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IntroductIon:

Concept oI rIsk pooIIng:


Fisl pooling is sIarcd sclf-insurancc" wiiI cacI pariicipaiing cniiiy agrccing io pay iIcir proporiional sIarc of iIc
financial risls proiccicd ly iIc risl pool. Ii is a coopcraiivc group joining iogciIcr io financc an cposurc, lialiliiy, or
risl. Fisl may includc propcriy and lialiliiy, worlcr's compcnsaiion, or cmploycc IcaliI carc."
EIements oI pooIIng:
W Fisl sIaring among a Iomogcnous group
W Cosi conirol.
W Commiimcni io risl managcmcni io minimizc claims.
W Long icrm sialiliiy
W Conirol ovcr iIc iypc and amouni of covcragc
W Conirol ovcr invcsimcni incomc
W TIc largcr iIc group of pariicipanis iIc lowcr iIc cosi
Firc Ias scrvcd iIc Iuman racc wcll sincc iIc dawn of Iuman Iisiory. Ai iIc samc iimc ii also Ias lccn iIc causc of
dcsiruciion io loiI propcriy and pcoplc. As firc iIrcaicns almosi cvcry Iuman aciiviiy, insurancc againsi firc was
dcvclopcd carlicr iIan mosi oiIcr lincs of insurancc.
In firc insurancc, iIc Insurcr (i.c. insurancc companyi and Insurcd (i.c. an individuali cnicr inio a lcgal coniraci.
TIc Insurcd pays a prcmium io iIc Insurcr and in rciurn iIc Insurcr assurcs iIc Insurcd io compcnsaic Iim againsi
iIc losscs or Iazards mcniioncd in iIc coniraci.
TIc Insurcd Ias an insurallc inicrcsi in iIc suljcci maiicr (i.c. somc propcriy or lifc of ccriain individuali. TIis mcans
iIai iIc Insurcd siands io gain if iIc suljcci maiicr is proiccicd againsi iIc Iazards and will siand io losc if any
damagc is causcd io iIc suljcci maiicr. In icrms of maicrial damagc iIc cvidcncc of pIysical loss, dcsiruciion, or
damagc is olvious.
TIc cIarrcd rcmains from a firc, iIc collapscd ccilings from a siorm, iIc soggy carpcis from a flood arc clcar camplcs
of pIysical damagc. AnoiIcr similar camplc is iIc impaci of smolc wIicI coniains acidic gascs, carlon dcposiis,
vaporizcd plasiics and oiIcr unlnown maicrials. Oncc ii is dcposiicd on propcriy iIc propcriy will lccomc pIysically
damagcd io a ccriain cicni sincc iIc dcposiis lcfi on iIc propcriy may causc somc laicni dcicrioraiion and damagc io
iIc propcriy.
TIus rcsuliing inio a nccd for purcIasc of firc insurancc policy.
IstorIcaI Background:
TIc conccpi of firc insurancc originaicd in Ccrmany wIcrc ii was iniroduccd in municipaliiics for providing
compcnsaiion io owncrs of iIc propcriy, in rciurn for an annual coniriluiion, lascd on iIc rcni of iIosc prcmiscs.
TIc firc insurancc in iis prcscni form siaricd aficr iIc mosi disasirous firc in Iuman Iisiory lnown as ' TIc Crcai Firc
' in London wIicI dcsiroycd scvcral luildings. Ii drcw iIc aiicniion of iIc pullic and iIus iIc firsi firc insurancc policy
was commcrcially iransacicd in 1667. TIc Indusirial Fcvoluiion ( 1720-1850i gavc mucI impcius io firc insurancc. TIc
19
iI
ccniury marlcd iIc dcvclopmcni of firc insurancc.
Ire Insurance In IndIa:
Firc insurancc scIcmcs wcrc siaricd in India during iIc DriiisI rcgimc. TIc carly playcrs in iIc indusiry includcd iIc
Sun Insurancc officc, Calcuiia ( 1710i, London Assurancc and Foyal EcIangc Assurancc ( 1720i, PIocni Assurancc
Company ( 1782i cic.
Ai prcscni, major proporiion of firc insurancc lusincss is in Iands of Ccncral insurancc corporaiion of India and iis
four sulsidiarics and oiIcr privaic insurancc companics. TIcrc arc fcw privaic playcrs wIo arc wcll lnown in iIc
lusincss. Firc insurancc is onc of iIc corc insurancc policics in iIc propcriy insurancc scgmcni. TIcrc arc somc of
rcnowncd Indian Privaic playcrs wIo Iavc lind of csiallisIcd iIcir nicIc in iIis scgmcni namcly, TATA AIC now HDFC
Ergo, io iIc iunc iIai AIC Ias major poriion of iIcir insurancc lusincss iIrougI propcriy rclaicd insuranccs.
A lusincss mi for ycar 2008-09 of iIc 2 companics mcniioncd alovc can lc sIown lclow.
Tata AIg BusIness MIx C Ergo BusIness MIx
Segment
In INR
crores Segment
In INR
crores
Ire 160 Ire 50.75
MarIne 111.47 MarIne 7.78
EngIneerIng 35.04 EngIneerIng 11.01
Motor 249.43 Motor 156.25
eaItb 78.95 eaItb 45.5
AvIatIon 0 AvIatIon 1.83
LIabIIIty 115.6 LIabIIIty 32.86
PersonaI
accIdent etc. 117.95
PersonaI
accIdent etc. 6.03
AII otbers 13.58 AII otbers 27.47
Firc forms almosi 18% in Taia Aig Dusincss Mi wIcrc as ii
forms almosi 14% in HDFC Ergo lusincss mi. TIis sIarc is
iIc IigIcsi aficr moior insurancc.
oIIowIng are Iew key dates In IIre bIstory In IndIa:
14
tb
AprII 1944: Harlor cplosion in Domlay. TIc Bombay ExpIosIon (or Domlay Docls Eplosioni occurrcd on 14
April 1944, in iIc Vicioria Docl of Domlay (now Mumlaii wIcn iIc SS Fori Siilinc carrying a micd cargo of coiion
lalcs, gold, ammuniiion including around 1,400 ions of cplosivcs ,oil larrcls, scrap iron cic. caugIi firc and was
dcsiroycd in iwo giani llasis, scaiicring dclris, sinling surrounding sIips and lilling around 800 pcoplc.
2?
tb
ec 19?S: Minc cplosion in CIasnala. CbasnaIa mInIng dIsaster is a disasicr in 1975 in a coal minc in
CIasnala ncar DIanlad in Indian siaic of JIarlIand . TIc cplosion in iIc minc followcd ly flooding lillcd 372
mincrs. TIc caving in of a roof of coal lci in scvcn million gallons of waicr pcr minuic in iIc minc. Mincrs wcrc irappcd
undcr a mouniain of dclris and drowncd wIcn iIc waicr surgcd inio iIc minc. TIc Indian Iron and Siccl Company,
wIicI owncd iIc minc, said ii conformcd io inicrnaiional siandards.
3
rd
ec 19S4: Union CarbIde pIant IIre In BbopaI. During iIc nigIi of Dcccmlcr 3 1984, largc amounis of waicr
cnicrcd ianl 610, coniaining 426 ioncs of mciIyl isocyanaic(MICi. TIc rcsuliing rcaciion gcncraicd a major incrcasc in
iIc icmpcraiurc of liquid insidc iIc ianl io ovcr 200 C (400 Fi. TIc MIC Iolding ianl iIcn cplodcd rclcasing a largc
volumc of micd ioic gascs, forcing iIc cmcrgcncy rclcasc of prcssurc.
PerIormance oI IIre Insurance busIness
Years
Gross
PremIum In
INR crores
AccretIon
Growtb
YoY
(In %)
2003 - 04 3,180.38
2004 - 0S 3,351.70 171.32 5
200S - 06 3,750.06 398.36 12
2006 - 0? 4,163.00 412.94 11
200?-0S 3,516.80 -646.20 -16
200S-09
3,420.04
-96.76 -3
TabIe A
Market Sbare oI varIous segments
Segment 2003 - 04 2004-0S 200S-06 2006-0? 200?-0S 200S-09
Ire 20%
19% 18% 17% 13% 11%
MarIne 7%
7% 6% 7% 7% 7%
EngIneerIng 5% 5% 5% 5% 5% 5%
Motor 41% 43% 43% 43% 46% 44%
eaItb 9%
10% 11% 13% 18% 20%
AvIatIon 3%
2% 2% 2% 1% 1%
LIabIIIty 2%
2% 2% 2% 2% 2%
PersonaI
AccIdent
2%
3% 3% 2% 3% 3%
AII Otbers 10%
10% 10% 10% 7% 7%
TabIe B
In iallc A alovc, ii Ias lccn olscrvcd iIai lciwccn ycar 2004 and 2006 iIc prcmium growiI in firc insurancc was
posiiivc, Iowcvcr duc io dciarifficaiion iIcrc Ias lccn a sulsianiial dcclinc in iIc prcmium undcrwriiicn and iIis was
mainly duc io Icavy discounis offcrcd in iIis scgmcni. TIc scgmcni Ias undcrwriiicn 3420 crorcs during ycar 2008-09
and Ias grown wiiI a CACF of 1.46%. TIc Firc insurancc was dciariffcd during ycar 2007, Icncc wc can olscrvc iIai
iIc prcmium growiI fcll ly 16% during ycar 2007-08 and ly 3% during ycar 2008-09.
In Tallc D, wc can olscrvc iIai iIc marlci sIarc of firc Ias rcduccd io 11% during ycar 2008-09 from 20% during ycar
2003-04, wiiI moior scgmcni lcing consisicnily siallc, ii is iIc IcaliI lusincss wIicI is gaining marlci sIarc and
sIowing an incrcasing ircnd in iIc prcmium undcrwriiicn.
TIc proccss of dciarifficaiion is givcn lclow.
AVAITION AVAITION
LIABILITY LIABILITY
PA & EALT PA & EALT
MARINE CARGO MARINE CARGO
MARINE &LL MARINE &LL
IRE IRE
ENGINEERING ENGINEERING
MOTOR O MOTOR O
MOTOR TP MOTOR TP
AVAITION AVAITION AVAITION AVAITION
MARINE &LL MARINE &LL
MARINE &LL MARINE &LL
IRE IRE
ENGINEERING ENGINEERING
MOTOR O MOTOR O
MOTOR TP MOTOR TP
IRE IRE
ENGINEERING ENGINEERING
MOTOR O MOTOR O
MOTOR TP MOTOR TP
LIABILITY LIABILITY LIABILITY LIABILITY
PA & EALT PA & EALT PA & EALT PA & EALT
MARINE CARGO MARINE CARGO MARINE CARGO MARINE CARGO
APRIL 200S JAN&ARY 200?
1994
WTIc proccss of dciarifficaiion, firsi lcgun in
1994, Ias gradually movcd iIc Indian marlci
io a posiiion wIcrc iIc ovcrwIclming majoriiy
of insurancc is iransacicd wiiIoui a iariff.
WTIc progrcss iowards full dciarifficaiion
lcgan in 1994.
W TIc pcriod lciwccn 1994 & 2005 wiincsscd
somc progrcss in icrms of dciarifficaiion in
iIc marinc insurancc.
W Till iIcn Moior, Firc, WC & Enginccring
risls siill rcmaincd iariffcd accouniing for
almosi iwo iIirds of prcmium.
W Sincc January 2007 all class of lusincss
cccpi for Moior TP lialiliiy arc no longcr
undcr iIc pricc iariffs.
ETARIE ETARIE TARIE TARIE
Segment wIse Incurred cIaIms RatIo (In %)
PubIIc Sector PrIvate Sector TotaI
Segment 2006-0? 200?-0S 2006-0? 200?-0S 2006-0? 200?-0S
Ire 60.81 72.28 43.92 50.69 58.52 68.69
MarIne 80.5 82.68 112.57 100.32 86.52 86.68
Motor 92.25 104.76 64.28 71.95 84.69 92.31
eaItb 157.79 112.36 103.42 94.84 141.02 107
Otbers 53.93 54.13 47.11 46.08 52.85 52.51
TotaI 85.22 90.43 68.02 72.21 81.27 84.88
TIc incurrcd claim raiio of firc in comparison io oiIcr scgmcnis lilc marinc, moior and IcaliI is iIc lcasi during iIc
ycar 2007-08, Iowcvcr in comparison wiiI iIc ycar 2006-07 iIc incurrcd claims raiio of firc incrcascd ly almosi10%.
TIis can lc aiiriluicd duc io dciarifficaiion pIasc wIicI was iniroduccd carly during ycar 2007. Hcavy discounis wcrc
offcrcd posi dciarifficaiion wIicI lcd io a dccrcasc in prcmium amouni collccicd wIicI uliimaicly affccicd iIc claims
raiio in firc insurancc.
SEGMENTWISE CLAIMS EXPERIENCE (Rs In crores)
Siaics INIAN OREIGN
Earned
PremIum
Incurred
CIaIms
Incurred
cIaIms
RatIo
Earned
PremIum
Incurred
CIaIms
Incurred
cIaIms
RatIo
Ire-200?-0S 817.01 914.33 112% 936.69 729.78 78%
Ire-2006-0? 771.55 617.44 80% 682.57 434.27 64%
EngIneerIng-200?-0S 382.51 253.27 66% 111.44 65.24 59%
EngIneerIng-2006-0? 250.70 182.09 73% 69.16 28.83 42%
MarIne-200?-0S 238.06 339.81 143% 163.56 198.91 122%
MarIne-2006-0? 158.55 258.13 163% 122.56 86.84 71%
MIsc. Otber-200?-0S 1606.77 1379.41 86% 130.90 99.04 76%
MIsc. Otber-2006-0? 1026.16 604.96 59% 118.08 92.58 78%
LIIe-200?-0S -1.06 1.04 -98% 10.56 0.73 7%
LIIe-2006-0? 1.35 0.71 53% 0.16 0.00 0%
AvIatIon-200?-0S 52.00 56.48 109% 262.87 193.69 74%
AvIatIon-2006-0? 37.74 39.90 106% 296.15 232.07 78%
Motor-200?-0S 2489.39 1758.65 71% 28.25 21.11 75%
Motor-2006-0? 1717.26 1038.82 60% 11.81 6.07 51%
200?-0S SSS4.6S 4?02.99 S4% 1644.2? 130S.S0 S0%
2006-0? 3963.31 2?42.0S 69% 1300.49 SS0.66 6S%
CIC's rolc in scgmcni-wisc claim cpcricncc(in crorci
IndIan Context: WiiI rcspcci io claims cpcricncc, firc, marinc and aviaiion Iavc wiincsscd Incurrcd claims raiio(ICFi
of morc iIan 100% wiiI marinc scgmcni Iaving iIc IigIcsi raiio of 143% during ycar 2007-08.
oreIgn Context. TIc forcign insurcrs arc morc conscrvaiivc wIilc undcrwriiing insurancc lusincss Icncc in mosi of
iIcir scgmcnis iIcy Iavc an ICF of lcss iIan 80 %.
TIc comlincd (Indian + Forcigni carncd prcmium Ias incrcascd ly 37% in ycar 2007-08 lui iIcrc Ias also lccn an
cquivalcni incrcasc in comlincd claims incurrcd wIicI is almosi 66%, almosi 20% IigIcr iIan iIc carncd prcmium.
Source l8uA
Ire azards:
TIc icrm firc Hazards rcfcrs noi only io iIc causcs of firc lui also io iIosc circumsianccs, wIicI incrcasc iIc
prolaliliiy of firc. Firc Iazards arc iIc undcrlying causcs of iIc occurrcncc of firc and conscqucnily of iIc nccd for
insurancc and of iIc paymcni of losscs ly insurcrs.
Types oI Ire azards
Firc Iazards may lc dividcd in io iwo lroad classcs, pIysical and moral.
PbysIcaI bazards arc iIosc concrcic iIings cvidcni io iIc scnscs wIicI may givc risc io firc or coniriluic io iis sprcad.
MoraI bazards arc iIc iniangillc Iuman qualiiics wIicI may Iavc iIc samc rcsulis.
PIysical Iazards arc furiIcr dividcd inio common Iazards and spccial Iazards.
Common bazards arc iIosc wIicI arc found in grcaicr or lcss dcgrcc in all soris of risls, sucI as ligIiing, powcr
gcncraiion, powcr iransmission, Icaiing, inflammallc liquids, cplosivcs, maicIcs, smoling and vcniilaiing sysicms.
SpecIaI bazards arc iIosc wIicI arc pcculiar io spccial classcs of risls sucI as cnginc icsiing in auiomolilc faciorics,
compounding of cIcmicals in drug planis, disposal of sawdusi in woodworling planis, accumulaiion of dusi in flour
mills and drying of maicrials in laundrics.
Moral Iazards is dividcd inio 2 classcs, voluniarily and involuniarily.
VoIuntary bazards includc iIc purposcful causing or incrcasing of firc losscs, failurc io ialc mcasurcs of ciinguisIing
or prcvcniing iIc sprcad of fircs, and dcfrauding iIc insurcrs ly caggcraiing losscs.
InvoIuntary moraI bazards arc iIosc iniangillc clcmcnis in Iuman cIaracicr and slill wIicI do noi rcflcci on iIc
Ioncsiy of iIc pcrsons involvcd lui wIicI arc ncvcriIclcss powcrful in iIcir cffcci on firc losscs.
TIcrc is anoiIcr caicgory of Iazards i.c. coniriluiory Iazards wIicI incrcasc iIc prolaliliiy of firc and oncc siaricd
allows iIc firc io sprcad and iIus incrcasc iIc loss. Following arc fcw camplcs of coniriluiory firc.
Duildings consirucicd wiiI wood worl, Iaving inicrnal woodcn pariiiions, many floor opcnings, cic, involvc
coniriluiory Iazards.
Eposurc Iazards arisc duc io closcncss of iIc cposcd propcriy io iIc ncigIloring propcriics from wIicI a firc can
sprcad and rcsuli in loss from firc, Icai ,waicr, cic.
Alscncc of pcoplc io raisc alarm in casc of firc.
Loclcd or isolaicd prcmiscs.
Ire Causes:
Ire Is a Iorm oI beat energy wbIcb causes
Durning
Hcaiing
Mcliing
SIouldcring
Causes oI IIre and expIosIon bazards:
Following arc iIc aspccis wIicI lcads io firc Iazards.
Impropcr sioragc of flammallc oils, grcascs and fluids, comlusiillc wasics cic.
Smoling ly cmployccs.
Poor Iousc lccping.
Dcfcciivc Icaiing cquipmcni, clccirical cquipmcni and wiring.
Eplosivc gas lcalagc.
Igniiion of gascs, vapors or comlusiillc dusis.
Inadcquaic of clcciric moiors.
Sparling in clcciric wircs and cquipmcni
Causes oI expIosIon and Products oI combustIon.
Causes oI expIosIon. An cplosion is dcfincd as an cpansion wiiI violcni forcc of maicrials iIrougI a cIcmical
cIangc or iIrougI dccomposiiion. Duc io dcvclopmcni in ncw proccsscs in manufaciurc, involving cIcmical and
mccIanical iransformaiions, and oiIcr uscs of ncw sulsianccs and ncw uscs of old sulsianccs, cplosions incrcasc. If
cplosions occur, ii will affcci iIc propcriy and prcmiscs io a largc cicni. TIcrcly ncccssiiaiing a nccd for firc
insurancc. If cplosion causc firc, and firc causc loss, ii is a loss ly firc as proimaic causc; and if firc causc cplosion,
and cplosion causc loss, ii is a loss ly firc as cfficicni causc.
Eplosions arc iIc rcsulianis of clcmcnial gascs, vaporizaiion, coniaci of diffcrcni sulsianccs, as wcll as of iIc
spccifically namcd cplosivcs. TIcrc arc scvcral pIascs of an cplosion. iIc original sIocl wavc llasi of iIc cplosion;
iIc flying sIrapncl of iIc cploding coniaincr; and, dcpcnding on iIc prcssurcs of iIc llasi, iIcrc is iIc cnclosing
luilding carricd along wiiI iIc llasi, sucI as paris of walls, roof, floors, doors, windows and ccilings.
Products oI CombustIon: Comlusiillc maicrial is a sulsiancc iIai can lc lurncd io providc Icai or powcr. Oygcn
and cIlorinc arc oidizing gascs iIai sirongly suppori comlusiion lccausc iIcy can lurn wiiIoui air.
Comlusiillc maicrials includc gasolinc, oil, lcroscnc, and oiIcr pcirolcum producis, cIcmicals, alcoIol, grcascs,
accionc, cic.
If sponiancous comlusiion occurs duc io firc iIc possililiiy of firc sprcading incrcascs wIicI also rcsulis in firc losscs,
iIus iIc propcriy will lc damagcd ly iis own sponiancous comlusiion. TIc propcriy siorcd in lull may lc liallc io
sclf-Icaiing lui would lc suljcci io siringcni rcquircmcnis aloui sioragc condiiions.
Impacts oI ExpIosIon:
Eplosion produccs firc gascs, flamcs, Icai, smolc wIicI impacis iIc propcriy io a largc cicni.
Following arc iIc rcsuliing impacis duc io firc, flamcs, Icai and smolc.
Ire gases inicnsiiy dcpcnds on naiurc of sulsiancc i.c. flammallc or inflammallc. If iIc sulsiancc is flammallc
iIc conscqucniial impaci will lc morc as comparcd io inflammallc sulsiancc. Ii also produccs suffocaiing, ioic gascs
lilc carlon monoidc wIicI affccis IcaliI and propcriy.
Iames inicnsiiy dcpcnds on availallc gascs sucI as oygcn. Prcscncc of oygcn incrcascs iIc inicnsiiy of flamcs
and iIus rcsulis in sprcad of firc and Icai iIrougI surrounding maiicr.
eat inicnsiiy dcpcnds on (comlusiion produci i. Inicnsc Icai injurcs occupanis and also crcaics difficuliics in firc
figIiing opcraiions.
Smoke inicnsiiy dcpcnds on tbe visililiiy Eccssivc amouni of smolcs crcaics poisonous gascs affcciing propcriy
and Iuman lifc. Prcscncc of smolcs crcaics panic amongsi occupanis rcsuliing io siampcdc , injurics & dcaiI.
RIsk AnaIysIs In Ire Insurance.
Fisl Analysis can lc donc in iIc following ways.
azard IdentIIIcatIon. Prior io risl analysis ii is imporiani io includc iIc conscqucncc rcsuliing from Iazard
sccnarios. Hazard sccnarios may addrcss iIc following. wIo, wIai, wIcrc, wIcn and Iow. TIis providcs an
inicrmcdiaic produci iIai cprcsscs iIc condiiion and iIc conscqucnccs iIai will lc uscd during risl analysis.
azard AnaIysIs. Fisl analysis is iIc proccss wIcrcly Iazards arc cIaracicrizcd for iIcir lilcliIood and scvcriiy. Fisl
analysis lools ai Iazards io dcicrminc wIai can Iappcn wIcn. TIis can lc ciiIcr a qualiiaiivc or quaniiiaiivc analysis.
RIsk Assessment. Fisl asscssmcni is gcncrally dcfincd as iIc proccss of comlining iIc impacis of risl clcmcnis
discovcrcd in risl analysis and comparing iIcm againsi somc acccpialiliiy criicria. Fisl asscssmcni can includc iIc
consolidaiion of risls inio risl scis iIai can lc joinily miiigaicd, comlincd and iIcn uscd in dccision maling.
RIsk treatment. Fisls can lc ircaicd in iIc following ways;
-Eliminaiion of risl ai sourcc
-Transfcr io insurcrs
-Fisl Fcicniion
RIsk sbarIng MecbanIsms
Concept oI ContrIbutIon:
TIc principlc of coniriluiion says 'if iIc samc propcriy is insurcd undcr morc iIan onc policy, iIc insurcd cannoi
rccovcr morc iIan Iis loss. Hc can rccovcr only a raicallc poriion of loss undcr cacI policy.
Coniriluiion is an cquiiallc docirinc, and opcraics wIcrc iIcrc is oiIcr insurancc and iIc assurcd Ias claimcd from
onc insurcr raiIcr iIan iIc oiIcr.
Lci us assumc iIai iIc insurcd Ias ialcn a policy from insurcr A and a policy from insurcr D and iIc claim Ias lccn
madc againsi insurcr A alonc. Coniriluiion is insurcr A's rigIi io claim from insurcr D, a proporiion of A's paymcni io
iIc insurcd.
TIcrc arc 2 ways ly wIicI iIc paying insurcr can rccovcr from iIc coniriluiing insurcr. TIcy arc.
1i Indcpcndcni Lialiliiy Calculaiion and
2i MaimumLialiliiy.
Indcpcndcni lialiliiy calculaiion is lasically applicallc io lialiliiy insurancc. In iIis, mciIod, iIc couri lools ai iIc
amouni of iIc assurcds' loss for wIicI insurcr is liallc, and iIc loss is apporiioncd accordingly.
For c.g. if iIc insurcr A covcrcd iIc insurcd's lialiliiy upio Fs 1,00,000 and insurcr D Fs. 10,000. iIc assurcd suffcrcd
a loss of Fs 4,400. ii was Icld iIai cacI insurcr would Iavc lccn liallc for iIai sum.
Insurcr A wIo paid for iIc loss was cniiilcd io rccovcr 50% from insurcr D.
TIc maimum amouni of lialiliiy of cacI insurcr lccomcs imporiani only wIcn iIc loss ccccds iIc financial limiis of
onc or loiI of iIcm. Considcring iIc alovc c.g., if iIc assurcds' loss would Iavc lccn Fs. 30,000, iIcn iIc rcspcciivc
indcmniiy lialiliiy of rcacI insurcr would Fs. 30,000 and Fs. 10,000.
In iIis casc Insurcr a will lcar iI and insurcr D will lcar ViI of iIc loss.
MaimumLialiliiy Calculaiion.
Ii is uscd in propcriy insurancc and givcs imporiancc io iIc financial limiis of cacI insurcr lialiliiy.
For c.g. Assumc iIai iIc maimum lialiliiy of insurcr A is Fs. 50,000 and D Fs. 25,0000
Any loss io lc lornc ly iIc insurcrs, upio iIc financial limiis of iIcir policics, in iIc proporiion of 2.1.
Pro rata Average CondItIon:
If iIc insurcd propcriy is of IigIcr valuc iIan iIc sum insurcd ai iIc iimc of loss, iIc insurcd Ias io lcar raicallc
proporiion of iIc loss. Evcry iicm covcrcd ly iIc policy is scparaicly considcrcd.
E.g. a company Ias insurcd iis luilding for Fs. 10 LalI and plani and macIincry for Fs 20 lalI. An accidcni duc io
firc occurrcd causing loss io plani and macIincry and iIc damagc is asscsscd ai Fs 10 lalI. TIc marlci valuc of iIc
luilding ai iIc iimc of occurrcncc of firc is calculaicd ai F.s 5 lalI and iIai of plani and macIincry ai Fs. 25lalI
TIc luilding is ovcr insurcd, lui iIc plani and macIincry is undcrinsurcd considcrcd scparaicly, as pcr iIc policy
condiiion. Collcciivcly, Iowcvcr iIc marlci valucs of iIc asscis arc samc as iIc valuc insurcd for. TIis will noi givc any
advaniagc io iIc insurcd.
Sincc iIc plani and macIincry is undcrinsurcd ly 20 % of iIc marlci valuc, iIc insurcr will pay only 80% of iIc aciual
loss, i.c. Fs. 8 lalI. TIc insurcd Ias io lcar a loss of Fs 2 LalI wIicI lccomcs a pari of Iis dcduciillc amouni.
On iIc oiIcr Iand if iIcrc was loss of Fs 2.5 LalI io iIc luilding, iIc insurancc company would pay iIc full amouni.
NoiIing cira is paid for ovcr-insurancc.
Co-Insurance:
Co-insurancc is a form of coniraci undcr wIicI iIc inicrcsis of iwo or morc pcrsons arc insurcd undcr a singlc policy.
TIc amouni of insurancc io lc calculaicd sIould lc cqual io iIc full valuc of iIc propcriy insurcd.
TIcrc arc iwo forms of co-insurancc.
Joini co-insurancc
Composiic insurancc.
Joini co-insurancc.
A joini policy is onc undcr wIicI iIc pariics Iavc a common and indivisillc inicrcsi in iIc insurcd suljcci maiicr.
A joini owncrsIip of iIc propcriy insurcd is an camplc for a joini policy.
Composiic Insurancc.
A composiic policy is onc undcr wIicI iIc diffcrcni inicrcsis of iwo or morc pcrsons arc insurcd undcr a singlc policy.
Ii is iIcrcforc a scrics of scparaic singlc coniracis cmlodicd undcr a singlc documcni.
TIc rigIis of cacI assurcd undcr iIc policy may lc diffcrcni in scopc. E.g. includcs ,
Landlord and icnani
Morigagor and morigagcc,
Coniracior and sul-coniracior of luilding worls cic.
Need Ior IIre Insurance and IunctIon oI Ire Insurance:
Need Ior Ire Insurance
ExIstence oI materIaI property . TIc cisicncc of maicrial propcriy is iIc suljcci maiicr iIus ii forms an inicgral
pari in iIc firc insurancc policy if ii lccomcs susccpiillc io damagc or dcsiruciion ly firc or oiIcr pcril. Hcrc iIc
maicrial propcriy includcs luilding, macIincry, plani cic. Maicrial propcriy Ias inirinsic valuc wIcrc inirinsic valuc
is gcncrally dcfincd as iIc inIcrcni woriI of somciIing, indcpcndcni of iis valuc io anyonc or anyiIing clsc.
PurcIasc of firc insurancc covcr can iIus Iclp in rccovcring iIc loss if incurrcd from insurcd pcrils.
Ii will also Iclp iIc policyIoldcr in iIc cvcni loss occurs duc io Aci of Cod Pcrils. Hcrc Aci of Cod pcrils includcs
Siorm, Tcmpcsi, Flood cic.
unctIon oI Ire Insurance
Firc docs noi rcplacc iIc cconomic loss icrmcd 'firc wasic'. Howcvcr wiiI iIc purcIasc of firc insurancc, iIc
policyIoldcr can oliain a clausc lnown as Dclris rcmoval clausc. Undcr iIis clausc, iIc cosi of rcmoving dclris,
dismaniling or pulling down damagcd paris of iIc siruciurc and1or sIoring up iIc siruciurc arc covcrcd. Howcvcr
iIc amouni of cpcnscs is rcsiricicd io only 10% of iIc Sum Insurcd.
Firc insurancc cffccis cquiiallc disiriluiion of firc losscs among all insurcd. Equiiallc sums musi lc collccicd from
individuals dcsiring varying forms of indcmnificaiion, or lcncfiis, so iIai iIcrc will lc no discriminaiion among
iIosc lclonging io iIc samc group. TIus, if A loscs Fs. 25000, D Fs. 45000, C Fs. 80000, iIc sum is Fs. 150000
and iIc avcragc loss io cacI is Fs. 50000, iIai is, ii mcans iIai iIc sum of iIc cccsscs alovc Fs. 50000 can lc
uscd io sci off iIc losscs wIicI arc lcss iIan Fs. 50000.
Cosi of rcplaccmcni of propcriy dcsiroycd .Fcinsiaicmcni in simplc icrms mcans rcplaccmcni of losi propcriy or
rcpairing damagcd propcriy. TIc rcinsiaicmcni valuc of iIc said maicrial or iIc propcriy, wIicI is normally valucd
and dcrivcd posi applying dcprcciaiion cic. TIc clausc is rclaicd io iIc firc insurancc policy of ficd asscis lilc
luildings, macIincry, furniiurc and fiiiings cic.
AppIIcatIon oI basIc prIncIpIes oI Insurance
A firc insurancc coniraci musi coniain csscniial clcmcnis lilc offcr and acccpiancc, considcraiion, capaciiy, lcgal
purposc and agrccmcni lciwccn iIc pariics. TIc gcncral law of coniraci govcrns firc insurancc coniraci and iIc
prcscncc of iIcsc csscniial clcmcnis malc ii cnforccallc ai law. In addiiion, firc insurancc is govcrncd ly iIc lasic
principlcs applicallc io any insurancc coniraci.
&tmost good IaItb:
TIc principlc of uimosi good faiiI implics iIai a proposcr musi disclosc io iIc insurcr all maicrial facis in rcgard io
iIc proposcd insurancc. TIis principlc applics noi only io maicrial facis wIicI Ic lnows lui also cicnds io maicrial
facis wIicI Ic ougIi io lnow.
TIc maicrial facis wIicI arc io lc discloscd undcr a siandard firc insurancc policy includc iIc consiruciion of iIc
luilding ( mciIod of consiruciion, maicrials uscd, cic.i, occupancy ( rcsidcniial, official, warcIousc, manufaciuring
uniis, cic.i naiurc of goods siorcd ( cplosivcs, non- Iazardous cic.i in iIc luilding cic. iIc duiy of uimosi good faiiI
also applics io insurcrs. TIcy cannoi issuc a firc policy if iIcy arc awarc iIai iIc insurcd Ias no insurallc inicrcsi in
iIc propcriy covcrcd. TIcy arc lound io cnsurc fair dcaling in iIc iransaciions and sciilc iIc claim wiiI fairncss and
cquiiy.
InsurabIe Interest:
TIc insurcd musi lcar a lcgal rclaiionsIip wiiI iIc suljcci maiicr of iIc conccrncd insurancc covcr.
An insurallc inicrcsi is of sucI a naiurc iIai iIc posscssor would suffcr financial loss on iIc occurrcncc of firc duc io
an insurcd pcril. In firc insurancc, insurallc inicrcsi sIould cisi ai iIc iimc of ialing iIc policy, coniinuc iIrougIoui
iIc pcriod of policy and cisi ai iIc iimc of loss.
WIcrc iIc insurcd Ias no insurallc inicrcsi in iIc propcriy covcrcd ly iIc policy, iIcrc can lc no loss and Icncc
noiIing can lc indcmnificd.
IndemnIty:
Indcmniiy rcfcrs io rcimlurscmcni for aciual loss susiaincd. Firc insurancc coniracis arc coniracis of indcmniiy and
noi of profii.
SubrogatIon:
TIc principlc of sulrogaiion conicnds iIai iIc insurcr Ias iIc rigIi io procccd againsi iIc iIird pariy oncc Ic Ias
indcmnificd iIc assurcd for Iis loss. TIc sum rccovcrcd may lc iIcn rciaincd ly iIc insurcr. TIc conccpi of
sulrogaiion is applicallc io all insurancc coniracis, wIicI arc coniracis of indcmniiy, and iIus ii is applicallc io firc
insurancc policics also.
ProxImate Cause:
TIc principlc conicnds iIai iIc insurcr will indcmnify iIosc damagcs or losscs io propcriy causcd ly an insurcd
pcril. TIc firc insurancc policy compcnsaics iIc losscs only if iIc damagc is causcd ly a pcril mcniioncd in iIc
siandard firc insurancc policy.
Express condItIons and warrantIes oI a IIre poIIcy
Express CondItIons
A dciailcd lnowlcdgc aloui iIc cprcss condiiions of diffcrcni iypcs of firc policics is ncccssary. TIis is lccausc a
lrcacI of any of iIcsc condiiions will affcci iIc validiiy of iIc coniraci. TIc cprcss condiiions in a firc policy arc .
MIsrepresentatIon and ConceaIment:
Any firc insurancc policy will lccomc void if iIc insurcd Ias willfully conccalcd or misrcprcscnicd any maicrial faci
conccrning iIc insurancc or suljcci iIcrcof. Ina firc insurancc coniraci, iIc insurcr acis alsoluicly ai iIc mcrcy of iIc
insurcd. for iIis rcason iIc cniirc policy will lc considcrcd null and void in casc of willful misrcprcscniaiion or fraud.
Conccalmcni is wiiIIolding any faci iIai iIc undcrwriicr sIould lnow from iIc insurcd. TIus iIc validiiy of iIc policy
dcpcnds on iIc full disclosurc of iIc maicrial informaiion.
raud:
According io iIis condiiion, iIc cniirc coniraci will lc void if any falsc dcclaraiion Ias lccn madc or uscd in suppori
iIcrcof. TIc coniraci will lc void if any fraudulcni mcans or dcviccs arc uscd ly iIc insurcd or any pcrson aciing on
Iis lcIalf io oliain iIc lcncfii undcr iIc policy. If iIc damagc Ias lccn causcd ly iIc willful aci of iIc insurcd, ii is
considcrcd as a void coniraci.
CanceIIatIon:
Oncc a valid coniraci Ias lccn madc, ii can lc icrminaicd ai iIc opiion of iIc insurcd or iIc insurcr. TIus, if loiI iIc
pariics agrcc io cIangc iIc icrms or icrminaic iIc cniirc coniraci, a muiual agrccmcni sIould lc arrivcd ai. SucI an
agrccmcni will lc valid only if ii Ias csscniial clcmcnis of iIc coniraci.
Firc insurancc policy can also ccasc duc io following rcasons.
TIc insurcd is guiliy of misrcprcscniaiion, misdcscripiion or non-disclosurc of any maicrial facis.
TIc insurcd luilding siruciurc or pari iIcrcof is dcsiroycd ly rcasons oiIcr iIan an insurcd pcril.
If iIc insurallc inicrcsi of iIc owncr ccascs aficr iIc commcnccmcni of iIc policy, iIc coniraci will icrminaic.
ReInstatement:
In ccriain circumsianccs, iIc insurcr may lc cniiilcd io rcinsiaic or rcplacc iIc propcriy damagcd, raiIcr iIan pay a
sum of moncy io iIc Insurcd. TIis rigIi of iIc insurcr io rcplacc or rcinsiaic iIc damagcd propcriy may arisc undcr iIc
icrms of iIc policy or iIc siaiuic. Fcinsiaicmcni in simplc icrms mcans rcplaccmcni of losi propcriy or rcpairing
damagcd propcriy. TIc clausc is rclaicd io iIc firc insurancc policy of ficd asscis lilc luildings, macIincry, furniiurc
and fiiiings cic.
TIc opiion of rcinsiaicmcni ciis for 2 rcasons.
In a siandard policy, iIc insurcd can rccovcr only iIc dcprcciaicd valuc of iIc insurcd propcriy lui undcr iIc
rcinsiaicmcni of policy, iIc insurcd is cniiilcd io rccovcr iIc cosi of rcplacing iIc losi or damagcd propcriy.
Insurancc will noi worl as a pIilosopIy io malc good iIc lusincss losscs.
E.g. if a luilding is damagcd duc io firc and if iIc insurcr Ias cIoscn io rcinsiaic, a frcsI coniraci for rcluilding comcs
inio lcing lciwccn iIc insurcr and iIc insurcd. iIc insurcr is undcr an implicd olligaiion io rcinsiaic iIc propcriy io
an appropriaic siandard wiiIin a rcasonallc iimc. Normally iIc insurcr asls iIc insurcd io nominaic iIc luildcr. Evcn
in iIis casc iIc insurcr rcmains liallc io iIc insurcd for dcfcciivc rcinsiaicmcni. TIcrc is no coniraci lciwccn iIc
insurcd and iIc luildcr and so if iIc luildcr is ncgligcni, iIc insurcd can claim againsi iIc insurcr.
A grcaicr prollcm migIi arisc if iIc insurcr aficr Iaving io rcinsiaic, finds iIai rcinsiaicmcni is noi only cpcnsivc, lui
also impossillc as a maiicr of law. TIc insurcr's posiiion can lc siaicd as follows.
If iIc insurcr Ias noi commcnccd rcinsiaicmcni wIcn iIc impossililiiy occurrcd, Iis olligaiion rcvcris io iIc
provision of a financial indcmniiy. TIis mcans if iIc insurcr Ias noi commcnccd Iis opcraiions pcriaining io
rcinsiaicmcni of iIc damagcd propcriy and duc io currcni opcraiion of law, iIc insurcr finds ii vcry cpcnsivc iIcn iIc
insurcr Ias iIc opiion of providing iIc insurcd wiiI financial indcmniiy.
If iIc insurcr Ias commcnccd rcinsiaicmcni wIcn iIc impossililiiy occurrcd, iIc samc posiiion would apply. In
iIis casc, aliIougI iIc insurcr would Iavc incurrcd cpcnscs, iIcrc is no lcgal lasis upon wIicI Ic can sccl io dcduci
any cpcndiiurc from iIc full sum duc io iIc assurcd.
AIteratIon:
TIc various fcaiurcs of alicraiion includc.
1i TIc insurcr sIall lc discIargcd from iis lialiliiy.
If iIc insurcd propcriy is cIangcd or alicrcd in sucI a way as io incrcasc iIc risl of loss or damagc ly iIc insurcd
pcrils.
If iIc luilding insurcd or coniaining iIc insurcd propcriy rcmains unoccupicd for a pcriod of morc iIan 30 days.
If iIc inicrcsi in iIc propcriy insurcd passcs from iIc insurcd ciiIcr ly will or opcraiion of law.
2i TIc insurcr will lc discIargcd from Iis lialiliiy unlcss iIc alicraiions arc noiificd io iIc insurcrs and iIcir
acccpiancc oliaincd ly an cndorscmcni on iIc policy.
3i TIis condiiion also providcs iIai in iIc cvcni of any alicraiions iIc insurancc will ccasc io aiiacI iIc pariicular
propcriy affccicd.
4i Ii is quici olvious iIai alicraiions could incrcasc iIc risl of loss or damagc ly iIc insurcd pcrils.
WIciIcr or noi iIc risl is incrcascd is dcicrmincd according io iIc circumsianccs in cacI casc, and iIc lurdcn of
proof iIai iIc risl Ias lccn incrcascd falls on iIc insurcrs.
WarrantIes:
A warraniy is dcfincd as an undcrialing ly iIc insurcd iIai a ccriain siaic of affairs will, or will noi, coniinuc, or iIai
somciIing sIall, or sIall noi lc donc, iIrougIoui iIc duraiion of iIc coniraci".
TIc conccpi of warraniy in a firc insurancc policy diffcrs from iIc conccpi applicallc in a law of coniraci. In a law of
coniraci, a warraniy is a minor coniraciual icrm, a lrcacI of wIicI givcs iIc innoccni pariy iIc rigIi io claim
damagcs for lrcacI, lui noi io rcfusc furiIcr pcrformancc undcr iIc coniraci.
In a firc insurancc policy, a warraniy is a promisc madc ly iIc assurcd, wIicI, if lrolcn, allows iIc insurcr io dcny
lialiliiy as from iIc daic of lrcacI.
Following arc iIc fcaiurcs of warraniics in Firc Insurancc
Ii is an uncondiiional promisc ly iIc assurcd.
Ii nccd noi rclaic io iIc maicrial faci.
Ii musi lc adIcrcd io cacily.
TIc assurcd cannoi rcmcdy a lrcacI of warraniy, as iIc faci or lrcacI dcicrmincs iIc insurcr's lialiliiy.
An assurcd may lc rcquircd io warrani onc of iIc 3 iIings.
TIai a pariicular faci is iruc or iIai an inicnsion is Icld ly iIc assurcd, ai iIc daic of iIc policy.
TIai iIc assurcd gcncrally Iolds a pariicular opinion on iIc daic of iIc policy.
TIai iIc assurcd will aci, or will rcfrain from aciing, in a siaicd fasIion during iIc pcriod of iIc policy.
Standard Ire PoIIcy
TIc carlicr firc insurancc policy was cniircly wriiicn ly individual undcrwriicrs wIo confincd iIcir opcraiions io iIcir
immcdiaic gcograpIical arcas.
FuriIcr iIc policics wcrc gcncrally limiicd io propcriy wIicI iIc undcrwriicrs wcrc pcrsonally acquainicd wiiI.
TIc policcs wcrc lricf and includcd only dcscripiion of propcriy, amouni of insurancc, icrm of insurancc and
prcmium.
TIis lcd io lacl of uniformiiy in iIc insurancc policics and iIus arosc iIc nccd for a siandard firc insurancc policy.
Tbe need Ior unIIormIty
Somc companics io cnIancc iIcir lusincss ly issuing aiiraciivc spccial policics and somc oiIcrs io dcfraud iIc
insurcd in iIcir rigIiful claims. FuriIcr wIcncvcr a company issucd iis own spccial policics, ii frcqucnily Iappcncd
iIai many of iIc insurcd wcrc dcprivcd of iIc indcmniiy iIcy Iad confidcnily rclicd upon.
TIis lacl of co-opcraiion in icrms of policy wordings and undcrwriiing lciwccn companics and lacl of uniformiiy in
firc policics provcd io lc ccccdingly unforiunaic for iIc insurcd and insurcrs. Also, wIcn largc firc losscs occurrcd,
and scvcral policics Iad lccn wriiicn on iIc propcriy, ii was found iIai dissimilariiy in icrms and applicaiion
prcvcnicd a saiisfaciory sciilcmcni of iIc loss among iIc scvcral insurcrs involvcd.
Reasons Ior tbe deveIopment oI standard IIre poIIcy
TIc lacl of uniformiiy wIicI rcsulicd in various limiiaiions lcad io iIc dcvclopmcni of a siandard firc policy.
Inadequacy oI tbe underwrIters knowIedge and capItaI. A primc rcquisiic in insurancc is iIc financial sircngiI of
iIc insurcr. As lusincss dcvclopcd in sizc, largc sums of capiial wcrc rcquircd io cnsurc propcr sccuriiy of iIc insurcd.
Undcrwriicrs wcrc rcquircd io Iavc cicnsivc lnowlcdgc and undcrsianding of iIc risl analyzcd lui iIcrc wcrc a lacl
of adcquacy of compcicni undcrwriicrs. TIus, if largc claims occurrcd iIcn ii would impaci iIc financial sianding of
iIc insurancc company.
CompetItIon: Compciiiion was onc of iIc major faciors iIai lcd io iIc dcvclopmcni of siandard firc policy. WiiI iIc
incrcasc in sizc of iIc lusincss, compciiiion dcvclopcd all ovcr iIc world. Compciiiion and cpansion forccd iIc
companics io namc agcnis in various iowns io promoic iIcir salcs and providc cfficicni scrvicc io iIc policyIoldcrs.
Advantages and dIsadvantages oI StandardIzatIon
VarIous Advantages oI StandardIzatIon IncIude:
Cuards againsi misusc of fraud ly ciiIcr iIc issuing company or iIc agcnis.
Avoids amliguiiics lcading io lciicr undcrsianding for iIc insurcd.
Simplifics iIc iraining of agcnis and iIus rcsulis in lciicr pullic awarcncss.
Simplificd undcrwriiing guidclincs.
Tbe dIsadvantages are:
WiiI iIc rapidly cIanging ficld lilc insurancc, morc frcqucni rcvisions arc ncccssary, wIicI is noi fcasillc for
siandardizcd firc policy.
TIc insurcrs arc noi willing io cpcrimcni ncw and lroadcr forms of covcragc lccausc of iIc wcll csiallisIcd lody of
lcgal dccisions wIicI discouragc nccdcd rcvisions.
TIc cIangcs arc morc difficuli io malc lccausc of iIc naiural cnircncImcni of siandardizcd coniracis. For insiancc,
iIc siandardizcd firc policy Iad rcmaincd uncIangcd for morc iIan 40 ycars.
Howcvcr firc scgmcni Ias movcd iowards dciarifficaiion wIicI gavc iIc insurcrs iIc frccdom io dcicrminc iIc raic and
iIc iypc of risl iIcy arc prcparcd io undcrwriic. TIc impaci of iIis rcsulicd in companics offcring siccp discounis in
iIc profiiallc scgmcnis sucI as firc scgmcni. Frcc marlci rcgimc will cncouragc scicniific raiing of risl and adopiion of
lciicr risl managcmcni praciiccs. TIis will lilcly incrcasc iIc significancc of risl managcmcni and claims conirol in
insurancc lusincss. In icrms of undcrwriiing, iIcrc will lc an incrcascd focus on undcrwriiing disciplinc io avoid
undcrwriiing losscs io incrcasc profiialiliiy and lc compciiiivc.
Coverage- Standard Ire PoIIcy
Propcriy covcrcd.
- All immovallc propcriy of TIc Insurcd and1or for wIicI iIcy Iavc an insurallc inicrcsi and1or may
oiIcrwisc lc inicrcsicd in casc of foriuiious and accidcnial pIysical loss or damagc covcrcd undcr iIis Policy.
Pcrils covcrcd and iIcir cclusions(In luili covcragcsi.
Firc lui ccluding damagc causcd io iIc propcriy insurcd ly
Iis own naiural Icaiing or sponiancous comlusiion
Is undcrgoing any Icaiing or drying proccss
Durning of propcriy insurcd ly ordcr of any pullic auiIoriiy
Forcsi firc
Sulicrrancan Firc
LigIining
Eplosion1 Implosion
Ecluding damagc io
Doilcrs oiIcr iIan domcsiic loilcrs, cconomizcrs or oiIcr vcsscls, macIincry or apparaius (in wIicI iIc
scam is gcncraicdi or iIcir conicnis rcsuliing from iIcir own cplosion1implosion
Causcd ly ccnirifugal forccs
Aircrafi
Acrial or spacc dcviccs and ariiclcs droppcd iIcrc from ccluding iIosc causcd ly prcssurc wavcs.
Impaci
Loss of or visillc pIysical damagc causcd io iIc Propcriy Insurcd duc io impaci ly any Fail1 Foad
vcIiclc.
or animal ly dircci coniaci noi lclonging io or owncd ly iIc Insurcd or any occupicr of iIc Prcmiscs or
iIcir cmployccs wIilc aciing in iIc coursc of iIcir cmploymcni.
Lcalagc from Auiomaiic Sprinllcr insiallaiions
Ecluding damagc causcd ly
Fcpairs or alicraiions io iIc luildings or Prcmiscs
Fcpairs, Fcmoval or Eicnsion of iIc Sprinllcr Insiallaiion
Dcfccis in consiruciion lnown io TIc Insurcd
ExtensIons
SpecIaI extensIons:
ArcbItects, Surveyors and ConsuItIng EngIneers' ees - In Excess oI 3 % oI tbe cIaIm amount.
WIcn iIcrc is a damagc io iIc luilding, macIincry cic., iIcrc ariscs a nccd for rcinsiaicmcni or rcpair of propcriy
insurcd. During iIis proccss iIc insurcd spcnds a sulsianiial amouni on iIc ArcIiicci and Survcyors fccs in ordcr io
gci iIc rcsiruciuring and oiIcr cnginccring worls donc. Hcncc ii lccomcs impcraiivc for iIc insurcd io cicnd iIc
covcragc io ialc inio considcraiion iIis aspcci as wcll. Fccs for Plans, spccificaiion icndcrs, quaniiiics, and scrvicc in
conncciion wiiI iIc supcrinicndcncc of iIc rcinsiaicmcni for iIc Duilding, MacIincry, Acccssorics and Equipmcni can
lc cicndcd io covcr for an amouni ccccding 3% of iIc claim amouni. (SucI cicnsion is rcsiricicd upio 7.5% of Loss
and also sucI covcragc is noi applicallc for prcparaiion a claim or csiimaic of iIc lossi
RemovaI oI ebrIs.
WIcn iIcrc is a dcsiruciion causcd ly firc or iIc allicd pcrils, iIc maicrial damagc or iIc salvagc oui of iIc samc nccds
io lc managcd propcrly and iIcrcly arising a cosi on rcmoval of dclris. Hcncc ii lccomcs imporiani io includc iIis
clausc undcr iIc policy. Epcnscs incurrcd for rcmoval of dclris io clcar iIc siic can lc cicndcd io covcr for an
amouni ccccding 1 % of iIc claim amouni. Dismaniling 1 DcmolisIing 1 SIoring up is also covcrcd if ciiIcr Duilding
or MacIincry is covcrcd. (SucI cicnsion is rcsiricicd upio 10% of Sum Insurcdi
etorIatIon oI Stocks In coId Storage
TIc policy can lc cicndcd io covcr loss arising.
Duc io accidcnial Failurc conscqucni io damagc ai iIc prcmiscs of Powcr Siaiion duc io Insurcd pcril (Howcvcr iIc
duraiion of Failurc sIould ccccd 24 Ioursi.
Duc io cIangc in Tcmpcraiurc arising oui of loss or damagc io iIc cold sioragc macIincrics duc io opcraiion of iIc
Insurcd Pcril (Howcvcr iIc duraiion of Failurc sIould ccccd 24 Ioursi
Spontaneous CombustIon
TIc policy can lc cicndcd io covcr iIc loss or damagc ly Firc only io Propcriy Insurcd ly iis own fcrmcniaiion
1Naiural Hcaiing or Sponiancous Comlusiion
RIot, StrIke, MaIIcIous and TerrorIsm amage (RSMT) cover
TIc policy can furiIcr lc cicndcd io covcr pcrils lilc Fiois, Sirilc & Malicious Damagc as a pari of Firc Insurancc
policy. You bave mIssed TERRORISM cover wbIcb Is one oI tbe most Important coverages reIerred to as RSMT
In tbe IIre tarIII. R - RIot, S - StrIke, M - MaterIaI amage, T - TerrorIsm.
Eartbquake (Ire & Sbock) IncIudIng TsunamI
From iIc lusincss insurancc siandpoini, cariIqualcs rcprcscni iIc worsi lind of risl - iIc onc iIai cvcryonc lnows is
going io Iappcn somcday. EariIqualcs cannoi lc prcvcnicd or sioppcd. EariIqualcs arc also rcgional cvcnis limiicd
io lnown fauli zoncs. Hcncc iIc locaiions Iavc lccn caicgorizcd undcr IV zoncs, I lcing iIc mosi pronc zonc and wiiI
IV lcing iIc lcasi.
Following arc iIc policy raics applicd zonc wisc.
Zonc I- Fs 1.00%o For, c.g. KaicI, Srinagar, cniirc siaic of Assam cic.
Zonc II- Fs 0.50%o For c.g. Paina, Jamnagar, Amriisar, Calcuiia cic.
Zonc III- Fs 0.20%o For c.g. Eniirc siaic of Coa, Punc, TIanc, Crcaicr Domlay cic.
Zonc IV- Fs 0.10%o For c.g. Dangalorc, DIopal, Hydcralad cic.
Noic. Dwclling, officcs, Ioicls, sIops, cic raicallc undcr scciion III of iIc iariff can lc covcrcd ly cIarging a uniform
raic of Fs. 0.10%o rcgardlcss of zoncs.
Hcncc if a pariicular zonc is cariIqualc pronc iIc samc will Iavc a lii IigIcr raiing and vicc vcrsa. Loss or damagc in
conscqucncc of cariIqualc and Tsunami, including Flood, ovcrflow of iIc sca, lalcs, rcscrvoirs, and rivcrs can lc
cicndcd undcr iIis cndorscmcni. TIis cicnsion will also covcr landslidc 1 roclslidc.
Act oI God PerIIs
Loss will lc paid in rcspcci of cacI and cvcry loss arising oui of Aci of Cod Pcrils sucI as ligIiing, STFI(Siorm,
Tcmpcsi, Flood, inundaiioni sulsidcncc, landslidc and roclslidc cic. Howcvcr iIc firsi 5 % of cacI and cvcry claim
suljcci io a minimum of Fs. 10000 will lc lornc ly iIc policyIoldcr.
SpoIIage MaterIaI amage Cover
TIc policy may lc cicndcd io covcr spoilagc Fisl suljcci io iIc following condiiions.
TIc covcr sIall cicnd io maicrial damagc, i.c.
Loss of siocl in proccss; and
Damagc io macIincry, coniaincrs and cquipmcni (including cosi of rcmoval of dclris and clcaningi
Leakage & ContamInatIon Cover (ExtensIon appIIcabIe to oIIs and cbemIcaIs onIy)
TIc policy can lc cicndcd io includc risls of ciiIcr.
Accidcnial lcalagc and coniaminaiion covcr .SucI cicnsion will includc iIc pIysical loss of oil1cIcmical ly
lcalagc from iis coniaincr ly accidcnial mcans and all accidcnial coniaminaiions ly coniaci wiiI forcign maiicr.
Accidcnial lcalagc only .SucI cicnsion will includc iIc pIysical loss of oil1cIcmical ly lcalagc from iis
coniaincr ly accidcnial mcans.
TerrorIsm
TIc Indian gcncral insurancc indusiry Iad sci up iis own indcpcndcni icrrorism pool aficr iIc 9111 aiiacls on iIc U.S
wIicI is managcd ly CIC Fc wIcrc CIC Fc Ias a sIarc in risls ccdcd io iIc pool. TIc icrrorism pool is csscniially a
corpus of funds collccicd from all insurcrs io offsci possillc fuiurc losscs arising oui of sucI violcncc. TIc pool rcccivcs
90% of iIc original prcmium on a ccdcd risl and Ias a corpus of 1000 crorcs. TIc maimum limii of lialiliiy for
insurancc of icrrorism risl undcr iIc pool is currcnily Fs 750 crorc, pcr locaiion, undcr all policics . WIcrc iIc claims
ai a singlc locaiion arc in cccss of Fs20 lillion, all claims arc io lc proccsscd in consuliaiion wiiI CIC Fc. In oiIcr
cascs mcmlcrs can Iandlc claims wiiIin iIc claims limii. TIis diffcrs from mcmlcr io mcmlcr. for mcmlcrs wIosc
sIarc is lcss iIan 10% of iIc pool iIc limii is Fs100 million, and for mcmlcrs wIosc sIarc is grcaicr iIan 10% of iIc
pool iIc limii is Fs500 million. Claims alovc iIc claims limii arc io lc Iandlcd ly CIC Fc. In consuliaiion wiiI iIc Pool
Undcrwriiing Commiiicc, CIC Fc may "advisc on iIc appoinimcni of adjusicrs" and "conirol all ncgoiiaiions,
adjusimcnis and sciilcmcnis in conncciion wiiI iIc loss. Howcvcr undcr iIis cicnsion, iIc cclusion of Tcrrorism
Damagc wiiIin iIc policy siands dclcicd (suljcci io ccriain cclusionsi.
Temporary RemovaI oI property otber tban Stock, Raw MaterIaI and InIsbed goods
TIis cicnsion covcrs iIc Insurcd's propcriy ccluding Siocl, FinisIcd Coods and Faw Maicrials againsi iIc pcrils
covcrcd undcr iIis Policy, lcyond 60 days and noi lcyond a prc dccidcd numlcr of days, wIilsi icmporarily rcmovcd
for clcaning, rcnovaiion, rcpair and oiIcr similar purposcs, wiiIin iIc icrriiorial limiis prc-dccidcd.
AddItIonaI Expenses OI Rent or An AIternatIve AccommodatIon (OnIy Ior Non ManuIacturIng
PremIses)-
Addiiional cpcnscs of rcni for an alicrnaiivc accommodaiion in rcspcci of non-manufaciuring risls may lc covcrcd
undcr iIis cicnsion
Start-up and Sbut down Expenses
TIis cicnsion covcrs aciual loss susiaincd duc io spccificd siari-up 1 sIui-down cosis for powcr and uiiliiics sucI as
clcciriciiy, waicr, sicam, gas as wcll as fccdsiocl, fucls or comlusiillcs io rc-csiallisI iIc plani in iIc opcraiional
siaic ii was ai iIc iimc of iIc damagc in a normal siari-up proccdurc
CIvII AutborIty
As pcr iIis cicnsion iIc loss or incrcascd cosi occasioncd ly iIc insurcd for any Civil AuiIoriiy's cnforccmcni of any
ordinancc or law rcgulaiing iIc rcconsiruciion, rcpair or dcmoliiion of any Propcriy Insurcd is covcrcd undcr iIis
policy. TIc inicnsion of providing iIis covcragc was io providc covcr in siiuaiions wIcrc iIc insurcd's own propcriy Ias
noi iisclf lcing damagcd lui duc io damagc of ncarly propcriy rcsuliing iIc policc or firc figIicrs io cordon off iIc arca
and proIilii acccss, pcrIaps cvcn io iIc prcmiscs iIai Iavc noi lccn dirccily involvcd in iIc loss.
CIauses IncIuded
Agreed Bank CIause:
All policics in wIicI a Danl1Financial Insiiiuiion Ias inicrcsi sIall lc issucd in iIc namc of Danl1Financial
Insiiiuiion and owncr or morigagor and sIall coniain a suiiallc clausc io proicci iIcir inicrcsi.
TIis clausc siaics iIai wIcncvcr a claim is passcd and moncy lccomcs payallc, iIc claim amouni will lc givcn ly iIc
company dirccily io iIc lanl raiIcr iIan iIc assurcd. NormaIIy tbIs Is done wben certaIn goods wbIcb are
bypotbecated to banks and In sucb cases a Ioan opted by tbe Insured wbIIe optIng Ior sucb goods. or e.g. II tbe
Insured company opts Ior a bank Ioan Ior tbe structurIng tbe server and II a cIaIm arIses due to tbe Insured
event, tbe bank wIII be tbe 1st boIder oI tbe rIgbt over tbIs property because tbe bank bas granted tbe Ioan.
If iIc Insurcd Ias madc any dcfaulis in iIc paymcni of iIc inicrcsi on iIc loan ialcn, iIosc dcfaulis paymcnis will lc
dcducicd ly iIc lanl and iIcn iIc lalancc will lc Iandcd ovcr io iIc Insurcd.
Contract PrIce Insurance CIause:
Ii is applicallc only for insurancc of imporicd goods( and noi for goods of local manufaciurcri wIicI arc sold undcr a
coniraci wIicI is canccllcd ciiIcr wIolly or io iIc cicni of loss or damagc. In sucI cascs ii lccomcs pcrmissillc io
issuc a policy lasis of coniraci pricc.
ReInstatement vaIue cIause:
Fcinsiaicmcni valuc insurancc may lc granicd on Duildings, MacIincry Furniiurc, Fiiurc and Fiiiings only.
Undcr iIis clausc in iIc cvcni of propcriy lcing dcsiroycd or damagcd, iIc lasis upon wIicI iIc amouni payallc
undcr iIc policy is io lc calculaicd sIall lc cosi of rcplacing or rcinsiaiing on iIc samc siic or any oiIcr siic wiiI
propcriy of iIc samc lind or iypc lui noi supcrior io or morc cicnsivc iIan iIc insurcd propcriy wIcn ncw as on daic
of iIc loss. or e.g. II a computer Is damaged, tbe Insurer wIII ascertaIn II tbere Is a sImIIar modeI avaIIabIe In
tbe market wItb sImIIar conIIguratIon and tbe Insurer wIII reImburse tbe saId amount to tbe Insured. In case II
tbe saId modeI Is not avaIIabIe tben tbe Insurer wIII reImburse tbe cost oI tbe next versIon wItb tbe appIIcabIe
excess or deductIbIe.
LocaI AutborIty cIause:
Undcr iIis clausc addiiional cosi of rcinsiaicmcni can lc covcrcd solcly ly rcason of iIc ncccssiiy io comply wiiI iIc
rcgulaiions of local auiIoriiy. TIc insurancc ly iIis policy cicnds io includc addiiional cosi of rcinsiaicmcni of iIc
dcsiroycd or damagcd propcriy as may lc incurrcd solcly ly rcason of iIc ncccssiiy io comply wiiI iIc Duilding or
oiIcr Fcgulaiions undcr or wIicI arc framcd in pursuancc of any aci of Parliamcni or wiiI Dyc-laws of any Municipal
or Local auiIoriiy.
Howcvcr iIc amouni rccovcrallc undcr iIis scciion sIall noi includc
-TIc cosi incurrcd in complying wiiI any of iIc alovc mcniioncd Fcgulaiions or Dyc-laws
-In rcspcci of dcsiruciion or damagc occurring prior io iIc graniing of iIis cicnsion
-In rcspcci of dcsiruciion or damagc noi insurcd ly iIc policy
-Undcr wIicI noiicc Ias lccn scrvcd upon iIc insurcd prior io iIc Iappcning of iIc dcsiruciion of damagc.
ecIaratIon cIause:
TIc Insurcd agrccs in wriiing iIc valuc of Iis siocls lcss any amouni insurcd ly Policics oiIcr iIan dcclaraiion
policics, in cacI scparaic luilding or non-communicaiing comparimcni or in iIc opcn on iIc IigIcsi valuc ai risl
during iIc moniI. In casc of loss duc io firc and iIc policics arc covcrcd undcr a dcclarcd valuc, iIcn in casc of loss ii
lccomcs casy io asccriain iIc valuc of siocl dcsiroycd. TIis clausc is also rcquircd, duc io fluciuaiion in priccs of iIc
siocls insurcd.
EscaIatIon cIause:
TIc insurcrs may allow auiomaiic rcgular incrcasc in iIc sum insurcd iIrougIoui iIc pcriod of iIc policy in rciurn for
an addiiional prcmium io lc paid in advancc. Wben tbere Is an ongoIng work on a saId premIse or typIcaIIy In a
productIon bouse, tbe vaIue oI tbe goods In tbe saId IocatIon keeps IncreasIng over a perIod oI tIme, bence tbe
Insured Is requIred to keep decIarIng tbe Increased vaIue oI tbe goods. SometImes II tbere Is a mIss, tbe Insured
remaIns unInsured Ior tbat mucb amount. Tbus to avoId tbIs, It Is aIways advIsabIe tbat tbe cIIent bas tbIs
cIause, wbIcb wIII keep escaIatIng tbIs Sum Insured on reguIar basIs.
Ioater CIause:
In floaicr clausc, policics can lc issucd for siocls ai various locaiions undcr onc sum insurcd. iIis is noi allowcd for
goods in locaiions, wIicI arc noi spccificd ly iIc iariff advisory commiiicc. II a cIIent or a corporate wIII bave
number oI warebouses or godowns due to wbIcb It becomes unIeasIbIe Ior tbe cIIent to keep track and record oI
tbe goods avaIIabIe In a partIcuIar godown at a gIven poInt In tIme, even tbougb be Is supposed to bave a
detaIIed report at aII tImes. So Ior Insurance purpose tbere Is a cIause wbereIn a IIoater cover Is made avaIIabIe
to cIIents/ corporates , sucb tbat In case tbere Is a materIaI damage In one oI tbe warebouse and tbe decIared
vaIue oI tbe goods In tbe saId IocatIon Is Iower tban tbat oI tbe actuaI goods avaIIabIe at tbe tIme oI tbe IIre,
tbe IIoater cover wIII beIp absorbIng tbe Iosses sucb tbat tbe Insured gets beneIIt In sucb adversIty.
esIgnatIon oI Property CIause:
For iIc purposc of dcicrmining, wIcrc ncccssary, iIc iicm undcr wIicI any propcriy is insurcd, iIc insurcrs agrcc io
acccpi iIc dcsignaiion undcr wIicI iIc propcriy Ias lccn cnicrcd in iIc insurcd's lools. Wben tbe Insured decIares
bIs goods be Is requIred to maIntaIn tbe regIster detaIIIng eacb Items, oI tbe company wbIcb Is requIred to be
Insured. owever, wbere tbe corporates bave a buge asset regIster, decIarIng eacb and every mInute Item may
not be IeasIbIe, tbus resuItIng Into InIIexIbIIIty . ence tbey usuaIIy desIgnate a property sucb tbat under tbe
saId desIgnatIon tbere Is a no. oI Item wbIcb gets covered. E.g. Work statIon wbIcb wIII IncIude, computer
monItor, CP&. , keyboard, wooden tabIe, cbaIr, statIonery etc vaIuIng at INR X. So wbIIe decIarIng tbe Insured
property, It wIII state 1S0 workstatIons - wbIcb wIII mean aII Items IncIuded tbereIn.
VoIuntary eductabIe cIause:
TIis clausc is aiiacIcd io iIc policy(icsi in casc iIc insurcd acccpis iIc dcduciillc and iIc discouni iIcrc undcr.
Dcduciillc mcans iIc amouni of a loss iIai an insurancc policy Ioldcr Ias io pay oui-of-poclci lcforc insurancc
company siaris paying iis sIarc of cosi. Undcr iIis clausc iIc insurcd voluniarily acccpis dcduciillc in iIc policy. TIc
IigIcr your dcduciillc is, iIc lowcr iIc risl io iIc insurancc company and iIc lcss you Iavc io pay in prcmium cosis
for iIc covcragc. On iIc oiIcr Iand, lowcr dcduciillcs mcan IigIcr prcmium cosis io lc paid.
In fcw policics, iIc maimum amouni of insurcr's lialiliiy is iIc policy limii lcss iIc amouni of dcduciillc.
TIc various iypcs of Dcduciillcs undcr iIc clausc arc
SiraigIi. Ii may lc siaicd as a flai amouni of moncy, a pcrccniagc of valuc cic.
FrancIisc. A ficd amouni or pcrccniagc of valuc or insurancc applicd, lui if iIc loss ccccds iIc rcquircd amouni,
iIcn iIc cniirc loss is paid in full.
Disappcaring. Losscs ovcr iIc siaicd amouni of iIc dcduciillc arc paid ai a raic in cccss of 100% so iIai ai somc
lcvcl iIc dcduciillc is climinaicd.
or e.g. In Firc insurancc covcragc, if a plan is sclccicd wiiI a dcduciillc of Fs.1,00,000. TIis would mcan iIai if an
insurcd cvcni occurs and iis loss is amouniing io Fs 5,00,000, iIc insurancc company would pay only Fs4,00,000,
wIcrc Fs.1,00,000 will lc lornc ly iIc policyIoldcr.
Mortgage cIause:
TIc morigagc is framcd in sucI a way so as io safcguard iIc inicrcsis of loiI iIc morigagcc and iIc morigagor.
TIc morigagor ialcs oui a policy in Iis or Icr namc and a spccial clausc is cndorscd on iIc coniraci io proicci iIc
morigagcc. Undcr iIc cndorscmcni, iIc insurcr agrccs io proicci iIc morigagcc's inicrcsi as ii may appcar, rcgardlcss
of iIc conduci of iIc morigagor as conccrns iIc provisions of iIc policy.
Undcr a siandard morigagc clausc, paymcni musi lc madc io iIc morigagcc io iIc cicni of iis inicrcsi, and iIcn iIc
lalancc of iIc insurancc procccds, if any, may lc sougIi ly iIc morigagor.
Temporary removaI oI stocks cIause:
Ii is agrccd iIai iIc siocl insurcd Icrcly noi ccccding 10% of iIc ioial sum insurcd of sucI siocl is covcrcd wIilc
icmporarily rcmovcd io any oiIcr prcmiscs for purposcs of falricaiion or proccssing or finisIing or oiIcr similar
purposcs.
TIc pro-raia condiiion of avcragc sIould lc applicd io iIc limii of siocls icmporarily rcmovcd as wcll as io iIc ioial
sum insurcd of sucI siocl undcr iIc policy.
Pro Rata IstrIbutIon cIause:
TIc lasic purposc of a pro raia disiriluiion clausc is io disiriluic iIc insurancc auiomaiically ovcr iIc scvcral iicms in
proporiion io iIcir rcspcciivc valucs. TIis is donc irrcspcciivc of iIc fluciuaiions iIai may occur from iimc io iimc in
sucI valucs.
Sincc luildings arc suljcci io liiilc fluciuaiions in valuc, iIis clausc is lcss imporiani. Howcvcr, ii is imporiani wiiI
rcspcci io macIincry and siocl of goods, wIcrc valucs cIangc rapidly. TIc clausc opcraics io disiriluic iIc amouni of
iIc policy ly providing iIai insurancc amouni wIicI is aiiacIcd in cacI luilding or locaiion in iIc proporiion iIai iIc
valucs ai iIc locaiion lcar io iIosc in all locaiions covcrcd. TIc pro raia disiriluiion clausc iIus limiis iIc company's
lialiliiy ai cacI scparaic locaiion, wiiI only a spccific proporiion of iIc policy applying io cacI locaiion.
For c.g. Valucs ai locaiion A- Fs 5,00,000
Valucs ai locaiion D- Fs 10,00,000
Valucs ai locaiion C- Fs 15,00,000
A policy of $ 24,000 wiiI a pro raia disiriluiion clausc covcring all 3 locaiions.
Amount oI Insurance appIIcabIe to IocatIon A
Valuc of locaiion A1 Valuc of all locaiions Fs 24,00,000
Fs 5,00,0001Fs 30,00,000 Fs 24,00,000 Fs 4,00,000
Amount oI Insurance appIIcabIe to IocatIon B
Valuc of locaiion D1 Valuc of all locaiions Fs 24,00,000
Fs 10,00,0001Fs 30,00,000 Fs 24,00,000 Fs 8,00,000
Amount oI Insurance appIIcabIe to IocatIon C
Valuc of locaiion D1 Valuc of all locaiions Fs 24,00,000
=Fs 15,00,0001Fs 30,00,000 Fs 24,00,000 Fs 12,00,000
ContrIbutIon cIause:
If ai iIc iimc of loss or damagc Iappcning io any propcriy insurcd, iIcrc migIi lc sulsisiing insurancc or insuranccs,
wIicI arc covcring iIc samc propcriy, iIc insurancc company docs noi lccomc liallc io pay or coniriluic morc iIan
iis raicallc proporiion of sucI loss or damagc.
For c.g. A firm Ias insurcd iis finisIcd goods siorcd in a warcIousc for Fs. 50 lalI wiiI XYZ Insurancc Company.
Sincc iIc siocls arc IypoiIccaicd io a lanl, iIcy also insurc iIc samc propcriy for Fs. 30 lalI wiiI ADC Company,
iIinling iIai iIc insurcd Ias noi insurcd iIcm. A firc occurs in iIc godown and iIc loss is asccriaincd ai Fs. 10 lalI.
In iIis casc iIc XYZ company pays 518iI of Fs. 10lalI i.c. Fs. 6.25 lalI and ADC company pays 318
iI
of iIc amouni
i.c. Fs 3.75 lalI.
eductabIe cIause:
TIis clausc lasically providcs iIai iIc insurcd musi lcar iIc firsi pari of any loss covcrcd ly iIc coniraci iIc cffcci of
iniroducing iIis clausc is io rcducc iIc insurcr's lialiliiy ly iIc applicallc amouni of dcduciillc. In fcw policics, iIc
maimumamouni of insurcr's lialiliiy is iIc policy limii lcss iIc amouni of dcduciillc.
TIc various iypcs of Dcduciillcs undcr iIc clausc arc
SiraigIi. Ii may lc siaicd as a flai amouni of moncy, a pcrccniagc of valuc cic.
FrancIisc. A ficd amouni or pcrccniagc of valuc or insurancc applicd, lui if iIc loss ccccds iIc rcquircd amouni,
iIcn iIc cniirc loss is paid in full.
Disappcaring. Losscs ovcr iIc siaicd amouni of iIc dcduciillc arc paid ai a raic in cccss of 100% so iIai ai somc
lcvcl iIc dcduciillc is climinaicd.
Pro Rata IstrIbutIon cIause:
TIc lasic purposc of a pro raia disiriluiion clausc is io disiriluic iIc insurancc auiomaiically ovcr iIc scvcral iicms in
proporiion io iIcir rcspcciivc valucs. TIis is donc irrcspcciivc of iIc fluciuaiions iIai may occur from iimc io iimc in
sucI valucs.
Sincc luildings arc suljcci io liiilc fluciuaiions in valuc, iIis clausc is lcss imporiani. Howcvcr, ii is imporiani wiiI
rcspcci io macIincry and siocl of goods, wIcrc valucs cIangc rapidly.
GeneraI RuIes and ReguIatIons
LoadIng Ior kutcba constructIon:
KuicIa" consiruciion involvcs consiruciion of luildings Iaving walls and1or roofs of woodcn planls or iIaicIcd lcavcs
and1or grass1Iay of any lind lamloo1plasiic cloiI1aspIali cloiI1canvas1iarpaulin cic.
An addiiional raic of Fs.4.00%o sIall lc cIargcd for sucI luilding(si and1 or conicnis iIcrcof.
TIc policy also covcrs icmporary sIcds (aiiacIcd io luildingsi crccicd during iIc monsoon solcly for iIc purposc of
monsoon proicciion arc pcrmiiicd wiiIoui any addiiional cIargc providcd sucI sIcds arc noi uscd for sioragc
purposcs.
Addiiional prcmium is cIargcd lccausc KuicIa consiruciion Ias iIc following limiiaiions sucI as, waicr pcnciraiion,
crosion of walls ai lcvcl ly splasIing of waicr from ground surfaccs, aiiacl ly icrmiics and pcsis, IigI mainicnancc
rcquircmcnis cic.
MId-Term revIsIon In Sum Insured.
Mid-icrm rcvision in sum assurcd is allowcd undcr iIc policy. If iIc rcvision rccommcnds an incrcasc in sum insurcd,
ii is calculaicd on pro-raia lasis and if ii rccommcnds a dccrcasc in iIc sum insurcd, ii is calculaicd on a sIori pcriod
scalc.
CIaIms ExperIence Iscount/LoadIng:
Fisls Iaving sum insurcd (on luilding and conicnis of all llocls in onc compound of onc complc in onc locaiioni
alovc Fs. 50 crorc raicallc undcr various scciions of iIc iariff sIall aiiraci discounis or cIargcd loadings lascd on
insurcd claims cpcricncc of all iIc policics covcring iIc insurcd's inicrcsi for iIc prcccding 36 moniIs ccluding iIc
cpiry pcriod of iIc policy.
If iIcrc is any lrcal in insurancc, availallc 36 moniIs cpcricncc sIall lc ialcn inio accouni.
Ire extInguIsbIng appIIance Iscount:
Discounis may lc granicd ly iIc insurcrs io dciacIcd or scgrcgaicd llocls of iIc risls proiccicd ly firc ciinguisIing
applianccs, wIicI arc raicallc undcr various scciions of iIc policy ( cccpi for floaicr and1or floaicr dcclaraiion
policicsi suljcci io following. ai Sysicm is crccicd and icsicd as pcr iIc rclcvani Fcgulaiions of iIc TAC and a ccriificaic
from Loss prcvcniion associaiion of India (LPAi or Tariff Advisory commiiicc (TACi accrcdiicd Profcssional(si
1Profcssional agcncy(icsi confirming iIc cfficacy of iIc sysicm and iis full compliancc wiiI iIc Commiiicc's rulcs arc
sulmiiicd ly iIc Insurcd.
l. TIc insiallaiion is mainiaincd in an cfficicni worling ordcr ai all iimcs and an Annual Mainicnancc Coniraci (AMCi
wiiI an cicrnal agcncy in forcc.
For c.g. if A opis for a firc policy and Iis prcmiscs Iavc adcquaic vcniilaiion, firc figIiing cquipmcnis lilc firc
ciinguisIcr, an cmcrgcncy cii door, sccuriiy alarm sysicms cic. iIcn as pcr iIc rulcs laid down ly TAC, iIc
policyIoldcr A will lccomc cligillc for discouni undcr 'firc ciinguisIing Appliancc'.
TIc discounis allowcd arc mcniioncd in iallc givcn lclow.
Ire ExtInguIsbIng AppIIances Iscount
Type oI InstaIIatIon Iscount(%)
Hand Applianccs & Trailcr
Pumps1 Firc Engincs 2.5
Hand Applianccs & Hydrani
Sysicm 5
Hand Applianccs &
indcpcndcni Sprinllcr 1
Ficd Waicr Spray Sysicm 7.5
Hand Applianccs + Hydrani
Sysicm & indcpcndcni
Sprinllcr1 Ficd Waicr
Spray Sysicm 10
Alscncc of Hand Applianccs for Sioragc risls will noi
prcjudicc iIc applicallc discounis. Also, iIc discounis arc
noi cumulaiivc
RatIng oI RIsks In muItIpIe occupancy IndustrIaI estate:
Fisls in Muliiplc Occupancy Indusirial Esiaic sIall lc raicd `Pcr sc'. If iIc cniirc luilding of iIc Indusirial Esiaic is
insurcd undcr onc sum, a spccific raic is cIargcallc io 'luilding'.
ExcIusIons
W Epcnscs incurrcd on ArcIiiccis, Survcyors' Consuliani Enginccrs fccs and Dclris rcmoval in cccss of 3% and 1% of
claim amouni rcspcciivcly. Howcvcr iIc samc can lc includcd undcr cicnsion for arcIiiccis, survcyors' Consuliani
Enginccrs fccs upio 3% and Dclris rcmoval upio 5%.
W Loss of carnings, loss ly dclay, loss of marlci or oiIcr conscqucniial or indircci loss or damagc of any lind.
W War and allicd pcrils
W Ionizing radiaiions and coniaminaiion ly radioaciiviiy Ionizing radiaiions includcs X rays and gamma rays. TIis can
causc ccll dcaiI in IigI doscs ovcr a sIori pcriod of iimc, and crrors in iIc rcproduciivc proccss (muiaiionsi in lowcr
doscs ovcr longcr pcriods of iimc. Fadioaciivc coniaminaiion Fadioaciivc coniaminaiion is iypically iIc rcsuli of a spill
or accidcni during iIc produciion or usc of radionuclidc wIicI an unsiallc nuclcus wIicI Ias cccssivc cncrgy.
Coniaminaiion may occur from radioaciivc gascs, liquids or pariiclcs. For camplc, if a radionuclidc uscd in nuclcar
mcdicinc is accidcnially spillcd, iIc maicrial could lc sprcad ly pcoplc as iIcy wall around.
W Polluiion or Coniaminaiion- Polluiion cclusion proIiliis payoui on a loss iIai ariscs from or is rclaicd io smolc,
sooi(dirii, fumcs, acids, cIcmicals, wasics cic.
W Iicms lilc manuscripis cic. unlcss spccifically dcclarcd.
W Cold sioragc siocls duc io cIangc of icmpcraiurc.
W Loss 1 damagc1 dcsiruciion of any clccirical and1or clccironic macIinc, apparaius, fiiurc or fiiiing arising from ovcr
running, cccssivc prcssurc, sIori circuiiing, arcing, sclf Icaiing or lcalagc of clcciriciiy, from wIaicvcr causc
including ligIining.
W Loss 1 damagc 1 dcsiruciion of Doilcrs, Economizcrs or oiIcr Vcsscls in wIicI sicam is gcncraicd macIincry or
apparaius suljcci io Ccnirifugal forcc, ly iis own cplosion1 implosion.
utIes, and LImItatIons oI tbe partIes
utIes oI tbe Insured:
TIc duiics of iIc insurcd undcr iIc firc policy arc.-
To olscrvc good faiiI iowards iIc insurcr ai iIc iimc of inccpiion of iIc coniraci and also during iIc pcriod of iIc
coniraci.
To aci as if uninsurcd ai all iimcs and ialc ncccssary sicps io minimizc iIc loss and cnsurc propcr firc figIiing
opcraiions.
To ialc rcasonallc sicps io ciinguisI iIc firc and prcvcni ii from sprcading.
To noiify iIc firc lrigadc and wIilc ialing mcasurcs io prcvcni aggravaiion of loss, iIc insurcd is noi rcquircd io
inicrfcrc wiiI firc lrigadc.
To movc iIc propcriy insurcd io a placc of safciy. If iIc failurc of iIc insurcd is csiallisIcd io lc willful, iIc insurcrs
arc cniiilcd noi only io rcpudiaic iIc pariicular loss lui iIc cniirc lialiliiy undcr iIc policy.
To givc noiicc of loss io iIc insurcrs, and cnallc iIcm io ialc mcasurcs io dcicrminc iIc causc of loss, csiimaic iIc
cicni of loss and dcal wiiI iIc salvagc. TIc noiicc of loss sIould lc givcn as soon as possillc. If ii is dclaycd lcyond a
rcasonallc iimc iIc insurcrs may noi lc allc io asccriain iIc iruc facis rclaiing io iIc loss as iraccs of firc and oiIcr
cvidcncc may disappcar.
To producc proof and pariiculars of loss ai Iis own cpcnsc. Proofs may lc in iIc form of lools of accouni, salcs
rccord, purcIasc rccord, invoiccs, and voucIcrs, coniraciual agrccmcnis wiiI supplicrs or cusiomcrs.
To malc a dcclaraiion of iIc iruiI of iIc claim and of any maiicrs conccrncd iIcrcwiiI.
Tbere are some specIIIc dutIes especIaIIy reIated to buIIdIng and macbInery.
BuIIdIng:
If iIc firc or any oiIcr spccificd pcril Ias damagcd iIc roof of iIc luilding, iIcrc may lc furiIcr damagcs io iIc
luilding ly rain. Hcncc, ii is iIc duiy of iIc insurcd io ialc ncccssary sicps io covcr iIc roof ly iarpaulin (canvasi or
cccuic icmporary rcpairs io minimizc iIc loss if iIc nccd ariscs.
Ii is also possillc iIai a luilding, wIcn dcsiroycd ly firc or somc spccificd pcril lccomcs unsafc for occupancy or
may provc dangcrous io iIc adjaccni luilding or io iIc sircci iraffic, lccausc of iIc wcalcncd paris of iIc siruciurc. In
sucI cascs, ii is iIc duiy of iIc insurcd io ialc mcasurcs for dcmoliiion or sIoring up of iIc siruciurc.
MacbInery:
WIcn macIincry is scriously damagcd ly firc or cplosion, cic., sucI propcriy is furiIcr cposcd io damagc ly rusi
or lrcalagc of macIincry duc io collapsc of iIc uppcr floors or wall. Hcncc iIc insurcd is rcquircd io ialc all iIc
ncccssary sicps io safcguard iIc assci.
Ii is iIc duiy of iIc assurcd io ialc iIc macIincry io a placc of safciy. If iIc macIincry was in opcraiion ai iIc iimc
of loss, wiiI fillcd siocl-in proccss, iIc siocl Ias io lc rcmovcd from iIc macIincs io rcducc iIc losscs loiI in siocls
and macIincry.
Tbe IoIIowIng Iacts must be estabIIsbed by tbe Insured:
TIai iIc loss iool placc during iIc policy pcriod.
TIai iIc loss is causcd ly a pcril againsi wIicI insurancc is providcd.
TIai iIc pcril occurrcd in circumsianccs wIicI arc noi wiiIin iIc scopc of policy cccpiions.
TIai iIc propcriy dcsiroycd answcrs io all maicrial pariiculars in iIc dcscripiion of iIc suljcci maiicr of iIc
insurancc coniaincd in iIc policy.
TIai Ic Ias an insurallc inicrcsi in sucI propcriy ai iIc iimc of loss.
LImItatIon on Insurer's IIabIIIty
In a siandard firc policy, iIcrc arc a numlcr of provisions iIai Iavc iIc cffcci of limiiing iIc insurcr's coniraciual
lialiliiy. TIcsc principlcs arc jusiificd lccausc iIcy suppori iIc principlc of indcmniiy. Indcmniiy dcpcnds on
ace VaIue:
TIc firsi limiiaiions on iIc insurancc company's lialiliiy arc iIc words ' io an amouni noi ccccding Fs. ______'. TIis
facc amouni of iIc coniraci is gcncrally sclccicd ly iIc insurcd. iypically, insurancc companics sci maimum limiis on
iIc amouni iIcy will wriic ly class of propcriy or gcograpIical arca. WIcrc iIc amouni of insurancc ccccds iIcsc
limiis, muliiplc policics may lc nccdcd. TIc undcrwriicr may also Iavc rcquircmcnis rcgarding iIc minimum amouni
of insurancc iIc insurancc companics will wriic in rclaiion io iIc valuc of propcriy.
In iIc casc of low valucd propcriy, minimum prcmium rcquircmcnis may cffcciivcly sci iIc amouni of insurancc, lui
iIc limii sIould noi ccccd iIc valuc of iIc insurcd propcriy.
ActuaI Casb vaIue:
TIis provision limiis iIc insurcr's lialiliiy io iIc aciual casI valuc of iIc propcriy ai iIc iimc of loss. Ii is imporiani
io noic Icrc iIai cvcn iIougI iIc facc valuc of iIc propcriy is for a largc amouni, iIc insurancc companics sIould
ncvcr, in iIc alscncc of spccial agrccmcni, lc Icld liallc for morc iIan iIc aciual casI valuc of iIc propcriy ai iIc
iimc of iIc loss.
Aciual casI valuc as dcfincd ly iIc couris ly iIc couris is iIc rcplaccmcni cosi ai iIc iimc of loss lcss pIysical
dcprcciaiion. TIc rcplaccmcni cosi is dcicrmincd ly calculaiing iIc cosi of rcpairing or rcplacing iIc damagcd propcriy
wiiI maicrials of samc lind and qualiiy.
Cost to repaIr or repIace:
According io iIis provision, insurancc companics may sciilc ciiIcr ly paying iIc aciual casI valuc of iIc loss io iIc
insurcd pr ly rcpairing or rcplacing iIc propcriy losi or damagcd.
Ii is io lc noicd iIai iIc insurancc company musi rcplacc iIc propcriy wiiI goods of lilc lind and qualiiy".
Interest oI tbe Insured:
TIc insurcr will lc liallc io pay an amouni noi ccccding iIc inicrcsi of iIc insurcd in casc of any loss wIicI
supporis iIc lasic principlc of indcmniiy. Hcncc iIc owncr cannoi profii ly collcciing insurancc in cccss of Iis
original inicrcsi in iIc propcriy.
Measures oI PreventIng Ire azards:
Ire protectIon system:
TIc firc proicciion sysicm lasically consisis of loss rcduciion iIrougI firc dcicciion and ciinguisImcnis. TIcrc arc
diffcrcni firc ciinguisImcni applianccs iIai can lc uscd for iIc prcvcniion of damagcs duc io firc.
Firsi aid applianccs arc uscd io ciinguisI firc in iIc carly siagcs.
Eamplc, poriallc ciinguisIcrs, luclcis cic. cicrnal applianccs arc lasically iIc Iydrani sysicms wIicI involvc iIc
provision of adcquaic waicr supplics along wiiI piping, nozzlcs, cic ly mcans of wIicI waicr can lc lrougIi io iIc siic
of firc.
Sprinllcr insiallaiion is Iclpful in ciinguisIing firc, in iis carly siagcs.
Good ousekeepIng:
Cood Iousclccping dcpcnds upon iIc culiurc of iIc organizaiion and iIc aiiiiudc of iIc iop managcmcni. Ii Iclps in
promoiing cfficicncy and fasicr safciy ai iIc worl placc.
A good Iousclccping involvcs.-
Clcan and iidy mainicnancc.
Fcgular mainicnancc of iIc luilding, firc ciinguisIing dcviccs, firc alarm sysicms cic.
Propcr layoui for sioragc and movcmcni of siocls and finisIcd producis.
Scparaic sioragc of pcirol, oil, cIcmicals, painis, cic.
Scgrcgaiion of Iazardous producis and goods.
Layout:
TIc layoui sIould lc in sucI a manncr iIai iIc firc sIould noi sprcad iIrougIoui iIc sioragc paris of iIc luilding.
TIc following poinis in iIis rcgard sIould lc olscrvcd.
TIc siocls siorcd sIould lc wiiIin iIc rcacI of iIc firc figIicrs.
Hcavy macIincry sIould lc lcpi in iIc lowcsi floor io prcvcni ii from crasIing lccausc of firc in iIc wIolc luilding.
Pacling maicrials lilc siraws sIould lc avoidcd.
WeIIare and SupervIsIon oI work peopIe:
Employccs arc iIc crucial facior in any organizaiion and ii is ncccssary iIai iIcy arc providcd wiiI safc worling
condiiions, adcquaic ligIiing, vcniilaiion, propcr iraining in safc worl mciIods, caniccn, rcsirooms, cic. In faciorics
wIcrc comlusiillc wasic is madc, smoling sIould lc siricily proIiliicd as a prcvcniivc mcasurc.
Management oI trade waste:
TIcrc sIould lc arrangcmcnis for all wasics io lc clcancd ai rcgular inicrvals and disposcd safcly ciiIcr ly cariing or
ly lurning. Ii is io lc noicd iIai wasic lilc oil wasic, iradc wasic cic sIould lc lcpi in propcr mcial lins wiiI
adcquaic covcrs and sIould lc disposcd off, cvcry nigIi prcfcrally, ly lurning safcly.
Dy following iIcsc praciiccs and sulscriling io an appropriaic firc insurancc policy, an individual or an organizaiion
can rcducc or complcicly avoid iIc losscs duc io firc.
CIaIm Procedure and RequIrements:
CIaIm Procedure:
TIc following is iIc proccdurc io lc adopicd ly iIc owncr wIcn Iis propcriy gcis affccicd ly firc.
Scnd a noiicc of loss io iIc insurcr immcdiaicly.
Try io proicci iIc propcriics wIicI arc affccicd or wIicI arc noi affccicd ly iIc firc, as if iIcy arc noi lccn covcrcd ly
insurancc. TIis Iclps in prcvcniing moralc Iazard. Moralc Iazard is iIc indiffcrcni aiiiiudc of iIc insurcr duc io
availaliliiy of insurancc covcr.
Sulmii a proof of loss duly signcd and wiiIin a rcasonallc iimc from iIc daic of occurrcncc of loss.
Awarc of iIc iimc and origin of iIc loss.
Disclosc iIc aciual casI valuc" of iIc propcriy.
Mcniion iIc amouni of loss.
Disclosc oiIcr coniracis of insurancc covcragcs and informaiion rclaicd io iIc insurcd propcriics.
Insurcr appoinis a survcyor or adjusicr io Iandlc complc cascs. TIcy givc iIcir rcpori aficr invcsiigaiion of claim.
oIIowIng documents are to be submItted:
Insurancc policy coniraci wiiI laicsi prcmium paid rcccipi.
Endorscmcnis1 AiiacImcnis (if anyi madc in iIc policy.
Ccriificaiion from lurcau of Firc proicciion.
Sworn siaicmcni of claim.
PIoiograpIs of damagcd propcriy.
An aIIIdavIt by tbe owner or statement decIarIng.
Naiurc of iIc owncrsIip of iIc propcriy wIicI was dcsiroycd.
Localiiy or siic of propcriy.
Eicni or dcgrcc of damagc io iIc propcriy.
Salvagc valuc of iIc propcriy.
Valuc of iIc propcriy wIicI was damagcd or dcsiroycd.
Licns and cncumlranccs, if any on iIc propcriy.
Ycar of manufaciurc, purcIasc or consiruciion of propcriy1 luilding.
Original cosi of consiruciion (for luildingi or cosi of purcIasc or manufaciurc of iIc propcriy.
In case oI Ioss to tbe buIIdIng tbe IoIIowIng addItIonaI requIrements are to be submItted to tbe Insurer.
A dciailcd csiimaic io placc iIc luilding in iIc samc siaic as lcforc iIc firc ly a civil cnginccr or an arcIiicci.
A ccriificd copy of iIc dcclaraiion of Fcal Propcriy for iIc luilding.
A copy of iIc luilding plan1slcicI prcparcd ly iIc cnginccr1arcIiicci.
A copy of iIc lcasc coniraci or agrccmcni if iIc assurcd is noi iIc owncr.
Ccriificaic of Tiilc of propcriy.
A copy of iIc Dccd of Salc", if iIc luilding was purcIascd.
In case oI Ioss to contents/MacbInery/EquIpment tbe IoIIowIng addItIonaI documents are to be submItted to
tbe Insurers.
A complcic lisi of all iicms wiiI iIc cosi pricc of cacI iicm iogciIcr wiiI iIc daic of acquisiiion.
A dciailcd lisi of iIc iicms damagcd or dcsiroycd, and iIc cosi pricc of cacI iicm wiiI daic of acquisiiion.
Fccords, purcIasc invoiccs, dclivcry rcccipis or any oiIcr proof of acquisiiion of iIc macIincry1cquipmcni.
If iIc luilding is noi owncd iIcn copy of lcasc agrccmcni is io lc furnisIcd.
Liccnsc copy1 ccriificaic of Fcgisiraiion of lusincss Namc, copics of Incomc ia rciurns of lasi 2 ycars and also,
financial siaicmcnis.
In case oI Ioss to stock-In-trade, tbe IoIIowIng addItIonaI documents are to be submItted to tbe Insurance
company:
Liccnsc copy1 Ccriificaic of Fcgisiraiion of Dusincss Namc, copics of Incomc Ta Fciurns of lasi 2 ycars and also
Financial Siaicmcnis.
PurcIasc and Salcs Invoiccs1Dclay Fcccipis or VoucIcrs or Official Fcccipis1PurcIasc and Salcs journal and oiIcr
lusincss rccords.
All oiIcr documcnis associaicd io iIc lusincss.
In tbe event oI partIaI Ioss to tbe stock In trade tbe IoIIowIng documents are to be submItted:
A full lisi of all iIc damagcd goods sIowing iIc rcspcciivc cosi priccs and iIc salvagc valucs.
WIcrc iIc invoiccs arc noi availallc for produciion, iIcn supplicr's ccriificaic can lc sulmiiicd.
InIormatIon RequIred Ior
&nderwrItIng Key poInts requIred Ior tbe cIIent
LocatIon
TIc calculaiion lascd on locaiion dcpcnds on iIc amouni of waicr ncccssary io comlai a major
firc in iIosc arcas, as wcll as iIc numlcr of firc figIiing companics, pcrsonncl, iypcs of
apparaius rcquircd, Iow closc arc iIc luildings locaicd, cisicncc of comlusiillc maicrial cic.
Fcmoic locaiion wIcrc ii lccomcs difficuli for firc figIicrs io rcacI lcads io IigIcr raic in
prcmium cIargcd.
Type oI ConstructIon/Age
Consiruciion io lc dcicrmincd if sioricd or noi sioricd. If sioricd, wIciIcr siaircasc is
scgrcgaicd. FCC roof1 FCC inicrmcdiaic floor1 FCC suppori (50 mm concrcici, any comlusiillc
falsc cciling1 wall lining uscd arc imporiani aspccis wIilc cIccling iIc consiruciion of luilding
Occupancy
TIc main usc or occupancy of a siruciurc, rcprcscnicd ly iis 'occupancy iypc', also significanily
influcnccs iIc lcvcl of firc risl wiiIin a propcriy. For various luildings, diffcrcnccs occur in iIc
aciiviiics ialing placc, iypcs of maicrials uscd and siorcd, quaniiiy of sioragc nccdcd, numlcr of
occupanis prcscni and iIc cquipmcni and luilding scrviccs rcquircd io fulfill iIc funciion of a
propcriy. All iIcsc aiiriluics of an occupancy iypc can iniroducc firc Iazards and may incrcasc
iIc ncccssiiy for addiiional firc proicciion mcasurcs in a commcrcial luilding.
Process
Ii will gcncrally lc olvious from iIc iradc wIciIcr iIc proccss uscs inflammallc maicrials or is
onc wIicI is lilcly io siari fircs. Howcvcr iIc dcgrcc of Iazard may noi lc apparcni. TIc
survcyor will iIcrcforc caminc iIc wIolc proccss, including iIc iransporiaiion ai cacI siagc
and iIc paclaging of iIc final produci. Hc will lool oui for anyiIing lilcly io causc Icai
(cIcmical rcaciions, drying proccsscsi inflammallc vapors (solvcnisi, dusi (many dusis arc
cplosivc wIcn micd wiiI airi, sparls (sulsianccs lcing ground will usually coniain siray
mciallic impuriiicsi. TIc survcyor will caminc iIc sioragc of iIc proccss maicrial, wasic
maicrial and finisIcd goods, lcaring in mind iIcir comlusiililiiy. Hc will lool for fraycd clcciric
callcs and any oiIcr unsaiisfaciory fcaiurcs.
Ire protectIon firc proicciion cquipmcni availallc (pariicularly sprinllcr sysicmsi
SurroundIng Exposure Eisicncc of comlusiillc maicrial, locaiion wIcrc Icavy macIincrics arc lcpi cic.
CAT exposure
CAT cposurc will Iclp in Iazard mapping and lciicr undcrsianding of disiriluiion, scvcriiy and
iIc lilcliIood of naiural disasicrs.
Loss Istory
If iIcrc a numlcr of claims prcviously madc iIcn iIc prcmium raics arc cpccicd io lc on a
IigIcr sidc.
LIst oI preIerred segments
Airporis (Ecludcd aircrafisi SIopping malls
Auio Ancillarics (ccludcd Scai Manufaciuring Officc Complc
Auiomolilc manufaciuring Uniis ScIools1Collcgcs
DPO's Muliiplc
Ccmcni Planis Sofi Drinl Manufaciurc Uniis
Ccrcmic Tilcs1Coods Manufaciurcrs Sofiwarc dcvclopmcni Uniis
Cold rolling Mills
Spongc Iron Planis (ccluding sponiancous
comlusiioni
Cyclc Manufaciuring Siccl Falricaiion Uniis
Dairics Siccl Maling Manufaciuring
Enginccring worlsIops
Sugar Mills (ccluding sponiancous
comlusiioni
Carmcni Manufaciuring Tca Faciorics
Class manufaciuring Tilc1 Poiicry manufaciuring
Hoicls Two wIcclcr Manufaciuring Uniis
Hospiials WaicI Manufaciuring
Summary
Firc insurancc lusincss can lc dcfincd as iIc lusincss of affcciing, oiIcrwisc iIan incidcnially io somc oiIcr class
of insurancc lusincss, coniraci of insurancc againsi loss ly or incidcnial io firc or oiIcr occurrcncc cusiomarily
includcd among iIc risls insurcd againsi in firc insurancc policics." Firc insurancc was iIc firsi io dcvclop in iIc
propcriy and casualiy indusiry.
TIc firc insurancc lusincss siaricd originally in London aficr iIc Crcai London Firc. Firc insurancc camc io India
during iIc rcign of iIc DriiisI.
TIc lasic principlcs of an insurancc coniraci lilc uimosi good faiiI, insurallc inicrcsi, indcmniiy, cic, apply io iIc
firc insurancc as wcll.
Inadcquacics of financial sircngiI of iIc individual undcrwriicr, growing compciiiion, and iIc sclfisIncss of iIc
local agcnis arc iIc primc rcasons for iIc dcvclopmcni of a siandard firc policy.
Any misrcprcscniaiion of iIc facis or fraud will malc iIc policy void. TIc policy can also lc canccllcd ly muiual
agrccmcni of iIc insurcr and iIc insurcd. iIc policy can also lc canccllcd ai iIc will of iIc insurcr ly providing prior
noiicc io iIc insurcd.
Warraniics may lc mainiaincd io rcducc iIc risl of firc Iazards. A warraniy is a condiiion assurcd iIai ccriain
aciions will or will noi lc donc.
In India all iIc iransaciions rcgarding iIc firc insurancc lusincss arc govcrncd ly iIc All India Firc Tariff wiiI cffcci
from 3113101 and goi dciarrifcd in iIc ycar 2007.
Somc spccial policics lilc floaicr policy, dcclaraiion policics, rcinsiaicmcni valuc policy arc also availallc.
According io iIc conccpi of coniriluiion if iIc samc propcriy is insurcd undcr morc iIan onc policy, insurcd cannoi
rccovcr morc iIan Iis loss. Hc can rccovcr only a raiallc poriion of loss undcr cacI policy.
If iIc inicrcsis of iwo or morc pcrsons arc insurcd undcr a singlc policy ii is callcd co-insurancc. Ii can lc joini or
composiic co-insurancc.
TIc duiics of iIc insurcd arc noiificaiion of loss, mainicnancc of good faiiI and ialing sicps io minimizc iIc loss,
sulmission of proofs and pariiculars of loss.
Loss prcvcniion mcasurcs lilc good layoui, rcady firc proicciion sysicm and good Iousclccping will rcducc iIc firc
risls.
uture ScenarIo:
TIc proposcd dc-iariffing of iIc firc porifolio in iIc ncar fuiurc will cal for pcr sc raiing of cacI risl lascd on iIc risl
faciors of individual risl in a compciiiivc manncr. TIis would mcan iIai a risl nccds io lc ncccssarily loolcd ai from a
risl managcmcni pcrspcciivc and Icncc risl cnginccring would lc callcd io play a viial and largcr rolc in a dciariff
rcgimc.
Tbank you
Manisha Calno
.Con, MS (Insuianco) ,AIII.

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