VPinsupedia

MLOP policies are issued with restricted indemnity period of 3 to 6 months and subject to condition that all critical spare parts are available at insured premises. In view of the same business interruption following MBD is normally short unlike FLOP policies where interruption can be as long as 24 to 30 months in the event of devastating fire. That is why add on covers not provided in MLOP tariff. In majority of cases stand alone MLOP policies are not given and it comes as a part of IAR policy where FLOP is compulsory and all desired extensions are available.  I don't think any company has filed add on covers under stand alone MLOP policy which is rarely given now a days. Please understand that even under IAR policy, suppliers and customers premises extension including failure of utility is not extended to cover MBD perils even though they are covered under IAR policy. Further MLOP sum insured is also fixed on the lines of fire LOP but at the time of calculation of premium rate, r...

MBD policy is not an All risk cover although it is mentioned that it covers loss or damage to insured property by any peril not excluded in policy.  If you look at exclusions, you will find that policy excludes all possible causes other than electrical or mechanical breakdowns. Depreciation is not applied on parts other than having limited life. This is important to understand that adequacy of sum insured is checked by comparing it with replacement value of new machinery of same make & capacity as on date of loss and adequacy of sum insured is required to be checked in each claim whether depreciation is applied or not. Total loss claims are settled at Market value as on date of loss or sum insured, whichever is less. Market value is invariably calculated by applying depreciation on current replacement value of new machinery of similar make and type. Reason for this so called anamoly is that It is one of the policy condition which is inserted  because we cover only...

Some time back, one of the senior surveyor pointed out that under business interruption policy we apply time excess in terms of standard gross profit which is nowhere defined in the policy. Due  to this it becomes very difficult to convince insured or his Technical  advisors in respect of application of policy time excess. This is to inform all that while submitting revised  IAR policy wordings with IRDA, we have explicitly defined standard gross profit in the policy to avoid anomalies at the time of assessment of loss. To understand it more clearly you may visit vpinsupedia channel on YouTube and look at Part 2 of Business Interruption policies to understand the calculation part of 7 or 14 days time excess in terms of standard gross profit.

Project insurance policies exclude part of project which is completed and put into use for intended purpose. By virtue of taking "Put into use" add on cover, insured buys back this exclusion with certain loss limits and period as defined in add on cover by the insurance company. Say for example, it can be given for a loss limit of rupees 10 crores for a period of 6 months. That means, any loss or damage to insured property which is put into use up to  rupees 10 crores shall remain covered under the policy up to a maximum period of 6 months or the expiry of policy, whichever is earlier. Continuity cover is granted in projects where integral testing is required after erection of all plant and machineries before final commissioning of plant. As per this addon cover, any machinery which is tested and commissioned but is required  to wait for completion of remaining portion of plant, shall be allowed to remain covered under the policy till successful completion of integral testing...

As per the current GIC treaty norms, STFI and/or EQ perils can be deleted subject to the condition that total Occupancy rate after deletion of peril(s) should not be less than minimum nat cat rates (STFI + EQ) as per min rates published by GIC. Suppose a risk having flexa rate of 0.42%o falls under EQ zone 2 (0.25%o) and insured wants deletion of STFI peril, it can be allowed if the sum total of minimum Flexa and EQ rate is more than min STFI & EQ rate i.e. 0.25% + 0.25%o = 0.50%o.  In the instant case since the sum total of flexa and EQ shall be 0.42 + 0.25 i.e. 0.67%o which is higher than minimum rate to be charged, STFI deletion can be allowed by charging rate of 0.67%o. On the contrary if insured wants deletion of STFI & EQ both, same can be permitted subject to charging minimum rate of 0.50%o because flexa rate (0.42) alone is less than minimum rate to be charged.