subject Matter insured, Previous Insurance History, etc.
Policy
Policy evidences Contract of Insurance . It has to be stamped according to the provisions of Indian Stamp Act. The general format of a Policy is given under Printed Section Blank Section Contains Variable Data which changes Contains Standard Data which is common to all clients from customer to customer It contains the following Sections Contents: a) Heading: Name & Address of Insurer. a) Name & Address of the b) Recital Clause (Preamble): Introduces parties to the Contract Insured c) Operative or Insuring Clause: Perils Covered, Exclusions & b) SI & Premium Conditions c) Description of the Property d) Warranties Clause: Warranty is an undertaking by the Insured to insured do a certain thing or not to do a thing. d) Period of Insurance etc. e) Signature Clause: Signature of the Authorized signatory.
Cover Note
Certificate of Insurance Endorsement Renewal Notice
5 6
A temporary Document issued pending the preparation of the Policy. It is generally issued when negotiations for insurance are in progress (eg. Premises are being inspected to arrive at a Premium Rate) A Cover Note has a specific validity period (eg. 60 days) Ultimately it has to be replaced by a Policy before its expiry. o Certificates of Insurance are generally issued in Motor & Marine. o In Motor Insurance, a Certificate of Insurance is issued in addition to a Policy Document as it is mandatory as per the provisions of MV Act. It is evidence to the Police Authorities (RTA) that the vehicle is properly insured. o In Marine Insurance, a Certificate of Insurance is issued to cover the shipments under Open Cover. Endorsement is a document issued to record an alterations in the Policy like change of name, address, increase/decrease of SI, Add/delete perils etc. Renewal Notice is a reminder to the Insured that his insurance is due for Renewal. Insurers issue a Renewal Notice one month before the expiry of the Policy.
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Chapter: 6
Fire Insurance
Chapter Summary: 1 Standard Fire Special Perils Policy Perils covered Standard Fire Special Perils Policy Add on Covers Standard Fire Special Perils Policy Exclusions Standard Fire Special Perils Policy Conditions Special Policies: Floater Declaration Floater Declaration Reinstatement Policy IAR (Industrial All Risks) Policy FLOP (Fire Loss of Profits)
I. Perils Covered: Sr PERIL Covered Fire Exclusions: Own fermentation, natural heating or Spontaneous Combustion 1. Any heating or drying process Burning of property by order of any Public Authority Note: Spontaneous Combustion can be covered at extra premium (Add on Cover) 2 Lightening - (with/without Fire) (AOG Peril) Explosion/Implosion - (with/without Fire) (External Explosion only covered) Exclusions: Boilers (other than domestic boilers) etc. in which steam is generated (i.e. Internal Explosion) 3 Machinery or apparatus subject to centrifugal force. Note: Items in which explosion occurred are excluded but the property in the vicinity is covered. Boiler Explosion Policy can cover explosion of Boilers. (Engineering Insurance). Aircraft Damage - (by all Aerial Devices with/without Fire) Exclusions: 4 Damage caused by pressure waves. RSMD (with/without Fire) Only direct physical visible damage is covered. Consequential damage is excluded. Exclusions: Stoppage of work due to strikers action Losses due to dispossession Losses caused by action of Govt. authorities 5 Burglary, house-breaking, larceny, theft etc. Terrorism Note: 1) Terrorism can be covered at extra premium (Add on Cover) 2) If the Insured opts to delete RSMD Cover from the inception of the Policy, a discount is given in the Rate. Discounts vary from Section to Section. STFI (with/without fire) (also known as Water Damage Perils) (AOG Peril) Note: 1) If the Insured opts to delete STFI Cover from the inception of the Policy, a discount is given in the Rate. 6 2) IF EQ is NOT Covered, water damage caused by other convulsions of nature (like Tsunami ) are excluded. Impact Damage (by rail/road vehicles or animals) Exclusions: 7 Impact caused by insured or any occupied of the premises Impact by insureds employees during their employment Note: Can be covered on payment of additional premium (Add on Cover) Subsidence & Landslide including Rock slide - (AOG Peril) Exclusions: Normal cracking, settlement or bedding down of new structures The settlement or movement of made up ground 8 Coastal or river erosion Defective design or workmanship or use of defective material Demolition, construction, structural alterations or repair of property or ground works or excavations STFI perils caused by EQ, Volcanic eruption or other convulsions of nature 9 Bursting &/or overflowing of Water Tanks, Apparatus & Pipes (with/without fire) 10 Missile Testing Operations (with/without fire) 11 Leakage from Automatic Sprinkler Installations (with/without fire) Exclusions: Compiled by: Kamalakar. T Page 10 of 43
12
Repairs or alterations to the buildings or premises Repairs, Removal or Extension of Sprinkler Installations Defects in construction known to the insured Bush Fire Exclusions: Forest Fire Note: Forest Fire can be covered at extra premium (Add on Cover)
Add on Covers: Sr Add on Cover Architects, Surveyors & Consulting Engineers Fee: (in excess of 3% claim amount). Upto 3% of claim are already covered as part of the policy 1. This extension provides cover upto 7.5% of loss The SI is on Buildings & Machinery should be increased to include such fee Removal of Debris: (in excess of 1% claim amount) up to 1% already covered under normal policy 2
4 5 6
SI for this Extension should NOT exceed 10% of the total SI Deterioration of Stocks in cold storage: Damage to the Power Station by an insured Peril Damage to the Cold Storage Unit by an insured Peril Exclusions: Act of Govt. or Municipal Authorities 24 Hrs. Waiting Period Forest Fire Impact Damage - (Insureds own vehicles) Spontaneous Combustion (ie. Burning which results from internal heating & not from external causes. Eg: Groundnut, dyes, chemicals, paints, varnish, hay, grass, copra etc)
Loss by Fire only is Covered Materials are classified into 4 Categories. Category-I are lowest rates & Category-IV are the highest. Omission to insure additions, alteration or extension: Applicable to Bldg. & Mach. Only Max. up to 5% of SI of each Item Addl. Premium on 5% of SI to collected in advance at the inception of the Policy All new additions to be notified during the policy period or at the end Earthquake (Fire & Shock): (AOG Peril) Excess: 5% of each & every claim subject to a minimum of Rs. 10,000/ Entire property in the complex to be insured, no selection available. If STFI is NOT opted out, then only water damage perils caused by EQ are covered else they are NOT covered. There are 4 EQ Zones (Highest rate for Zone-I & lowest for Zone-IV) Spoilage Material Damage: Covers loss of Stock-in-Process
10
11 12
13
14 15
Damage to Machinery & Equipment (including cost of removal of debris & cleaning) Leakage & Contamination Cover: (for Oils & Chemicals only). Two types of cover Leakage only (Rate is less) Leakage & Contamination (Rate is more) Exclusions: Indirect Losses like shrinkage, loss of weight, loss of use, market loss etc. Improper handling, faulty workmanship, infidelity Burglary or theft Legal or contractual liability Consequential losses Special Conditions: Excess: 1% on each tank subject to minimum of Rs. 60,000/ Pro-rata condition applies in the event of under insurance Temporary Removal of Stocks: Up to 10% of SI of stocks can be shifted for fabrication, processing etc. Loss of Rent (for Owner) -- Separate SI should be specified for Rent Addl. Expenses of Rent for Alternative accommodation: Cover for Non-manufacturing premises only Difference between new & original rent is payable Owner-Occupant has to insure both the buildings & contents Occupant has to insure only the contents The Maximum Period allowed for alternate accommodation is 3 years Startup Expenses Terrorism:
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Terrorism Cover can be granted only in conjunction with RSMD Cover (ie. If the Insured does not want RSMD Cover, we cannot give Terrorism cover alone). All properties in the complex to be covered without any selection Maximum Liability of Insurance Company is 200 crores per risk (MD + LOP) Excess: Industrial Risks: (Section 4 to 7) 0.5% of TSI (Total SI) subject to a minimum of Rs. 1 lakh Non-Industrial Risks:(Section 3 of AIFT) 0.5% of TS subject to a minimum of Rs. 25,000/Exclusions: Sr Excess 1. 2 3 4 5 6 7
Exclusion
8 9 10 11 12 13 14
Non-AOG Perils : Rs.10, 000/War Perils Nuclear Losses Pollution or Contamination Excluded Property Certain property like bullion, precious stones, curios, works of art etc whose value exceeds Rs.10, 000/- are excluded unless otherwise expressly stated in the policy. Stocks in Cold Storage Premises Can be covered as Add on Cover Electrical Risks (Items in which electricity is originated. Eg. Fans, Lights, machinery etc.) Note: Items in which electrical fire originated are excluded but the property in the vicinity is covered. Electrical Risk can be covered under Machinery Breakdown (MB) Insurance. Expenses incurred on Architects, Surveyors & Consulting Engineers fee exceeding 3% of claim amount Debris expenses exceeding 1% of claim amount Spoilage Material Damage Can be covered as Add on Cover Earthquake (EQ) Can be covered as Add on Cover Property moved out of the insured premises Exception: Machinery can be moved for repairs for a period not exceeding 60 days. Theft (during or after the occurrence of insured peril) Terrorism Can be covered as Add on Cover Consequential Losses (Loss of market, loss of delay etc.)
a) b)
AOG Perils : 5% of claim subject to a minimum of Rs.10, 000/-
Conditions: No CONDITION 1. Misrepresentation, Mis-description or non-disclosure of material facts Fall or displacement: Insurance ceases after 7 days of fall or displacement (as the risk increases) 2 If the fall is due to insured peril, cover continues If it is due to uninsured peril & the insurers are informed & they agree, the cover continues Alterations: The cover ceases in case of Alteration of trade or manufacture 3 Building remains unoccupied Property is sold off Marine Clause: If the same stock is insured both under the Marine Policy & Fire, the claim is payable only under Marine Policy. 4 However, if there is under-insurance under Marine Policy, the balance can be covered under Fire Policy. Cancellation: At the option of the Insured: Premium is retained on Short Period Rates & the balance is refunded. 5 At the option of the Insurer: Refund is on Pro-rata basis. (Insurer has to give 15 days Notice to the Insured) Example: SI is Rs. 10 lacs. Rate @ 1.00%o. Premium Collected is = Rs. 1,000/-. Policy cancelled after 6 months. Duty of the Insured (at the time of the loss): A. a) Notice of Loss immediately b) Submit all supporting documents within 15 days 6 c) Particulars of other insurances B. If the Company rejects the claim, the insured must approach the Court within 12 months, otherwise the claim becomes timebarred (abandoned) Rights of Insurer: (on happening of the loss) Enter & take possession of building/premises 7 Take possession of property Remove, sort, salvage the property Sell off the damaged property Frauds: 8 If the claim is fraudulent or fraudulent means are employed to recover the claim, the benefits under the policy are forfeited. Reinstatement: 9 Insurers can reinstate the property, if they wish, instead of giving monetary compensation. 10 Condition of Average: Compiled by: Kamalakar. T Page 12 of 43
11 12 13 14 15
At the time of the loss, if the SI is less than the Market Value (i.e. Under-insurance), the claim will be proportionately reduced. The condition applies to SI declared under each & every item. Example: SI = Buildings Rs. 10,00,000 + Machinery Rs. 6,00,000 + Stocks Rs. 4,00,000 = Total SI Rs. 20,00,000 . Loss on Machinery = Rs. 8,000 MV at the time of Loss = Bldg. Rs. 10,00,000 + Machinery Rs. 8,00,000 + Stocks Rs. 2,00,000 = Total MV Rs. 20,00,000 Though the Total SI was equivalent to Total of MV, there is an under insurance under Machinery. Therefore, Claim Payable = SI/MV x Loss = 6,00,000/8,00,00 x 8,000 = Rs. 6,000/Contribution: In case of more than one policy covering the same property, the claim will be proportionately paid by all the policies. Subrogation: If the claim is caused by a negligent 3rd party, the insureds right of recovery against the 3rd party is subrogated to the Insurer. (Modification: Subrogation takes place even before payment of claim). Arbitration: Only disputes regarding quantum (amount) of claim are referred to Arbitration but disputes regarding admissibility of claim can only be settled in a Court. Notice: Every Notice or communication to the company must be written or printed. Reinstatement of SI: The loss will reduce the SI by the amount of loss. It can be reinstated to the original position by payment proportionate premium which is deducted from the claim amount.
Special Policies: Sr Special Policy with brief description Floater Policy: (A Policy where SI keeps floating on various locations. Insured can give a single SI for all locations) o Can be issued only for Stocks. (Covers stocks-in-process also) 1. o Insured should specify the locations. Unspecified locations are NOT permitted. o Rate = Highest Rate applicable at any one location + 10% loading (called Floater Loading) Declaration Policy (For stocks whose value frequently fluctuates). Declaration Policy is adjustable policy as the premium is adjusted at the end of the Policy The Minimum SI should be 1 crore in one or more locations & Rs 25 lacs at least in one location 2 Methods of Declarations are a) Average Value of each day of the month b) Highest value during the month Reduction in SI is NOT allowed The Insured is supposed to make the Declarations at least by the last day of the succeeding month. If he fails to do so, the Total SI shall be deemed to have been declared. 2. Minimum Retention = 50 % (ie. Refund of Premium on adjustment shall NOT exceed 50% of Provisional Premium) This policy cannot be issued to o Insurance required for short period o Stocks at railway sidings o Stocks-in-process o Retail stocks o Transport companies stocks Floater Declaration Policy Combination of Floater & Declaration Policies The Minimum SI should be 2 crores Rate: Highest Rate + 10% Loading Minimum Retention = 80% (ie. Only 20% can be refunded on adjustment) Reinstatement Value (RIV) Policy: Fire Policy with Reinstatement Value Clause attached
3.
4.
Issued only for other than Stocks (ie. Buildings, Plant & Machinery, FFF etc) The Claim settlement differs from Standard Fire Policy as NO Depreciation is applied. Indemnity is the cost of replacement of the damaged property by new property of the same kind. But due to technical advancements, replaced machinery is better than the damaged machinery (eg. Output increased with less consumption of power), insured is obliged to bear a part of the cost. Important Provisions of the RIV Clause o Reinstatement must be completed by insured within 12 months from the date of loss o Until Reinstatement, liability remains on the normal indemnity basis ie. Market value basis o Pro-rata Average is applied by comparing SI with cost of Reinstatement o The Reinstatement will NOT apply a) if the insured fails to intimate within 6 months his intention to replace; b) If insured is unable or unwilling to replace
5.
Extension of RIV Policy Local Authority Clause: Addl. Costs incurred for complying with Municipal or Local Authority regulations are payable. Industrial All Risks (IAR) Policy: Package Policy (with Fire & Special Perils, Burglary, MB, BPP, EEI & Business Interruption) Page 13 of 43
Policy designed for Industrial Risks (Manufacturing & Storage facilities) with minimum SI of Rs 100 crores Under Insurance of upto 15% is permitted Loss of Profits (LOP) Policy:
Also known as Consequential Loss Policy or Business Interruption Policy Fire Policy provides cover for Material Damage (ie. Physical damage to property by insured perils). Because of the Material Damage, Insureds business is stopped which results in Loss of Profits which can be covered under this Policy. Fire Policy is concerned with the Capital Loss where as LOP Policy is concerned with Revenue Loss Basis of LOP: The profits of a business are related to Total Income or Turnover. Turnover is defined as the money payable to the insured for goods sold or services rendered. Turnover has 3 basic parts a) Variable Charges; b) Standing Charges; c) Net Profit A) Variable Charges: Expenses incurred in producing goods (eg. Cost of raw materials, wages etc). They increase/decrease with the increase or decrease in Turnover. B) Standing Charges or Fixed Charges: Fixed expenses which do not vary with change in business. Eg. Salaries to permanent staff, Taxes, Bank Interest etc. The Standing Charges have to be specified by the Insured to the Insurer at the time of taking the policy. C) Net Profit: = Turnover (Variable Charges + Standing Charges) Gross Profit: = Standing Charges + Net Profit. Indemnity Period:
6.
The LOP Policy indemnifies the loss of Gross Profits during the Indemnity Period chosen by the Insured. This Period is different from Period of Insurance which is 12 months. The Indemnity Period may vary from 3 months to 3 years.
The Period starts from the Date of Loss and ends when the business becomes normal or the Period stated in the Policy, whichever is earlier. Sum Insured: SI should represent the Gross Profits. If the Indemnity Period is <= 12 months, then SI = Annual amount of Gross Profits If the Indemnity Period is > 12 months, then SI = Gross Profits for the No. of months chosen (eg. If Indemnity Period is 24 months, the SI should be twice the Annual Gross Profits) Specification: A formula is incorporated in the Policy to calculate the loss which is known as Specification. Material Damage Proviso: Insured should have Material Damage Policy to get a LOP Policy Claim under LOP is subject to claim admissible under Material Damage Policy
Important Clauses Sr Clauses Agreed Bank Clause: Wherever a financial institution has advanced a loan on the property insured, a Policy is issued in the Joint names of the Bank & the Insured with Agreed Bank Clause attached. 1 Any money payable under the policy, can be paid to Bank Banks acceptance will be binding on all parties concerned Contract Price Insurance Clause: Applicable only to Imported Goods 2 If goods sold under a Contract are damaged & the contract is cancelled, the Indemnity will be Contract Price but not Market Value SI should represent the Contract Price, otherwise under insurance will be applicable Designation of Property Clause: 3 As per this Clause, Insurer accepts the classification of property as per Insureds books. Eg. If Policy shows an item as stock but Insureds books show them as Furniture, then that item will be treated as Furniture for insurance purpose. Escalation Clause: Applicable to Buildings, Machinery and FFF only (on payment of additional premium) SI increases automatically day by day till the last day of the Policy 4 Max. Escalation Limit is 25% of SI (which would be available only on the last day of the Policy). Eg. SI is Rs. 1,00,000 & Escalation is 20% of 1 lac, ie. Rs. 20,000/-. If the loss occurs on 180th day, the Escalation Amount would be 20000/365 x 180 = Rs. 9,863/ On Date of Loss, the SI would be = Original SI + Escalation amount upto the date of Loss Pro-rata Condition of Average will apply as usual Local Authority Clause attached to RIV policy.
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Chapter: 7
Chapter Summary: 1 Introduction to Marine Insurance 2
Marine Insurance
Overseas Insurance
Exports & Imports
Transit within the country
Marine Cargo Insurance
Insurance of goods in transit by various modes of Transit. Hence, it is termed as Transit Insurance Modes of Transit are Road, Rail, Sea and Air
Who affects Insurance? It depends on the Contract of Sale. Some of the types of Contracts are Sr Type of Contract Insurance is effected by 1. FOB (Free On Board) Buyer 2. FOR (Free On Rail) Buyer 3. 4. C&F (Cost & Freight) CIF (Cost, Insurance & Freight)
Buyer Seller
3. Various Clauses Sr Clauses I. Institute Cargo Clauses II Institute Cargo (Air) Clauses III Inland Transit (Rail/Road) Clauses
Drafted by ILU (Institute of London Underwriters) ILU (Institute of London Underwriters) TAC (Tariff Advisory Committee)
Inland Insurance
Contract of Marine Insurance = Policy + Clauses Various Marine Clauses: I. Institute Cargo Clauses (ICC) 3 II. Institute Cargo Clauses (Air) III. Inland Transit (Rail/Road) Clauses 4 Rating & Underwriting Various Marine Policies: Specific Policy 5 Open Policy Open Cover Special Declaration Policy 6 Claims
1. Introduction:
Marine Insurance
A. Hull Insurance B. Cargo Insurance (Hull = Body of = Goods) (Cargo the Ship)
Used in Sea Transit Air Transit Rail/Road Transit
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I. Institute Cargo Clauses: There are 3 types of Clauses ICC (C), ICC (B) and ICC (A). ICC (C) provides the Minimum Cover & ICC (A) is the maximum Cover. ICC (A) is considered as All Risks Cover A. Risks Covered: Sr 1 2 3 4 5 6 7 8 9 10 11 12 Perils Covered Fire or Explosion Stranding, grounding, sinking, capsizing Overturning or derailment of land conveyance Collision or contact with any external object (other than water) Discharge of cargo at a port of distress GA Sacrifice Jettison Earthquake, Volcanic eruption or lightning Washing overboard Entry of sea, lake or river water Sling loss (lost during loading & unloading) Any other risk not specifically excluded
B. Extraneous Risks: Risks covered on payment of additional premium. Sr Extraneous Risks 1 TPND (Theft, Pilferage & Non-Delivery) 2 Fresh Water & Rain water damage 3 Hook/oil damage 4 Heating & sweating 5 Damage by mud, acid & other extraneous substances 6 Breakage 7 Leakage 8 Country damage 9 Bursting / tearing of bags War 10 NOTE: War risk is restricted to the time when goods are water borne. 11 SRCC (Strike, Riot & Civil Commotion) C. Exclusions: Sr Exclusions 1 Willful misconduct of the assured 2 Trade Losses (Ordinary leakage, loss in weight or wear & tear. Eg. Oils, Chemicals & other liquids) 3 Inherent vice (nature of subject matter. Eg. Fruits, Vegetables etc. deteriorate without any accidental cause) 4 Delay, even if caused by an insured peril Malicious Damage (Deliberate damage by the wrongful act of any person) 5 NOTE: It can be covered as extraneous peril under B & C. Under A it is automatically covered. 6 Insolvency 7 Inadequate packing 8 War & kindred perils (Note: Can be covered as extraneous peril) 9 SRCC (Strike, Riot & Civil Commotion) (Note: Can be covered as extraneous peril) D. Duration of the Cover: as defined in the Transit Clause or Warehouse to Warehouse Clause . Risk commences from the time the goods leave the warehouse {place mentioned in the policy}, continues during the transit & terminates a) At final warehouse{mentioned in the policy} b) At any intermediate warehouse c) On expiry of 60 days from the date of discharge from the vessel, whichever shall first occur. II. Institute Cargo Clauses (Air):
A. B. C.
Risks Covered : Similar to the above mentioned Exclusions : Similar to the above mentioned Duration of the Cover : Similar to the above mentioned (except the Time Limit is 30 days)
Page 16 of 43
III. Inland Transit (Rail/Road) Clauses: A. Risks Covered: Sr 1 2
Perils Covered Fire Lightening
3 4 5 6 7
Breakage of bridges Collision with or by the carrying vehicle Overturning of the carrying vehicle Derailment Any other risk not specifically excluded
B. Exclusions: Similar to the above mentioned. C. Duration of the Cover: Risk commences from the time the goods leave the warehouse {place mentioned in the policy}, continues during the transit & terminates a) At final warehouse or destination {mentioned in the policy} b) On expiry of 7 days from the date of arrival at the final railway station or town, whichever shall first occur.
The Summary of Time Limits for various modes of transit are 1. Water Transit 60 days 2. Air Transit 30 days 3. Rail/Road Transit 7 days
4. Rating & Underwriting Proposal forms are NOT used Declaration Form is used Contents of Declaration Form: Sr Description 1 2 3 4 5 6 Name of the Insured (Shipper or Consignor) Full description of goods Method of Packing Voyage & Mode of Transit Cover required Name of Steamer
The Rates of Premium depend upon 1. Nature of commodity 2. Method of Packing 3. The Vessel 4. Type of Insurance Cover
5. Marine Policies Sr Policy 1 Specific Policy Description A policy issued for a single shipment or consignment
Also known as Floating Policy Issued to cover Inland Consignments Issued for a period of 12 months It is a Stamped Document Declarations are made as & when consignments take place When a Declaration is made, a Certificate of Insurance is issued. There is SI under Open Policy SI will gradually be reduced by the amount of each declaration Policy gets expired either on completion of 12 months or exhaustion of SI, which ever occurs first. If the SI is exhausted before 12 months, it can be enhanced by paying additional premium Issued to cover Overseas Transit (ie. Exports & Imports) Issued for a period of 12 months It is NOT a Stamped Document Declarations are made as & when shipments take place When a Declaration is made, a Specific Policy or Certificate of Insurance is issued & is stamped. Page 17 of 43
Open Policy
Open Cover
There is NO SI under Open Cover but there are 2 limits Limit per bottom or Limit per Conveyance Limit per location It is a Floating Policy Issued to clients who have large turnover with many dispatches of goods within the country Eligibility Minimum Turnover of Rs. 2 crores NOT assignable or transferable Based on duly completed Proposal Form SI is based on previous years Turnover In case of fresh proposals, the SI shall represent a fair estimate of annual dispatches TOD (Turn Over Discounts): Certain % discounts allowed on premiums
Special Declaration Policy
7. Claims The marine perils give rise to many types of losses. Claims are settled depending upon the type of loss. Types of Losses: Sr Type of Loss Sub-classification Meaning
1.1 Actual Total Loss

1) Total Loss
1.2 Constructive Total Loss
2.1 Particular Average

2) Partial Loss
2.2 General Average
Loss where the subject matter is entirely destroyed. Eg. Ship sunk in the ocean. Loss where the subject matter is NOT completely destroyed but cost of repair/recovery would be higher than the value of the subject matter. (Eg. A ship costing 100 crores was severely damaged in a storm. For bring the ship to a nearest port would cost 40 crores & the repairs would cost another 80 crores. So the total cost would be 120 crores which is in excess of the value of the ship. Therefore, ship has to be abandoned as Total Loss) Accidental Partial Loss caused by an insured peril. Only a particular party bears the loss. (Eg: if the cargo is damaged, only the cargo owners had to bear the loss) Deliberate Partial Loss incurred to save the whole venture. It is distributed over all the interests (like Ship, Cargo & Freight). General Average is a loss caused by General Average act. o Expenses incurred to avert or minimize the loss (eg. Cost of reconditioning) o An insured peril must occur & then only the charges are payable
3)
Expenses
Sue & Labour Charges
The charges must be incurred short of destination i.e. at an intermediate port o They are independent of the contract, ie. Even if the amount exceeds the SI under the Policy, they become payable. No Excess or Franchise is applicable.
Extra Expenses incurred in addition to the claim amount. Eg: Survey fee, Sale charges etc. Charges Note: In Marine Insurance, Average means Partial Loss . 4) Claims Documents: Claims Documents vary depending upon the type of loss, mode of travel, circumstances of claim etc. Some of the documents required for Particular Average claims are as under Sr Document Meaning 1) 2) 3) 4) 5) 6) 7) Policy Bill of Lading Invoice Survey Report Debit Note Copy of Protest Letter of Subrogation Document which evidences that the subject matter is insured Document which evidences that the goods are shipped. It contains terms of contract of carriage as well as particulars of cargo. Document with details of the goods & its prices. It evidences the terms of sale. Document which shows the cause & extent of loss given by a Surveyor. It is a Claim Bill. The claimant gives the Debit Note showing the amount he is claiming. Protest made by the Master of the Ship before a Notary Public that he is NOT responsible for the damage to cargo. Document which transfers the rights of the Claimant against third parties to the Insurers.
Some of the documents required for Inland Transit claims are as under a) Policy b) Invoice c) Certificate of Loss issued by Carriers d) Non-delivery Certificate e) Letter of Subrogation f) Special Power of Attorney
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Chapter: 8
Chapter Summary: 1 Introduction to Motor Insurance 2 3 MV (Motor Vehicles) Act Types of Policies & their Coverage 2) Two Wheelers (Motor Cycles/Scooters)
Motor Insurance
4 Rating 1) Private Cars 5 Claims
a) Goods Carrying Vehicles
1. Introduction: For the purpose of Motor Insurance, Motor Vehicles are classified into 3 broad categories 3) Commercial Vehicles b) Passenger Carrying c) Miscellaneous Vehicles Vehicles Ambulances, Cinema Film Autos, Taxis, Buses recording vans
Types of Losses: a) Loss/Damage to the Vehicle & b) TP Liability

2. MV Act, 1988: Motor Insurance is governed by MV Act, 1939 & its various amendments. Some of the important provisions are
Compulsory Insurance Insurance of Motor Vehicle is NOT Compulsory

Any Vehicle plying in a Public Place has to be compulsorily insured. Compulsory Insurance should cover the following Liability Covered Compensation Payable Unlimited (There is NO fixed limit. Whatever the Court decides, the amount is payable as a) Death or Bodily Injury compensation) b) TPPD (Third Party 2 Wheelers = Rs.1 lakh & for Others = Rs.7.5 Lakhs (OR) Property Damage) 6,000/- (Statutory Limit). (Rs. 100/- is deducted from TP Premium, if Rs.6000/- is chosen)
Insurance of 3 rd Party Liability arising out of use of Motor Vehicle is Compulsory.
Exemptions (subject to maintenance of Self Insurance Fund, the following are exempted from compulsory insurance) Vehicles owned by Central & State Governments (if the vehicle is NOT used for any commercial purpose) Any Local Authority State Transport Undertaking NFL(No Fault Liability) Section 140 of the Act deals with NFL
The principle of NO Fault means, the Claimant need NOT prove the negligence on the part of the Insured. The claim under these provisions is NOT defeated in any way, by any wrongful act, neglect or default on the part of the Claimant. The claim cannot be reduced on the basis Claimants share of responsibility for the accident. In other words, the legal defense of Contributory Negligence is NOT available to the Insured.
Compensation payable A) Death = Rs. 50,000/- and B) Permanent Disablement = Rs. 25,000/-
MACT(Motor Accidents Claims Tribunal) MACT are constituted by State Governments They are presided over by District or High Court Judge When a Tribunal has been set up for an area, NO Civil Court has any jurisdiction to entertain any claim
Purpose = Speedy disposal of 3 rd Party Claims at a minimum cost Only a nominal fee has to be paid for instituting a case Tribunals deal with Death, Personal Injury & 3rd Party Property While making an award, the Tribunal specifies the amount payable by the Insurer
Lok Adalat or Lok Nyayalaya is a subset of Tribunal which are set up for Compromise Settlements
When there is a clear liability under the policy, claims are negotiated with the 3rd party with the help of Lok Adalats for an amicable settlement.
Hit & Run Accident Section 161 of the Act deals with Hit & Run Accidents
The Act defines it as an accident arising out of use of motor vehicle, the identity whereof cannot be ascertained in spite of reasonable efforts The compensation payable under this section is known as Solatium The compensation is payable from fund known as Solatium Fund established by Central Govt. Page 19 of 43
Compensation payable A) Death = Rs. 25,000/- and B) Grievous Hurt = Rs. 12,500/-
Section 1 GR (General Rules & Regulations): GR Description Insureds Declared Value (IDV): IDV is the SI which is fixed at the commencement of each policy period. It is to be fixed on the basis of Manufacturers listed selling price Depreciation as per Schedule. IDV shall be treated as the Market Value throughout the Policy Period without any further Depreciation for the purpose of Total Loss/Constructive Total Loss Claims (CTL). The Insured Vehicle is deemed to be a CTL, if the cost of repair/retrieval exceeds 75% of IDV. Depreciation on Parts for Partial Loss Claims: Sr Parts Depreciation % age 1) Rubber, Nylon, Plastic, tyres, tubes & batteries 50 2) Fiber 30 3) Glass NIL 4) All Other Parts (Depends on the Age of the Vehicle) Various Geographical Zones: Type of Vehicles a) Private Cars b) Motorized Two Wheelers c) Commercial Vehicles ratable under Section 4.C.1 and C.4. Commercial Vehicles (Excluding vehicles ratable under Section 4. C.1 and C.4.) Zone A B A B C Cities Ahmedabad, Bangalore, Chennai, Hyderabad , Kolkata, Mumbai, New Delhi and Pune Rest of India Chennai, Delhi / New Delhi, Kolkata, Mumbai All other State Capitals Rest of India
10
27
40
No Claim Bonus (NCB): a) NCB is only on OD Premium b) NO NCB on Motor Trade Policies c) For Fire/Theft risks, NCB is applicable only on Fire/Theft components of premium. d) NCB is as per the Table. %age depends on the years completed. Year %age of Bonus 1 20 2 25 3 35 4 45 5 50 e) On transfer of vehicle, the entitlement of NCB depends on the Insured (NOT on the Vehicle). Only in case of the death, the NCB is transferred to the legal custodians of the vehicle. f) If Insurance is transferred from one Co. to another, the new insurer can give the same NCB with the confirmation from the previous insurer. g) NO NCB is allowed when a policy is NOT renewed within 90 days of its expiry Compulsory Deductibles: Claims under OD Section only are subject to Excess or Compulsory Deductible. The Excess depends on the Type of Vehicle & Capacity of the Vehicle (ie. CC or GVW or Passengers) Type of Vehicle Capacity (CC/GVW/PCC) Compulsory Deductible (Rs) 2 Wheelers All CC types 50.00 <= 1500 cc 500.00 Private Car > 1500 cc 1,000.00 7500 Kg GVW 500.00 Goods Carrying Vehicles > 7500 GVW & <= 16500 GVW 1,000.00 > 16,500 GVW 1,500.00 <= 17 passengers & Taxis <=1500 cc 500.00 Passenger Carrying Vehicles > 17 <= 36 Passengers & Taxis > 1500 cc > 36 Passengers 1,000.00 1,500.00
3. Types of Policies: (1. Liability Only & 2) Package Policy) 1) Liability Only Policy
Page 20 of 43
Cove r
1)
Indemnifies the Insured in respect of the following Compensation awarded (against the Death/Bodily Injury/TPPD) Legal Expenses incurred by the Claimant Legal Expenses incurred by the Insured with the written consent of the Insurer Indemnifies any Driver who is driving the vehicle with Insureds permission Indemnifies the Personal Representative PA cover for Owner-Driver : Owner-Driver must be the Registered owner of the Vehicle The Owner-Driver must be the Insured named in the Policy The Owner-Driver must be holding an effective driving license Compensation is provided as per the Table Vehicle 2 Wheelers Other Vehicles
2) 3) 4)

CSI Rs. 1 Lakh Rs. 2 Lakhs
Premium Rs. 50/Rs. 100/-
Exclusions
NO Compensation is payable, if the death or disablement is caused by a) suicide b) intoxication of liquor Vehicle being used other than in accordance with the Limitations as to Use Vehicle being driven by other than a Driver as per the Drivers Clause Claim arising out of Contractual Liability Death arising out of & in course of employment War & Nuclear Risks
Notice of Loss, Cancellation of Policy, Arbitration etc Conditions in the event of the death of the Insured, the Policy will remain valid for 3 months or Date of Expiry, whichever is earlier The Legal Heirs to whom the custody of the Policy passes, may apply for transfer of this Policy or obtain a new policy by making an application to the Company along with a) Death Certificate b) Proof of Title & c) Original Policy. Package Policy (Common to all types of Vehicles) Own Damage: Perils Covered: 1) Fire 2) Burglary 3) *Riot & Strike 4) *EQ 5) Water Damage Perils 6) Accidental External Means 7) Malicious Act 8) Terrorist Activity 9) While in transit by road, rail, inland-waterway, lift, elevator or air
Transfer of Policy to Legal Heirs:
2) Sec-1
10) Landslide & Rockslide *Note: If EQ and Riot & Strike are deleted, a discount is allowed. This feature is common to all types of vehicles.
Addl. Benefits Protection & Removal Costs (Towing Charges) Authorization for Repairs
Exclusions: Commercial Vehicle Private Car Private Car Rs. 1,500/Rs. 500/2 Wheeler Rs. 300/Rs. 150/Commercial Vehicle Rs. 1,500/- (4 Wheelers) Rs. 750/- (3 Wheelers) Rs. 500/-
2 Wheeler
a) Consequential Loss, Depreciation, Wear & Tear, Mechanical Breakdown, failures or breakages, claim arising out of contractual liability, War & Nuclear Risks b) Any Loss caused outside the Geographical Area c) if the vehicle is used against the Limitations as to Use or driven by a person other than a Driver as stated in the Drivers Clause
Sec-2 Sec-3
d) Damage to Tyres & Tubes unless the Vehicle is damaged at the same time e) When the Insured or any person driving with his consent is under the influence of intoxicating liquor or drugs f) Loss of Accessories by Burglary, housebreaking or theft unless the vehicles is stolen at the same time g) Damage caused by Overloading or strain of the Vehicle Liability to 3 rd Parties: Similar to Cover mentioned under Liability Only Policy (except PA Cover.) PA Cover for Owner-Driver: As per the PA cover mentioned under Liability Only Policy. Page 21 of 43
Sec-4
Towing disabled Vehicles: Applicable only to Commercial Vehicles. But the towed vehicle should not be towed for hire or reward.
Deductible: All types of vehicles are subject to Compulsory Deductibles under Section I. Ref. to GR. 40.
Page 22 of 43
Rating: The premium rating depends upon the following factors Rating Factor 1) Private Cars 2) Two Wheelers 3) Commercial Vehicles Goods Carrying Passenger GVW (Gross Vehicle Weight) Rates are provided for a) GVW upto 12,000 Kgs. b) Above 12,000 Kgs. addl. Premium for each 100 kgs. is charged Zone A, B & C a) <= 5 Yrs b) > 5 Yrs <= 10 Yrs c) > 10 Yrs Ref. to Tariff LCC (Licensed Carrying Capacity) or PCC (Passenger Carrying Capacity) a) <= 18 Passengers b) > 18 & <= 36 c) >36 & <= 60 d) > 60 Zones depend upon the type of the Vehicle a) <= 5 Yrs b) > 5 Yrs <= 10 Yrs c) > 10 Yrs Ref. to Tariff
1) IDV
IDV Rules are Common to all types of Vehicles. (Ref. GR. 8) CC (Cubic Capacity) a) <= 1000 cc b) > 1000 <= 1500 cc c) > 1500 cc Zone P1 to P4 (Ref. to GR 10) a) <= 5 Yrs b) > 5 Yrs & <= 10 Yrs c) > 10 Yrs a) Rs. 15,000 b) Rs. 20,000 c) Rs. 30,000 CC a) <= 150 cc b) > 150 <= 350 cc c) > 350 cc
2) Capacity
3) Geographical Zones 4) Age of the Vehicle 5) Minimum IDV Depends on the Capacity (CC or GVW) of the Vehicle NOTE
Zone A & B a) <= 5 Yrs b) > 5 Yrs <= 10 Yrs c) > 10 Yrs a) Rs. 5,000 b) Rs. 6,000 c) Rs. 7,000 Ref. to above CC rules.
Extra Benefits (@ Addl. Premium)

(Common to all types of Vehicles)
Ref. to above CC rules. The rates are in %age (not per mille) & they are applied on IDV The rates are higher for Higher Age & CC & use in Zone A The above rating pattern is for the OD Section only. The Rate for TP Section depends on CC which is slightly different from OD Section OD Section TP Section 1) Electric/Electronic Fittings (Cost of Fittings x 4%) CNG/LPG Bi-Fuel Kit (Rs. 60/-) 2) CNG/LPG Bi-Fuel Kit (Cost of Kit x 4%) Trailer (Fixed Amount = Rs.125) 3) Trailer (50+(IDVx0.5%)) Compulsory PA for Owner/Driver 4) Geographical Extn. (Fixed Premium = Rs.500) (Rs.50 or Rs. 100) 5) Imported Vehicles (OD Premium x 30%) PA Cover for Others 6) Fiber Glass Tanks (Fixed Amount = Rs.50) (Rs. 5 x CSI/10000 x No. of persons) 7) Driving Tuitions (OD Premium x 60%) LL paid Drivers/Cleaners (Rs.25 x Persons) 8) Rallies held in India LL to Employees of the Insured (Rs.60 x Persons) a) Anti-Theft Devices
b)
Discounts (Common to all types of Vehicles)
c) d) e)
Side Car attached (Only for 2 Wheelers ) Specially designed vehicles for handicapped Voluntary Deductible NCB AAI Discount (Only for 2 Wheelers & Private Cars) Deletion of EQ Deletion of Riot & Strike
f)
g) h)
5. Claims:
Motor Claims
(A) OD Claims a) Partial Loss Claims b) Total Loss Claims c) Theft Claims
(B) TP Claims a) MACT Claims b) Compromise c) Lok Adalat
Page 23 of 43
o o o o
(A) O D Claims Notice of Loss from Insured Claim Assessment: Settlement Claim Documents If the vehicle is beyond repair, it is settled on TL (Total Loss) or CTL (Constructive Total Loss) basis. Insured will be paid the IDV As the Salvage belongs to the Insurer, he will dispose off the salvage Insured has to submit RC, Taxation Books, Ignition keys etc to Insurer The RC Book & keys to be returned to RTA If the whole vehicle is stolen, then it is considered as TL. Insured has to report to Police & obtain FIR Police will issue a non-traceable certificate after 3/4 months, if it is not traced.
(B) T P Claims On Notice of Loss, Advocate is appointed Panchanama & Policy Report are obtained Claim is decided upon by the MACT The amount awarded is deposited with MACT
a)Partial
b)Compromise
a) MACT
b)Total
Claims are negotiated with 3rd Party where there is a clear liability If the Claimant agrees, the amount is deposited with MACT for disbursement.
c)Theft
c)Lok Adalat
Pending cases with MACT where there is a clear liability are placed before Lok Adalat. This is also a compromise settlement
Page 24 of 43
Chapter: 9
Chapter Summary: 1 Introduction to PA 2 Individual Policy:
Personal Accident (PA) Insurance
a)
b)
Table of Benefits Types of Diablement Additional Benefits & Extensions Family Package Cover Rating & SI
c) d)
3 e) Group Policy
1. Intro to PA PA Policy provides indemnity against Death or Disablement caused due to accidental external means. An accident can happen in the residence, in an office, on the road or in any place in the world. Any death or disablement caused due to such accidents is covered by PA. PA Policy provides coverage for 24 Hours & World-wide. PA Policy is Benefit Policy rather than a Reimbursement Policy as fixed benefits are paid on the happening of an event. There is a Table of Benefits which shows the fixed amounts payable on the happening of an event. Age Group: 5 Years to 70 Years. No Medical Examination is required for New or Renewal Policies. 2. Individual Policy a) Table of Benefits: Table of Benefits I IA Benefit No 1 2 3 4 5 6 Benefit Death Loss of 2 limbs or 2 eyes or 1 eye and 1 limb Loss of one limb or one eye Permanent Total Disablement (PTD) Permanent Partial Disablement (PPD) Temporary Total Disablement (TTD) (Weekly Benefits) % of CSI Payable 100 100 50 100 Various 1% or 3,000 whichever is less per week (Max. is 100 weeks)
II III
Capital Benefits : Benefit No. 1 to 5 are known as Capital Benefits Weekly Benefits : Benefit No. 6 is known as Weekly Benefits
b) Types of Disablement: Sr Disablement Explanation Disablement is permanent in nature (ie. Throughout the life) & also total. One cannot go to work & earn livelihood. Eg. 1 PTD Paralysis. 2 PPD Disablement is permanent in nature (ie. Throughout the life) but not total. Eg. Loss of a Finger Disablement is temporary in nature (ie. For a specified period only) Afterwards insured can go to work. Eg. Fracture of 3 TTD thigh bone. c) Additional Benefits & Extensions: Additional Benefits (at NO Extra Premium)
Extensions (at Extra Premium)
1)
Cumulative Bonus : CSI would be increased by 5% for each claim free year, subject to a max. of 50% (Note: The policy has to be renewed within 30 days of expiry)
1) 2)
2) 3)
Carriage of Dead Body & Funeral Expenses : Fixed amounts are paid. Education Fund : In the event of Death or PTD to the Insured, the Policy provides for Education Fund of the dependent children.
d) Family Package Cover: (5% discount) a) Insured & Spouse (Both are earning) b) Spouse (if not earning) c) Children (5 to 25 Yrs) Compiled by: Kamalakar. T
Medical Expenses: Both Individual & Group Policies can be extended to include Medical Expenses incurred due to accident. War Risk Cover: War risk cover is granted to Indian Personnel working in foreign countries (Both Individual & Group)
100% of CSI 50% of CSI 25% of CSI or Rs. 50,000/- which ever is lower per child. Page 25 of 43
e) Rating & SI : Rating Rating depends on the Occupation of the Insured. Occupations are classified into 3 Groups. SI (Sum Insured) SI is chosen by the Insured SI is limited to Average Monthly Income x (60 or 72) The Multiplier (ie 60 months or 72 months) vary from Insurer to Insurer
1)
Risk Group I (Normal Risks) Administrative duties like Teachers, Accountants, Doctors etc.
2) 3)
Risk Group II (Medium Risks) Manual Labour & out door duties like Builders, drivers, labourers etc. Risk Group III (Heavy Risks) Hazardous occupations like mining, explosives etc. 3. Group Policy Introduction: A Group Policy can be issued where o there is a common relationship among the persons to be insured
o
o o
there is a central point of administration of insurance scheme Insured (Company) is required to furnish a complete list of Insured Persons Additions/deletions during the currency of the Policy to be informed to Insurer
Categories of Groups: o Employer Employee o State/Central Govt. organizations o Co-operative Societies o Registered Service Clubs o Credit Card holders o Deposit Certificate holders of Banks etc. o Shareholders of Public Limited Companies etc. Differences between Individual & Group Policies: Sr Features 1 Cumulative Bonus 2 Education Grant for Children 3 Medical Expenses Extension 4 War Risks Extension 5 Family Discount 6 7 8 9 10 Group Discount Bonus (Low Claim Ratio Discount): Discount is allowed on the Renewal Premium depending on the Incurred Claims Ratio Malus (High Claim Ratio Loading): Loading is applied on the Renewal Premium depending on the Incurred Claims Ratio for adverse claims experience On Duty Cover: Cover is operative for Restricted hours of duty. Premium charged: 75% of appropriate premium. Off Duty Cover: Cover is operative for Restricted hours when the employee is out of duty. Premium charged: 50% of appropriate premium. Individual Policy Yes Yes Yes Yes Yes No No No No No Group Policy No No Yes Yes No Yes (depending on the size of the Group) Yes Yes Yes Yes
Page 26 of 43
Chapter: 10
Subject: Health Insurance
Chapter Summary: 1 Health Insurance Policies: A) Medi-claim B) Cancer Policy C) Critical Illness D) OMP (Overseas Medi-claim Policy) 2 Sub Classification of Medi-Claim & OMP 3 Features (like Coverage, Conditions, Exclusions etc.)
Health Insurance (A) Medi-Claim OMPPolicy (C) Critical Illness (B) Cancer (D)
Mediclaim Individual Mediclaim - Group
B&H E&S CFT
(A) Medi-Claim
a) Medi-claim Individual :
Introduction: This is a Health Insurance Policy given to an Individual or a Family. Family means Insured, Spouse, 2 Dependent Children & 2 Dependent Parents of the Insured. Requirements:
a)
b)
Proposal Form: has to be filled up & the Declaration has to be signed. Age Limit: For children 3 months to 5 Years (provided one of the Parents are covered) For others 5 Years to 80 Years Medical Questionnaire: Required only in case of adverse medical history in respect of Diabetes, Hypertension, Chest pain or Coronary insufficiency or Myocardial infarction.
c)
Sum Insured (SI): Minimum Maximum Premium:
Rs. 15,000/Rs. 5,00,000/-
Premium depends on 2 factors SI & Age . Family Discount: 10 % discount on the Premium is given, if more than 1 member is covered.
Coverage: Basic Coverage Hospitalization Expenses: incurred due to illness or accident are payable as per the following heads: Room/Boarding Exp. Nursing Exp. c Fees of Doctors, Surgeons etc. Diagnostic Tests like Anesthesia, Blood etc. 1 Additional Coverage 1 2 3 Pre-Hospitalization: 30 days Post-Hospitalization: 60 days Tax Benefit: under Sec. 80 D of Income Tax Act Cumulative Bonus (CB): 5% increase of SI in every claim free year subject to max. accumulation of 10 claim free years. If there is a claim, the increased %age will be reduced by 10% of SI. However, the Basic SI will not be reduced. If the Policy is NOT renewed on the date of expiry, the Bonus will be lost. allows the Bonus, if the policy is renewed within 7 days from the date of expiry. Cost of Health Checkup: 1% on Avg. SI can be availed once Page 27 of 43
Hospital: is required to satisfy the criteria like registration with local authorities, Op. theater, qualified doctors & nursing staff round the clock, required No. of beds etc. 24 Hrs. Hospitalization : is required except in case of Dialysis, Chemotherapy, Radiotherapy, Eye/Dental Surgery etc.
Any one illness : means illness relapsed within 45 days from the day of last consultation. Domiciliary Hospitalization Expenses: Treatment taken at
7 days Grace Period: In exceptional cases, the Company

5
home for a period exceeding 3 days due to a) the critical condition of the patient b) no accommodation at the hospital Exclusions: Pre-existing diseases/injuries
in 4 years, if there are NO claims.
Waiting Period (first 30 days). This exclusion do not apply in case of accidents. Diseases excluded during the 1st Year Circumcision Cost of spectacles, contact lenses & hearing aids Dental treatment (unless hospitalized) Intentional self injury, use of intoxicating drugs etc. AIDS & related diseases Charges incurred for diagnostic, X-ray or laboratory examination Expenses on Vitamins & Tonics (Unless part of treatment) Pregnancy or child birth Naturopathy Treatment
Conditions:
Notice of Claim within 24 hours of hospitalization Claim documents to be submitted within 7 days Medical Practitioner authorized by Company shall be allowed to examine the insured person Treatment allowed only in India & all claims are payable in Indian Currency only Rule of Abandonment
Claims: Claims are serviced by TPA (Third Party Administrator).
b) Medi-claim Group :
Introduction: A Group Policy can be issued where o there is a common relationship among the persons to be insured
o
o o
there is a central point of administration of insurance scheme Insured (Company) is required to furnish a complete list of Insured Persons Additions/deletions during the currency of the Policy to be informed to Insurer
Categories of Groups: o Employer Employee o State/Central Govt. organizations o Co-operative Societies o Registered Service Clubs o Credit Card holders o Deposit Certificate holders of Banks etc. o Shareholders of Public Limited Companies etc. Differences between Individual & Group Policies: Benefits NOT available: 1) Cumulative Bonus
2)
Cost of Health Check-up
Additional Benefits available: 1) Group Discount: Depending upon the group size various discounts are offered.
2) 3) 4)

Bonus (Low Claim Ratio Discount): Discount is allowed on the Renewal Premium depending on the Incurred Claims Ratio. Malus (High Claim Ratio Loading): Loading is applied on the Renewal Premium depending on the Incurred Claims Ratio for adverse claims experience. Maternity Benefit: The Insured has to opt for this Benefit at the inception of the Policy Additional Premium has to be paid for opting this Benefit NO Refund is allowed if this benefit is cancelled during the currency of the policy Page 28 of 43
The Maximum Benefit allowed is Rs. 50,000/These Benefits are admissible only if the expenses are incurred in a Hospital Waiting Period: 9 Months. (Not applicable in case of accidents) Benefit allowed only for the first 2 children. Those already having 2 or more children are NOT allowed for the benefit. Expenses incurred for Voluntary Medical termination of Pregnancy during the first 12 weeks from the date of conception are NOT covered Pre-natal & Post-natal expenses are NOT covered, unless admitted in a hospital.
(B) Cancer Policy

Introduction: Policy granted to members of the Cancer Patients Aid Association (CPAA) A Proposal Form with a Declaration has to be submitted by the member The member has to undergo a Medical Check-up & attach the Report to the Proposal Form. The Premium is to be paid by the Insured to CPAA as part of the membership fee. Coverage: o If the insured contracts cancer during the currency of the policy, the Hospitalization Expenses are paid to the tune of SI. Only Allopathic mode of treatment is covered. o The concept of CB is similar to Medi-claim Exclusions: No Claim is payable
During Waiting Period (first 30 days) Unless investigation reveals positive presence of Cancer Contact with radiation or radioactivity Insured ceases to be a member of CPAA
Claims Procedure: o Notice of Claim within 30 days o Claim to be substantiated with supporting documents duly certified by CPAA o Claim reimbursement of medical expenses may be submitted on quarterly basis o Differences as to the claim are to be referred to the Committee set up by CPAA
(C) Critical Illness

Introduction: o A Critical Illness means one of the diseases mentioned in the Policy
o
o
It is a Benefit Policy rather than a Reimbursement Policy Since it is a Benefit Policy, the full SI is payable on diagnosis of Critical Illness subject to Policy conditions.
Special Conditions: o Waiting Period : 90 days from the inception of the Policy.
Survival Period : The insured has to survive for a minimum period of 30 days from the date of diagnosis of Critical Illness.
(D) OMP
Introduction: Policy given to Indian Residents going abroad for medical expenses incurred due to accidents or illness. Eligibility: Indian Residents (Purposes: Business, Holiday, Employment & Studies) Accompanying spouse & children of the Insured Foreign Nationals working for Indian Employers whose salary is paid in Indian Currency & they should go abroad on official visits only. Premium: The premium depends on Age of the Insured Duration of Stay Type of Plan
Page 29 of 43
Period of Insurance: Commencement First Day of Insurance (OR) Date of Departure, whichever is later Expiry Last Day of Insurance (OR) Return to India, whichever is earlier
Types of Policies: (Refer to Chart for comparative study) A) B & H (Business & Holiday) B) E & S (Employment & Study) C) CFT (Corporate Frequent Traveler) A) B & H (Business & Holiday) Medical expenses incurred outside India are payable Death or permanent disablement is directly caused by the bodily injury. Such death or permanent disablement should be caused within 12 months from the date of injury. Only the following are covered a) Death; b) Permanent Total Disablement; c) Loss of eyes/limbs. Loss of total Baggage checked in by an International Airline. Exclusions: Photographic, electrical equipment, computers etc Delay of more than 12 hours from the schedule arrival time at the destination for an International outbound flight from India. Documents required are a) Non-delivery Certificate by Airlines & b) Proof of Purchase. Actual expenses incurred for obtaining emergency travel documents in place of lost passport outside India Exclusions: * Loss due to confiscation by Customs or Police authorities * Theft which is not reported to police
Section A Medical Expenses & Repatriation Section B Personal Accident Section C Loss of Checked in Baggage Section D Delay of Checked in Baggage
Section E Loss of Passport
Section F Personal Liability
Accidental damage to 3rd party Property Exclusions: a) Less than deductible b) Arising out of animals belonging to Insured
Accidental bodily injury to 3rd parties
B)
E & S (Employment & Study)
1)

Section 1 Medical Sub Section A Medical expenses incurred abroad in respect of disease or injury, subject to maximum liability under the policy 52 weeks after the injury/sickness 12 weeks after the expiration of insurance Medical Expenses incurred in India, if the Insured is evacuated to India Max. Limit = US $ 500,000 Repatriation & Alternative Expenses: The expenses incurred for transportation to India the remains of the insured person Funeral expenses in the country of posting Max. Limit = US $ 8,000 Medical Emergency Reunion Expenses: Travel expenses to mother, father, spouse etc. for Cost of Economy Air Ticket Travel & Accommodation expenses Max. Limit = US $ 500,000 Applicable to Sponsored students only Claim is payable to the person who sponsors the Student, if the student is unable to continue due to death or disablement caused by sickness or injury Amount Payable = US $ 750 per month x No. of completed months of study
Sub Section B
Sub Section C
Sub Section D
2)
Insurance C)
Section 2 Contingency
CFT (Corporate Frequent Traveler) This Policy is granted to officials of Companies who frequently go abroad It is an Annual Policy, issued for 12 months, subject to a trip not exceeding 60 days Maximum Age Limit is 70 years In this case, B & H Policy is issued with CFT Endorsements attached
Page 30 of 43
Heads Age Grp.
B & H 6 months to 70 years o o o o o Section Section Section Section Section Section A-1 A-2 B-1 B-2 K
A Comparative Statement of OMP Policies E & S 1month to 60 years C (Excluding USA/Canada) D (Including USA/Canada) D-1 (Including USA/Canada)
CFT 18 to 70 years
Plans
(Excluding USA/Canada) (Excluding USA/Canada) (Including USA/Canada) (Including USA/Canada) (Asian Countries excl. Japan) A-1 A-2 B-1 B-2 K = US $ 50,000 = US $ 250,000 = US $ 100,000 = US $ 500,000 = US $ 15,000
E-1 (World wide) E-2 (World wide)
SI
o C = US $ 150,000 o D = US $ 150,000 o D-1 = US $ 500,000
o o
E-1 = US $ 100,000 E-2 = US $ 500,000
3)
Sec A Medical Expenses & Repatriation B Personal Accident C Loss of Checked in Baggage D Delay of Checked in Baggage E Loss of Passport F Personal Liability
Section 1 Medical Sub Section A Sub Section B Sub Section C Sub Section D
As per B & H Policy
4)
Section 2 Contingency Insurance Annual Policy
Max. Policy Period
180 days
180 days
Page 31 of 43
Chapter: 11 Chapter Summary: 1 Introduction to Liability Insurance 2
Liability Insurance
Legal aspects Various Liability Policies: PLI (Public Liability) Act Policy PLI Policy (Industrial/Non-Industrial Risks) Products Liability Lift Third Party Insurance Professional Indemnity D&O (Directors & Officers) Liability Policy WC (Workmens Compensation) or Employers Liability Policy
INTRODUCTION: Classification of Insurance on the basis of Subject matter of insurance:
Insurance
Insurance of Person of Property Insurance Insurance of Liability
Meaning of Liability: Liability means Responsibility. Liable means bound to do a certain thing or under an obligation. (e.g. every citizen is liable to pay tax else have to pay penalty). Legal Liability means specific responsibilities, which can be enforceable at Law. Policies available under Liability Insurance: Sr Policy Public Liability (PLI Policy) a) Act Policy 1. b) Industrial Risks Policy c) Non-Industrial Risks Policy Products Liability 2. Domestic Sales Exports Professional Indemnity Doctors Indemnity Medical Establishments 3. Engineers etc CA & FC Lawyers 4. Lift (TP) Insurance 5. 6. Employers Liability or Workmens Compensation (W.C. Policy) Directors & Officers Liability (D&O Policy)
Insured Vs. Claimant The Company Vs. General Public
Governed by Market Agreement
Manufacturer Vs. Consumer
Market Agreement
Professional Person Vs. Client
Market Agreement
Building Owner Vs. user of the Lift Employer Vs. Employee Director/Officer Vs. Victim
Market Agreement Tariff Non-Tariff
Differences between Liability Policies & Other Policies: Sr Liability Insurance 1. 3 Parties a) Insurer; b) Insured; c) Claimant or Victim 2. Claim money goes to Claimant 3. Insured is NOT the sufferer 4. NO Sum Insured concept but Limit of Indemnity is introduced.
Other Insurances (Insurance of Person & Property) 2 Parties a) Insurer & b) Insured Claim money goes to Insured Insured is the sufferer Sum Insured concept is available
What is covered in Liability Insurance? A) Compensation awarded at Law B) Legal Costs incurred by the Claimant C) Legal Costs incurred by the Insured (in defense of the claim with the written consent of the Company) Common Terminology in Liability Insurance: Limit of Indemnity AOA, AOY, AOP Policy Period Effective Date & Expiry Date Period of Insurance Retroactive Date & Expiry Date Limits of Indemnity: Insured has to choose AOA & Ratio. AOA (Any One Accident) 10 Lakhs Ratio 1:1 1:2 1:3 1:4 AOY (Any One Year) 10 Lakhs 20 Lakhs 30 Lakhs 40 Lakhs
Period of Insurance: Insured has to choose AOA & Ratio. Year of Insurance Policy Period Compiled by: Kamalakar. T
Period of Insurance Page 32 of 43
1st year 2 nd year 3 rd year LIABILITY POLICIES:
Effective Date 01/01/2000 01/01/2001 01/01/2002
Expiry Date 31/12/2000 31/12/2001 31/12/2002
Retroactive Date 01/01/2000 01/01/2000 01/01/2000
Expiry Date 31/12/2000 31/12/2001 31/12/2002
Public Liability Act Policy (PLI Act, 1991): Features PLI Act Policy The Claimant need not prove that the death, injury or damage was due to any wrongful act, neglect or default of 1. No Fault Liability any person a) Fatal Accident (Death) Rs. 25,000/b) PTD (Permanent Total Disability) Rs. 25,000/c) PPD (Permanent Partial Disability) Amount depends on % of disability (as certified by an authorized 2. Relief payable physician) under Section III d) TPD (Temporary Partial Disability) Rs. 1,000/- pm up to a maximum of 3 months (provided the victim i) has (of PLI Act) been hospitalized for a period exceeding 3 days & ii) above 16 years of age) e) Actual Medical Expenses Max. of Rs. 12,500/f) Property Damage up to Rs. 6,000/Compulsory insurance only for those companies handling hazardous substances under the Act. If it is a Company, Policy to be taken for an amount not less than the Paid-up capital If it is not a Company, Paid up capital = Market Value of Assets + Stocks 3. Compulsory Insurers Liability in a single accident = 5 crores Insurance Insurers Liability in more than 1 accident or in a year = 15 crores
e) Insured has to pay towards Environment

4. Exemptions
Relief Fund (ERF), an amount equivalent to total premium If the loss exceeds the amount payable under the policy, it will be paid from the ERF All Central/State Govt. bodies or Local Authorities provided they maintain a Public Liability Insurance Fund of Rs. 5 crores or amount equivalent to their paid up capital. A. Indemnity Premium = Limit of Indemnity (AOA) x Rate/1000 = XXX B. Turnover Premium = Annual Turnover x Rate/1000 = XXX ----------C. Total Premium = = XXX D. ERF (Environment Relief Fund) Premium = XXX (Note: ERF Premium should be equal to Total Premium under C -----------E. Grand Total = XXXX Statutory Liability arising out of accidents due to handling of hazardous substances a) willful or intentional non-compliances of statutory provisions b) fines, penalties, punitive or exemplary damages c) Liability arising under any other Legislation d) Property owned, leased by the Insured (Insured can have a separate material damage policy) e) War & Nuclear Risks NO liability under the policy, if the claim is made after 5 yrs of accident Keep a record of Annual Turnover & declare it at the time of renewal The Co. is NOT going to pay any claim if the claim is fraudulent or there has been nondisclosure of material facts a) Application for claim must be made within 5 years of occurrence of accident b) Collector is the authority to hold an enquiry & give the award c) The Insurer is required to deposit the award money with the Collector within 30 days of the announcement of award.
5. Premium
6. Coverage 7. Exclusions
8. Conditions (Special)
5. Claims Procedure
Public Industrial & Non-Industrial Risks Policy: Features PLI Industrial & Non-Industrial Risks Policy 1. Industrial Risks? All manufacturing units (including godowns & warehouses) 2. Non-Industrial Non-manufacturing Units (like Cinema Halls, Auditoriums, Houses, Offices etc.) Risks? 3. Cover Legal Liability arising out of accidents during the Policy Period Products Pollution 4. Exclusions Transportation of hazardous substances (Add on cover) Injury to Employees (can be covered under WC Policy) 5. Premium Rates depend upon a) Risk Group; b) Limit of Indemnity; c) Ratio; d) Turnover Risks are categorized into 4 groups. A. Indemnity Premium = Limit of Indemnity (AOA) x Rate/1000 = XXX B. Turnover Premium = Annual Turnover x Rate/1000 = XXX Compiled by: Kamalakar. T Page 33 of 43
C. Total Premium
-----------= XXX
6. Excess
Products Liability: Features
Industrial Risks: .50% of AOA (Minimum Rs 2000/- & Maximum Rs. 3 Lacs) Non-Industrial Risks: .25% of AOA (Minimum Rs 1000/- & Maximum Rs. 1 Lac)
1. Cover
2. Exclusions
3. Premium 4. Excess
Professional Indemnity: Features
Products Liability Policy Legal Liability arising out of use of defective product. For instance, if a defective product (eg. Medicine) causes death, illness or bodily injury to a person, the manufacturer is legally liable to pay compensation. Such compensation amount can be recoverable under the policy. o Cost of repair, reconditioning etc. o Product guarantee o Efficacy risk o Recall of product Rates depend upon a) Class of Risk; b) Limit of Indemnity; c) Ratio; d) Turnover Products are categorized into 7 groups. Rates are higher for Exports compared to Domestic Sales. Domestic Sales: .50% of AOA Exports: 1% (with a minimum of Rs. 4000/-)
1. Cover
2. Exclusions
Professional Indemnity Policy Legal Liability arising out of negligence in performance of professional duties. Eg: Doctors, Medical Establishments, Engineers, Architects, CA, Lawyers, Advocates etc. o Violation of Law o Services rendered under the influence of intoxicants o TP Liability o AIDS o Cosmetic Surgery, Plastic Surgery etc. Rates of Premium are charged as a Rate per Mille (%o) on AOY. For Medical establishments premium for per in-patient/out-patient is charged. Doctors Policy: NIL Others: As applicable.
3. Premium 4. Excess
D&O Policy: Features
1. Cover
D& O Policy Personal Civil Liability of Directors & Officers. They are responsible for shareholders, employees, creditors etc. They may have to pay compensation for wrongful acts committed by them in the supervision & management of Co. affairs. NOTE: The Policy indemnifies them only if the claim is against the officers but not against the Company.
Employers Liability (WC) Policy: Features Employers Liability or Workmens Compensation 2 Covers Table A and Table B Cover. 1. Cover Table A Only those employees who come within the definition of workmen Table B employees who are NOT workmen under the Act There is NO Sum insured or Limit of Indemnity under the Policy as the limit is based on the courts verdict as per 2. SI the WC Act. WC Tariff groups various trades according to the hazard involved. Premium depends on the earnings of employees. Since the total earnings cannot be computed at the commencement of the policy, premium is charged 3. Premium on estimated total earnings. At the end of the policy, again the premium is computed basing on the actual earnings and the premium adjustment is made. Occupational Diseases (mentioned in the WC Act) 4. Extensions Medical Expenses Liability for Contractors workmen
Page 34 of 43
A Comparative study of Liability Insurance Policies:

Sr
Policy
Insured Vs. Claimant The Company Vs. General Public
Governed by Market Agreement
Limit of Indemni ty 1) 2) 3) 4) Yes Yes
Exclusions Products Pollution Transportation Injuries to Employees
Extensions (extra premium) a) Pollution b) Transportation
Excess (Y/N)
1.
PLI Policy Act Policy Ind.Risks Policy NonInd.Risks Policy Prod. Liab. Domestic Sales Exports
1a) 1b)
-- NO -.50% of AOA (Min.2,000 Max 3 lacs) .25% of AOA (Min.1,000 Max. 1 lac) 1) Repair/recondi tioning 2) Guarantee/War ranty 3) Efficacy risk 4) Recall .50% of AOA 1% of AOA (Min.4,000) (for USA & Canada Only)
1c)
Yes
2.
Manufacturer Vs. Consumer
Market Agreement
Yes
3. 3a)
Prof. Indem. Doctors Indemnity Medical Establishmen ts Engineers etc CA,FC etc. Lawers etc. Lift Insurance W.C. Policy D&O Policy
Professional Vs. Client
Market Agreement
Yes
As in PLI Industrial Risks Pol 1) AIDS 2) Cosmetic surgery -- NO --
3b)
-- NO --
3c) 3d) 3e) 4.
-- Yes --- Yes --- Yes -Building Owner Vs. user of the Lift Employer Vs. Employee Director/Office r Vs. Victim Market Agreement Yes ---a) Occupational diseases b) Medical exp c) Contractors workmen -- NO --
5.
Tariff
NO
-- NO --
6.
Non-Tariff
Yes
-- NO --
Page 35 of 43
Chapter: 12 Subject: Engineering Insurance Chapter Summary: 1 Introduction to Engineering Insurance Various Engineering Policies: CAR Vs. EAR (Contractor All Risks & Erection All Risks) MCE Marine-cum-Erection MB/MI Machinery Breakdown/Machinery Insurance 23 CPM Contractors Plant & Machinery BPP Boiler & Pressure Plant Insurance DOS (Deterioration of Stocks (Other than Potatoes)) DOS (P) (Deterioration of Stocks (Potatoes)) EEI (Electronic Equipment Insurance) 3. Sub-contractor
Introduction: Engineering & its branches (e.g. Civil, Mechanical etc.) Evolution of Engineering Insurance: Boiler explosions in UK Parties involved: 1. Principal/Owner; 2. Contractor;
Features Common to all Engineering Policies:

I. Construction Phase Phases/Policies 1) General Exclusions 2) General Conditions 3) Basis of Fixing SI 4) Basis of Indemnification 5) Excess Clause 6) Claims Procedure CAR EAR/ SCE MCE II. Operation Phase MB/ MI CPM BPP III. Miscellaneous DOS DOS (P) EEI
7) Period
8) Renewal
Project Period (Time required for completion of the project as specified by the Insured). Extn. Of period possible on payment of addl. Prem. One Time Policies
Annual Policies
Annual Policies. (Short period policies can be issued in respect of DOS & DOS (P)). Can be Renewed
Can be Renewed
I. Construction Phase Policies (CAR, EAR & MCE):

CAR & EAR Policies: Features CAR Policy Civil Engineering projects (Buildings, bridges etc. in course of construction ) Buildings, bridges, roads, dams, tunnels, irrigation, drainage, sewer systems, railways, runways of airports, harbours etc. A) Basic Coverage: Property described in the schedule. Cover is on All Risks basis (i.e. Covers all perils other than those specifically excluded). B) Supplementary Coverage: 1) Debris removal 2) Construction Plant & Mach 3) Surrounding Property 4) TP Liability 5) Addl. Exp (OT, work on public holidays, express freight etc) 6) Increased replacement value 7) Addl. Exp for Air freight 8) Addl. Customs Duty Section I : (Material Damage Section ) EAR Policy Plant, Machinery & equipment in course of erection All Plant & Machinery like Boilers, Transformers, switchgears, compressors, machinery for manufacturing purpose, tanks, oil refinery plants, blast furnaces etc.
1. Issued to 2. Insurable Property
A) Basic Coverage: Property described in the schedule. Cover is on All Risks basis (i.e. Covers all perils other than those specifically excluded). B) Supplementary Coverage: 1) Debris removal 2) Construction Plant & Mach 3) Surrounding Property 4) TP Liability 5) Addl. Exp (OT, work on public holidays, express freight etc) 6) Increased replacement value 7) Addl. Exp for Air freight 8) Addl. Customs Duty
3. Coverage
4. Policy Sections
Section I : (Material Damage Section ) Page 36 of 43
Covers both the A) Basic Coverage as well as B) Supplementary Coverage except TP Liability. Section II: (TP Section ): Covers a) b) c) Compensation awarded at Law (for death/bodily injuries/property damage caused to third parties) Legal Costs (incurred by Claimant) Legal Costs (incurred by the Insured)
Covers both the A) Basic Coverage as well as B) Supplementary Coverage except TP Liability. Section II: (TP Section ): Covers a) b) c) Compensation awarded at Law (for death/bodily injuries/property damage caused to third parties) Legal Costs (incurred by Claimant) Legal Costs (incurred by the Insured)
MCE Policies: It is a composite policy (Combines the covers of Marine + EAR Policies) Cover is continuous and uninterrupted (Cover starts from the moment equipments leave the manufacturers premises & continues during the voyage till the port of destination, unloading at the port, inland transit to the site of erection including incidental storage & thereafter during erection, testing & commissioning) Time Limits imposed by Marine Policies can be deleted or extended on payment of additional premium. Under Marine Polices, on vehicle reaching the destination, the cover expires after the time limits imposed for various modes of transit. The Time Limits for various modes of transit are 1. Water Transit 60 days 2. 3. Air Transit Rail/Road Transit 30 days 7 days
Under Marine Policy, cover expires if the goods are delivered at an intermediate port but coverage can be provided under an MCE Policy on payment of additional premium War & SRCC covers can be provided (War coverage is only for Ocean Voyage)
Disadvantages of taking 2 separate policies (Marine & EAR): Time Limits: Cover under Marine Policies expires after 60 days of arrival of vessel at the port of entry or delivery at the site whichever occurs earlier. But due to customs clearance or non-availability of railway wagons or other modes of transport, equipments cant be cleared from the port.
Storage Insurance required: While the goods are lying in a warehouse against risks of fire & burglary. Separate Inland Transit Policy required: while the goods are being transported from the port to the site of erection
Survey required before commencement of EAR Policy: Before the EAR policy is issued, a survey of the goods is required to confirm that there is no claim under the Marine Policy. To avoid all these problems, MCE policy has been devised.
II. Operation Phase Policies (MB & BPP):

MB/MI Policies (Machinery Breakdown/Machinery Insurance): Features MB/MI Policy 1. Issued to Owners of Plant & Machinery g) Boilers with auxiliaries such as strokers, fans, blowers, oil firing equipment h) Electrical Equipment including alternators, generators, motors, rectifiers, switchgears & transformers 2. Insurable Property i) Mechanical Plant such as engines, turbines, blowers, compressors, pumps, machine tools etc. j) Lifting equipment such as cranes, conveyors & lifts Covers unforeseen & sudden physical damage to insured property While it is at work or at rest While being dismantled for cleaning & overhauling During cleaning or overhauling operations When being shifted within the premises During subsequent erection
3. Coverage
a) Electrical Breakdowns :
protection circuits
such as short circuits, arcing, failure of insulation, malfunctioning of control &
4. Perils covered
b) Mechanical
Breakdowns : such as faulty material, faulty design, faulty casting, vibration, maladjustment, loosening of parts, abnormal stress, centrifugal force, explosion due to internal/external pressure etc. such as entry of foreign bodies, impact, collision etc.
c) External Sources :
Page 37 of 43
Fire & Special Perils: Perils covered under Fire Policy are excluded Explosion:
External Fire (Note: Internal Fire due to electrical faults is covered) Fire spreading from an adjacent machine
5. Exclusions
The risk of External Explosion taking elsewhere in the vicinity affecting the insured item is NOT covered
as it is the scope of Fire Insurance
Internal Explosion caused by gas, steam liquid due to internal pressure is covered
General Exclusions: As stated above BPP Policies (Boiler & Pressure Plant Insurance): Features 1. Issued to Owners of Boilers & Pressure Plants
Items subject to centrifugal force or internal pressure are covered (they are excluded under Fire Policy)
BPP Policy
2. Insurable Property
Boilers & Pressure Plants in which steam is generated. Eg. Paper mills, cotton mills, fertilizers, petrochemicals etc. and driving machinery like in thermal power plants it is used to drive turbines for the generation of electricity. Covers Explosion or Collapse of the insured boilers resulting in Damage to the insured item Damage to the surrounding property TP Liability
3. Coverage
1.
o
Fire & Special Perils: Perils covered under Fire Policy are excluded
o
4. Exclusions
o 2.
External Fire (Note: Internal Fire due to electrical faults is covered) Fire spreading from an adjacent machine Explosion: o The risk of External Explosion taking elsewhere in the vicinity affecting the insured item is NOT covered as it is the scope of Fire Insurance o Internal Explosion caused by gas, steam liquid due to internal pressure is covered
General Exclusions: As stated above Annual inspection by Boiler Inspectorate Handling by certified attendants Maximum pressure on safety valve
3.
5. Warranties

III. Other Annual Policies (DOS & EEI): DOS & DOS (P) Policies (Deterioration of Stocks): Both the policies are Consequential Policies These policies can be issued only in conjunction with an MB (Machinery Breakdown) Policy Features 1. Issued to DOS Policy Owners of Refrigeration Plants & Cold Storage Units All edible food items (other than potatoes) such as sea foods like fish, prawns, frog legs etc., fruits, dairy products like milk, butter, cheese etc. in cold storage units Deterioration or putrefaction or contamination of the contents of cold store due to 1. Rise in temperature resulting from: a. Breakdown of refrigeration plant b. Damage to plant & equipment by an accidental cause (covered by an MB Policy) 2. Refrigerant escaping from the plant DOS (Potatoes) Policy Owners of Refrigeration Plants & Cold Storage Units Potatoes in cold storage units Deterioration or putrefaction or contamination of the contents of cold store due to 2. Rise in temperature resulting from: a) Breakdown of refrigeration plant b) Damage to plant & equipment by an accidental cause (covered by an MB Policy) 2. Refrigerant escaping from the plant
3. Coverage
EEI Policies (Electronic Equipment Insurance): Features 1. Issued to Owner, lessor or hirer of Electronic Equipments Compiled by: Kamalakar. T
EEI Policy
Page 38 of 43
All Electronic Equipments, in particular, computer installations. [Electronic Equipments = Main Components + Peripherals + Auxiliary Units ] Main Components like CPU, Motherboard, RAM Chips, HDD, Software etc Peripherals like Monitors, Keyboards, Mouse, Printers etc. Auxiliary Units like UPS, air-conditioners, heating & power conversion units. Examples of Electronic Equipments : EDP equipment Electro medical equipment Equipment for R&D Equipment for telecommunication & navigation Equipment for signal transmission etc. Excluded Equipment : Dish Antenna Laptop computers Video Projectors Sonography equipment etc. (Note: Special Contingency Policy can be issued for the above mentioned Excluded Equipment ) Basic/Compulsory Coverage: Section 1 (Equipments Section) Optional Coverage: Section 2 (External Data Media) Section 3 (Increased Cost of Working ICOW) Section I (Equipments Section): Provides cover to the Equipments against any unforeseen & sudden physical loss. Cover is on All Risks basis (i.e. Covers all perils other than those specifically excluded) Section II (External Data Media): External Data Media means all magnetic media, which is external to computer systems such as Floppy disks, Hard disks, Magnetic Tapes, CDs etc. Provides cover for Physical loss of Data Media (like floppies etc) The data stored on the media (cost incurred for reproducing the data) Section III (ICOW Increased Cost of Working): Provides cover for additional costs incurred due to hiring of substitute equipment, man power, extra man hours etc.
3.
Coverage
4.
Policy Sections
Page 39 of 43
Chapter: 13 Chapter Summary: Policies o Burglary o All Risks o Baggage o Money o Fidelity Guarantee o TV o Pedal Cycle o Plate Glass o Neon Sign o Householders o Shopkeepers o Bankers Blanket o Jewellers Block o Blood Stock
Subject: Miscellaneous Insurance Summary of the Chapter
Burglary (All Property is covered against Theft by actual, forcible & violent entry into the premises) All Risks (Covers Jewellery, valuables & antiques) Baggage (Only accompanied baggage covered) Money (Money moving between specified locations) Fidelity Guarantee (Loss caused by the acts of dishonesty of employees against Employer) TV (TV apparatus & antenna and TP Liability covered against fire etc ) Pedal Cycle (Loss of cycle) Plate Glass (Fixed Plain Glass against breakage) Neon Sign (Neon sign boards) Householders (10 sections provided for various coverages) Shopkeepers (10 sections provided for various coverages) Bankers Blanket (Money & Securities of Banks) Jewelers Block (4 sections covering various risks) Blood Stock (Covers Race Horses)
Comparative Statement of Householders & Shopkeepers Householders Sec Property/Perils Covered Buildings & Contents Perils Covered: All 12 Perils of Fire Policy are covered EQ (Fire & Shock )is also covered Contents Only Perils Covered: Burglary, Housebreaking, Larceny or Theft. All Risks Property Covered: Jewellery & Valuables Plate Glass Fixed Plate Glass (by accidental means) only Breakdown of Domestic Appliances Perils: Sudden Physical Damaged caused by Electrical/Mechanical breakdowns Television Set Perils: Fire & Allied Perils, Burglary, Mechanical & Electrical Breakdowns, Accidental external means Pedal Cycle Perils: a) Fire & Allied Perils and Burglary b) TP Liability Baggage Accompanied Personal Baggage only is covered. PA (Insured & his family Members) Provides cover against Death & Disablement. Fixed amounts are payable as per the Table of Benefits. Liability
Shopkeepers Property/Perils Covered Buildings & Contents Similar to Householders except in the following Money & Valuables are NOT covered Bush Fire, Leakage from Sprinklers, Missile Testing perils are NOT covered Contents Only Money & Valuables are NOT covered Larceny or Theft is NOT covered. Money Money in Transit Money in locked Safe Money in Cashiers till or counter Pedal Cycles Similar to Householders Plate Glass Similar to Householders Neon Sign/Glow Sign Perils: Fire & Allied Perils, Accidental external means Baggage Personal Baggage + Official Baggage of Insured & his employees is covered. PA (Insured & his employees) Similar to Householders Fidelity Guarantee Financial Loss caused by fraud or dishonesty of salaried employees Liability Similar to Householders
4 Coverage 5 6 7 8 9
a)
10
Compensation & Legal Expenses payable by the Insured to 3 rd Parties
b)
11 Features 2 3 NIL
Compensation payable by Insured to Employees as per WC Act, Fatal Accidents Act & Common Law
Business Interruption (LOP) - same as householders -
Section 1 is compulsory Section Discount: > 4 Sections = 15% > 6 Sections = 20%
Page 40 of 43
Chapter: 14 1) Obligations to Insurers: 1st Year 2% of Gross Premium 2nd Year 3% of Gross Premium Subsequent Years 5% Rural Policies
Subject: Rural Insurance
Rural Policies 1. Livestock 2. Sub-animals 3. Plantation & Horticulture
4. Property
5. Persons
1Cattle, Sheep, goat 3.a) Subrogation 3.b) Contribution
I. Livestock
1) Cattle Insurance: a) Type of Cattle: Milch Cows, Buffaloes, Stud Bulls, Bullocks b) Coverage: Death due to Accident (incl. natural calamities), Diseases, Surgical operations, Riot & Strike c) Add-on: PTD d) Exclusions: Neglect, overloading, unskillful treatment, use of animal for purpose other than stated in the policy, accidents occurred prior to commencement of risk, theft, sale of animal, transport by sea/air. e) Special conditions: Waiting period: 15 days and Ear Tags. f) Claims: Claim form, death certificate, postmortem report, Ear tag g) SI: MV recommended by Veterinarian. h) Premium: Indigenous / cross-bred : Low. Exotic animals: High. 2) Sheep & Goat Insurance: a) Coverage: Death due to Accident (incl. natural calamities), Diseases, Surgical operations, Riot & Strike c) Add-on: PTD d) Exclusions: Neglect, overloading, unskillful treatment, use of animal for purpose other than stated in the policy, accidents occurred prior to commencement of risk, theft, sale of animal, transport by sea/air. e) Special conditions: Waiting period: 15 days and Ear Tags. f) Claims: Claim form, death certificate, postmortem report, Ear tag g) SI: MV recommended by Veterinarian. h) Premium: Indigenous / cross-bred : Low. Exotic animals: High. 3)Poultry Insurance: a) Type Layers, broilers & parent stock (hatchery) exotic & cross breed only. b) Coverage: Death due to Accident (incl. natural calamities), Diseases c) Exclusions: theft, sale of animal, transport by sea/air, improper management (incl. over crowding), natural death d) Claims: Claims exceeding the excess limit. Eg. 5% of population of birds. e) Discounts: 1)Resident Veterinary Doctors, dead bird disposal system, good distance of sheds
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f) underwriting considerations: 1) all birds in the farm should be insured. 4) Others: Dogs, Elephants, Pigs, Rabbits, Zoo & Circus animals & birds.
II. Sub-Animals
1) Silk worm Insurance: a) Coverage: Death due to Accident or Diseases (only Total Loss is covered) b) Valuation: by Sericulture Officer c) Claims: Claim form + Mortality Certificate by Dept. of Sericulture 2) Honey Bee Insurance: a) Covered: Hives & bee colony belonging to individual or co-operative society b) Coverage: accidental loss or damage c) Add-on: Theft d) Exclusions: Neglect or improper management, natural mortality
III. Horticulture & Plantation

Horticulture Crops Grape, Citrus, Chikoo, Pomegranate, Banana Plantation Crops Rubber, Eucalyptus, Poplar, Teakwood, Oil Palm plantations, Sugarcane, Tea, all types of trees
Insured: Farmer or tenant engaged in cultivation, Association or registered body of farmers Coverage: Loss or damage to crop by fire, lightning, storm, Water damage perils, RSMD, Terrorism
III. Horticulture & Plantation

1) Agricultural Pump Sets: a) Property: Centrifugal Pump sets (electrical & diesel) b) Coverage: unforeseen & sudden physical damage to pump sets by fire, lightning, RSMD, Terrorism, mechanical, electrical breakdowns, burglary c) Add-on: Flood risk d) Discounts: Group policies, long term and for no-claim. 2) Salt works Insurance: a) Property: Salt stored on platforms against storm, cyclone, flood etc. 3) Cycle Rickshaw Insurance: a) Coverage: As per pedal cycle policy 4) Animal driven cart Insurance: a) Coverage: Damage to cart + death or pd to animal + TP + PA + Towing Charges
3) Hut Insurance: a) Coverage: Huts in rural areas financed by Banks / cooperative society / govt. etc. b) Coverage: Fire & allied perils
IV. Person
1) JPA:
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2) GPA 3) Farmers Package: 4) Tribal Package:
Chapter: 15
Subject: Claims
Chapter Summary: Claims Procedure: 1. Notice of Loss Claims Procedure 2. Investigation & Assessment Sr Policy Insured Vs. Claimant 3. Claim Documents 1 4. 1. Notice Arbitration Notice to Insurer: Insured has to intimate the Loss to the Insurer immediately. 5. Settlement Notice to Others: like Police, Carriers etc. 6. Salvage 2. Investigation & a) Investigation: Insurance Company would investigate whether the loss is a 7. Recoveries Assessment real one or bogus one. Small Claims: are investigated by Insurance Company officials. Major Claims: are entrusted to Licensed Professional Surveyors. b) Assessment: Insurers assess the claim to arrive at the Claim amount payable. c) Surveyors & Loss Assessors: Surveyors are granted licenses by IRDA to conduct surveys in 7 Classes of Insurance (Fire, Marine Cargo, Marine Hull, Engineering, Motor, Miscellaneous and LOP). In Marine Insurance, General Average (GA) losses are assessed by Average Adjusters. Claim Forms: Claim forms are designed to elicit information regarding loss 3. Claims Documents such as Date & Time of Loss, Cause of Loss, Extent of Loss etc. Arbitration is a method of settling disputes arising out of contracts as per the provisions of the Arbitration & Conciliation Act, 1996. But all claims cannot 4. Arbitration be referred to arbitration. Only disputes regarding the quantum (amount) of claim can be referred to Arbitration. If the claim is found to be in order, payment is made to 1) Insured: 2) Banker: If the policy is subject to Agreed Bank Clause 5. Settlement 3) Financier: In case of Total Loss, if the policy is subject to Hire Purchase Agreement 4) Claimant: In case of Marine, whosoever produces the policy gets the claim amount Property partially saved from loss is known as salvage. On payment of loss, it 6. Salvage belongs to Insurer. As per the Subrogation clause, the Insurers get the rights to recover losses 7. Recoveries from third parties who are responsible for the losses. Eg. Railways, Shipping Companies, Port Authorities.
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Summary of Chapters

2 Fundamental Principles of Insurance

II (Insurable Interest) Indemnity Subrogation & Contribution PC (Proximate Cause)

Legislative & Regulatory Matters

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

bought in the Market. The Two important Features of an Asset are

Monitory Value (Money) Expected Lifetime (Time)

Compiled by: Kamalakar. T

Principles of Insurance 1. Utmost Goodfaith 2. Insurable Interest 3. Indemnity 4. Proximate Cause

When Insurable Interest must Exist?

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Certificate of Insurance Endorsement Renewal Notice

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Compiled by: Kamalakar. T

AOG Perils : 5% of claim subject to a minimum of Rs.10, 000/-

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

Exports & Imports

Transit within the country

Marine Cargo Insurance

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Used in Sea Transit Air Transit Rail/Road Transit

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III. Inland Transit (Rail/Road) Clauses: A. Risks Covered: Sr 1 2

Perils Covered Fire Lightening

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Special Declaration Policy

1.1 Actual Total Loss

1.2 Constructive Total Loss

2.1 Particular Average

2.2 General Average

Sue & Labour Charges

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4 Rating 1) Private Cars 5 Claims

a) Goods Carrying Vehicles

Types of Losses: a) Loss/Damage to the Vehicle & b) TP Liability

Compulsory Insurance Insurance of Motor Vehicle is NOT Compulsory

Insurance of 3 rd Party Liability arising out of use of Motor Vehicle is Compulsory.

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

CSI Rs. 1 Lakh Rs. 2 Lakhs

Premium Rs. 50/Rs. 100/-

Transfer of Policy to Legal Heirs:

Compiled by: Kamalakar. T

Compiled by: Kamalakar. T

Extra Benefits (@ Addl. Premium)

(B) TP Claims a) MACT Claims b) Compromise c) Lok Adalat

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Compiled by: Kamalakar. T

Personal Accident (PA) Insurance

Extensions (at Extra Premium)

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Subject: Health Insurance

Mediclaim Individual Mediclaim - Group

B&H E&S CFT

Sum Insured (SI): Minimum Maximum Premium:

Rs. 15,000/Rs. 5,00,000/-

7 days Grace Period: In exceptional cases, the Company

Compiled by: Kamalakar. T

in 4 years, if there are NO claims.