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This extension is available only for Oil and Chemicals stored in tanks at insured premises. T his extension pays for the loss of chemical by leakage from insured container/ storage tank due to accidental means. For example, if the inter-connecting pipelines or valves of storage tank develop leakage / cracks by falling of any object then cost of leaked chemical / oil shall be payable under this extension up to the selected loss limits. This extension also pays for loss or damage to stocks due to its contamination by accidental mixing with other chemical/oil due to an unintentional error by a third party contractor's employee. For example, if third party contractor's employees wrongly unload stock in a tank having a different chemical, it would lead to accidental mixing and contamination of entire stocks stored therein. It may also be noted that any loss caused due to an error of insured's employee is not payable under this extension

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 tari...

Increased cost of working (ICOW) is a built in cover under Fire loss of profit policies and it is not required to be taken as Add-on cover separately. I have seen people asking for it as Add-on cover which is not correct because it is part and parcel of FLOP policies. It covers additional expenses incurred by insured with sole Intentions to save loss of Gross Profit for the insurance company by bringing the damaged property back into operation earlier than scheduled start of operations. This reduces the length of interruption period and saves insurer's liability towards Loss of GP suffered by insured. However, such expenses can be recovered up to a certain limit known as Economy limit. It emphasizes that insured cannot be paid more than the loss of GP saved for the insurance company. For example if by incurring   a sum of Rs 10 lacs, insured mitigates Loss of GP to the extent of Rs 6 lacs then Insured will be eligible to get receive max. of Rs 6 lacs towards ICOW and...

In one case a senior surveyor pointed out that under Business Interruption policies we apply time excess in terms of standard gross profit which is nowhere defined in policy and many times it becomes very difficult for them to convince insured on application of time excess based on standard gross profit This is to inform all that while submitting revised  IAR policy wordings to IRDA, the appointed Technical committee  has explicitly defined the method of applying  time excess in terms of standard gross profit in the policy to avoid any ambiguity at the time of assessment of loss.

As we know, wherever Contractor is contractually liable to maintain the project in efficient working condition, after successful completion of Testing, Commissioning and provisional handing over to the Principals, there, EAR / CAR policies can be extended to include Maintenance visit/ Extended Maintenance cover to indemnify loss occurring  to the  completed works arising out of  maintenance activity being carried out at the project site by the contractor or his employee during  the maintenance period. It is important to understand  that  all claims under this extension would go to the Contractor because till the end of maintenance period, Contractor has insurable interest in property as he is liable to make good  the loss arising out of maintenance activity during this period.  It must be noted by all that during the maintenance period, Principal must take operational policies like Fire, MBD, EEI or IAR to cover the operational plant bec...

Nowadays, it is commonly seen in market that Clients are asking for 'Margin clause' as well as 'Waiver of Under insurance' in many property policies.  At the same time they are demanding Underwriter's confirmation for clubbing of these two clauses in the event of claim so as to enjoy higher 'Waiver of Under insurance'.  Unfortunately, some Companies are agreeing to this unknowingly.  This understanding is wrong and should not be accepted because these two can not be clubbed in the event of claim. At the same time it is also to be understood that margin clause and escalation clause are two different covers and while  applying Underinsurance, the benefit of increased sum insured would be allowed only if insured has taken escalation clause by payment of additional premium. Margin clause says that in case of sum insured variation up to 10%, whether up or down, no adjustment of premium is required to be done. T his should not be confused with esc...

Steps for computation of BI Loss 1) Find out the interruption period for which the Insurers are liable to pay the loss. 2) Find Estimated TO which Insured would have produced had the loss not taken place. 3) To find out this, you will have to apply trends, Adjustment & Other circumstances clause on STO to arrive at the most reasonable figure. 4) Find the actual TO insured has generated during the IP. It can be nil also. 5) Find out Reduction in TO by subtracting Actual TO from Estimated TO 6) Apply ROGP on this RITO to derive Loss of GP during the IP 7) Add ICOW if incurred 8) Apply UI on ICOW if all standing charges are not insured.           (Not applicable when GP is insured on Difference method basis) 9) Reduce saving in Standing charges if any, during the maximum IP 10) Apply Average clause i.e. Under-insurance as explained 11) Apply policy deductible as already explained for 7 or 14 days of Std GP as defined in...