VPinsupedia

It is understood that many underwriters still do not have the clarity about the provision of continuity cover available under project insurance policies.  In view of the same I would  like to clarify that property underwriter should not remain under the impression that if continuity cover is opted for say 6 months, then the completed portion of the project will remain covered under project insurance policies indefinitely if the integral testing is completed within selected period of 6 months. Please understand Continuity cover starts after completion of testing and commissioning of a particular unit or part of project which is required to wait for completion of remaining units of the project to participate in integral testing of whole plant. If the period allowed for continuity cover is 6 months and integral testing commences after expiry of this period then the completed portion shall remain uncovered till commencement of integral testing.

Spoilage material damage cover is allowed under fire policy as add-on cover operates. It covers spoilage of material under process resulting from the retardation or interruption or cessation of any process or operation caused by any of the perils covered under this Policy e.g. Stoppage of production machinery due to failure of power supply caused by operation of insured peril. Damage due to change in temperature is different and is excluded under  IAR policy unless covered as an Add on cover e.g. Deterioration of stocks kept in cold storage due to rise in temperature arising out of stoppage of refrigeration plant & machinery.

IAR policy excludes loss or damage to insured property arising out of failure of electricity supply to the plant. But as per exclusion wordings, any subsequent loss to insured property caused by an ensuing peril not excluded in the policy, shall be payable. For example if material undergoing process gets damaged / spoiled due to failure of electricity, it is excluded but if failure of power supply causes accidental fire and damages insured property, then this shall be payable as ensuing damage. This should not be confused with CBI extension available under BI section of policy in respect of failure of electricity supply. We are talking about material damage section of policy. Hope it clarifies all doubts relating to this exclusion