AN INTRODUCTION TO

IAR
&
OPERATIONAL MEGA POLICY
EVOLUTION,POLICY COVERAGE & CLAIMS
A PRESENTATION BY
SRI DEBASHIS PURKAIT
GENERAL MANAGER – IN SITU
UNITED INDIA INSURANCE CO LTD
COLLEGE OF INSURANCE AT KOLKATA ON 17/07/2021
EVOLUTION OF PROPERTY INSURANCE
Property insurance can be traced to the Great Fire of
London, which in 1666 devoured more than 13,000
houses. A number of attempted fire insurance
schemes came to nothing, but in
1681, economist Nicholas Barbon and eleven
associates established the first fire insurance
company, the "Insurance Office for Houses", at the
back of the Royal Exchange to insure brick and frame
homes. Initially, 5,000 homes were insured by
Barbon's Insurance Office.
A TYPICAL FIRE POLICY OF THE OLDEN
DAYS
 EXISTING COVERS IN PROPERTY SEGMENT
FIRE PORTFOLIO:
Standard Fire & Special perils Policy + Add-on covers

Fire LOP

Extensions under Fire LOP

 LIMITATIONS UNDER FIRE

• NAMED PERILS POLICY & SPECIAL PERILS BY EXTENSION

ONLY.
• ELECTRICAL FIRE LOSSES EXCLUDED & ONLY SPREAD OF
FIRE LOSSES PAYABLE.
• CONDITION OF AVERAGE APPLICABLE.
THE NEED FOR AN ALL RISK EXCLUSION
BASED POLICY
The All Risk concept got popular in the
property segment around 1980s. There was an
increased demand for the same for a hassle
free insurance experience. The insurers were
also were eager to provide such
comprehensive covers to large industrial
houses for multiple reasons.
• To shore up their top line
• The enabling factor was long years of benign
claims experience
• To present themselves as single point service
provider
• To have the comfort of dealing with customers
with excellent risk management practices
• To get rid of small time claims
 THE INDIAN SCENARIO
FIRST SHIFT TOWARD ALL RISK POLICY-
INDUSTRIAL ALL RISK POLICY
• The market sentiments in India during the 1990s
were not much different than those of the European
market where All Risk Policies had rapidly gathered
popularity
• The onset of liberalization resulted in major
investments and emergence of several mega risks
• A new Comprehensive Machinery Insurance Policy
on all risks basis designed by Munich Re in the mid
nineties caught the attention of the Indian insurers
• A team went to UK for discussions with Association
of British Insurers and studied the wordings used by
them
• After considerable deliberations and informal
discussions with trade bodies like CII, FICCI,
ASSOCHAM Fire Sub-Committee of TAC brought out
the draft IAR policy in 1997.
• After the ensuing debates and discussions TAC
introduced the IAR Policy w.e.f. 1/7/1997.
 IAR INTENDED TO COVER THE
FOLLWING PERILS
• Fire & allied perils as per fire insurance practice,
accidental damage
• Burglary
• Machinery Breakdown/Boiler Explosion/Electronic
Equipment Insurance
• Business Interruption following operation of perils
mentioned above
N.B. Min SI criterion Rs. 100 Cr which was removed
vide IRDA circular dt 6/11/2010
 EXCLUDED CAUSES
• WEAR AND TEAR, FAULTY OR DEFECTIVE DESIGN OF
MATERIALS OR WORKMANSHIP,INHERENT VICE,
LATENT DEFECT, WEAR & TEAR
• LOSSES DUE TO F.O.U.S. UNLESS DAMAGED BY A
CAUSE NOT EXCLUDED IN THE POLICY ENSUES &
THEN INSURER LIABLE FOR FOR ENSUING DAMAGE
ONLY.
• COLLAPSE OR CRACKING OF BUILDINGS
 EXCLUDED CAUSES (Contd…)

• CORROSION & RUST

• LARCENY, ACTS OF FRAUD, UNEXPLAINED
INVENTORY SHORTAGE
• WILFUL NEGLIGENCE, CESSATION OF WORK,
LOSS OF MARKET
• WAR GROUP OF PERILS
• NUCLEAR GROUP OF PERILS
• DESTRUCTION OF THE PROPERTY BY ORDER
OF PUBLIC AUTHORITY
 EXCLUDED PROPERTY
• MONEY, CHEQUES, PRECIOUS STONE/METAL,
SECURITIES OF ANY DESCRIPTION, GOODS
HELD IN TRUST OR ON COMMISSION,
COMPUTER SYSTEM RECORDS UNLESS
SPECIFICALLY COVERED.
• VEHICLES LICENSED FOR ROAD USE
• PROPERTY IN TRANSIT OUTSIDE THE
PREMISES
 EXCLUDED PROPERTY (Contd…)
• PROPERTY OR STRUCTURES IN THE COURSE
OF CONSTRUCTION, DEMOLITION OR
ERECTION
• LAND, PAVEMENTS, ROADS, RUNWAYS,
RAILWAYS LINES, ETC., UNLESS SPECIFICALLY
COVERED
• GROWING CROPS OR TREES
• PROPERTY DAMAGED AS A RESULT OF ITS
UNDERGOING ANY PROCESS
 EXCLUDED PROPERTY (Contd…)
• PROPERTY REMOVED TO OTHER LOCATIONS
FOR A PERIOD EXCEEDING 60 DAYS
• PROPERTY UNDERGOING TESTING
• PROPERTY MORE SPECIFICALLY INSURED
• PROPERTY INSURED UNDER A MARINE POLICY
 SUM INSURED - SECTION-1
• FOR BUILDING PLANT AND
MACHINERY, FURNITURE, FIXTURES
AND FITTINGS ON REINSTATEMENT
VALUE BASIS
• FOR STOCKS ON MARKET VALUE
BASIS
 SECTION - II
BUSINESS INTERRUPTION
SCOPE OF COVER

• LOSS OF GROSS PROFITS (MLOP

OPTIONAL)
• INCREASE IN COST OF WORKING
 EXCLUSIONS UNDER SECTION-II
• INSURED’S LACK OF SUFFICIENT CAPITAL
• ANY RESTRICTIONS IMPOSED BY ANY PUBLIC
AUTHORITY
• LOSS OF BUSINESS DUE TO CAUSES SUCH AS
CANCELLATION OF A LEASE, LICENCE OR ORDER ETC.
• DAMAGE TO BOILERS, ECONOMISERS, MACHINERY,
ELECTRONIC INSTALLATIONS AND DATA PROCESSING
EQUIPMENT & MB OF MACHINERY
N.B: ARISING OUT OF THE ABOVE - MLOP BUY BACK.
 SUM INSURED - SECTION II
• EXTRACTED FROM THE PREVIOUS
YEAR’S PROFIT & LOSS ACCOUNT

• FACILITY OF RETURN OF PREMIUM

CLAUSE(MAX 1/3RD)
 SPECIAL CONDITION

• If during the indemnity period goods are sold

or services are rendered elsewhere than at
the premises for the benefit of the business
either by the Insured or by others acting on
his behalf, the money paid or payable in
respect of such sales, or services shall be
taken into account in arriving at the Turnover
during the Indemnity Period.
IAR POLICY WORDING HAVE
INHERENT DICHOTOMIES WHICH
LEAD TO COMPLICATIONS VIS-À-
VIS SETTLEMENT OF CLAIMS
 HOW THE SUM INSURED UNDER IAR POLICY IS
ARRIVED AT FOR CLAIMS CALCULATION
• In the MD section the RIV clause defines RIV
as the cost of replacement on the date of
replacement of the property
• Under Condition 8 of General Conditions it is
mentioned as the RIV value on the date of
occurrence of loss
• Under Special Conditions to MD Section the
RIV date is stated as the first day of the period
of insurance
 CONFUSION BETWEEN PERILS &
CAUSES
In some places the words ‘excluded perils’ are
used to mean excluded causes of loss which is
not technically correct. Under General
Condition 2 the definition specifically states
about ‘excluded peril’ instead of ‘excluded
cause’. Under General Condition 3 it is stated
that claim is payable when the loss is caused
by insured peril which is not in sync with “All
Risk” nature of the policy
OTHER AMBIGUITIES IN WORDING
Since All Risk and MBD are not separate
sections, there may be issues in BI loss
settlement(particularly when MLOP is not
opted for) although MD claims will get settled
because of the All Risk nature of the policy.
Let us suppose there is damage to the civil
foundation of the machinery which the client
might have classified as machinery in his
books and the policy has Designation of
Property Clause. The MD part of the claim
would be payable but if the client has not
opted for MLOP coverage, whether the BI part
of the claim will be payable would be open to
interpretation.
 DILUTION OF ALL RISK CONCEPT
• The concept of All Risks and Multiline covers is
defeated by the exclusion under Section 1
Material Section Exclusion no B(3g) :Property
undergoing alteration repair testing
installation or servicing
On the other hand vanilla MBD policy covers
machinery under repair and
maintenance(including testing after
maintenance).
 CONCEPTS OF MEGA POLICY
 RISK WITH SI IN EXCESS OF INR 25000 MIO FALL BEYOND
THE REALM OF TARIFF WORDINGS AS PER REGULATORY
NORMS.

 PACKAGE POLICIES BASED ON REQUIREMENT OF INSUREDS

AND THEIR LENDERS CAN BE DEVISED.

 SUITABLE POLICY WORDINGS, RATES AND OTHER TERMS

AND CONDITIONS AS PER REQUIREMENT CAN BE ARRANGED
BY TIE -UP WITH REPUTED REINSURERS IN INTERNATIONAL
MARKET.
 EXCLUSION DRIVEN POLICY
• MEGA is also an All Risk Exclusion driven
policy but the wording here has better clarity.
Besides the ambit of coverage is much wider
since various types of Add On covers are
extended under a Mega Policy.
• THE EXCLUSIONS IN A MEGA POLICY ARE TWO
FOLD: EXCLUDED CAUSES AND EXCLUDED
PROPERTIES
• THERE IS A RATIONALE BEHIND THE
EXCLUSIONS
COVERAGE AVAILABLE UNDER OTHER
POLICIES

Examples would include losses which do gel

with the concept of property insurance and
which can be covered under other policies.
For example employee dishonesty losses can
be insured under a “FIDELITY GUARANTEE”
policy.
EXPOSURES WHICH ARE GENERALLY
CONSIDERED TO BE UNINSURABLE
Certain perils are considered to be so
hazardous that the insurance industry has
determined that they are uninsurable. These
include war, nuclear hazards etc.
COVERAGE IS AVAILABLE BY ENDORSEMENT FOR
AN ADDITIONAL PREMIUM

Examples would include Minor Works,

Additional Custom Duty, Prevention of Access,
Obsolete Part Clause, Public Authorities
Clause and many more.
MEGA RISK POLICY – SECTIONS AND COVERAGES

SEC I (PART
A)

SEC I
(PART B)

SEC II
 CUSTOMER HAS A WIDER CHOICE
• Insured can opt for only AR or AR & MBD
Section also without BI coverage
• Unlike in IAR there are no limited choice of
Add On Covers. The client can choose from an
wide array of Add-on covers
 TERMS & CONDITIONS – MEGA RISK
SECTION – I (PART A) (ALL RISK)
Indemnification in respect of all risk due to sudden

and accidental physical loss / destruction / damage

to property other than exclusions

 EXCLUSIONS
EXCEPTED CAUSES
• Breakdown of any mechanical or electrical or electronic
equipment
• Wear and tear, gradual deterioration, rusting, corrosion
erosion, scaling
. Evaporation, fermentation, loss of weight, contamination ,
change in quality unless caused by an occurence not
otherwise excluded.
• Go-slow of labour or cessation of work Gradual
subsidence and settlement of soil
. Deliberate operation of insured’s plant in excess of design
specification
. Nuclear and War risks
• The cost of replacing, repairing, or rectifying defective parts, materials,
workmanship, design or defect or omission in design or specification or
latent defect.
• Loss of data, data media and records, as well as its regeneration.
• Leakage or overflowing of the contents of any storage tank, vessel or other
container or the flaring of the products.
• Seepage and/or pollution and /or contamination, direct or indirect, arising
from any cause whatsoever.
• Marine Perils and Marine Liability to all property
 EXCLUSIONS
EXCLUDED PROPERTY
• Property in course of construction or erection or dismantling or undergoing
testing or commissioning
• However, the above exclusion shall not apply in respect of normal
maintenance testing; It is also understood that bringing up from
shutdown shall not be construed as testing.
• Road vehicles licensed for general road use
• Goods or property in transit(except within the premises)
• Off-shore property
• Property belonging to third parties
• Construction Plant and equipment
• Cash, bullion, coins, cheques, stamps, precious stones, jewellery,
Antiques, securities, books of account, computer records or data,
manuscripts, plans, drawings etc.
• Land (including topsoil, backfill) runways, canals, dams, bridges,
docks and tunnels
 BASIS OF INDEMNIFICATION - ALL RISKS

For Building and Plant & Machinery

• On reinstatement or replacement basis :
• Subject to reinstatement of damaged property without any betterment

For stocks
• On Market Value basis :
***Under-insurance up to 15% will be ignored.
 SECTION I (PART B)
MACHINERY BREAKDOWN

INSURING CLAUSE :

Sudden and accidental breakdown

of property including physical
explosion or implosion of boiler
and other pressure vessels.
‘Breakdown’ shall mean sudden and accidental physical loss

or damage resulting from –

 Defects in material , design , construction , erection

 Fortuitous working accidents
 Excessive voltage or current , failure of insulation, short circuit ,
open circuit or arcing or effect of static electricity.
 Negligent acts or lack of skill of employees or third parties
 Falling , impact , collision or similar occurrences ,obstruction or
the entry of foreign bodies.
 Overpressure
 Any other cause not excluded from the cover
 EXCEPTIONS APPLICABLE

TO THIS
Loss due to Fire and allied perils
SECTION
 Wear and tear

 Corrosion /Deterioration due to atmospheric conditions

 Loss caused by imposition of abnormal conditions directly/indirectly

resulting from testing or wilful overload beyond safe limits or experiments
except for conditions allowed by manufacturers/competent engineer

 Wilful act or wilful neglect of insured

 All consequential losses.

Loss due to damage/defect

 SETTLEMENT OF MB
• On replacement value basis subject to repairs /
replacements being carried out
• No deduction for depreciation
• If cost of repairs exceeds actual value of damaged
equipment, settlement will be on Total Loss basis.
 SECTION II - BUSINESS INTERRUPTION

 INSURING CLAUSE - Compliance of Material Damage proviso

under Section I / II
 SPECIFICATIONS – Gross Profit
 DEFINITIONS APPLICABLE TO THIS SECTION
 TURNOVER
 GROSS PROFIT & NET PROFIT
 INDEMNITY PERIOD
 RATE OF GROSS PROFIT
 STANDARD TURNOVER
 ANNUAL TURNOVER
 SHORTAGE IN TURNOVER
• The insurance cover is limited to loss of Gross
Profit due to (a) Reduction in Turnover and (b)
increase in Cost of Working and the amount
payable as indemnity there under shall be: -
• IN RESPECT OF REDUCTION IN TURNOVER:
the sum produced by applying the Rate of
Gross Profit to the amount by which the
Turnover during the Indemnity Period shall, in
consequence of the Damage, fall short of the
Standard Turnover.
• IN RESPECT OF INCREASE IN COST OF WORKING:
the additional expenditure necessarily and
reasonably incurred for the sole purpose of
avoiding or diminishing the reduction in Turnover
which but for that expenditure would have taken
place during the Indemnity period in
consequence of the Damage but not exceeding
the sum produced by applying the Rate of Gross
Profit to the amount of the reduction thereby
avoided.
• Less any sum saved during the Indemnity
Period in respect of such of the Insured
Standing Charges as may cease or be reduced
in consequence of the Damage
• Provided that if the Sum Insured by this Item
be less than the sum produced by applying
the Rate of Gross Profit to (where the
Indemnity Period exceeds 12 months insert
‘times’ as may be appropriate e.g. for 18
months insert one and a half times) the
Annual Turnover, the amount payable shall be
proportionately reduced.
 NON TRADING REVENUE

• The indemnity in BI insurance is limited to

operational income only. Hence non-trading
revenue like interest income, rent from
property, royalty etc cannot be a part of the
indemnity.
• The standard turnover, as the name implies, is the standard
against which comparison has to be made in order to
ascertain the shortage in turnover. Turnover during the period
in the twelve months immediately before the DOL is
considered since it provides for the seasonal fluctuations
which affect a large proportion of business.
• The definition of standard T.O is , however, qualified by what
is also known as the “other circumstances clause” which
provides for adjustments to be made for trend of business or
for variations in other circumstances affecting the business
either before or after the loss.
• GROSS PROFIT – The sum produced by adding
to the Net Profit the amount of the insured
Standing Charges, or if there be no Net Profit
the amount of the Insured Standing Charges
less such a proportion of any net trading loss
as the amount of the Insured Standing
Charges bears to all the Standing Charges of
the business.
• NET PROFIT – The net trading profit (exclusive
of all capital receipts and accretions and all
outlay properly chargeable to capital)
resulting from the business of the Insured at
the premises after due provision has been
made for all Standing and other charges
including depreciation, but before the
deduction of any taxation chargeable on
profits.
• TURNOVER – The money paid or payable to
the Insured for goods sold and delivered and
for services rendered in course of the business
at the premises.
• RATE OF GROSS PROFIT – The rate of Gross
Profit earned on the turnover during the
financial year immediately before the date of
the damage
• ANNUAL TURNOVER – The Turnover during
the twelve months immediately before the
date of the damage.
• STANDARD TURNOVER –The Turnover during
that Period in the twelve months immediately
before the date of the damage which
corresponds with the Indemnity Period
• To which such adjustments shall be made as may be
necessary to provide for the trend of the business
and for variations in or special circumstances
affecting the business either before or after the
damage or which would have affected the business
had the damage not occurred so that the figures thus
adjusted shall represent as nearly as may be
reasonably practicable the results which, but for the
damage, would have been obtained during the
relative period after the damage.
 Departmental Clause

• “If the business be conducted in departments,

the independent trading results of which are
ascertainable, the provision of ascertaining the
indemnity to be extended shall apply separately
to each department affected by the damage
except that if the Sum Insured by the said item be
less than the aggregate of the sum produced by
applying the rate of gross profit for each
department of the business (whether affected by
the damage or not) to the relative Annual
Turnover thereof, the amount payable shall be
proportionately reduced.”
WHAT SETS MEGA POLICY APART
FROM OTHER PROPERTY
OPERATIONAL POLICIES IS THE
WIDE RANGE OF ADD ON COVERS
BOTH ON THE MATERIAL
DAMAGE AND THE BUSINESS
INTERRUPTION SIDE
 MINOR WORKS

COVERS minor projects by way of alterations

and/or constructions and /or re-construction
and/or additions and /or maintenance and /or
testing and commissioning and /or modifications
and/or work carried out in insured premises
property in course of construction – erection
including testing and commissioning up to a
certain value. No resultant BI to be covered.
 CAPITAL ADDITIONS

COVERS Any newly acquired buildings, machinery

and plant and Alterations, additions and
improvements to buildings, machinery and plant
during the current period of insurance at any of
the premises subject to quarterly declarations and
certain limits eel and in aggregate
 INLAND TRANSIT
COVERS Plant & Machineries and spares
whilst in transit within territorial limits of
India. Coverage on comprehensive basis with
deductibles in line with Transit Insurance.
TEMPORARY REMOVAL OTHER THAN
STOCK
COVERS property temporarily removed for
cleaning, renovation, repair and similar other
purposes elsewhere subject to a limit( e.e.l.
and in aggregate).
 CONTAMINATION AND
COMINGLING
COVERS loss or damage to stock as a result of
contamination and/or comingling whilst in
insured’s custody/care subject to limits.
LOSS MINIMIZATION EXPENSES
COVERS Loss minimization expenses
necessarily incurred to prevent any
aggravation of an insured loss due to a cause
not excluded can be covered subject to limits
if this leads to loss minimization.
 OFFSITE STORAGE
COVERS properties (machineries and stocks
both) temporarily stored in unspecified
locations outside the insured premises upto
certain limits e.e.l. and in aggregate.
 CATALYST AND CONSUMABLES
Catalyst and consumable materials including lining and
refractory in the course of process are covered subject to a
Limit.
This extension also covers loss and / or damage of catalyst due to
sudden poisoning / deactivation by a cause not excluded under
the policy.
Basis of indemnity – Actual Cash value
The ACV amount shall be calculated by taking into account: The
Expired Life (EL) in working hours at the time of occurrence and
The Normal Life Expectancy (NLE) in hours according to the
technical service department assessment and applying them in
the relationship (1-EL/NLE) to the total replacement costs.
 DELIBERATE DAMAGE

COVERS physical loss of property insured or

expenses incurred, directly caused by any act or
order of any governmental authority acting under
the powers vested in them to prevent or mitigate
the damage or imminent damage or threat,
resulting directly from damage to the property
insured.
PLANS,DOCUMENTS & COMPUTER
RECORDS

COVERS loss of data, data media and records

including plans and documents as well as as
cost of it’s regeneration upto a limit
 IMMEDIATE REPAIRS
POLICY will allow insured to begin
repair/reconstruction work immediately
following a loss.
 INVOLUNTARY BETTERMENT
Notwithstanding Condition of Reinstatement, In the event that new Property
of like kind and quality is not obtainable, Property which is as similar as
possible to that which has sustained Damage and which is capable of
performing the same function shall be deemed to be new Property Insured of
like kind and quality and in no event shall this be considered as a betterment
to the Insured. In the event of replacement with new Property Insured the
Insurer will pay the cost of purchasing and installing technologically current
Property Insured which is necessitated by incompatibility between
(1) new Property Insured installed to replace Property Insured which has
sustained Damage
and
(2) existing Property Insured which has not incurred Damage
at the same or an interdependent location
 UNDAMAGED PROPERTY
• Where any property hereunder is damaged
but the foundations or any part thereof are
undamaged whether reinstatement of the
property is carried out upon another site(s) or
not, the undamaged foundations or any part
thereof will be considered as being destroyed
 PROPERTY NOT IN PLANT
PREMISES
Covers property (Machineries /
Equipments) of the insured kept outside
the insured premises up to a limit stated
 CLAIM PREPARATION COST

Covers costs reasonably incurred in

producing and certifying any
particulars or details in support of any
claim
 OBSOLETE SPARE PARTS

In the event of spares becoming

obsolete following a loss to Plant and
Machinery to which they belong, such
spare should form part of the claim
subject to Insurer’s retaining right of
salvage over such obsolete parts.
DECONTAMINATION EXPENSE &
POLLUTANT CLEAN UP
– Policy shall cover, as a result of enforcement of
such law or ordinance: The cost of
decontamination and removal of insured property
in a manner to satisfy such law or ordinance;
– The cost to extract pollutants and/or
contaminants from soil from the Insured's
premises if the release, discharge or dispersal of
such pollutants and/or contaminants.
SHUTDOWN & STARTUP COSTS

COVERS shutdown expenses also along with

start up costs necessarily and reasonably
incurred consequent upon an admissible loss.
 PUBLIC AUTHORITIES CLAUSE
Cost of betterment following a loss as per
order of a Public authority can be
considered under this clause
 OEM CLAUSE
• Price differential between the OEM
price and lowest bidder price up to a
certain extent(max 25%) can be
considered under this clause
 Leakage and Overflowing
It is hereby agreed that notwithstanding
anything contained herein to the contrary, this
policy extends to cover the loss of stock
caused by sudden and accidental leakage and/
or overflowing from any storage tank or
vessel, pipeline.
 Expediting Expenses
In the event of loss hereunder the insurer
shall also pay, in addition to the indemnity
otherwise provided, the reasonable extra cost
of safeguarding, preserving, temporary repair
and of expediting the repair of such damaged
property, including overtime and extra cost of
express and other rapid means of
transportation.
 Spontaneous Combustion
This policy shall extend to include loss or damage by fire only of or to the property insured
caused by its own fermentation, natural heating or spontaneous combustion.

The above cover is subject to the following warranties

• Warranted that adequate drainage facilities are provided to prevent accumulation of water
due to watering
• Warranted that majority of the hotspots within 1-1.25 meters of the surface and all stacks
should be inspected weekly for overheating
• Warranted that temperature at frequent intervals within the stack to be
measured/monitored at different surface levels
• Warranted sufficient provision for water spraying system should be made all along the area
storage facility
• Warranted that the water monitor provided at the storage should be checked on weekly
basis for its efficiency
• Warranted that all water sprinkler heads in the storage area need to be cleaned once in
month for its smooth functioning
 Vessel Impact to Jetty
• Policy may be extended to cover the Insured's
physical damage/loss and
• The consequent Business Interruption loss
resulting from "Damage“ caused by Vessel
Impact to Jetty
• As per treaty it will limited to a combined (PD+
BI) limit of Rs. 100 Cr
 Professional Fees
• The insurance by the policy shall include an
amount in respect of Architects' surveyors'
and Consulting Engineers’ and Legal and other
fees necessarily incurred in the reinstatement
of the property insured consequent upon its
destruction or damage but not for preparing
any claim.
 TPL and Damage To Surrounding Property

• This clause covers sudden and unforeseen physical loss or damage to

surrounding property of the insured described in the Schedule or to
property held by the insured in trust or on commission or for which he is
responsible; and to indemnify the insured in respect of any liability of the
Insured at law on account of –
• a) death of or bodily injury to any person (other than a person under a
contract of service or apprenticeship with the Insured sustaining death or
bodily injury which arises out of and in the course of employment with the
Insured);
• b) damage to property not belonging to the Insured nor held in trust or on
commission nor for which he is responsible arising out of perils insured
under MD section
 PR CRISIS MANAGEMENT

• Public relations costs reasonably incurred to

maintain the Insured's standing following a
loss
 72 HOUR CLAUSE
• Any and all losses caused by an AOG peril shall
constitute a single loss hereunder provided
that more than one AOG trigger occurring
within any seventy two (72) hour period
during the Period of Insurance of this Policy
shall be deemed to be a single AOG incident
within the meaning thereof.
 WAIVER OF RECOURSE
• It is understood and agreed that this Insurance shall
not be invalidated should the Insured waive, with
Insurers‟ agreement, prior to loss or damage
affected thereby, any or all rights and recovery
against any Party for loss or damage to the property
described herein, provided however, that the
Insurers‟ rights of recourse against any
manufacturers and suppliers of equipments be
maintained in force
 WAIVER OF SUBROGATION
• The Company agrees to waive its rights by
subrogation against any subsidiary or associated
organisation owned or controlled by the Insured and
any organisation which owns or controls the Insured,
and such organisations as specified in this Policy
before material loss. For the purpose of this
provision, organisation shall include any of its
partners, officers or employees acting on behalf of
the organization
 MARGIN CLAUSE
• This nonstandard property insurance provision
allows an insured to recover up to a certain specified
percentage over and above the reported value of an
insured item. No adjustment shall be made unless
the values reported represent an increase of more
than the specified percentage from the initial values
reported/declared. This is to include fluctuations
which may occur in the values of the property which
are automatically held covered.
 NO CONTROL CLAUSE
• This Insurance shall not be affected by failure
of the Insured to comply with the provisions
of the policy in any portion of the property
over which the Insured has no control.
 EXPIRATION CLAUSE

• If this policy expires or be cancelled while

an insured event is in progress, it is
understood that and agreed that
insurers, subject to all other terms and
conditions of the policy, are responsible
as if the entire loss had occurred prior to
the expiration of this insurance
 PRIMARY AND NON CONTRIBUTORY

• It is expressly agreed that this policy provides

primary Insurance Cover and shall not be
contributory to any other policy that may exist
whether the other policy also covers the
interest of the Insured or not. Subject
otherwise to the terms & conditions of the
polic
 AGGRAVATION CLAUSE
It is noted and agreed that excluded perils shall
not prejudice the right of the insured to recover
under the policy, any further loss caused by
aggravation of an originally covered loss within
the period of indemnity.
ADD ON COVERS UNDER
BI SECTION
 CONTINGENT BUSINESS
INTERRUPTION
• Prevention of Access with max limit of 4 weeks( over & above the
policy time excess) and with maximum radius of 5 kilometers from
insured premises & only inland. This extension is available only for
Mega policies.
• Suppliers and/or customers and/or utilities extension upto first tier or
direct suppliers/customers/public utilities.
– Named customers & suppliers for a max limit of 20% of the BI
SI/Loss limit. Coverage to be restricted to FLEXA perils for Overseas
customers/suppliers and to be restricted to FLEXA and AOG perils
for domestic customers/suppliers
– Un-named customers & suppliers located in India, for a maximum
limit of 10% of BI SI/Loss limit and coverage restricted to FLEXA
perils only. No cover for unnamed customers/ suppliers located
overseas
– Public utilities for a max limit of 17% of BI SI/ Loss limit.
 PREVENTION OF ACCESS
Coverage under this section shall extend to include loss or
reduction resulting from cessation, interruption, interference
or inhabitation to the business as consequence of:-

physical destruction of or damage to property belonging to

the Insured or property within a radius of 5 kms from the
insured premises (inland only & excluding port blockage)
which prevents or hinders the use of or access to the
premises;

The total liability under this section is limited to maximum of

4 weeks over and above the policy BI deductible.
 Additional Increase in Cost of
Working
It is hereby agreed and declared that notwithstanding
anything contained herein to the contrary, this policy
extends to cover costs and expenses necessarily and
reasonably incurred during the indemnity period in
consequence of the 'damage' for the purpose of
maintaining the business, it being understood that if
any such costs is of a capital asset nature then account
shall be taken of the residual value of such capital items
so involved existing at the end of the maximum
indemnity period.
 DELAYED INDEMNITY PERIOD CLAUSE

• In the event of interruption to the business insured

arising out loss or damage hereunder which
commences and/or recommences at a date later
than the actual date of the loss or damage to the
Property Insured hereunder and which gives rise to
such business interruption, Insurers shall agree to
extend the period during which indemnity is
provided by this Section of the Policy. Provided
always that Insurers shall not be liable for more than
the Sum Insured as stated in the Schedule nor the
Indemnity Period as stated in the attached Schedule.
 INTERDEPENDENCY
The policy is extended to cover losses arising
from business interruption sustained by the
insured as a result of an insured loss having
been incurred at another insured location as
specified in the schedule.
(N.B. A necessary cover in view of forward and
backward integration)
 PORT BLOCKAGE
• Loss resulting from interruption of or interference
with the Business in consequence of blockage of the
port or harbour which causes disruption to shipping
and is caused by stranding, grounding, sinking or
capsize and/or through collision or contact of any
vessel or craft with any other vessel, craft, structure
or other object of any kind shall be deemed to be
loss resulting from damage to property used by the
Insured at the situation
 ACCUMULATED STOCK CLAUSE
In adjusting any loss, account shall be taken
and an equitable allowance made, if any
shortage in turnover due to damage is
postponed by reason of the turnover being
temporarily maintained from accumulated
stocks of finished goods owned by the
Insured.
 Professional Accountants
• Any particulars or details contained in the Insured's books of account or
other business books or documents which may be required by the insurers
under the conditions of this Policy for the purpose of investigating or
verifying any claim hereunder may be produced by professional
accountants if at the time they are regularly acting as such for the Insured
and their report shall be prima facie evidence of the particulars and details
to which such report relates.
• The insurer will pay to the insured the reasonable charges payable by the
Insured to their professional accountants for producing such particulars or
details or any other proofs, information or evidence as may be required by
the Insurer under the terms of this Policy and reporting that such
particulars or details are in accordance with the Insured’s books of
account or other business books or documents
THANK YOU