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Final Insurance F
Final Insurance F
INTRODUCTION
Insurance is a contract whereby, in return for the
Payment of premium by the insured, the insurers pay the
Financial losses suffered by the insured as a result of the
Occurrence of events. The term risk is used to describe
All the accidental happenings, which produce a monetary
Loss.
Insurance is an ethos in which a large number of people exposed to a similar risk
make contributions to a common fund out of which the losses suffered by the
unfortunate due to accidental events, are made good. The sharing of risk among
large groups of people is the basis of insurance. The losses of an individual are
distributed over a group of individuals.
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DEFINITION
There can be two approaches for defining insurance. One is functional
approach other is contractual approach.
FUNCTIONAL DEFINITION
According to Encyclopedia Britannica, Insurance may be defined as a
social device where by a large group of individuals through a system of
equitable contribution, may reduce or eliminate measurable risk of economic
loss common to all members of the group
CONTRACTUAL DEFINITION
According to Justice Tindall, Insurance is a contract in which a sum of
money is paid to the assured in consideration of insurers incurring the risk of
paying a large sum upon a given contingencies.
The risk becomes insurable if the following requirements are
compiled with :
The insured must suffer financial loss if the risk operates.
The loss must be measurable in money.
The object of the insurance contract must be legal.
The insured should have sufficient knowledge about the
Risk he accepts.
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WHAT IS INSURANCE?
Mankind is exposed to many serious perils such as property losses from
fire and windstorm and personal losses from disability and premature death.
Although it is impossible for an individual to foretell or completely prevent their
occurrence but it is possible to provide against their financial affectthe loss of
property and earnings.
From the point of view of the individual the life Insurance may be defined
as a contract whereby for a Consideration amount called the premium, one party
(the insurer) agrees to pay to the other (the insured) or a beneficiary a particular
amount upon the occurrence of death or any other agreed event.
Insurance is the method of spreading and transfer of risks
Losses of few unfortunate are shared by and spread over to many
exposed to the same risk.
Assets created by the owner in expectation of future needs have a
value.
Losses of assets for any reason deprive the owner of the expected
benefits.
It acts as a form of a safeguard against misfortunes.
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We can say that the human life value is an ongoing generating asset,
which can be lost on early death or disability caused by accidents.
Insurance doesnt protect the assets but only compensates the economic or
financial loss.
CONCEPT OF INSURANCE
The concept of insurance is that people exposed to the same risk come
together and all shares loss suffered by a few.
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The insurance companies play a role of implementing the said concept --control in advance the shares in the shape of premiums and create a fund
out of which loss is paid.
Life insurance covers the contingencies and provides relief to the family
members in the event of death or retirement of the bread earner.
Insurance covers the risk of dying to early and living to long.
KINDS OF INSURANCE
Insurance can be classified into two categories.
1. LIFE INSURANCE
2. GENERAL INSURANCE
LIFE INSURANCE
The subject matter of this type of insurance is human life most of the
insurance policies are combination of savings and securities. According to
section 2 (ii) of Insurance Act 1938 Life insurance is the business of effecting
contracts of insurance upon human life including any contract, where by the
payment of money is assured on death except death by accident on the
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GENERAL INSURANCE
All the types of insurance are called general insurance or non life insurance.
1. Marine Insurance
It covers the sea or marine perils. Perils are the cause of loss which is a
condition that may increase the chance of loss. Protection agonists marine
perils like sinking of the ships, capture by enemy, sea piracy etc.
2. Fire Insurance
It covers the loss due to fire to the property like houses, shops,
goods, factories or godown etc. it covers the loss from fire and consequent
loss from such fire i.e. the loss of work due to stoppage of work due to
fire.
3. Liability Insurance
This type of insurance covers the risk of liability against third
parties, which an insurer might have to pay under certain circumstances
e.g. injury to the property and/or person of a third person in road accident
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THE FUNDAMENTALS PRINCIPALS OF INSURANCE:The mechanism of insurance involves a contractual agreement in which
the insurer agrees to provide financial protection against a specific set of risk for
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discussions.
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Insurable
Interest
Utmost
Good
Faith
Principle
of
Indemnity
Principl
e of
Insuran
ce
Principle
of Causa
Proxima
Principle
of Loss
Minimizat
ion
Principle
of
Contributi
on
Principle
of
Subrogati
on
1. THE PRINCIPLE OF UTMOST GOOD FAITH:The principle of utmost good faith, uberrimae fides (in Latin),
literally means perfect good faith or abundant good faith. The phrase is
used to express that an insurance contract must be in perfect good faith
concealing nothing. The principle is mostly discussed in the context of
the duty of the insured towards the insured, though it is equally applicable
to the insurers duty towards the insured.
From the point of view of the insured, the principle of Utmost
Good Faith could formally be defined as A positive duty to voluntarily
disclose, accurately and fully all facts material to the subject matter being
proposed, whether requested or not.
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3. THE PRINCIPLE OF INSURABLE INTEREST:The second major principle of insurance is that of insurable interest.
The existence of insurable interest is an essential ingredient of any
insurance contract.
insurance.
A common definition used for insurable interest is the legal right
to insure arising out of financial relationship, recognized under law,
between the insured and the subject matter of insurance.
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ii.
iii.
The insured must bear a legal relationship to the subject matter such
that he stands to benefit by the safety of the property, right, interest,
life or Freedom of liability. By the same token, he must stand to lose
by any loss, damage, injury or creation of liability.
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insurers would together indemnify the policyholder for the loss suffered
and no more. If he were to collect insurance money from all the insurance
for the full value, this would violate the principle of indemnity, as he
would make a profit the loss.
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ART
Q. What is ART?
It is not only expensive paintings; it also includes the fondness and love for:
Sculptures
Visual Arts ceramics, murals, works on paper
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ART INSURANCE
Art needs to insured separately from ordinary contents. Only those things
that can be replaced with reasonable ease can be insured with ordinary
replacement value insurance. Art is not replaceable with reasonable ease. Art is
unique and original.
`Each art or antique item needs to be listed carefully on the policy.
Updated appraisals will be needed periodically. The owner is responsible for the
appraisal.
The insurer can repair or replace when damage or loss occurs.
Replace means to give the owner the money amount agreed upon in the
insurance contract. Repair means the insurer will provide enough money to
repair the item up to the agreed limit of the policy.
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piece would have been severely reduced as any expert would be able to see the
restoration work done.
If your art is insured with Barrington, after the restoration is complete, an
independent valuator will assess the actual value you have lost and you will be
compensated accordingly.
The Scream
"The Scream" and "Madonna," two major paintings by famous Norwegian artist
Edvard Munch, were stolen several years ago from the Munch Museum in
Norway by armed robbers in broad daylight. The significance of the art theft is
notable, but what's really shocking is that the art was not insured against theft
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(although it was insured for fire and water damage, for restoration costs that
would be incurred to repair the paintings if they were damaged). According to a
BBC news story, John Oyaas, managing director of the museum's insurers, said
of the paintings, "They are not replaceable so you can't buy 'The Scream' on the
street and put a copy up there. The focus is on other issues than insuring them.
To a certain extent this is common practice because these items aren't
replaceable."
Now according to the statement, Mr. Oyass appears to be saying that the
paintings are so valuable that they're not worth insuring, or put another way,
since the paintings are not replaceable, insuring them is a waste of money. This
thinking makes absolutely no sense. The museum should have had theft
insurance; all museums should have theft insurance, as should all art galleries
and private collections. Whether or not a work of art is "replaceable" is not the
issue. The issue is getting compensated if the art is stolen. What's better-- a
stolen painting and a $5 million insurance settlement or a stolen painting and a
$0 insurance settlement?
World over investments in fine arts has grown over by 55% annually. The
possession of Fine Arts is a symbol of confidence, wealth, image and status.
Besides nowadays increasing terrorist activities are damaging many valuable &
antique collections. So for protection against the loss incurring from such
activities insurance are required.
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INSTRUCTIONS:1. Step 1
Speak To Your Current Homeowners Insurance Company.
Many people who own art cover it under their homeowners property
policy. It is always easier to extend a relationship rather than start a new
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one so check with your current provider to see the options they provide.
The next step is for those who are not satisfied with the plan under
their homeowners. These tend to be those with larger, more valuable
collections.
2. Step 2
find an outside Art Insurance Specialist. If you have a larger collection
then a specialty provider may offer advantages that coverages under a
homeowners plan don't. The most common advantages are no deductibles;
coverage of recent purchases and less exclusion look for a specialty
insurer that is knowledgeable in the field. Some deal only with art and
collectibles but some companies, mostly high net worth insurers will
specialize in art and collectibles also.
3. Step 3
Get your collection appraised. This can be either Step 2 or 3. It is
crucial to know how much your collection is worth in order to buy the
right coverage. Also, many times the company will offer discounts for a
collection that has been appraised in the last two years. After buying
insurance it is standard to have your collection appraised every 3 to 5
years as market prices often shift.
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4. Step4
Determine How Much Coverage you really need. The art insurance
company will tell you that you need coverage at 100% of the value of
your collection. However, many people decide to insure for less. Usually
these are circumstances where the art is held in different locations, and the
owner doesn't foresee disaster in all places at once. Another instance is
when owners don't move their art, as most claims occur as a result of
moving damage.
ART VALUATION
Art valuation, an art-specific subset of financial valuation, is the process
of estimating the potential market value of works of art and as such is a financial
rather than an aesthetic concern. Art valuation involves comparing data from
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multiple sources such as art auction houses, private and corporate collectors,
curators, and specialized analysts to arrive at a value.
There are two different programs available to cover Fine Arts. It is important to
understand the differences in coverage and what is necessary to secure coverage.
Following are the two different policies which can be used to cover any Fine
Art:
Fine Arts (Scheduled) and
Species-Fine Arts and Library Collections (Unscheduled).
Following explanation describes the difference between these two
policies, the coverage available and the procedures for securing coverage and
reporting losses.
B. NAMED INSURED:
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Natural ageing.
Gradual deterioration.
Inherent defect.
Rust/oxidation, moth, vermin, warping, shrinking.
Loss during repairing, reframing, restoring, retouching.
Aridity, humidity, exposure to light, heat unless caused by fire,
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I. VALUATION:
Property of the Insured shall be valued at the current market value of the
property at the time any loss or damage occurs. The loss or damage shall
be determined according to such current market value.
Property acquired or to be acquired by the insured as a gift or under wills
or similar requests shall be valued at the current market value at the time
the loss or damage occurs. The policy will not cover such property
beyond the companies interest therein and in the event of loss of such
property, the interest of the company at the time of the loss shall be that as
stipulated in the will, bequest, contract or other document executed
between the company and the owner of the said property.
Property of others loaned to the insured and which the insured has been
instructed to insure, or for which the insured may be liable, shall be
valued at amounts agreed upon by the insured and owners. In the absence
of an agreement, the insurance policy will not be liable beyond the current
market value of the property at the time the loss or damage occurs and in
no event for an amount in excess of that specified in the policy.
J. IN THE EVENT OF A LOSS
All losses shall be promptly reported to the Campus Risk Management
Office and the Office of Risk Services, Office of the President.
All incidents involving theft or vandalism should also be reported to the
campus and/or local police department.
Take reasonable emergency measures to mitigate any further damage.
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E. Covered Property:
All forms of Fine Art of any nature or description and
Library Collections of any nature or description, including but not limited to:
Volumes, serials received currently, personal manuscripts, UC archival
manuscripts, other archival materials, maps, microfilm reels, micro cards,
microfiche, microprints, pamphlets, government documents, audio discs,
audio cassettes, audio reels, compact discs/digital audio, videotapes,
videodiscs, multi-media kits, motion pictures, filmstrips, pictorial items, 35
mm slides, computer tapes, monographic CD-ROM discs, serial CD-ROM
discs and floppy discs.
COVERED PROPERTY INCLUDES:
1. Property of the Insured.
2. Property of others on loan to the Insured.
3. Property of others offered as gifts to the Insured or for the sale to the Insured
and while awaiting formal acceptance by the Insured.
4. The Insureds interest in residuary gifts and jointly owned property, but only
to the extent of the Insureds interest therein at the time of the loss or damage;
all of the above being part of, and known as the Insureds Permanent Collection,
while on exhibition or otherwise, and while in transit worldwide.
5. Property of the Insured or property of others loaned to the Insured and which
the Insured has been instructed to insure, covering said property on a wall to
wall basis from the time the said property is removed from its normal
repository, incidental to shipment, until returned thereto to or other point
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designated by the owner or their agent prior to return shipment, including while
in transit and while on exhibition or otherwise worldwide.
F. Covered Perils: All risks of physical loss or damage from any external cause,
except as excluded.
G. Perils Excluded:
Wear and tear, gradual deterioration, moths, vermin, inherent vice, or loss or
damage sustained due to or resulting from any repairing, restoration or
retouching process.
War; invasion; acts of foreign enemies; hostilities (whether war be declared
or not); civil war; rebellion; revolution; insurrection; military destruction or
damage to property under the order of any government or public or local
authority.
Shipments by mail unless registered first class mail or parcel post provided,
however, such shipments by parcel post shall not exceed the sum of $1,000
(USD) in value.
Against loss or damage to property shipped under on deck Bills of Lading.
Nuclear reaction or radiation, or radioactive contamination.
Earthquake, landslide or subsidence.
Note: The Species-Fine Arts and Library Collection insurance does not insure
loss caused by Earthquake, which is included under the Fine Arts Insurance
Policy.
H. Valuation:
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KINDS OF CLAIMS
1. Total Loss Claims (no great difficulty in settling this).
2. Partial Loss Claims (this needs attention).
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such as theft, burglary etc investigator is appointed & also the claim is not
settled unless & until the final police report is received.
3. Expertise of the Experts:A panel of the best experts available locally who are well respected in
India and are consulted routinely by the international Fine Arts Institutions
like, The Christies and Sothebys. The experts are used for the purpose of
valuation at the time of inception of risk as well. The value that has done the
valuation before commencement of risk is usually not appointed as surveyor
for assessment of claim amount.
In case insured not agreeing with the assessment done by the expert,
one more expert may be used in consultation with the insured. Experts
have their own fee and insured should have a discussion with them to arrive
at mutually acceptable fee. In case of partial losses where the insured wishes
to surrender the work, artwork can be sold after restoration, in the secondary
art market. Essentially the assessment of Fine Arts claim is a negotiation
between the insurance company, the expert, and the insured.
PARTIAL LOSS AGREEMENT:In case of partial loss agreement due to perils insured against, the amount
of loss shall be the cost and expense of restoration including additional charges
insured in connection therewith. The assured and the underwriters should agree
upon depreciation, if any, after restoration. In the event if the assured and the
underwriters does not agree on the amount of depreciation, property is to be sold
at public auction and the net proceed goes to the account of the assured.
Underwriters have to pay the assured the difference between the amount so
realized and the insured value of the property. In no event shall underwriters
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steady the affected object, and in turn, may reduce the amount of permanent,
long-term harm besides loss of worth to the work of art.
All in all you need to protect your artwork collection by getting every
item in it registered by the Fine Art Registry. You need to get it appraised by an
art dealer so that you have a clear idea about the amount of coverage required
for your collections, before speaking to any agent offering insurance for art. If
you have a small home collection, get it covered under homeowner's insurance
policy. Otherwise contact the artwork insurance companies for more coverage of
larger collections.
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installation, and exhibition. Do note that this does not automatically include
coverage for damage to the artwork itself, so you're covered if the art hurts
someone but not if someone hurts the art. That's a separate policy.
One needs to know that art needs to insured separately from regular
contents in the gallery. Only those stuffs which may be replaced with practical
ease may be insured with regular replacement value insurance instead of art
insurance. Bear in mind that art cannot be replaced with ease. It is not only
unique, it is original as well. So it requires insurance for art only.
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CHUBB GROUP
"Chubb's Masterpiece Valuable Articles policy, valuable items are covered
anywhere in the world with no deductible. Whatever possessions you insure,
you will have the choice to repair, replace, or keep the cash."
ATLANTIC MUTUAL
Atlantic Mutual's Valuables Policy provides broad coverage for fine art.
AXA ART
"AXA Art is the only globally operating specialty art and collectibles
insurance company offering tailor-made coverage solutions for private and
corporate collections, museums, galleries and artists."
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Insurance potential lies with art traders with stock value up to Rs 50 crore
as it is completely untapped. We feel that only 10-15% of potential in this
segment has been tapped yet. We have a comparatively small portfolio, yet
a profitable one, says Rajive Kumaraswami, head-risk and re-insurance,
ICICI Lombard GIC Ltd.
Some estimate that the value of art that can be insured in India totals to
about $1 billion. This has an estimated accretion of about 5% per annum.
At these levels, we estimate the premium potential of the art insurance
market to be about Rs 150-Rs 200 crore overall, says Gaurav Garg, MD
and chief executive officer, Tata AIG, general insurance.
Art insurance generally covers the risk like damage during transit,
restoration and framing. There are risks associated with handling the piece
of art within the premises of a gallery which can also be covered. It
extends covers to natural perils, accidental damages and terrorism damage.
The target customers for the art insurers may be art galleries, art auction
houses, art funds, art warehousing service providers and private collectors.
Private players like ICICI Lombard, Tata AIG and Bajaj Allianz are the
key players in art insurance in India. Profile of the insured, location,
security measures and past loss history are some of the underwriting
parameters regarding this policy.
Art insurance is yet to catch up due to the challenge of valuation which
may differ among different valuators. As insurers require the exact price of
the asset, it usually becomes difficult to ascertain the sum insured
applicable. Also, artworks such as paintings of sculptures require high
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maintenance in terms of the care taken and security, due to which insurers
may be reluctant to take on this risk, says TA Ramalingam, headunderwriting, Bajaj Allianz General Insurance.
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Various Vintage Cars that are insured with Art Insurance policy
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INSURANCE TIPS
For anyone, public or private, who owns expensive art:
Photograph and document your collection, or at least the most valuable
works in your collection. Include current appraisals, original sales
receipts, and any additional paperwork that speaks directly to the value of
your art.
Buy as much insurance as you can comfortably afford, whether or not that
amount covers the entire value of your art. Most loss, damage, or theft
affects only a portion of a collection, not the entire collection. To repeat-receiving some compensation is better than receiving no compensation at
all.
Make sure you understand your insurance policy. This means reading the
fine print, and asking every question about every conceivable loss or
damage situation that you can think of. You don't want to find out after a
loss that you were not covered for that specific type of loss.
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CONCLUSION
There is no reason for not having art insurance. True, it is quite expensive. Art
Insurance premiums typically range around 3-4% of the face value of the art.
While it seems like a small amount, in most cases, especially when the art in
question is worth millions, the premium is not a small amount. You need
insurance for your art because it is worth a lot of money. You need to be
protected against loss or damage to anything precious or of high value that you
might own. Often artwork is among the most expensive things that you own and
it is also easily damaged and art thefts are not uncommon.
Insurance against loss or theft of your art is the most common type of art
insurance and it is always a good idea to have a policy that covers this. It is quite
disheartening to lose your favorite and most valuable piece of art. In most cases,
premium for this type of insurance is quite high. Therefore, it is a good idea to
be at least partially covered.
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Art insurance that covers damage is extremely useful to protect you in the
unfortunate event that the artwork is damaged. Usually damage policies cover
all causes such as transportation, natural disasters, fire etc. Repairing art,
especially sculptures is an expensive process as one would require experts to get
it done.
Overall art insurance is a very useful and in most cases necessary entity to go
with your art whether you are a dealer, private owner or owner of a private
gallery. The best you can do is to choose the policy that you feel is right for you.
Art insurance is expensive but that is no reason not to have it. The importance of
it undermines the price and if you can afford a very expensive piece of art you
can just as well afford the insurance for it!
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Website:-
www.google.com
www.wikipedia.org
www.Google
www.Yahoo
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