new fire ppt

8/13/2019 New Fire Ppt

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FIRE INSURANCE

By: SUNIT MATHUR

RO-1, NEW DELHI


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OVERVIEW

No. of Sections : 8

No. of Perils ( In built ) : 12

No. of Exclusions : 13 No. of General Conditions: 15

No. of Add On Covers : 15+6

No. of Clauses : 11 ( A to K )


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SECTIONS

SECTION I : GENERAL RULES & REGULATION.

SECTION II : POLICY WORDING

SECTION III : DWELLINGS, OFFICES ETC.

SECTION IV : INDUSTRIAL & MANU. RISKS

SECTION V: UTILITIES OUSIDE MANU. RISK

SECTION VI: STORAGE OUTSIDE MANU. RISK

SECTION VII: TANKS FARMS / GAS HOLDERSOUTSIDE MANU. RISK

SECTION VIII: ADD ON COVERS


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COVERAGES

1. FIRE2. LIGHTENING3. EXPLOSION/ IMPLOSION4. AIRCRAFT DAMAGE5. RIOT, STRIKE & MALICIOUS DAMAGE.

6. STORM, CYCLONE, TYPHOON, TEMPEST, HURRICANE,TORNADO, FLOOD & INUNDATION,7. IMPACT DAMAGE8. SUBSIDENCE & LANDSLIDE INCLUDING ROCK SLIDE9. BURSTING & /OR OVERFLOWING OF WATER TANKS,

APPARATUS & PIPES10. MISSILE TESTING OPERATIONS11. LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS12. BUSH FIRE


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1. FIRE :Excluding (i) own fermentation, natural heating or

spontaneous combustion(ii) Its undergoing heating & drying process

(iii) Burning by order of Govt.

FIRE IN INSURANCE : Actual ignition under accidental circumstances

for insuredIgnition means burningpresenceof flames, thus loss by smoke, heating, charring

without burning is not considered fire The property should not be on fire


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FIRE IN INSURACE POLICY : Fire lighted for definite purpose is not

considered Fire for Insurance unless broken itslimitslike sugar processing

No difference if fire comes to property or

property comes to the fire like unlightedgrate

( both the above cases fire breaks its limits &causes ignition or property breaks its properlimits & comes into contact with fire, there isan accidental loss by fire )


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FIRE IN INSURACE POLICY :

Once there is a fire within the meaning of thepolicyother losses becomes payable like:

Smoke & heat

Scorching Falling Walls

Damage of Fire brigade water, chemical etc.

Damage to property removed from burningcaused by weather provided removal made for

LCM.


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LIGHTNING ( AOG )

An electricity for cloudsLoss with or without

actual ignition covered3. EXPLOSION / IMPLOSION

Only domestic boilers are covered for

explosion / implosion ( for other perils thecommercial boilers can be covered )

4.AIRCRAFT DAMAGE

Damage by Aircraft or other aerial or spacedevices and articles dropping therefromexcept damage caused by pressure waves


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. RIOT, STRIKE & MALICIOUS DAMAGE Only visible physical damage by external,

violent meansExcept

(i) Permanent or temporary dispossession bythe order of Govt.

(ii) Permanent or temporary dispossessionresulting from the unlawful occupation by anyperson

(iii) Burglary, housebreaking, theft ( whetheror not committed in course of disturbance ofpublic peace)


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6. STROM, CYCLONE, FLOOD.ETC. (AOG)( Excluding resulting from Earthquake or other

convulsions of natureIf Earthquake if coveredthrough add on than this exclusion is not

applicable)

Storm: violent disturbance of atmosphere withthunder or strong wind or heavy rainfall

Tempest : A violent Storm

Cyclone & Hurricane : Storm of greater intensity

Flood : Escape of water from its normal confines (

except water from tanks or apparatus or pipe)


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- Overflowing of lakes, rivers, canals, sea byhigh tides etc.

- Bursting of street water mains, overflowing

of sewage pipes

Inundation : Synonymous of Flood7. IMPACT DAMAGEDirect physical visible loss

by impact of rail / road vehicle or animal not

belonging to :

- Insured or occupier of the premises

- The employees of the insured


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8. SUBSIDENCE & LANDSLIDE INCLUDING

ROCKSLIDE - EXCEPT

- Normal cracking, bedding down of new bldg.

- Settlement or movement of made up ground

- Coastal or river erosion

- Defective design or workmanship or use of

defective material

- Demolition, construction, alteration, repair,

excavation of the property


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9. BURSTING & / OR OVERFLOWING OF WATERTANKS, APPARATUS & PIPES

- Largely applicable to cold regions wherebursting of pipes takes place

10. MISSILE TESTING OPERATIONS:

- Carried out by Defence Deptt., Govt. of India

11. LEAKAGE FROM AUTOMATIC SPRINKLERINSTALLATIONSEXCEPT

- Repair or alternation of the bldg.

- Repair, removal or extension of sprinkler

- Defects in construction known to insured


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12. BUSH FIRE :Excluding loss of damage by Forest Fire

GENERAL EXCLUSIONS

1. EXCESS ( NOT FOR DWELLINGS ) W.E.F. POLICIES

ON OR AFTER 01.04.2010: - PER EVENT PER

INSURED

Policies having SI of Rs.10 Crores Per location

(i) For AOG perils : 5% of claim amount subject

to Minimum of Rs.10,000/-. Each & every loss

(ii) For other perils : Rs.10,000 each & every loss


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Policies having SI above Rs.10 Crores Per location

(i) For AOG perils : 5% of claim amount subject to

Minimum of Rs.25,000/-. Each & every loss(ii) For other perils : 5% of claim amount subjectto Minimum of Rs.10,000/-. Each & every loss

2. War and kindred Perils

3. Radioactive Contamination4. Pollution or Contamination Except :

(i) Pollution or contamination caused by theinsured peril or,

(ii) The insured peril which did the loss is caused bythe pollution or contamination


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5. Loss to any bullion, curios, work of art, antiqueexceeding Rs.10,000/-, stamps, coins, cash etc.

Unless expressly stated in the policy6. Stocks of cold storage due to temperature change

7. Loss to any electrical machine, apparatus, fittingby over-running, short circuiting, self heating,electricity leakage from whatever cause exclusion applicable for particular machine

8. (a ) Architects, Engineers fee in excess of 3% of

claim amount(b) Debris Removal expenses in excess of 1% of

claim amount


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9. Any Consequential losslike profit, market etc.

10. Loss of spoilage due to retardation or

interruption of any process caused by insuredperils

11. Loss by theft during or after occurrence exceptas provided in RSMD ( burglary or theft due to

riots, strikes are covered under Fire Policy)12. Earthquake Damage

13. Loss to any property in the place other than

which stated in the policy except machinery orequipment temporarily removed for repairs,renovation etc. for not more than 60 days.


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GENERAL CONDITIONS1. Misrepresentation, non-disclosure etc.

2. Bldg. Fall and displacement : ( part or whole)

(i) All Insurance under this policy cease on

expiry of 7 days from the date of such fall if

occurred other than insured peril.

( ii ) If Fall by insured perils the Co. should be

notified within 7 days for continuance of

insurance on revised rates, terms &conditions


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3. Alternation :Policy becomes void unless notify to the Company

(i) If the Trade, Manu. Or occupation changes

(ii) If bldg. is unoccupied for more than 30 days

(iii) If interest passes from the insured except

automatically by will or law ( in case of death of

insured)

4. Marine Clause : If the same property is covered

under the Marine Policy the loss will notpayable in Fire Policy except any excess amount

over the marine policy


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5. CANCELLATION : By either Partygiving 15 days

notice and refund of premium

6.DUTIES OF THE INSURED :

(i) For any claim give notice in writing and a claimstatement item wise within 15 days of loss at hisown expense without any profit

(ii) Details of all other insurances, if any

(iii) Co. not liable for loss after expiry of 12months from the date of loss unless claim issubject to pending action or arbitration .

(iv ) If claim is repudiated by the Co., & theinsured has not filed a suit within 12 months ofdate of repudiation, it is not recoverablethereafter


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7. RIGHTS OF INSURER :After a loss the Co. without admitting liability can:

(i) Enter, take possession, examine, sorting and can

do salvaging operations

(ii) If the insured do not co-operate or hinders the

benefits of the Policy forfeits

(iii) The insured cannot abandon the property after

loss whether possessed by the Co. or not

8. FRAUD : If any fraudulent means used forclaiming, the benefits of policy forfeits.


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9. OPTION OF THE INSURER:

(i) If Co. feels the claim amount is exaggerated

then has option of reinstate or replace thedamaged property subject to S.I.

(ii) If due to municipal regulations Co. cannot

reinstate then Co. will pay such amountrequisite to reinstate to its former condition.

10. CONDITION OF AVERAGE (

UNDERINSURANCE)11. CONTRIBUTION


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12. SUBROGATION : Company take rights &remedies even before payment of claim

13. ARBITRATION ( only in case of quantum ofclaim, loss otherwise admitted under the Policy)

14. ALL NOTICE / CORRESPONDENCE MUST BE INWRITING

15. REINSTATEMENT OF SUM INSURED AFTER ALOSS :(i) By deducting pro-rata premium from the net claim

amount

(ii) If insured notify the Co. immediately after the loss fornot reinstating the SI, then the SI will be reduced by theamount of claim paid


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S.NO. ADD ON COVER RATE APPLICABLE VALUE TO BE

INSURED

1. Architects, consulting Engineers fees

in excess of 3% of claim amount

Policy Rate Specified SI not

exceeding 7.5% ofclaim amount

2. Removal of Debris ( in excess of 1%

of Claim Amount)

Policy Rate Specified SI upto

maximum 10% of S.I.

3. (a) Deterioration of Stock in Cold

Storage by to change oftemperature due to power failure at

Power Station by insured perils

Policy Rate Sum Insured of the

Stocks

(a) Deterioration of Stock in Cold

Storage by to change of

temperature due to loss to

machinery at premises by insured

perils

Policy Rate Sum Insured of the

Stocks

4. Forest Fire Minimum 3.75%o Specified SI


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5. Impact Damage due to Insureds

own Rail/road vehicle, lifts,

cranes

5% of Policy Rate Policy Sum Insured

6. Spontaneous Combustion

Category I

Category II

Category I : 0.20%0

Category I : 0.45%0

SI of relative

commodity

7. Omission to Insure additions,

alterations or extensions

Policy Rate 5% of SI of BMA

8. Earthquake ( Fire & Shock )Zone I

Zone II

Zone III

Zone IV

Zone I : 0.75%oZone II : 0.40%o

Zone III : 0.15%o

Zone IV: 0.075%o

Policy S .I. ( Dwellings,offices ratable under

Section III will be

charged as Zone IV

rate regardless the

Zone

9. Spoilage Damage Material Cover(i) Stocks in specified blocks

(ii) Machinery in specified blocks

(i) 5 times of policy rate(ii) 2.5 times of policy rate

(i) Value of stocks inspecified blocks

(ii) Value of M/A in

specified blocks


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10. Leakage & Contaminationa. Where tanks located in insuredspremises

Only

leakage

a. 3.75%o

Leakage &

Contamination

a.7.5%o

Specified Sum

Insured

b. Where tanks are locatedelsewhere

b. 4.5%o b. 9.00%o

11. Temporary removal of Stocks 10% of Policy Rate Policy S.I.

12. Loss of Rent Clause ( For Owner of

Bldg.)

Policy Rate Specified SI

13. Addl. Expenses of rent for an

alternative accommodation ( For

Tenant )

Policy rate Specified SI

14. Start up expenses Policy rate Specified SI

15. Terrorism ( Only with RSMD ) Rates as per the Terrorism

Pool

Policy Sum

Insured


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CLAUSES

A. AGREED BANK CLAUSE : To protect the interestof a banker or financer whose interest is in theinsured property

B. CONTRACT PRICE INSURANCE CLAUSE

For imported goods only where the prices arefixed as per contract little deviation ofindemnity

C. DESIGNATION OF PROPERTY CLAUSE

Co. accept the designation under which theproperty entered in the insuredsbook


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D. REINSTATEMENT VALUE POLICIES Only for Bldg., P & M, FFF & not to stocks

Reinstatement must commence and completewithin 12 months of date of loss

Underinsurance will also apply

If need extension of time notify the Company

If insured fail to intimate the intention ofreinstatement within 6 months than the thisclause will not apply

If insured unwilling to replace the property thanon market value basis

Reinstatement can carry out at another site also


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E. LOCAL AUTHORITY CLAUSE

Reinstatement Value policies can be extendedfor this clause

Some extra expenses can be allowed to

comply the local by laws but subject to S.I.

F. ESCALATION CLAUSE

Maximum 10% if allowed ( IGT )

50% of full rate on selected percentage

Only for Bldg., P & M & not for stocks & FFF


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G. ARCHITECTS FEE ( upto 3% of claim amount)H. REMOVAL OF DEBRIS ( upto 1% of claim amt.)

I. FLOATER CLAUSE

One, more or all locations as specified

Should have good internal audit & account

Change of location must be intimated

J. DECLARATION CLAUSE

Basis of declaration (i) Average of value on each day ofthe month or (ii) Highest Value during the month

Declaration must be latest by the last day of nextmonth


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J. DECLARATION CLAUSE On expiry subject to adjustment by taking

average of 12 declarationsMaximum refund

35% only

Basis of valuationMarket Value basis

If stock is covered by any other insurance than

this policy will be used only for the excess

amount, if any

K. VOLUNTARY DEDUCTIBLE CLAUSE


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GENERAL RULES AND REGULATIONS

All India Fire Tariff effective from 31.03.2001

Detariff from 01.01.2007 ( IGT from 01.01.2008 )

Only SFSP with permitted add on covers is allowed

Only land based properties are allowed

Policy covering Bldg. & Contents shall show all block-wise separate amount on (i) Bldg. (ii) Machinery &Accessories (iii) Stock & Stock in Process & (iv)Furniture & other contents

Deletion of STFI & RSMD is allowed

Rates shown are minimum rates & higher rates can becharged


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Valued Policies : For property whose marketvalue cannot be ascertained like works of art,obsolete machinery etc. subject to valuationcertificate

Long Term Policies : No policy exceeding 12months can be issued except Dwellings

Mid Term Cover: Generally not permissible to

grant STFI & RSMD perils mid term. If allowedwith certain conditions :(i) Must receive specific advice from insuredwith payment in Cash or draft. No adjustment

from existing CD or Bank Guarantee(ii) Should be for entire property coveringentire interest


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Cover shall commence after 15 days of receipt

of premium Premium rates as under shall be on Short

Period Scale

Mid-term

Inclusion

of

SECTION

III

SECTION VI SECTION

IV, V &

VIIMaterial in

Godown

Material in

Open

STFI 0.20%o 0.35%o 2.00%o 0.35%o

RSMD 0.15%o 0.15%o 0.15%o 0.15%o


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Payment of Premium : Shall be paid in full &

no installment is allowed not permissible to

split SI of same property in various policies totake advantage of deferred payments.However various policies of stock can beissued where necessitate.

Minimum Premium : Minimum Premium shallbe Rs.200. ( IGT )


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Partial Insurancea. Not to issue certain part of Bldg. However

Plinth & Foundation or only foundation can beexcluded

b. Not to issue covering specified machinery (

except boilers ) or part of the machineryc. Where portions of a bldg. or machinery isunder different ownership, in such cases it ispermissible for each owner to insure his own

portion but full extent of his interest.

SHORT PERIOD RATES


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Not Exceeding 15 days 10% of Annual Rates

Not Exceeding 1 Month 15% of Annual Rates

Not Exceeding 2 Months 30% of Annual RatesNot Exceeding 3 Months 40% of Annual Rates

Not Exceeding 4 Months 50% of Annual Rates

Not Exceeding 5 Months 60% of Annual RatesNot Exceeding 6 Months 70% of Annual Rates




Exceeding 9 Months The Full Annual Rates

Extension of Short Period Policy shall not be permitted


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Rules for CancellationAt the Option of Insured : (i) Retention of SP Rates

(ii) During Currency if the policy replaced by sameCo. by new annual policy for same property thenPro-rata refund is allowed

(iii) For the SI not replaced refund after retaining

premium on SP Rates for such S.I.(iv) In Case of S.P. policies premium retained as per

S.P. Rates

(v) In case Policy cancelled by Govt. Orders or on

completion of a Bldg. in course of construction orwhere bldg. is demolished, pro-rata refund beallowed

At the Option of Insurer : Pro-rata refund is allowed


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Mid Term Revision in S.I.Increase in S.I. : On Pro-rata Basis

Decrease in S.I.: On Short Period Scale

Escalation Clause

a. Only upto 10% of the S.I.

b. 50% of Full Rate to be charged on selected%age

c. Only for Bldg., Machinery & Accessories & not for

stocksd. Average condition will also apply


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Floater Policy : Can be issued for stocks at

various locations under one Sum Insured (

unspecified locations are not allowed )- Rate Shall be highest rate applicable at anylocation with 10% loading- In case stock in process block is covered

under Floater Policy & the rate of processblock is higher than the storage rate, theprocess block rate plus 10% loading shall apply- If stock situated within godown / process

block in the same compound are coveredunder floater policy, no floater extra ischargeable


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Declaration Policies : For frequent fluctuations in

Stock / Stock Values- Minimum SI shall be Rs. 1 Crore in one or more

locations & the SI shall not be less than 25 lacs inatleast one of these locations. Declared valueshould approximate to this figure at sometimeduring the policy year

- Monthly declaration based on (a) average of thevalues at risk on each day of month or (b) highestvalue at risk during the month. If declaration notreceived within specified time the full SI shall bedeemed to have been declared

- Reduction of SI is not allowed- Refund of premium on adjustment shall notexceed 35% of the total premium


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- Basis of Valuation will be Market Value

- Not Permissible for (a) on Short Period Basis(b) Stocks undergoing process Stocks atRailway sidings

- If at the time of loss it is found that the lastdecl. previous to the loss is less than the amt.ought to have been declared, the claim amt.

shall be reduced in such proportion as theamt. of said last decl. bears to the amt. thatought to have been declared.


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Floater Declaration Policies :- Minimum S.I should be 2 Crores

- Both Floater & Declaration policy rules willapply

- Minimum retention of premium shall be 80%

Rating of Multiple Occupancy Industrial Estate

- Shall be rated perse

- If the Entire Bldg. of Industrial Estate is

insured under one S.I. a rate of 1.80%o becharged

- The Contents will be rated perse


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Silent Risk : Under Section IV & V Only

- Factories where no manufacturing & Storagework is carried out for continuously 30 ormore days

- Retention of premium shall be based onappropriate storage rate or silent risk rate ofRs. 1.00%o whichever is higher

- The Silent risk rates are not applicable if risk issilent due to a claim / loss.


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VOLUNTARY DEDUCTIBLES both SFSP plus add ons

Deductible Amount (Rs. In Lacs) Discount

(%)AOG Perils5% of claim amt. subject to

minimum to Rs.

Other Perils

10 Lakhs 5 Lakhs 4

20 Lakhs 10 Lakhs 8

30 Lakhs 15 Lakhs 10



>100 Lakhs >50 Lakhs Refer to

HO


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SECTION III

Dwellings, Officers, Hotels, Shops Etc. Located outside thecompound of a Factory

Long Terms Policy for Dwellings only

- Minimum for 3 yrs.

- Refund : Subject of Circular dt.03.03.2009 i.e.- (i) If cancelled within 3 yearsretain premium with normal

rates with no discount

- (ii) If cancelled after 3 years rework premium as perdiscounted slabs For fraction of year, rounded of to next

higher yearSubject to retention of minimum premium- No inclusion of perils mid-term

- Method : A

- Method : B ( Discount upto 50 % for 10 yrs. & above)


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SECTION IV

INDUSTRIAL / MANUFACTURING RISK- One rate for entire property in one compound i.e.

process area, storage, office, utilities etc.- If more than one product is manufactured in the

same block the highest rate will be applicable- If 2 or more factories are there or independent

products are manufactured in the samecompound the manu. Block shall be rated perse if located detached. Misc. Blocks / utilities /

godowns / tank farms etc. in such cases shallcarry lowest rate of all such manu. Blocks.

- Dwelling located inside the factory may be ratedper se


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SECTION V

Utilities outside the Manufacturing Risks

- Rates given for various utilities


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SECTION VI

Storage outside Indl./ Manu. Risk- Two RatesWithin Godown & Open

- 4 CategoriesNH, I, II, & III

- Rates will apply for bldg./ storage area and stocks

- Operation like packing/selecting/mending /stitchingetc. are covered if do not materially alter nature of risk

- Presence of hazardous goods of higher category notexceeding 5% to total S.I. are also covered

- Utilities / Misc. Blocks shall be rated Re. 1.00%o- Open Storage of 2% of S.I. is allowed when the risk is

rated within godown


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SECTION VII

Tanks Farms / Gas Holders outside the Factory All tanks in same area shall carry highest rate

- Tanks of hazardous chemicals / liquid are covered

- Utilities & Misc. Blocks shall be rated atRe.1.00%o

- Associated properties like pumping station,compressor house, blower house etc. will rated atpar with Gas holder


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CLAIMS

While Deputing Surveyor the nature of subjectmatter involved should be kept in mind andappropriate Surveyor should be appointed

A Company official should visit to site as early as

possible If there is a doubt in admissibility of claim an

investigator should also be appointed

For disposal of salvage the general guidelines laid

down should be followed but salvage disposalbe undertaken on priority basis because thesalvage due to Fire deteriorate faster.


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Processing of Claimsdocuments required

A. Common

1. Claim Intimation

2. Policy

3. Claim Form

4. Survey ReportB. Specific

In case of Fire & Explosion : (i) FIR & Fire BrigadeReport

In case of AOG:(i) Meteorological Report or inabsence (a) Local Bodies certificate or (b)cutting of newspaper


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In case of RSMD & Impact damage : PoliceReport

DOS due to Power Failure :

(i) Log Book Maintained by the insured for

maintaining temperature

(ii) Certificate from Electricity Deptt.

In Addition to the above the U/W may insist anyother document / evidence to establish loss

NON STANDARD / COMPROMISE


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NON-STANDARD / COMPROMISE

When breach is not material or of tech. nature

or beyond the control or knowledge of insured

:

(i) Policy is rectified after collecting addl.

Premium if due

(ii) A deduction is made from assessed amt.

equivalent to 3 years premiumwhich wouldhave come had correct information available


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If breach is material to loss or insured or his

agent contributed to loss and has not

consciously committed the breach :

- Payment can be considered on merits of each

case upto a maximum of 75% of the Assessed

Loss

STEPS INVOLVED IN LOSS ASSESSMENT


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STEPS INVOLVED IN LOSS ASSESSMENT

1. Gross Loss Assessed

Less : Depreciation = A

2. Less : Salvage = B

3. Less : Under Insurance = C

4. Less : Excess = D

5. Net Claim Payable = A-B-C-D


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