PARA 13.2|IC 57, Fire Insurance|ONE LINER|CHAPTER 2
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 57, Fire Insurance Chapter 2 “Add on covers and Special Policy” for para 13.2 and III exam . These questions will be very helpful for upcoming promotional exam in 2020.
IC 57 / Fire Insurance is a very important topic in insurance promotional exam. This IC 57 / Fire Insurance paper comes in all GIPSA exams which makes it very important.
♦Chapter 2 “Add on covers and Special Policy”
- Insurance companies offer various ‘add on’ covers along with fire insurance on payment of additional premium. These add on covers are granted by attachment of endorsements.
- the additional cover provided is only in respect of only fire damage, as a result of spontaneous combustion.
- Earthquake-Earthquake cover shall be granted only if the entire property is in one complex/ compound / extension is identical to the sum insured against the risk covered under main policy except for the value of the plinths and foundations of the buildings.
- Earth quake clause does not cover losses caused by STFI perils and vice versa.
- The Earthquake (Fire and Shock) cover in conjunction with STFI is essential to cover Tsunami damages. If either of the two perils are not simultaneously covered Tsunami risk is not covered.
- Rates of Premium are charged according to location
- The fire policy covers bush fire but excludes forest Fire. The extension includes loss ofor damage to the property insured directly caused by burning, whether accidental or otherwise, of forest, jungles and clearing of lands by fire.
- Impact damage due to Insured’s own Vehicles and the articles dropped from them.
- Deterioration of Stocks in Cold Storage premises due to accidental power failure consequent to damage at the premises of Power station due to an insured peril.
- Deterioration of stocks in cold storage premises due to change in temperature arising out of loss or damage to the cold storage machinery in the insured’s premises due to operation of insured peril.
- The extension endorsement provides cover for Debris Removal in excess of 1%up to 10.00%.
- All new buildings and/or Machinery, plant and other contents declared, which the insured may erect or acquire or for which they may become responsible.
- The liability under this extension shall not exceed 5% of the sum insured under the relevant property.
- All stocks and machinery, containers and equipment sum being declared for each block and subject to condition of average.
- The policy may be extended to cover accidental leakage and contamination or accidental leakage and applies to oils and chemicals only. The cover is for physical loss by leakage by its container due to accidental leakage and all accidental contaminations by contact with foreign matters.
- The policy to cover start up costs necessarily and reasonably incurred consequent upon loss or damage by this policy.
- Escalation of Sum Insured is applicable for Building, Machinery and Accessories and not for Stocks. Escalation clause provides an automatic increase in sum insured from the day of inception of cover.
- The reinstatement value policy provides a basis of fixing sum insured on the fire policy form with a Reinstatement Value memorandum incorporated therein.
- This RIV policy is issued in respect of building, plant, machinery, furniture, fixture and fittings only and not on stocks.
- This RIV Policy differs from the fire policy in the basis of fixing the sum insured and settlement of claims.
- Under the fire policy, claims are settled on the basis of the market value of the insured property immediately before the fire.
22.The cost of repair without taking into account depreciation.
- reinstatement is not carried out by the insured, the liability of the company is limited to the normal indemnity basis.
- The insurer within 6 months or any extended time from the date of loss, his intention to replace the damaged property.
- Reinstatement Value Policy may be extended to cover additional cost of reinstatement incurred by the insured to comply with regulations enforced by Authorities by incorporating the following Local Authorities clause in the policy.
- The total amount recoverable under any item of the policy shall not exceed the sum insured thereby.
- If the liability of the insurer under (any item of) the policy apart from this extension shall be reduced by the application of any of the terms and conditions of the policy.
- the policy except in so far as they may be hereby expressly varied shall apply as if they had been incorporated.
- Declaration Policies-Stocks which are subject to frequent fluctuations in value, or in quantity, present a problem for issuing insurance policy.
- The insured can fix a ‘provisional sum insured’ which represents the highest value of stocks at any point of time during the policy period.
- The Insured agrees to declare to his Insurance Company in writing the value of his stocks (other than retail) less any amount insured by policies other than declaration policies, in each detached building or non communicating compartment or in the open.
- The basis of monthly declaration is
- average of the highest value at risk on each day of the month or
- the highest value on any day of the month.
- The declarations shall be submitted by the insured latest by the last day of the succeeding month.
- The insured shall be deemed to have declared the sum insured hereby as the ‘value at risk.
- Valuation for declarations shall be the Market value.
- If the resultant premium is less than the provisional premium, the difference shall be repaid to the Insured but such repayment shall not exceed 50% of the provisional premium.
36.The total of the values declared or deemed to have been declared divided by the number of declarations deemed to have been made.
- This condition under declaration policy shall apply only to the excess of the value of such stocks at the time of loss over the sum insured under the other policy.
- Tariff Rules-The minimum sum insured shall be Rs. 1 crore.
- Reduction of sum insured shall not be allowed under any circumstances.
- The highest value at risk on each day or highest value on any day of the month shall be submitted by the insured latest by the last day of the succeeding month.
- Value for declaration shall be the Market Value unless otherwise agreed to between insurers and insured.
- Floater policy-Floater Clause in Fire policies (also known as Floater Policies) is granted to cover stocks which fluctuate between different locations under a single Sum Insured in a single policy.
- A floating policy covers stocks at various locations (process blocks, godowns and/ or in open) under one sum insured.
- The Tariff provides that presence of “Kutcha” construction may be ignored for rating purposes.
- The changes in the address of locations specifically declared at inception should be communicated.
- Agreed Bank Clause-All policies in which a Bank/ Financial Institution has interest shall be issued in the name of Bank/ Financial Institution and Owner or Mortgagor and shall contain a suitable clause to protect their mutual interest.
- The Bank shall mean the first named Financial Institution / Bank named in the policy.
- Contract Price Insurance Clause-insurance of imported goods only (and not for goods of local manufacture) which are sold under a contract which is cancelled either wholly or to the extent of loss or damage, it is permissible to issue a policy on the basis of Contract Price and the following clause shall be inserted in the Policy.
49.Combustion due to Fire only is the additional cover that is provided in respect of fire damage only, as a result of spontaneous combustion.
- The forest fire extension includes loss of or damage to the property insured directly caused by burning of forest, jungles and clearing of lands by fire.
- The Debris removal extension endorsement provides cover for Debris Removal up to 10.00%.
- The Spoil age Material Damage extension covers material damage by perils causin spoilage same as in fire policy.
- Insurance of Additional Expenses of Rent for An Alternative Accommodation extension is for non manufacturing premises only under material damage.
- Floating policies are granted to cover under a single policy stocks which fluctuate between different locations.
- Some of the clauses for special purposes commonly used in fire insurance which can be modified according to specific requirements are
- Agreed bank clause
- Contract price insurance clause
- Designation of property clause
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