FIRE & ENGINEERING IMPORTANT POINTS

(Compiled by Ms B Ramaprabha,Asst Manager,Uiic,Madurai)

1) TRANSFER OF RISK IS CALLED INSURANCE
2) FIRE COVERS 12 PERILS
3) FIRE MEANS… OTHER THAN SPONTANEOUS COMBUSTION, OTHER THAN SUBSTANCE OF
INHERENT IN NATURE, OTHER THAN OWN FERMENTATION
4) WE CAN AVOID , FIRE, BY REMOVING SOURCE OF IGNITION.
5) EXPLOSION/IMPLOSION (OTHER THAN INDUSTRIAL BOILER)..MEANS ONLY DOMESTIC BOILER IS
COVERED
6) SPONTANEOUS COMBUSTION 2 TYPES: NON FIRE DAMAGES & FIRE DAMAGES
7) SPRINKLER INSTALLATION DAMAGE DUE TO REPAIRING OF BUILDING NEARBY IS NOT PAYABLE
IN FIRE CLAIM
8) WE CANNOT REDUCE THE NUMBER OF PERILS NOT BELOW 10 (EVEN IT IS DETARIFF)
9) FIRE DETARIFF FROM : 01.01.2007 *PRICE REDUCTION IS DONE
10) FROM -1.4.08 – PRODUCT VARIATION
11) CASH – SPECIFICALLY MENTIONED ONLY IS COVERED
12) SUM INSURED IN FIRE : MARKET VALUE
13) WE CANNOT INSURED FOR : CAPITAL COST (IT SHOULD INCLUDE LAND VALUE ALSO)
14) WE CANNOT INSURED FOR : BOOK VALUE/AUDITED ACCOUNTS COST ALSO
15) FIRE POLICY COVERS ONLY SUPERSTRUCTURE OF THE BUILDING
16) STOCKS INSURED BY INVOICE VALUE
17) FIRE POLICY CAN BE INSURED AS VALUED POLICY FOR : VERY OLD MACHINERY … MEANS
MARKET VALUE CANNOT BE ASCERTAINED.
18) PROPORTIONATE PREMIUM : MEANS.. PRO-RATA PREMIUM
19) CANCELLATION IN FIRE POLICY: 15 DAYS NOTICE PERIOD
20) INSURED SHOULD INTIMATE THE INSURER TO REINSTATE OR REPAIR(WITHIN 30 DAYS)
21) ARBITRATION CLAUSE ARISES ONLY IF LIABILITY IS ADMITTED
22) DIFF. IN DISPUTES IN QUANTUM ONLY REFERRED TO ARBITRATION
23) ELECL. INSTALLATION… FORMING PART OF BUILDING SUM INSURED
24) PROFIT PORTION NOT TO BE INCLUDED IN SFPP
25) LOCAL AUTHORITIES CLAUSE INCLUDES: SOLAR PANEL/RAIN WATER HARVESTING
26) RIV POLICY : MODIFIED INDEMNITY POLICY
27) ESCALATION CAN BE GIVEN INCONJUCTION WITH RIV POLICY: FALSE
28) IN BOTH RIV & ESCALATION: ..NO STOCK IS COVERED
29) ESCALATION SUM: SUM INSURED: RS.10,00,000 , ESC: 25%
25/100 X 10,00,000 = 250000
.. PREMIUM CHARGED AS 50% OF APPLICABLE RATE
30) IN RIV POLICY : UNDER INSURANCE APPLICABLE (MEANS ADEQUATE SI TO BE MENTIONED)
31) RIV & ESCALATION APPLICABLE TO : B/P/M/F/F
32) DECLARATION POLICY: ONLY FOR STOCKS
33) DECLN. POLICY CANNOT BE GIVEN TO:
● STOCK IN RETAIN SHOP
● STOCK RAILWAY SLIDING/IN PROCESS/ FLUCTUATION IN STOCKS
34) BASIS OF DECLARATION: HIGHEST VALUE IN ANY DAY OF THE MONTH.
35) FLOATER DECLN. POLICY: GIVEN TO FREQUENT FLUCTUATION IN STOCK VALUE
36) IF 8TH MONTH IS LOSS: DECLARATION FOR 6TH MONTH DECLARATION TO BE TAKEN BECAUSE, 7TH
MONTH DECLARATION WILL REACH INSURER BY THE END OF SUCEEDING MONTH
37) FOR INCREASE IN SUM INSURED: PRO-RATA PREMIUM IS COLLECTED
38) FOR DECREASE IN SUM INSURED: SHORT PERIOD PREMIUM IS RETAINED AND BALANCE IS
REFUNDED TO THE INSURED
39) IN FLOATER DECLARATION POLICY: DIFFERENT OCCUPANCY IN ONE LOCATION, ONLY HIGHEST
RATE IS CHARGED
40) DESIGNATION OF PROPERTY CLAUSE IS AVAILABLE ON NO ADDL PREMIUM
41) WHICH AFFECTS RATE OF FIRE POLICY
● OCCUPANCY
● CONSTRUCTION
● CLAIM EXPERIENCE
● FEA
● STFI/RSMD EXCLUSIONS
42) PAID UP CAPITAL DISCOUNT AVAILABLE IN FIRE POLICY BY SOME INSURER
43) TAT
✓ FIRE CLAIM INTIMATION SHOULD BE WITHIN 14 DAYS
✓ CLAIMS DOCUMENTS SHOULD BE SUBMITTED WITHIN 15 DAYS
✓ INSURED SHOULD INTIMATE THE INSURER TO REINSTATE OR REPAIR(WITHIN 30 DAYS)
✓ CANCELLATION IN FIRE POLICY: 15 DAYS NOTICE PERIOD
44) TO REDUCE PREMIUM IN FIRE:
✓ TAKE DESIGNATION OF PROPERTY CLAUSE (NO ADDL PREMIUM)
✓ OMMISSION TO INSURE, ADDITION , ALTERATION CLAUSE ( WITH THIS WE CAN WAIVE
5% OF SUM INSURED CAN BE WAIVED)
✓ BY TAKING DECLN. POLICY
✓ CAN REDUCE SI FOR PLINTH AND FOUNDATION
✓ BY RI ARRANGEMENT.
45) TO ARRIVE PML : TAKE CONSIDERATION BOTH MD & LOP PORTION PUT TOGETHER.
46) DIFFERENCE BETWEEN LOSS OF RENT & ALTERNATIVE ACCOMMODATION OF RENT
LOSS OF RENT ALTERNATIVE ACCOMMODATION OF RENT
OWNER ONLY CAN TAKE BOTH OWNER & TENANT CAN TAKE
DIFF. BETWEEN ORIGINAL RENT &NEW RENT ONLY PAID
NEW PREMISES WILL BE IN SAME LOCATION
47) HOW TO ARRIVE SCRAP VALUE IF ALL DOCUMENTS VANISHED IN DIASTER:?
 ✓ IF SALES DONE… BY WAY OF SALES TAX
✓ IF PURCHASE … BY WAY OF INVOICE VALUE
48) LOSS OF PROFIT: EXPENSES CAN BE : 1) FIXED/STANDING CHARGES 2) VARIABLE CHARGES
49) INCREASED COST OF WORKING: INCLUDES
✓ RENT FOR ALTERNATIVE PREMISES
✓ OVERTIME FOR MANPOWER
✓ HIRING OF MACHINERY
50) PROPERTY TAX IS INCLUDED IN (STANDING CHARGES)
51) INCOME TAX INCLUDED IN NET PROFIT
52) IN IAR POLICY : EXCLUDED CAUSES… GROWING CROPS/ROADS ETC
53) IN IAR POLICY: FLOP IS COMPULSORY & MLOP IS OPTIONAL
54) IN IAR POLICY: UNDER INSURANCE UPTO 15% ALLOWED. IF MORE THAN 15% NO UI CONCEPT
55) IN IAR POLICY: THE FOLLOWING ARE PAYABLE
✓ HUMAN ERROR
✓ FAILURE OF SAFETY DEVISE
✓ INSTALLATION
✓ AOG PERILS
✓ HANDLING CHARGES
56) IF MORE THAN 50% CIVIL WORKS: CAR POLICY
57) IF MORE THAN 50% ERECTION WORKS: EAR POLICY
58) TESTING ONLY DIFFERENCE BETWEEN : CAR & EAR POLICY
59) PROJECT PERIOD IN ENGG. POLICY : IS CALLED: POLICY PERIOD
60) MIN.PERIOD IN CAR POLICY: 3 MONTHS
61) MIN.PERIOD IN EAR POLICY: 2 MONTHS
62) VALUE: COMPLETED ERECTED VALUE OF THE PROJECT
63) CAR CAN BE TAKEN BY : OWNER/PRINCIPAL/CONTRACTOR/FINANCIER
64) INSTALMENT PREMIUM IN ENGG. POLICIES

✓ 3 MONTHS ( INTERVAL BETWEEN INSTALMENT+

✓ 6 MONTHS ( ATLEAST 6 MONTHS BEFORE EXPIRY OF THE POLICY PERIOD)
✓ IF PROJECT EXCEEDS 12 MONTHS
✓ 3 … 6….12
65) EAR POLICY HAS 4 EXCESS: CAR POLICY HAS 3 EXCESS:
✓ STORAGE STORAGE
✓ ERECTION ERECTION
✓ TESTING ….
✓ AOG/MAJOR PERILS AOG/MAJOR PERILS
66) ENGINEERING POLICY : PREMIUM DEPENDS ON:
 ✓ SUM INSURED
✓ OCCUPANCY
✓ EXPOSURE
✓ SPL. CHARACTERISTIC OF BUILDING
67) CONTRACT PRICE + DUTY + TAX + FREIGHT
68) CROSS LIABILITY IS ADVANCED VERSION OF TP LIABILITY☹ EITHER IN PART OF
PRINCIPAL/CONTRACTOR/SUB-CONTRACTOR)
69) OPERATION POLICIES ARE CALLED ANNUAL POLICIES:
MBD / EEI / CPM / BPP / DOS
70) ACCIDENT SHOULD BE
✓ SUPA
✓ SUDDEN
✓ UNFORESEEN
✓ PHYSICAL
✓ ACCIDENTAL
✓ (WHEN THE MACHINERY IS @ REST / DISMANTLING/CLEANING /OVERHAULING)
71) IN MBD – 2 TYPES OF CLAIM SETTLEMENT
72) 1) REPAIR COST 2) TOTAL LOSS ( INDEMNITY BASIS)
IN BOTH CASES: DEPRECIATION IS APPLIED
BUT IN REPAIR COST : DEPRECIATION FOR LIMITED LIFE PARTS
73) CPM POLICY RELATES TO CLASS D VEHICLES OF MOTOR VEHICLES:
74) DIFF. BETWEEN CPM &MOTOR POLICIES IS
IN CPM IN CLASS D VEHICLES
CLAIM @ INSURED PREMISES CLAIM @ ROAD IS PAYABLE
75) COMBINED WITH LOP + MBD =➔ MLOP
76) PROJECT LOP : ALOP
77) MCE ; -→ MARINE + EAR ( MARINE: 50% EXCESS / EAR : 50% EXCESS)
78) DELAY IN MCE POLICY : DELAY IN START UP POLICY
79) IN ENGG POLICY:
● INCREASE & DECREASE IN PRIME COST OF MACHINERY NOT TO BE TAKEN
INTO ACCOUNT
● IF ESCALATION CHOSEN.. NO REFUND IS ALLOWED IN ESC. SI
● IF COST INCREASED, EXTRA INCREASE INPREMIUM
● ACD – ADDL. CUSTOMS DUTY CANNOT BE REINSTATED (IN EAR)
● INBUILT COVER FOR TESTING PERIOD: 1 MONTH
● ALL PROJECT POLICIES: MAX 12M
● THERMAL PLANTS: 6 MONTHS
80) REFUND OF PREMIUM ALLOWED FOR EARLY COMPLETION:
● PERIOD OF INSURANCE: POI SHOULD BE GREATER THAN 18 M
 ● CLAIM EXPERIENCE < 60%
● MIN. PERIOD FOR CLAIMING REFUND IS 3 M
81) IMPORTANT EXCLUSION BETWEEN CAR & EAR CAR
EAR
FAULTY DESIGN FAULTY DESIGN/DEFECTIVE WORKMANSHIP/

DEFECTIVE MATERIALS

82) IMPORTANT EXCLUSION IN CAR POLICY: BREAKAGE OF GLASS – ADD ON

83) CPM IS EXTENSION OF CAR/EAR
84) EXCESS IS APPLICABLE PER INCIDENT
85) SEPARATE INCIDENT: FREEDOM FROM PERILS FOR 7 CONSECUTIVE DAYS
86) TERRORISM IS NOT MAJOR PERIL
87) TEST RUN IN THERMAL POWER PLANT:

● STARTING OF TESTING PERIOD

● DATE OF SYNCHRONISATION OF TD SET WITH THE GRID SYSTEM

● PROVIDED SYNCHRONISATION IS WITHIN 72 HOURS FROM THE DT. OF INTRODUCTION

OF STEAM OR DT. OF INTRODUCTION OF STEAM
88) FOR LIGHTNING: DIRECT EFFECT OF LIGHTNING: COVERED UNDER SFPP
89) FOR LIGHTNING: INDIRECT EFFECT COVERED IN MBD
90) EXPLOSION: DAMAGE TO BOILER TO TP – NOT COVERED
91) 5 TYPES OF MACHINERIES ARE COVERED IN CPM