IC 78, Miscellaneous Insurance One Liner, Chapter-7: Bankers Indemnity and Jewellers Block Insurance
Insurance exams offered by the Insurance Institute of India (III), consist of various papers either in Life or Non Life or Combined. Here we are providing ONE LINER IC 78, Misc Insurance CHAPTER 7: Bankers Indemnity and Jewellers Block Insurance for para 13.2 and III exam . These questions will be very helpful for upcoming promotional exam in 2020.
IC 90, Human Resource Management is a very important topic in insurance promotional exam. This IC 78, miscellaneous insurance paper comes in all GIPSA exams which makes it very important.
The Article IC 78, Chapter 7: Bankers Indemnity and Jewellers Block Insurance
♦IC 78, Chapter 7: Bankers Indemnity and Jewellers Block Insurance
1.“Money” as used in this policy is deemed to mean bank notes (signed and unsigned), bullion, coins, currency, jewellery, precious stones, ornaments pledged with the insured, postage and revenue stamps (uncancelled) and stamp papers.
2.’Securities’ as used in this policy is deemed to mean air consignment notes, bank money orders, bills of exchange, bill of lading, bonds, certificates of deposit, certificate of shares / stocks, cheques, coupons, debentures, demand drafts, express postal orders, fixed deposit receipts issued by the insured, lorry receipts, lottery tickets, postal receipts, promissory notes, railway receipts, time drafts, warehouse receipts, mail transfers, travellers cheques and drafts and all other instruments of a negotiable character in respect of which, if negotiated by any holder, the insured would have no recourse against the innocent holder thereof.
3.‘Employee’ is deemed to mean all existing employees (officers, clerks and sub-staff) whether permanent or temporary, whole time or part time, on contract or otherwise, including apprentices, on the salary roll of the bank at all its offices, but shall not include any director or partner other than salaried.
4.Indemnity under Bankers’ blanket indemnity insurance : The policy provides indemnity for any direct loss of money and / or securities sustained by the insured and discovered during the period specified in the policy.
5.The policy provides indemnity against the following contingencies:
a) On premises
- Money and / or securities for which the insured is responsible or the custody of which he has undertaken.
- It also includes money and / or securities which are in his own premises or on the premises of his bankers that is lost, destroyed or otherwise made away with by fire, riot and strikes, burglary, house-breaking, theft, robbery or hold up.
- The cover operates even if any of these contingencies are brought about by the employees of the insured. However, the claim if any will be considered under the Section of Dishonesty
b) In transit
- Money and / or securities that is lost, stolen, mislaid, misappropriated or made away with, while they are in transit in the hands of employees.
- The cover is operative even if the loss is caused by the negligence or fraud conducted by the employees of the insured. (The negligence however is an exclusion under the policy, otherwise.)
c) Forgery or alteration
This can be caused by:
- The payment of bogus, fictitious, forged or raised cheques or drafts,
- The payment of genuine cheques, drafts or fixed deposit receipts bearing forged endorsements, or
- The establishment of any credit to any customer on the faith of such documents.
- The dishonest or criminal act of any employee of the insured with respect to the loss of money and/or securities wherever committed and whether committed singly or in connivance with others.
e) Hypothecated goods
- Fraud and /or dishonesty of the insured employee in respect of any goods and / or commodities pledged or hypothecated to the insured and under the insured’s control.
f) Registered postal sendings: Loss by robbery, theft or by other causes not excluded whilst in direct transit or intended to be dispatched by registered insured post from office of the insured to the consignee provided that each post parcel shall be insured with the post office.
The insurers liability for any one consignment is limited to the least of the following:
- 10 percent of the basic sum insured or
- g) Appraisers: Loss due to infidelity or criminal acts on the part of appraisers, provided that such appraisers are on the approved list of the insured bank and provided that the insured bank exercises reasonable precautions and safeguards in the selection and appointment of such appraisers.
The insurers liability in respect of each appraiser is limited to the least of the following:
- 5 percent of the basic sum insured or
h) Janata agents” Loss due to infidelity or criminal act on the part of janata agent / chhoti bachat yojana agents / pygmy collectors et
Provided that such agents are:
- Regular part time agents of insured bank
- Appointed after full scrutiny of their credentials and
- Guaranteed by two reliable independent persons.
- The insurers liability respect of each such agent is limited to 5 percent of the basic sum insured or Rs.10,000 whichever is less.
5.Policy excess” If the claim is under terms A to E above, the insured shall bear 25% of each loss or 2 percent of the basic sum insured, whichever is higher, but not exceeding Rs.50,000.
6.The excess will not apply to loss and / or damage arising out of:
- Riot and Strikes,
- Burglary and House breaking.
7.If the claim is in respect of items F to H above the insured has to bear 25% of each and every claim.
8.Automatic reinstatement” The policy contains a provision for an automatic reinstatement of the sum insured on payment of a loss.
The insured has to pay a pro rata additional premium for the said reinstatement.
The reinstatement can, however, be effected for a total amount not exceeding the original sum insured, under the policy. This means that the liability of the insurers will be limited to:
- Twice the respective sum insured in any one period of insurance and
- The respective sum insured in respect any loss or losses caused by acts and / or omission of any one person.
9.The reinstatement premium is deducted from the claim amount itself, while settling the claim.
10.Basic sum insured: The proposer has to select the sum insured which is the limit of liability of the insurer for any one loss. The sum is known as the basic sum insured.
11.Sum Insured cannot be increased during the currency of the policy. However, it may be increased at the renewal of the policy.
12.Time period: The policy is generally issued for a period of twelve calendar months.
13.It commences and ends as per the financial year of the insured bank.
- Bankers’ blanket indemnity insurance Exclusions The policy excludes the following losses:
- Losses of any money and /or securities due to wrongful act or default of any directors or partners of the insured, other than salaried.
- Losses of any property and / or securities and /or personal property confined to the care of the insured, the nominal value and descriptions of which have not been ascertained by the insured before loss.
- Trading losses, whether or not within the knowledge of the insured notwithstanding any act or omission on the part of the employee whether within the scope of authority or not.
- Losses caused by war and allied risks.
- Losses attributable to faulty computer programming or fraudulent use of computer programme or any other EDP System.
- Losses caused by earthquake, typhoon, cyclone flood and such other convulsions of nature.
- Losses caused by negligence act or omission of the insured employees. It may however be noted that under Section B Transit cover, losses due to negligence of employees is covered.
- Losses caused by ionizing radiations or contamination by radio activity from any nuclear fuel or from any nuclear waste.
- Losses caused by nuclear weapons material.
- Losses due to any acts or omissions committed by the concerned employee after discovery of a loss in which the said employee was involved.
14.Bankers’ blanket indemnity insurance Conditions
a)The cancellation condition provides for 15 days notice either side, by registered post.
- If the insurers cancel the policy, refund of premium is made to the insured on pro-rata basi
- If the insured cancels the policy, the insurers refund the premium, on short period scale provided no claim has been paid or reported till the date of cancellation.
b)The notice of any event likely to give rise to a claim under the policy is required to be given by the insured to the insurers, immediately when the event is discovered. A complaint should forthwith be lodged with the police. All practicable steps are to be taken by the insured to recover lost property and to apprehend guilty persons.
c)The insured bank is expected to take all reasonable steps to safeguard the property insured, and to secure all doors, windows and other openings and all safe and strong rooms etc.
d)The accounts are to be audited annually by the bank’s auditors.
e)Any amount payable by the insured to the employee, in respect of whom a claim is made, or any moneys, effects in possession of the insured in account of such employees are to be applied in priority towards making good the claim under the policy.
Any moneys recovered after settlement of the claim would be the property of the Insurance Company.
15.Sum insured: The Basic Sum Insured (as discussed earlier), is applicable to sections A to E of the Policy.
- In respect of section F, G and H lower sum insured is applied as a certain percentage of the basic sum insured.
- The risk involved in Section A and Section B is higher than the other
- The Basic Sum Insured which is applicable to all the sections will not usually be adequate for the first two sections.
- Hence, the Bank is allowed to select a higher Sum Insured for these two sections which is known as the ‘Additional Sum Insured’.
- Rating The premium is based on the following:
- The limit of indemnity i.e. Basic Sum Insured.
- The total number of persons employed by the Bank including appraisers, Janata and Chhoti Bachat Yojana Agents and pygmy collectors.
- Additional limits
- For the purpose of rating the total number of employees at the beginning of the earlier financial year is obtained from the proposal form and 5% is added to take into account normal increase in staff.
- As the number of branches of the insured bank increases the control and supervision becomes less effective.
- Hence no branch discount is given where the number of branches exceeds 500.
16.1.The discount varies in inverse proportion to the number of branches as under:
- Upto 50 Branches 20% discount
- 51-100 Branches 15% discount
- 101-250 Branches 10% discount
- 251 – 500 Branches 05% discount
- Above 500 Branches Nil
- Bankers’ blanket indemnity insurance Claims
17.1.The investigation and assessment of claims under this class of business is generally entrusted to qualified Chartered Accountants who are licensed to assess Insurance Claims.
17.2.The policy provides that the insurers are not liable:
- For losses not discovered within the period of this insurance.
- In the event of non-renewal or cancellation of the Policy, for losses not discovered within six calendar months next following the date of expiry or the date of cancellation, as the case may be,
- For losses not sustained within a retroactive period not exceeding two years from the date of discovery of any such loss or losses
- It is to be noted that the policy is on discovery basis and not on occurrence basis.
- The relevant occurrence could be within the same policy period or earlier period but within the retroactive period covered which is a maximum period of two years from date of discovery of a loss.
18.In estimating the amount of any loss, the value of securities shall be taken at the average market price or value in rupees on the date of discovery of such loss (omitting Sundays and holidays).
18.1.If there be no market price, the value thereof shall be the value as agreed between the respective parties. In the event of difference, value will be ascertained by arbitration.
19.Jewellers Block Insurance: This policy had been specially devised for diamontaires, i.e those establishments dealing solely in diamonds.
- This is obvious from the fact that specific mention has been made of brokers, cutters, sorters etc. and also dispatch by registered post and angadia.
21.The policy can be used to cover jewellers either for retail or wholesale marketing.
22.This policy is not meant for those establishments whose work is predominantly manufacturing like cutters and goldsmiths.
23.This policy cannot be given to Angadias, brokers etc. This policy is also not meant for pawn broking establishments.
- Jewellers Block Insurance Coverage
The property covered under this type of insurance is as under:
- Jewellery gold and silver ornaments or plate, pearls and precious stones of any kind whatsoever, cash and currency notes and / or merchandise and materials usual to the conduct of the insureds’ business.
- Trade and office furniture and fixtures whilst they are in insureds’ business premises.
- The indemnity is extended to cover damage done by burglars/thieves to the premises and landlords fixtures and fittings for which the insured is legally responsible as tenant, upto a specified percentage of the Sum Insured.
25.The cover provided under the policy is divided into four sections.
26.It is not necessary for the proposer to cover the risk under all the 4 sections. If a proposer desires he can cover the risk under sections I and IV only.
27.coverage under Section I is compulsory.
28.Jewellers Block Insurance Section I: Loss of or damage to property whilst
contained in the premises insured by fire, explosion, lightning, burglary, house breaking, theft, hold up, robbery, riot, strikes and malicious damage
29.Jewellers Block Insurance Section II: Cover as in Section 1 whilst the property insured is in the custody of the insured, his/her partners, his employees, duly constituted attorneys, directors, sorters of diamonds OR whilst such property (excluding cash or currency notes) is in the custody of persons not in regular employment of the insured such as brokers, agents, cutters and goldsmiths.
30.Section II This section also covers jewellery which are displayed in exhibitions for a specified period of time.
- Such jewellery is covered during transit ( to and fro) to such exhibition within the Country.
- It is pertinent to note that if the exhibition is to be held outside the country, the same needs to be covered under a special perils or special contingency policy as the terms and conditions including valuation will be more complex.
31.Jewellers Block Insurance Section III: All risks cover whilst such property is in transit by Registered Parcel Post, Air Freight and through Angadia, subject to exclusions.
32.Jewellers Block Insurance Section IV: Loss of or damage to property (specified in para (b) above due to fire, explosion, lightning, burglary, house breaking, theft, hold up,
robbery, riot, strikes and malicious damage.
- Sum Insured
a)The sum insured has to be fixed by the insured in respect of property covered under Section I.
b)Under Section II, the insured has to specify limit for any one loss separately for property:
- In the custody of insured, partners etc; and
- Entrusted to brokers, cutters, etc.
c) Under Section III the insured has to specify limit any one loss for
- Registered post parcel
- Air freight
d)The condition of average is applicable to losses under Sections I, II and III.
e)Under Section IV the sum insured should represent the full value of property, otherwise average is applied.
f)In respect of sending by Registered Post parcel, the policy normally provides that the limit should not exceed Rs. 5 lakhs or 10 percent of the sum insured under Section I, whichever is less.
g)In respect of sending by Air Freight separate limit for any one loss is fixed.
34.The policy contains a warranty that all stocks covered whilst contained in the premises specified in the Schedule shall be secured in locked burglar proof safes at night and at all times outside their specified business hours.
35.It is warranted that registered post parcels are insured with the Postal Authorities for the maximum amount permissible.
36.Jewellers Block Insurance Exclusions: Some of the more important exclusions are:
- Loss of or damage to the insured property whilst the same is being worked upon, or directly resulting from any process of cleaning repairing or restoring.
- Shortage noticed at the time of stock taking. This exclusion applies to losses that have not been realized during its occurrence, but comes to light during such stock taking.
- Loss of or damage to the insured property while the same is at any public exhibition, unless intimated to the insurers, who in turn agree and pass an endorsement to that effect.
- While the property is being worn or used by the insured or any principal director or partner of the insured, or their wives, members of their families, relatives or friends, or while in their custody for such purpose.
- Theft or disappearance from vehicles owned by or under the control of the insured, whilst such vehicles are left unattended.
- Loss or damage caused by or arising from depreciation, wear and tear, vermin and mildew.
- Loss of or damage to any fragile article unless such loss or damage arises from accident to vessel, train, vehicle or aircraft by which the property is conveyed.
- Theft by or dishonesty of the insured’s family member, employee, broker or customer
- Loss following use of key to the safe or duplicate thereof belonging to the insured unless the same is obtained by threat or violence.
- Loss of or damage to insured property whilst in window display at night or whilst kept outside safes after business hours.
- Any consequential loss or damage including legal liability and delay.
- Loss or damage resulting from war and allied perils, flood, storm or other convulsions of nature.
- Losses caused by ionizing radiations or nuclear weapons material.
- Jewellers Block Insurance Conditions:
- The basis of valuation in respect of property described in the Schedule for the purpose of the policy is the insureds’ cost plus ten percent This aspect should borne in mind whilst deciding Sum Insured also.
- The loss in order to be payable under the policy has to be discovered within 60 days of its happening.
- Jewellers Block Insurance Rating
a)For rating purpose the premium is computed for each section separated and the added up in respect of Section I, the risk are divided into three categories.
- Class I Watchmen employed on 24 hours basis (round the clock) for all the premises declared for insurance.
- Class II Common watchmen for the premises day or night or 24 hours for the entire building.
- Class III All types of other risks
b)The rate applicable to class I premises is the lowest and highest in respect of Class III premises.
- A special discount is allowed in respect of Section I premium if the premises have any one of special protection devices or measures such as special security built-in vaults, strong rooms, closed circuit TV and armed guards.
- It is important to impose a warranty that such devices will be functional, throughout the currency of the policy.
- Jewellers Block Insurance Claims:
- The insured is required to give the insurers within 24 hours, a notice of the happening of any event likely to give rise to a claim.
- He is also required to inform the police within 24 hours.
- The insured has to furnish to the insurers full details of the loss, within 14 days of the event coming to his knowledge.
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