This article throws light upon the top nine types of insurance survey. The types are: 1. Insurance of Motor Vehicles 2. Insurance against Burglary 3. Employer’s Liability Insurance 4. Marine Insurance 5. Fire Insurance 6. Machinery Insurance 7. Erection All Risks Insurance 8. Loss of Profits (Machinery) Insurance 9. Householders Insurance.
Insurance Survey: Type # 1. Insurance of Motor Vehicles:
As per the Motor Vehicles Act, any vehicle plying on the public road must have a valid insurance policy. The policy may cover own damage as well as third party risk. This is also known as comprehensive policy. This means, in case of an accident the repairing charges of the vehicles are payable by the insurance company.
The third party risk means the damage caused by the insured vehicle to life and property belonging to other persons. Such damages are also covered in addition to the damage of vehicle itself.
If the vehicle is more than 10 years old then own damage may not be covered by the insurer. In such cases only third party liability should be covered. The extra fittings, like Neck-rest, Sun Shade, Tape recorder, Air conditioner, Fan or Musical horn may also be additionally covered.
The damages caused due to injury or deaths are settled at Motor Accident Claim Tribunal located at specific area. There is a prescribed rate of compensation for injury and death. In a public vehicle—tyres side of Bonnet, lamps, mudguard and body paintings are excluded.
Normal exceptions are—intentional damage, all illegal involvements, war etc. Limitations as to use of the vehicle and geographical area of movement of the vehicle would be applicable.
Insurance Survey: Type # 2. Insurance against Burglary:
Burglary means theft at night from the premises through felonious entry by violent and forcible means. House breaking means theft as above during day time. Scaling of boundary wall and taking out materials from the premises without any visible breakage is also covered. Application of force and overpowering the guards and then making entry without breaking is also covered. This is called dacoity.
However larceny i.e. theft without forcible entry or exit is not covered under burglary insurance of business premises, Deeds, Bonds, Bills of Exchange, Promissory Notes, Money or Securities for Money, Stamps, Stamp Collections, Medals, Coins, Precious stones (unset), Books of Accounts or Manuscripts are not included in the insurance.
In case of household premises larceny in covered. The surveyor being deputed to survey a claim arising out of such policy should first have a copy of FIR lodged with the local police. The section of IPC under which the police has taken note of the incident is very important.
The site should be examined to find out the breakages made by the miscreants for entry or exit. Photographs are to be taken. The insured may carry out repair of broken doors, windows and wall only after photographs are taken and with written permission from police.
Surveyor should make a physical inventory of items, value them at cost and calculate the stock after burglary. If necessary, adjustment for sales and purchase are to be made. The stock before burglary is to be ascertained from the stock register.
It should be remembered that stock should be valued at cost to the insured. The profit element of sales is to be excluded. With increasing borrowings from banks for business the stock might be hypothecated to bank.
In such cases surveyor should visit the concerned bank and get the periodical stock report as submitted by the insured to his banker. When the stocks are hypothecated to the bank the claimant should be the bank and the bank manager is to sign the claim form, along with the insured.
The insurance company issues the cheque to the Bank as drawee a/c the insured. The description of the broken passage is extremely important and should be highlighted in survey report. The evidence of application of force should also be discussed.
The steps taken by the insured to protect the property from such incidents should be elaborated. When the policy warrants for providing security guards either for a specific period or for 24 hours, such arrangement should be discussed. Reference is to be made to duty charts, roll of security supervisor and investigation report of security agency.
The claim will be settled by the insurer only after receipt of final police report. This report is available on application to Superintendent of Police of the concerned district with prescribed fees to be deposited at Government Treasury.
Insurance Survey: Type # 3. Employer’s Liability Insurance:
The Workman’s Compensation Act, 1923 states that when the principal in the course of or for the purposes of his trade or business contract with any other person for the execution by the contractor in part or whole which is ordinarily the principal’s trade or business, then the principal is liable for the accident to the contractor’s workmen.
The accident should happen in and around the premises in which the principal has undertaken to execute the work. In such cases the principal is entitled to be indemnified by the contractor. This policy is very popular and important amongst the contractor and builders. Services of surveyor may be required to investigate the incident. Surveyor should be guided by the Workman’s Compensation Act, 1923 and Indian Fatal Accidents Act, 1885, Common Law Liability and the general terms and conditions of this policy.
Insurance Survey: Type # 4. Marine Insurance:
The policy covers the risk in transit of goods. As soon as the specific journey is completed, the policy seizes. Loading and unloading of goods in truck, train or steamer is included. That means if goods are damaged during loading and unloading the incident will be considered as a valid claim. Any type of transit, i.e. by road, air or sea is covered. Transhipment of cargo would be allowed if declared.
The carrier of goods has a major role to play. He is the first person responsible for safe transit. So, it is the usual practice to conduct survey of goods under marine policy in presence of carrier’s representative. The insurance company pays the claim initially to insured but recovers the amount subsequently from the carrier. Hence it is necessary that recovery right of insurance company is established.
Marine policy is an agreed value policy. Once the insured declares the value of goods and pays premium as per schedule of charges applicable for nature of goods the policy would be accepted. Insurance company would normally not verify the price from market as declared. In case of loss, the value as declared would be the guiding factor.
For a claim, the packing box should also have broken along with the material. If the material inside is broken but the packing box is outwardly sound then insurance company’s liability does not normally arise. It could be concluded that material was broken because of its inherent defect or bad packing.
In a marine claim, the date of arrival of goods at destination is important. In case the delivery is accepted by the consignee with broken packing box (known as open delivery) then the assessment memo of the carrier or at least a receipt from the carrier that the box is broken should be intimated. Surveyor should examine whether the receipt given by the consignee to the carrier of goods is clean or conditional.
The consignee should lodge a claim on the carrier of goods by a Registered A/D letter, the A/D card along with copies of correspondence exchanged are to be submitted to the insurance company as soon as possible. The net result of claim on carrier is to be highlighted.
When the goods are carried by a steamer the master of the vessel’s certificate is required stating that the materials were carried out inside the hold of the steamer. The damage caused to the goods when carried on the deck is not covered unless otherwise covered. In this respect the nature of receipt given by port authorities to the steamer agent and the particulars of landing certificate are to be carefully examined.
All the packing boxes should bear markings as described in the Invoice. All individual tacking boxes should be identified. The Surveyor should verify the markings as per invoice and as available at site. The declaration no., certificate and policy no. are to be noted by the surveyor. He should also examine the salvage value in case of a total loss and the charges of repair when loss is partial.
Insurance Survey: Type # 5. Fire Insurance:
With effect from 1st July, 1987 the Tariff Advisory Committee has introduced Fire Policy ‘C’ for Industrial risks and warehouses which cover the following risks:
3. Explosion/Implosion but excluding loss of or damage to boiler, (other than domestic boilers) economizers or other vessels, machinery or apparatus in which steam is generated or their contents resulting from their own explosion/Implosion.
4. Impact by any Rail/Road vehicles or animal:
5. Aircraft and other aerial and/or space devices and/or articles dropped therefrom excluding destruction or damage occasioned by pressure waves caused by such devices.
6. Riot, Strike and Malicious Damage.
For insurance purposes, fire implies actual ignition and must be accidental in origin from insured’s point of view. Ignition means ‘burning’. Therefore, damage/loss caused by smoke, heating, scorching or charring without actual burning is not regarded as fire. Damage or loss caused by a fire lit for a specific purpose till it is confined within its own intended limits is not a fire within the meaning of the policy.
Arson provided it is not committed by, or with the consent of the insured, is covered. The onus is upon the insured to prove, prima facie, that his loss was caused by fire to the property insured. After his doing so, the burden of proving that the loss falls within any of the exceptions lies with the insurer.
Following various other types of losses come within the scope of the policy if fire is established within the meaning of the policy e.g.:
(a) Damage or loss caused during or immediately following a fire by:
(ii) Smoke and heat
(iii) Falling walls.
(b) Damage or loss caused in the discharge of duties by fire brigades e.g. loss by water or fire extinguishers e.g. chemicals, foam etc., loss or damage caused by blowing up the property as a measure to prevent spreading of fire.
(c) Damage or loss caused by exposure of weather to property removed from a burning building, provided the removal was made in an attempt to mitigate the loss.
Damage or loss so caused by this peril is covered whether fire results or not”, Damage or loss by lightning involving no ignition is not covered in absence of special mention in the policy.
Dictionary meaning of explosion is ‘a sudden violent burst with a loud report’. In explosion the loss is caused direct by rupturing, shattering, cracking, or shaking containers or structures by scattering material or by hurling pieces of debris etc. All these losses are collectively called ‘concession’ damage and this cover is provided by the explosion cover.
Implosion means collapse due to external pressure or bursting inward—it is also provided in the fire policy. Loss or damage to industrial boilers, economizers or other apparatus are not covered under fire policy since they are covered under an engineering policy.
Damage or loss caused to the insured property by impact of road vehicles, rail or any animal such as horses or cattle is covered under the policy.
Damage or loss to the insured property (whether by fire or otherwise) directly caused by aircraft and other aerial devices and/or space devices and/or articles dropped therefrom is covered by this policy. Aerial and space devices include balloons, rockets, artificial satellites etc., as well as conventional aircraft.
However, damage or loss caused by pressure waves of such devices is excluded from the scope of this cover e.g. damage to window panes caused by vibration from low flying planes and from sonic or supersonic bangs.
Riot, Strike and Malicious Damage:
Riot, Strike and Malicious damage are covered under the policy subject to loss of or visible physical damage to the insured property by external violent means directly caused by:
(i) The act of any person taking part together with others in any disturbance of the public peace (whether in connection with a strike or lockout or not)
(ii) The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimising the consequences of any such disturbance.
(iii) The wilful act of any worker done in furtherance of strike or in resistance to a lockout resulting in visible physical damage by external violent means.
(iv) The action of any lawfully constituted authority in preventing or attempting to prevent any such act or in minimising the consequences of any such act.
(v) Any malicious act but excluding any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) provided that the insurer shall not be liable for any loss or damage arising out of or in the course of burglary, housebreaking, theft or larceny or any attempt by any person taking part therein.
This insurance does not cover:
(a) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.
(b) Loss or damage resulting from total or partial cessation of work or the retarding or interruption or cessation of any process or operation or omissions of any kind.
(c) Loss or damage occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority.
(d) Loss or damage occasioned by permanent or temporary dispossession of any Building or Plant or Unit or Machinery resulting from the unlawful occupation by any person of such Building, Plant or Unit or Machinery in prevention of access to the same provided nevertheless that the insurer is not relieved under ‘c’ or ‘d’ above any liability to the insured in respect of physical damage to the property insured occurring before dispossession ok during the temporary dispossession.
Therefore, indirect or consequential losses such as trade losses suffered as a result of strike or lockout is not covered. Moreover, loss or damage to property (e.g. stock in process) caused by not switching off at the required time or by switching off the process is not covered by the policy.
So far (c) and (d) are concerned it is to be noted that insurers are liable for the physical damage caused before dispossession or during temporary dispossession to the property insured.
There are certain exclusions applicable to the policy which is provided on the policy itself. Similarly, the insurance is subject to as many as 15 conditions. Some of the conditions relate to details of practice and other relate to questions of principle. Breach of any of these will affect the liability for any particular loss or may effect the validity of the contract itself.
A special benefit has been given to tiny sector industries by which they are covered for all risks as covered by fire policy “A” (wide cover) at a lower premium. Such policy is subject to warranty that value of machinery and equipment’s of the factory does not exceed the specified limit and the value of the entire risk including building machinery/equipment’s and stock and stock in process within or outside worksite does not exceed the specified limit.
In addition to the above six perils, special perils may be covered by way of extension endorsements subject to the terms, conditions, payment of premium by insured and acceptance of risk by the insurer. In general, a fire policy does not cover loss or damage to bullions or unset precious stones, any curio or work of art for an amount exceeding Rs. 1,000, manuscripts, plans, drawings patterns, models or moulds’, securities, documents-of any kind, stamps, coins or paper, money, cheques, books of account-or other business books, computer system records, explosives, unless otherwise expressly stated in the policy.
The Surveyor on receiving the intimation of a fire loss should immediately rush to the site for inspection of the extent of damage. Photographs are to be taken. Measurement of the affected area and a sketch showing the damaged area will be helpful.
A list of half-burnt goods is to be made. A separate list is to be made for items which are not covered in the policy but found burnt at site. Description from eye witnesses of the incident is to be noted.
A very important point in survey on fire claim is the cause of fire and the person who has first seen the fire. The role of Fire Brigade or the Agency who extinguish the fire is also important. Again whether fire was extinguished by water or carbon Di-oxide is also to be considered important.
The duration of fire fighting can give the Surveyor some clue. In some cases sample of water which is coming out after extinguishing the fire is necessary for Forensic test. Such samples are to be collected from the floor.
The insurance Company will consider the claim after receiving the official fire report. This report is released by authorised official of Fire Department. It may be noted that the Fire Station who extinguished the fire may not be authorised to issue the fire report. Perhaps, the office, Superior to them, is empowered to do so. An application with necessary fees is to be deposited at Treasury with policy details.
In cases when fire is .not extinguished by Fire Brigade then a report from the agency fighting the fire will be required. The stock lost due to fire should be assessed by the Surveyor. The procedure for doing so is not uniform and will differ from claim to claim. If the stock Registers and other books of accounts are also burnt then data may be collected from other sources like records with the bank, Sales tax and income tax file.
In earthquake damage under a fire policy, meteorological report confirming occurrence of earthquake in the particular place should be necessary. Reports from the same department are also necessary for processing flood and inundation claims. However, such report can be waived if there is a Government notification declaring flood in a particular area. Newspaper reports and cuttings will be useful, if available.
Insurance Survey: Type # 6. Machinery Insurance:
In this policy the Insurance Company will indemnify the insured against unforeseen and sudden physical damage to the machinery insured by any cause not specifically excluded.
However, the insurer will not be responsible for:
(A) Damage due to:
(a) Fire and allied perils,
(b) War, act of foreign enemy, invasion, hostilities or war-like operations (whether declared or not), Civil War, Rebellion, Revolution, Insurrection, Mutiny, Ript, Strike, Lockout and Malicious damage, Civil commotion, Military Coup, Martial law, conspiracy, confiscation, commandeering a group of malicious person or persons acting, on behalf of or in connection with any political organisation, requisition or destruction or damage by order of any Government de jure or de facto or by any public, Municipal or Local Authority.
(B) Nuclear reaction, nuclear radiation or radioactive contamination.
(C) Loss or damage due to overload experiment requiring imposition of abnormal condition.
(D) Gradually developing flaws, defects, cracks or fractures in any part not necessitating immediate stoppage although at some future time repair or renewal of the parts affected may be necessary.
(E) Deterioration or wearing out of any machine caused by or naturally resulting from normal use or exposure.
(F) Loss, damage and/or liability caused by or arising out of the wilful act or wilful neglect or gross negligence of the Insured or his responsible representatives.
(G) Loss due to defect existing at the time of commencement of the policy and known to the insured but not disclosed.
While Surveying such claims the basis of indemnity could be to pay expenses incurred to restore the damaged machine to its former’ state plus the cost of dismantling and re-erection. Deduction for depreciation will not be allowed except for parts with limited life. The salvage is to be taken into consideration. Items like chains, knives, cutters, dies, rolls, objects of glass etc. are to be excluded.
If the insured item is destroyed then the company will pay the actual value of the item before the occurrence of the loss including cost of freight, erection and duties. The cost of any alterations, additions and overhauls will not be recoverable under these policies. Cost of provisional repair is allowed if such cost constituted the part of final repair bill. ‘Under insurance’ is to be checked by the Surveyor.
Insurance Survey: Type # 7. Erection All Risks Insurance:
It is taken by Contractors for their construction projects. It is a very popular policy covering all the major perils in one cover. Generally a specified sum is stated as cost of clearance and removal of debris. This is allowed by the insurer. However, debris should be generated from the insured property. Cost of clearing debris generated from uninsured property is not payable.
The following items are excluded:
(a) Excess amount as per policy;
(b) Loss discovered only at the time of taking an inventory;
(c) Normal wear and tear, gradual deterioration due to atmospheric conditions or otherwise, rust, scratching of painted or polished surfaces or breakage of glass;
(d) Loss or damage due to faulty design, defective material or casting, bad workmanship other than faults in erection. This exclusion shall be limited to the items immediately – affected and shall not be deemed to exclude loss or damage to other insured items resulting from such excluded perils;
(e) The cost necessary for rectification or correction of any error during erection unless resulting in physical loss or damage;
(f) Loss or damage to files, drawings, accounts bills, currency, stamps, deeds, evidence of debt, notes, securities, cheques, packing materials such as cases, boxes, crates;
(g) Any damage or penalties on account of the Insured’s non-fulfilment of the terms of delivery or completion under his contract of erection or of any obligations assumed thereunder including consequential loss of any kind or description or for any aesthetic defects or operational deficiencies.
In this policy the sum insured/stated shall not be less than completely erected value of the property including freight, custom duty, erection cost. Surveyor should examine the point of ‘under insurance’.
Construction plant and machinery like crane, derrick, general workshop machinery etc. are also covered. But the loss or damage caused by own explosion, own mechanical/electrical breakdown are excluded. By this policy surrounding property can also be covered.
There is special provision of claims arising out of Acts of G6d which includes:
(a) Earthquake, Fire Shock
Insurance Survey: Type # 8. Loss of Profits (Machinery) Insurance:
Under this policy, during the period if any machinery as stated and used by the insured for his business is damaged by an accident and the business gets interrupted or interfered then the Insurance Company will stand to pay to the insured the amount of loss for such interruption.
The Insurance Company will not be liable, however, for the following:
(a) Wilful neglect of insured,
(b) Exceptional events occurring during the period of interruption which are not among the perils insured by this policy or the concurrent machinery breakdown against insurance policy,
(c) Loss of turnover due to import licence,
(d) Restriction imposed by the Government authority including delay on account of getting import licence
(e) Shortage of Working Capital due to which repairing or replacement was delayed.
Trading profit is the profit from selling the goods manufactured. Standing charges shall be all costs incurred for operation of the plant.
In respect of increasing cost of the additional work done for avoiding reduction in turnover is payable. But if it stands to benefit beyond the agreed indemnity period then it is not payable. Trading profit and standing charges shall be indemnified only in so far as payment would have been made against these items had there been no business interruption.
All circumstances shall be taken into account which would have influenced favorably or unfavourably the course and outcome of operation during the period. Trading profit and standing charges shall not include taxes which need not be paid during the period of interruption, expenses for acquisition of goods and raw materials, expenses in respect of investments and speculative transaction.
In this policy, valuation period is a period of twelve months retrospectively from the time a loss caused by business interruption. The rate of gross profit earned on turnover during the financial year immediately before the date of accident has to be .considered.
This policy is very popular in large size business specially involving mechanisation and costly installation of production machines.
Insurance Survey: Type # 9. Householders Insurance:
It is designed to cater to the requirements of the householder by combining under a single policy a number of contingencies.
This policy extends to:
(i) Buildings of class A construction and contents,
(ii) Burglary, housebreaking and larceny or theft,
(iii) Plate glass,
(iv) Breakdown of domestic appliances,
(v) TV set,
(vi) Pedal cycles,
(vii) Baggage during tour;
(viii) Personal accident, and
(ix) All risks.
The buildings are insured against fire, lightning, explosion of gas of domestic appliances, bursting/overflowing of water tanks/apparatus/pipes, riot and strike, earthquake (fire and/or shock), malicious act’, flood inundation, storm, cyclone, landslide damage and impact damage. They should be built with stones/bricks/concrete blocks, etc.
Burglary etc. include loss or damage to property contained in the premises occupied by the insured.
Fixed plate glass is covered against ‘accidental damage subject to certain limits on the claims.
Breakdown of appliances covers damages caused by mechanical/electrical breakdown and includes also electronic appliances, apparatus or gadgets.
TV set coverage extends to its loss or damage due to the reasons stated under ‘buildings and burglary’ and mechanical/electrical breakdown. Its legal liability is limited to Rs. 25,000.
Pedal cycles are covered against loss or damage due to fire, lightning, explosion, riot, malicious act, flood, storm, cyclone, burglary, etc.
Baggage insurance extends to the loss or damage to insured’s accompanied baggage by accident or misfortune whilst in travelling on tour or holiday anywhere in India.
Personal accident coverage includes death or bodily injury by accidental, violent, external and visible means to the insured persons named and subject to certain limits of benefit categories.
All risk covers jewellery and valuables against loss or damage by accident or misfortune whilst anywhere in India subject to limits of liability specified.