SPOILAGE MATERIAL DAMAGE COVER

This Add on cover is given to indemnify

(i) Loss of stock in process and
(ii) Damage to machinery, containers and equipment including cost of removal of debris and cleaning of machinery and/ or container.
It covers loss or damage by Spoilage resulting from the retardation or interruption or cessation of any production process or operation caused by operation of any peril covered under this Policy provided the claim in respect of damage to property causing retardation/interruption or cessation of production process is admissible under the policy.

Important: It is necessary to opt coverage for all stocks in process as well as production machinery in a specified production block & the sum insured is declared with due care failing which, it shall attract Under-insurance at the time of claim.

In general, Underwriter are under the impression that "Stocks in process" or Machinery alone can be insured independently but this understanding is not correct although Fire tariff provides differential rating for both items. If done, it would attract Under-insurance.

 For Ex: In case of damage to Transformer by fire (insured peril) causing interruption in production process due to stoppage of power supply, resulting damage to Stocks in process and/ or Machinery shall be payable under this extension up to the Indemnity limits selected by Insured.
This is very common in Aluminium extraction plants where molten aluminium gets solidified inside pots. This I will discuss in my next blog where I will be discussing pot freezing cover in detail.

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