ENGINEERING INSURANCE

Badal Ch Rajbangshi ACA, FCS

01. Machinery Insurance Policy

This insurance is intended to cover sudden and unforeseen physical loss of or

damage to machinery, Plant & equipment etc. due to:-

i. Defective materials
ii. Faulty design
iii. Fault in erection or at workshop
iv. Bad workmanship
v. Lack of skill
vi. Carelessness
vii. Shortage of water in boiler
viii. Short circuit
ix. Physical explosion
x. Tearing apart on account of centrifugal force
xi. Storm.

Basis of Sum Insured:-

New Replacement Value (NRV) of Machinery of same kind and capacity.

Replacement cost includes cost, freight, duties, taxes, erection costs etc.

Under Insurance shall apply if sum insured does not represent new replacement
value.

Underwriting Considerations:-

The rate, terms and conditions for such type of insurance are obtained from the
re-insurer Sadhatan Bima Corporation (SBC).

Period : Annual

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 ENGINEERING INSURANCE
Badal Ch Rajbangshi ACA, FCS

02. Deterioration of Stock Insurance Policy

This insurance is intended to cover

Loss or damage to stock due to rise in temperature within the cold storage
chamber in consequence of sudden and unforeseen physical loss/damage to
machinery covered under Machinery Insurance Policy.

Loss or damage to stock is indemnifiable under DOS Policy if loss or damage to

machinery is indemnifiable under Machinery Insurance Policy.

Sum Insured:

Estimated maximum selling price of stock at the commencement of the policy.

Monthly declaration of stock based on every days selling price to be made by 10 th
day of the following month.

Premium:

75% as deposit premium on declared sum insured at the time of commencement

of the policy

Deposit premium is adjustable at the end of the year based on monthly

declaration of stock.

Minimum 50%of full premium based on sum insured stated in the schedule at the
time of commencement of the policy to be retained.

Full premium based on sum insured if no monthly declaration of stock is made by

the insured.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the
re-insurer Sadharan Bima Corporation (SBC).

Period: Annual

03. Contractors’ All Risk Insurance Policy

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 ENGINEERING INSURANCE
Badal Ch Rajbangshi ACA, FCS

This is a relatively modern branch of engineering insurance. This offers comprehensive

and adequate protection against the followings:-

Unforeseen and sudden physical loss of or damage to construction works as per schedule
of the policy during construction period from any cause, not specifically excluded.

Any peril, not excluded specifically is covered. But main perils include collapse, crack,
erosion, fire, burglary etc.

Additional perils viz, SRCC, Design defects, Flood, Cyclone, Earthquake, inland transit
may also be covered on consideration of additional premium.

Liability to third party for bodily injury or death or damage to third party property may
also be included on consideration of additional premium.

Construction Plant, Equipment, Machinery may also covered on consideration of

additional premium.

Basis of Sum Insured:

Initially Total Contract Value (TCV) as per Contract Agreement between the Principal and
the Contractor.

On successful completion of the construction works TCV is adjusted with completed value
on actual basis.

TCV includes cost of all construction materials including freight, custom duties, and
wages.

Cost/value of materials supplied by the Principal also to be included in the sum insured.

Cost for clearance of debris may also be included in the sum insured.

Period: Not an annual or renewable policy.

Whole period of contract as per Contract of Agreement between the Principal and the
Contractor but basically it commences on unloading of materials at site of construction
and ceases immediately on successful completion and handing over whichever is earlier.

Extendable on consideration of additional premium.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the re-
insurer Sadharan Bima Corporation.

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 ENGINEERING INSURANCE
Badal Ch Rajbangshi ACA, FCS

4) Erection All Risk Insurance Policy

This policy is intended to cover:

Unforeseen and sudden physical loss of or damage to machinery, to be erected, as per

schedule of the policy during erection period from any cause not specifically excluded.

Any peril, not excluded specifically is covered. But main perils include consequence of
human error in erection or faulty erection, fire, burglary etc.

Additional perils viz, SRCC, Manufacturers’ risks, Design defects, Flood, Cyclone,
Earthquake, inland transit may also be covered on consideration of additional premium.

Liability to third party or third party property damage may also be included on
consideration of additional premium.

Basis of sum insured:

Initially Total Contract Value (TCV) as per Contract Agreement between the principal and
the erector.

On completion of successful erection and commission TCV is adjusted with completed

value on actual basis.

TCV includes cost, freight, custom duties, cost of erection etc.

Cost/value of properties located on the Principal’s premises or on site may also be

included in the sum insured.

Cost of civil works may also be included in the sum insured.

Period of Policy:

Not an annual or renewable policy.

Whole period of contract as per Contract of Agreement between the Principal and the
erector but basically it commences on arrival of 1 st consignment of materials at site of
erection and ceases immediately on successful completion and handing over whichever is
earlier.

Extendable on consideration of additional premium.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the re-
insurer Sadharan Bima Corporation.

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 ENGINEERING INSURANCE
Badal Ch Rajbangshi ACA, FCS

05. Contractor’s Plant and Machinery Insurance Policy

This policy is intended to cover unforeseen and sudden physical loss/damage to the
insured’s plant and machinery from any cause, not excluded specifically during :-

At work or at rest

During dismantling for overhauling or cleaning

In course of operation

In course of re-erection.

Basis of Sum Insured:

On New Replacement Value (NRV) basis

NRV includes cost, freight, customs duties, taxes, cost of erection.
Under Insurance shall apply if sum insured does not represent new replacement value.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the re-
insurer Sadharan Bima Corporation.

Period: Not Annual or renewable policy.

06. Boiler & Pressure Vessel Insurance Policy

This insurance is intended to cover sudden and unforeseen damage to or loss of:-

Boiler or Pressure Vessel

Surrounding property of the insured

Liability for damage to the third party property

Liability at law for fatal or non-fatal injury to any person other than insured’s
own employees or workmen and members of insured’s family.

Due to: (I) Explosion and (ii) Collapse.

Basis of Sum Insured

New Replacement Value (NRV) of Boiler or Vessel of same kind and capacity.

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 ENGINEERING INSURANCE
Badal Ch Rajbangshi ACA, FCS

Replacement cost includes cost, freight, duties, taxes, erection costs etc.

Under Insurance shall apply if sum insured does not represent new replacement value.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the re-
insurer Sadharan Bima Corporation.
Period : Annual

07. Electronic Equipment Insurance Policy

This policy covers

1) Sudden and unforeseen physical loss to the Electrical Equipment from any cause
not excluded specifically during:-

a. at work or at rest
b. during dismantling for overhauling or cleaning
c. in course of operation
d. in course of re-erection

2) Loss of External Data Media

3) Loss due to total or partial interruption of equipment.

Basis of Sum Insured:-

On New Replacement Value (NRV) basis

NRV includes cost, freight, customs duties, taxes and cost of erection.

Underinsurance shall apply if sum insured does not represent new replacement value.

Underwriting Considerations:

The rate, terms and conditions for such type of insurance are obtained from the re-
insurer Sadharan Bima Corporation.

Period: Annual

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