Bullets

1. Note down the Suitable measures for Fire protection on construction

site.
Ans .
 site should be secured by a properly constructed fence
 Temporary buildings should be made of non-combustible
materials.
 Living quarters should be well separated from the construction
site.
 Combustible material /packing material/ explosive substances
should be stored at safe distance from Building, plants and
store.
 Use of combustible frame works material , scaff-folding should
be avoided
 Lightening conductor installed as early as possible.
 Hydrant System should be installed as early as possible
 Adequate Water storage facility should be there at site
 Good house keeping and orderly storage should be maintained
 Security guard should be round the clock

2. Steps involved in Computation of loss under LOP Policy

Ans>
 Calculation of the rate of gross profit based on turnover and
Gross profit figure of last audited Financial year
 Actual turnover during indemnity period ,deducted from
standard turnover to arrive at reduction in turnover
 Rate of gross profit applied on reduction in turnover (point-3)
 Additional expenditure incurred to reduce or avoid reduction
in turnover is added
 Additional expenditure is subject to adjustment (point-5)
A ) if any standing charges are not insured then only that
proportion of addition al expenditure is considered which net
profit and insured standing charges bears to net profit and all
standing charges
B) The additional expenditure can not exceed the sum
produced by applying the rate of gross profit to the amount of
reduction in turnover. This is known as economic limit.
  The amount of insured standing charges which are not
incurred during the indemnity period because of damage is
deducted (point-6)
 The amount of claim payable is point 3 + point 5 –point 6
 The rate of gross profit is applied to annual turnover to
determine the insurable amount. If this is less than the sum
insured then under insurance is to be applied accordingly.

3. Please dwell upon Nature of Fire Insurance Contract

 It is an agreement between Insurer and Insured.

 The Insurer having received premium undertakes to make good the
loss
 suffered by the Insured.
 The loss is made good subject to –

 The loss resulting from Insured risk/peril.

 The property damaged is covered under the policy.
 And the loss happened during the policy period. The fire insurance
 contracts are governed by the general law of contract as embodied in
the Indian Contract Act 1872 as following
 Fire Insurance contracts must have the following essential ingredients.
 Offer and acceptance.
 Consideration.
 Agreement between the parties
 Legal competence of the parties &
 Legality of the contract.

4. What are the provisions of Escalation Clause under Fire Policy :

 The selected percentage increase shall not exceed 25% of the Sum
Insured.

 The additional premium, payable in advance, will be at 50% of the

full rate, to be charged on the selected percentage increase.
 The Sum Insured at any point of time would be assessed after
application of the Escalation Clause.

 Escalation Clause will apply to policies covering Building, Machinery

and Accessories only and will not apply to policies covering stock.

 Escalation Clause will apply to all policies and is not restricted to

policies issued on reinstatement value basis.

 Pro-rata condition of Average will continue to apply as usual.

 The automatic increase operates from the date of inception upto the
date of operation of any of the Insured Perils.

5. What are the Duties Of Insured FOLLOWING AN ACCIDENT

under MB policy–

In the event of any occurrence which might give rise to a claim under
this Policy the Insured shall -

 immediately notify the Company by telephone or telegram as well as

in writing, giving an indication as to the nature and extent of loss or
damage;

 take all reasonable steps within his power to minimise the extent of
the loss or damage;

 preserve the damaged or defective parts and make them

available for inspection by an official or surveyor of the Company.

 furnish all such information and documentary evidence as the

Company may require.
 Submit Intimation and completed claim form to the Company within
Fourteen days of its occurrence.

6. A claim is lodged under fire policy granted to a chemical industry.

How will you proceed from intimation to finalization of the claim,
step-wise?
  Obtain Policy details from the Insured , along with details of loss

 Verify policy coverage vis a vis loss

 Deputation of Chemical Engg background surveyor of appropriate

category through competent authority with in 72 Hours

 Obtain Preliminary Report from the surveyor & analyse it

 Pursue with Insured & surveyor for submission of information &

documents , to enable surveyor to submit the Report with time
limit as prescribed by IRDA

 Process the claim , seek any other document & information from
Insured / surveyor with in stipulated time

 Settle the claim on merits & make an offer to the Insured & if
agreed obtain duly completed Discharge Voucher from Insured /
financier

 Make payment to Insured , surveyor etc & Dispose salvage , as per

procedure

7. The reasons for the low popularity of Business interruption cover

in Indian Insurance market (SME market segment) , please
discuss.

 Lack of awareness , both on part of Insurers & the clients

 Misgivings about the product , as regards to interpretation & un

simplified wordings of the product

 Absence of standard accounting practices & Audit procedure

as per laid down norms

 Non-insistence of Financial Institutions for this cover

  Present market force not fully conversant with LOP policy
provisions

8. A client approaches for insurance cover for potatoes stored in his

cold storage; what policies and extensions will be suggested to
make it a seamless cover ?

 SFSPP policy for stocks , Building , P& M

 Add on cover to Fire policy – of Deterioration of stocks in the

cold storage premises due to accidental power failure
consequent to Damage at the premises of Power station due to
an Insured peril

 Add on cover of Impact damage & accidental damages

 MB policy for all P & M including standby DG sets

 Deterioration of stock policy with Failure of Electricity supply

Extension

 Burglary policy with Theft extension

 PA/WC policy for employees

9. List out STANDING CHARGES which are generally INSURED

under LOP policies:

 Interest on Debentures, Mortgages, Loans and Bank

 Overdrafts :

 Director’s Fee and remuneration ;

 Rent and Rates;

 Taxes( other than those chargeable on profits);

 Insurance Premium ;

 Contributions to Pension Fund;

 Telephone Rentals ;

 Travelling expenses;

 Advertising Cost ;

 Auditor’s and legal fees;

 Trade and charitable Subscriptions ;

 Repairs and renewal chargeable to revenue

 Account;

 Depreciation on Building, Plant & Machinery

 And Motor Vehicles ;

 Motor upkeep and licenses;

 Lighting, Heating Power and Water Charges;
o Office Expenses ;

o Salaries including State Insurance Contribution;

10.What are main contents of a Risk Inspection Report (Fir

Insurance)

 Name of Client & situation of the premises

 Brief history of Insured Factory & activity

 Details of Finished productes / Details of raw materials

 Detailed description of each Building , with reference to

Constructional features , & its occupation , with special
 mention of number of separate Blocks involved , existence of
perfect party walls

 Detailed information of electrical Installations , compliance

with TAC / Govt Rules

 Methods of heating used in process of manufacture , separation

of combustible material from heat source

 Process of manufacture in each block with particular reference

to general hazards arising from dust , explosion , inflammable
solvents & chemical processes

 Nature & method of storage of stocks

 Exposure from neighbouring & adjacent buildings

 Fire fighting appliances installed details & adequacy

 Brief note on Management , supervision , housekeeping ,

maintenance , safety

 Any adverse available information related to risk / moral hazard

 Previous Insurance / Claims history

 Suggestions on Risk imrovement