abc of engineering insurance through 3ws

1Presented by K. S. Burli

ABCsABCs

of of

Engineering Engineering InsuranceInsurance

Through

3Ws3Ws


3Ws3Ws

1.1. WWHAT IS THIS POLICYHAT IS THIS POLICY

2.2. WWHO CAN TAKE THIS POLICYHO CAN TAKE THIS POLICY

3.3. WWHICH ARE THE AREAS HICH ARE THE AREAS INSURED NEED TO BE CAREFULINSURED NEED TO BE CAREFUL


Various Policies in Engineering Various Policies in Engineering InsuranceInsurance

BOILER AND BOILER AND PRESSURE PLANTSPRESSURE PLANTS

MACHINERY MACHINERY INSURANCEINSURANCE

MACHINERY LOSS OF MACHINERY LOSS OF PROFITSPROFITS

CONTRACTORS PLANT CONTRACTORS PLANT AND EQUIPMENTSAND EQUIPMENTS

ELECTRONIC ELECTRONIC EQUIPMENTSEQUIPMENTS

DETERIORATION OF DETERIORATION OF STOCKSSTOCKS


BOILER AND PRESSURE PLANTSBOILER AND PRESSURE PLANTS WHAT IS THIS POLICYWHAT IS THIS POLICY

This is the first Engineering policy to come in to business of General This is the first Engineering policy to come in to business of General Insurance. Insurance.

The specialty of this policy is that there is no Excess (Deductible The specialty of this policy is that there is no Excess (Deductible franchise) for this policy. All other Engineering Insurance policies have franchise) for this policy. All other Engineering Insurance policies have Excess. Excess.

Policy covers explosion/implosion (Collapse). Policy, which is a legal Policy covers explosion/implosion (Collapse). Policy, which is a legal contract, defines what is explosion/implosion (Collapse). Hence there is contract, defines what is explosion/implosion (Collapse). Hence there is no room for arguing what is explosion/implosion (Collapse). no room for arguing what is explosion/implosion (Collapse).

Exclusions clarify coverage. Exclusions clarify coverage. Policy can be extended to Third Party and surrounding property damage to Policy can be extended to Third Party and surrounding property damage to

the specified selected limits. the specified selected limits.

WHO CAN TAKE THIS POLICYWHO CAN TAKE THIS POLICY Any industrialist who has the boiler coming under the Boiler Inspectorates Any industrialist who has the boiler coming under the Boiler Inspectorates

act can cover his boiler, when Boiler Inspectorate certifies that the boiler act can cover his boiler, when Boiler Inspectorate certifies that the boiler is attended to by the qualified attendants. is attended to by the qualified attendants.

WHICH ARE THE AREAS INSURED NEED TO BE CAREFULWHICH ARE THE AREAS INSURED NEED TO BE CAREFUL The Sum Insured should be the replacement value of the Boiler and its The Sum Insured should be the replacement value of the Boiler and its

accessories, otherwise Under insurance eats away the portion of the accessories, otherwise Under insurance eats away the portion of the claim.claim.

Policy should be checked as to whether it is the same which they want Policy should be checked as to whether it is the same which they want with proper extensions.with proper extensions.

Documentations at the time of claimDocumentations at the time of claim has to be as per the policy and has to be as per the policy and surveyor’s requirementssurveyor’s requirements

The Insured should discuss with the Insurer in case of any doubt on the The Insured should discuss with the Insurer in case of any doubt on the policy and should be aware of the scope, extent and the exclusions to policy and should be aware of the scope, extent and the exclusions to realize the effect of it economically.realize the effect of it economically.


MACHINERYMACHINERY INSURANCEINSURANCE WHAT IS THIS POLICYWHAT IS THIS POLICY

This policy is for covering the sudden unforeseen physical damage to the equipments during rest, working, overhauling and in the course of shifting at the premises specified by the Insured. (After proper erection and testing of the equipments at the premises.)

Premium rate is with EXCESS. INSURED CAN OPT OF HIGHER LOSSES. Insurance company encourages this by reducing the rates on an agreed

schedule discount slabs. To give an example; Rate for machine is 1% with an excess of 1% of Sum insured (SI), the rate of 0.9% can be charged for an excess of 2% of SI or still further if Insured is prepared to bear higher loss.

Policy excludes mainly wear tear, (the repair or replacement of which is to the maintenances account) in addition to normal exclusions.

Coverage is made more EXPLICIT by exclusions Policy can be extended to cover Third party Liability & Surrounding property damage.

WHO CAN TAKE THIS POLICYWHO CAN TAKE THIS POLICY Wide range of machineries by all the industrialists can take this policy. Industries have to identify those

machineries where the repair/replacement costs following the accidental damages costs more than the policy excess chosen. Last five years trend will reflect the selection. INSURED HAS THE PREVILEDGE OF CHOOSING THE MACHINES. They need not insure all machineries

Insurance company INDEMNIFIES the loss, subject to average clause.

WHICH ARE THE AREAS INSURED NEED TO BE CAREFULWHICH ARE THE AREAS INSURED NEED TO BE CAREFUL Sum Insured in MACHINERY POLICY has to be the REPLACEMENT COST, which is equals to the cost of the new

machine of the same type & capacity including transport, custom duty & erection charges at the time of claim.

Exclusion should be studied and the extent of cover has to be clearly understood Claim arises only in case of physical damage to the machine/equipment Photographs to show the physical damages to be taken Documents such as log book entries, invoices, bills, labour deployment details, expert opinions,

manufacturers views, surveyors opinions etc. to be preserved till claim settlement and produced to the insurance company when called for.

Cause & extent of damage is of vital importance in every claim settlement and hence the sequence of events and the salvaged parts should be kept ready for assessment of surveyor ‘Without meddling with any R&D or reuse of them till claim settlement is over.” it may adversely affect the claim otherwise.) Ref. case study of MRL

Full cooperation with surveyor to arrive at the cause and extent of damage will help arrive at the liability by insurance company.


Electronic Equipment PolicyElectronic Equipment Policy

WHAT IS THIS POLICYWHAT IS THIS POLICY With the introduction of Electronic Equipments in the Industrial

and Medical field, need to insure these things arose and the comprehensive package policy to cover the risk of FIRE & Allied perils plus the machinery breakdown perils is devised. This package policy is EE or Electronic Equipment policy.

It does not cover the inherent, internal and functional errors. WHO CAN TAKE THIS POLICYWHO CAN TAKE THIS POLICY

All the electronic Data Processing equipments such as computers of all kind, Electronic Equipments such as Electrocardiographs, Electro medical equipments can be insured under this policy.

WHICH ARE THE AREAS INSURED NEED TO BE CAREFULWHICH ARE THE AREAS INSURED NEED TO BE CAREFUL If the EE is covered under this policy, then the same value under

the Fire Policy can be deleted, as EE Policy covers the fire and allied perils.

The policy can include data media and also Increased cost of working. Software can also be covered wherever it is available off the shelf in the data media section.


MACHINERY LOSS OF PROFITS (MLOP)MACHINERY LOSS OF PROFITS (MLOP) WHAT IS THIS POLICYWHAT IS THIS POLICY

The loss of Gross Profit (Net Profit + Standing Charges), GP can be covered against Machinery Break down resulting in to the loss of GP. GP can be affected by the Break down of any machinery in the line of production.

Selection of the machinery is the discretion of the Insured. Only when the selected machine gets affected the policy comes in to force.

MLOP policy comes in to force, only when under the MB policy a claim is admissible. Claim under MLOP arises only when the machinery breakdown results in to the loss of

GP due to the time taken to repair or replace the damage to machine selected by the Insured under MB policy.

WHO CAN TAKE THIS POLICYWHO CAN TAKE THIS POLICY All the industries where GP is affected by the machinery breakdown There is a time exclusion similar to the excess in MB policy. Only when the time involved for repair or replacement of any critical machine in the

industry is significantly more than the TIME EXCESS chosen in the policy, such machines alone can be taken for MLOP

Policy can be taken on either Turn Over or Out put basis. WHICH ARE THE AREAS INSURED NEED TO BE CAREFULWHICH ARE THE AREAS INSURED NEED TO BE CAREFUL

All the machines covered under MLOP should necessarily stand covered for MB. The selection of machineries should take in to account the Relative Importance (RI)

of each machine with GP and also the probable time required for the repair or replacement in the worst possible event.

INDEMNITY PERIOD has to be chosen with the longest time it takes for the worst of the machinery breakdown possible among the chosen machineries.

GP gets affected more if the time taken for Repair or Replacement is more. Thus it is the game of time taken and not the material damage and the extent of it that has affected the damaged machine.


CONTRACTOR’S PLANT AND EQUIPMENT POLICYCONTRACTOR’S PLANT AND EQUIPMENT POLICY

WHAT IS THIS POLICYWHAT IS THIS POLICY CONTRACTOR’S PLANT AND EQUIPMENT/MACHINERIES CONTRACTOR’S PLANT AND EQUIPMENT/MACHINERIES

POLICY is for the machineries used for the contract jobs POLICY is for the machineries used for the contract jobs against the external damages. This is similar to the motor against the external damages. This is similar to the motor policy with the coverage of toppling and the advantage of policy with the coverage of toppling and the advantage of full replacement in case of claim, unlike motor, where full replacement in case of claim, unlike motor, where depreciation is applicable.depreciation is applicable.

WHO CAN TAKE THIS POLICYWHO CAN TAKE THIS POLICY The contractors, principles & subcontractors

WHICH ARE THE AREAS INSURED NEED TO BE CAREFULWHICH ARE THE AREAS INSURED NEED TO BE CAREFUL the above cover can be included in CAR, EAR, MCE Policy if

sum insured is less than 5% of the total project cost. These machineries should not be allowed on public roads.


THANK YOU.