Plate Glass Insurance:

 

Plate Glass Insurance:

For many offices and other establishments like showrooms, hotels and theatres, plate glass often forms an important part of the building structure. Glass used for this purpose is available in various categories and can cost a lot. And more importantly, it is fragile. Thus, to cover the cost of its breakage, we need plate glass insurance.

 

Plate glass insurance covers accidental breakage of and damage to glass on business premises. It is not uncommon for glass fixtures on a business premise to break due to an accident or some other reason. This can turn out to be a costly affair. To manage such situations, business units often consider opting for plate glass insurance.

The plate glass insurance is a flexible policy. It covers the below mentioned areas:

• Intrinsic value of glass: This refers to the Reinstatement Value less depreciation
• Fixed glass: Glass refers to fixed plain glass and mirrors within the office or shopping complex excluding painting, tinting, ornamental work on the glass unless stated whilst calculating the sum assured

Plate Glass Insurance Covers?

In case of any damage or breakage to the glass fixtures, the replacements costs can be very high. Thus, plate glass insurance policy covers the following:

• Accidental loss or damage to plate glass within the insured premises
• Expenses incurred to erect any temporary boarding as a replacement for damaged plate glass
• Cost of replacing lettering, ornamentation and sign writing affixed to the broken item
• Cost of replacement of shatter proof or reflective film affixed to the broken plate glass
• Cost of replacement of the burglar alarm tape or wiring affixed to the broken plate glass
• Replacing damaged window frames due to wear and tear

If needed, insured can ask for an extended coverage against the following cases with an additional premium:

• Damage caused by terrorism, riot, strike and malicious damage

Eligibility Criteria 

Plate Glass Insurance can be availed by any businesses, such as showrooms, restaurants, hotels and shopping complexes that use plate glass for decoration or commercial purpose.

BURGLARY INSURANCE POLICY

 

BURGLARY INSURANCE POLICY

Burglary Insurance is one of the major classes of business underwritten in the miscellaneous department and accounts for a sizeable portion of the department's premium income.

For the business house Burglary insurance is as essential as Fire insurance, as it enables them to recoup the losses suffered by them consequent on burglary or house breaking. In addition to the burglary policy, other types of policies giving wider covers have also been devised by the burglary department. The main types of policies are as follows:

(i) Business Premises Policy,

(ii) Private Dwelling Policy,

(iii) Jewellary and Valuable Policy,

(iv) All Risk Policy, and

(v) Money in Transit Policy

Definitions

Burglary

The criminal law of the country does not speak of an offence called burglary. Hence it becomes necessary for the insurers to lay down in the policy the definition of the term. As normally understood burglary is:

(a) Theft of property from the premises following upon felonious entry of the said premises by violent and forcible means.

(b) Theft by a person in the premises who subsequently breaks out by violent and forcible means provided there shall be visible marks made upon the premises at the place of such entry or exit by tools, explosives, electricity or chemicals. Use of force may be against property and person.

Theft

Indian Penal Code in Section 378 defines theft as follows: "whoever intending to take is honestly any movable property out of the possession of any person without the consent of that person or of any person having for that purpose authority, moves that property in order to such taking is said to commit theft."

House-breaking

The word in practice is equal to 'Burglary'. Section 445 of the Indian Penal Code has laid down a definition of the term. A person is said to commit housebreaking who commits house trespass if he effects his entrance into the house (or any part of it), or if being in the house (or any part of it) for the purpose of committing an offence, or having committed an offence therein he quits the house, such entrance or exit being made by use of force in one of the six ways as described in the Indian Penal Code.

Robbery

Section 390 of the Indian Penal Code laid down, "If in order to the commission of or in committing of the theft or in carrying away property obtained by theft, the offender, for that end, voluntarily causes (or attempts to cause) to any person death or hurt or wrongful restraint or fear of instant death or hurt or wrongful restraint or fear of instant death or hurt or wrongful restraint".

Dacoits

Section 391 of the Indian Penal Code states dacoits as "where five or more persons conjointly commit or attempt to commit a robbery or are present and aid such commission or attempt, every one of them is said to commit dacoits"

Coverage

Business premises are generally covered against burglary and house breaking only. Mere theft without the use of force and violence is not covered, robbery and dacoits being aggravated forms of theft. It also covers risk of holdup. Burglary and house breaking fall within the scope of this cover. Under policies issued for private dwellings, the contents are covered against burglary, house-breaking and theft risks. Similarly Jewellery and valuables are also insured in the same manner.

Money in Transit

Policies, as a matter of rule, cover robbery, hold-up and dacoits in addition to burglary, housebreaking and theft.

Business Premises Insurance Policies

Policies issued to business premises cover stock-in-trade, goods in trust or on commission, fixtures and fittings, tools of trade such as typewriters, calculators and other similar property and cash and currency notes in locked safe against the risk of burglary and house-breaking. Loss or damage to contents or to any part of the building caused by burglary or any attempt therefore is also covered. In regard to stock-in-trade and other goods the policy may be issued on full value basis or on "first

loss" basis. A "First Loss" 'Policy insures the property up to a specified amount only which is calculated to be the maximum likely loss on any one occasion. This type of policy is taken where a total loss is a physical impossibility. First loss policies are usually taken for bulk commodities. The amount insured is always specified as a certain percentage of the full value, say, 10% or 12.5% of the full value. The amount of premium-loss reinsurance was `16.60 crores by New India in 1994-95. It has got profit of `12.12 crores in that year.

All Risks (Jewellery and Valuables) Insurance

Policies under this form of insurance cover risks in respect of jewellery, plate, watches, personal ornaments and other valuables. Loss or damage by any accident or misfortune including fire, theft, robbery from the person, defective settings or fastening and accidental damage are thus covered. The policies do not, however, cover loss or damage:

(i) Occasioned by or in consequence of war, invasion, act of foreign enemy, hostilities, civil war, noting, rebellion, revolution, insurrection, military or usurped power, riot, civil commotion, earth-quake or other convulsions of nature;

(ii) caused by or arising from any process of repairing, restoring or renovating any property insured;

(iii) Due to moth, wilder, wear or other deterioration or inherent defect in any property insured. The insurance is applicable in all places within the geographical limits provided for in the policy.

Exclusions

The exceptions peculiar to a burglary (business premises) policy are:

(i) Loss or damage where any member of the insured's household or his business staff is concerned as principal or accessory or resulting from any act committed by any other person lawfully on the premises wherein the property may happen to be;

(ii) Loss or damage which can be insured against by a fire or a plate glass or a motor insurance policy;

(iii) loss of or damage to deeds, bonds, bills of exchange, promissory notes, cash, treasury, bank notes, cheques, securities for money, stamps, stamp collections, books of accounts, manuscripts,

documents of any kind and medals and coins, unless specially mentioned and agreed to be covered.

 

 

Agriculture Insurance:

 

Agriculture Insurance:

 

The history of Agriculture in India dates back to Indus Valley Civilization Era and even before that in some parts of Southern India. Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and fisheries accounted for 13.7% of the GDP (gross domestic product) in 2013, about 50% of the work force. The economic contribution of agriculture to India's GDP is steadily declining with the country's broad-based economic growth. Still, agriculture is demographically the broadest economic sector and plays a significant role in the overall socio-economic fabric of India.

 

In the years since its independence, India has made immense progress towards food security. Indian population has tripled, and food-grain production more than fourfold. There has been a substantial increase in available food-grain per capita. These gains have come mainly from India's green revolution, improving road and power generation infrastructure, knowledge of gains and reforms. Despite these recent accomplishments, agriculture has the potential for major productivity and total output gains, because crop yields in India are still just 30% to 60% of the best sustainable crop yields achievable in the farms of developed and other developing countries. Additionally, losses due to poor monsoons, flooding, other natural calamities, continue to afflict the Indian farmer, coupled with the burden of compounding legacy of debt.

 

Agricultural insurance is an effective mechanism for reducing the losses farmers suffer due to natural calamities such as floods, droughts, and outbreaks of pests and diseases. There are a number of schemes initiated by the Government to promote and protect interests of the agricultural sector-

 Pradhan Mantri Fasal Bima Yojana

 Crop Insurance

 Livestock Insurance

 Weather Based Crop Insurance

 Unified Package Insurance Scheme (UPIS).

 

 

Objectives

1. To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.

2. To stabilise the income of farmers to ensure their continuance in farming.

3. To encourage farmers to adopt innovative and modern agricultural practices.

4. To ensure flow of credit to the agriculture sector.

 

Highlights of the scheme

 There will be a uniform premium of only 2% to be paid by farmers for all Kharif crops and 1.5% for all Rabi crops. In case of annual commercial and horticultural crops, the premium to be paid by farmers will be only 5%. The premium rates to be paid by farmers are very low and balance premium will be paid by the Government to provide full insured amount to the farmers against crop loss on account of natural calamities.

 There is no upper limit on Government subsidy. Even if balance premium is 90%, it will be borne by the Government.

 Earlier, there was a provision of capping the premium rate which resulted in low claims being paid to farmers. This capping was done to limit Government outgo on the premium subsidy. This capping has now been removed and farmers will get claim against full sum insured without any reduction.

 The use of technology will be encouraged to a great extent. Smart phones will be used to capture and upload data of crop cutting to reduce the delays in claim payment to farmers.

Farmers to be covered

All farmers growing notified crops in a notified area during the season who have insurable interest in the crop are eligible.

Compulsory coverage: The enrolment under the scheme, subject to possession of insurable interest on the cultivation of the notified crop in the notified area, shall be compulsory for following categories of farmers:

 Farmers in the notified area who possess a Crop Loan account/KCC account (called as Loanee

Farmers) to whom credit limit is sanctioned/renewed for the notified crop during the crop season. And Such other farmers whom the Government may decide to include from time to time.

 

Coverage of Crops

Food crops (Cereals, Millets and Pulses), Oilseeds, Annual Commercial / Annual Horticultural crops.

 

Risks covered under the scheme

Yield Losses (standing crops, on notified area basis). Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as Natural Fire and Lightning, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado. Risks due to Flood, Inundation and Landslide, Drought, Dry spells, Pests/ Diseases also will be covered.

 In cases where majority of the insured farmers of a notified area, having intent to sow/plant and incurred

expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse

weather conditions, shall be eligible for indemnity claims upto a maximum of 25 per cent of the suminsured.

 In post-harvest losses, coverage will be available up to a maximum period of 14 days from harvesting

for those crops which are kept in “cut & spread” condition to dry in the field.

 For certain localized problems, Loss / damage resulting from occurrence of identified localized risks like hailstorm, landslide, and Inundation affecting isolated farms in the notified area would also be covered.

Weather Based Crop Insurance Scheme (WBICS)

Weather Based Crop Insurance Scheme aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity etc.

Risk period (i.e. Insurance Period)

Risk period would ideally be from sowing period to maturity of the crop. Risk period depending on the duration of the crop and weather parameters chosen.

General Insurance Companies empanelled under Crop Insurance Schemes

List of insurance companies empanelled under crop insurance schemes:

 Agriculture Insurance Company

 Cholamandalam MS General Insurance Company

 Reliance General Insurance Co. Ltd.

 Bajaj Allianz

 Future Generali India Insurance Co. Ltd.

 HDFC ERGO General Insurance Co. Ltd.

 IFFCO Tokio General Insurance Co. Ltd.

 Universal Sompo General Insurance Company

 ICICI Lombard General Insurance Co. Ltd.

 Tata AIG General Insurance Co. Ltd.

 SBI General Insurance

 United India Insurance Co. Ltd.

 Live Stock Insurance

The component aims at management of risk and uncertainties by providing protection mechanism to the farmers against any eventual loss of their animals due to death and to demonstrate the benefit of the insurance of livestock to the people.

Animals covered

The indigenous / crossbred milch animals, pack animals (Horses, Donkey, Mules, Camels, Ponies and Cattle/Buffalo Male), and Other Livestock (Goat, Sheep, Pigs, Rabbit, Yak and Mithun etc.) are covered under the purview of this component.

 

Unified Package Insurance Scheme:

This policy is designed to take care of the insurance needs of farmers associated with agriculture activities. This policy provides yield based crop insurance to the farmer based on his ownership rights of land and sown crop. It covers both the personal assets of the farmer like the dwelling & its contents (Fire), the other assets which help him in earning his livelihood such as Agricultural Pump Sets, and Agriculture Tractor owned by farmer. The policy also provides protection to farmer and his/her family members in case of the Accidental Death / Disablement, accidental insurance protection of farmer's school/college going children and provisioning of education fee to the students in case of death of parent. Life insurance protection to the farmer and his/her family members and is issued for a period up to 1 year.

 

Fire Insurance

 

Fire Insurance

Introduction:

A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period. The contract specifies the maximum amount, agreed to by the parties at the time of the contract, which the insured can claim in case of loss. This amount is not, however , the measure of the loss. The loss can be ascertained only after the fire has occurred. The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy. A fire insurance policy cannot be assigned without the permission of the insurer because the insured must have insurable interest in the property at the time of contract as well as at the time of loss.

 The insurable interest in goods may arise out on account of (i) ownership, (ii) possession, or (iii) contract. A person with a limited interest in a property or goods may insure them to cover not only his own interest but also the interest of others in them.

Under fire insurance, the following persons have insurable interest in the subject matter:-

Owner  Mortgagee§  Pawnee§  Pawn broker§  Official receiver or assignee in insolvency proceedings§  Warehouse keeper in the goods of customer§  A person in lawful possession e.g. common carrier, wharfing, commission agent.§

 

Fire means  : In the fire insurance policy, 'Fire' means the production of light and heat by combustion or burning. Thus, fire, must result from actual ignition and the resulting loss must be proximately caused by such ignition. The phrase 'loss or damage by fire' also includes the loss or damage caused by efforts to extinguish fire.

The types of losses covered by fire insurance are:-  Goods spoiled or property damaged by water used to extinguish the fire.§  Pulling down of adjacent premises by the fire brigade in order to prevent the§ progress of flame.  Breakage of goods in the process of their removal from the building where fire is§ raging e.g. damage caused by throwing furniture out of window.  Wages paid to persons employed for extinguishing fire.

 The types of losses not covered by a fire insurance policy are:-

  loss due to fire caused by earthquake, invasion, act of foreign enemy, hostilities or§ war, civil strife, riots, mutiny, martial law, military rising or rebellion or insurrection.  loss caused by subterranean (underground) fire.§  loss caused by burning of property by order of any public authority.§  loss by theft during or after the occurrence of fire.§  loss or damage to property caused by its own fermentation or spontaneous§ combustion e.g. exploding of a bomb due to an inherent defect in it.  loss or damage by lightening or explosion is not covered unless these cause actual§ ignition which spread into fire.

A claim for loss by fire must satisfy the following conditions:-

 The loss must be caused by actual fire or ignition and not just by high§ temperature.  The proximate cause of loss should be fire.§  The loss or damage must relate to subject matter of policy.§  The ignition must be either of the goods or of the premises where goods are kept.§  The fire must be accidental, not intentional. If the fire is caused through a§ malicious or deliberate act of the insured or his agents, the insurer will not be liable for the loss.

Types of Fire Insurance Policies:- 

Specific policy:- is a policy which covers the loss up to a specific amount which§ is less than the real value of the property. The actual value of the property is not taken into consideration while determining the amount of indemnity. Such a policy is not subject to 'average clause'. 'Average clause' is a clause by which the insured is called upon to bear a portion of the loss himself. The main object of the clause is to check under-insurance, to encourage full insurance and to impress upon the property owners to get their property accurately valued before insurance. If the insurer has inserted an average clause, the policy is known as "Average Policy". 

Comprehensive policy:- is also known as 'all in one' policy and covers risks like§ fire, theft, burglary, third party risks, etc. It may also cover loss of profits during the period the business remains closed due to fire.

 Valued policy: - is a departure from the contract of indemnity. Under it the§ insured can recover a fixed amount agreed to at the time the policy is taken. In the event of loss, only the fixed amount is payable, irrespective of the actual amount of loss.

  Floating policy:- is a policy which covers loss by fire caused to property§ belonging to the same person but located at different places under a single sum and for one premium. Such a policy might cover goods lying in two warehouses at two different locations. This policy is always subject to 'average clause'.

 Replacement or Re-instatement policy:- is a policy in which the insurer inserts§ a re-instatement clause, whereby he undertakes to pay the cost of replacement of the property damaged or destroyed by fire. Thus, he may re-instate or replace the property instead of paying cash. In such a policy, the insurer has to select one of the two alternatives, i.e. either to pay cash or to replace the property, and afterwards he cannot change to the other option.

Insurance Act 1938:

 

Insurance Act 1938:

The Insurance Act, 1938, broadly provides the ground rules for the operating insurance companies in India. The Act provides for the following: The Insurance Act is the parent legislation which aimed at consolidating and amending the law relating to the business of insurance in February 1938, when, during the British Rule in India, there were many insurance companies which were operating. The Insurance Act, 1938, broadly provides the ground rules for the operating insurance companies in India.

Incorporation of insurance companies, issue of licence and renewal of licence (Sections 2C to 5)

Every insurer who proposes to do insurance business has to register with IRDA and obtain a licence before they start doing insurance business. Three lines of businesses recognised within insurance – Life insurance, Non-life insurance and Standalone Health insurance. Currently only one Reinsurer GIC is licensed in India as the National Reinsurer. Separate companies will have to be formed for doing Life, Non-Life and Standalone Health insurance business. Such companies cannot transact any business other than the insurance business for which the licence is issued. All companies formed for the purpose of doing insurance business shall carry the suffix “Assurance” or “Insurance” in their names to enable anyone to recognise that they are engaged in insurance business.

A Public company is first incorporated under the Companies Act, 1956, with the primary object of engaging in the business of life or non-life or standalone health insurance business. Applicants for insurance licence will have to submit, among other things, certified true copy of memorandum and articles of association, list of directors, certain affidavits and undertakings from Promoters and the fees required for registration. I

IRDA is vested with powers under the Act to cancel the registration of insurers on certain grounds such as default in complying with the provisions of the Act or Regulations passed thereunder, carrying on business other than insurance business etc.

(b) Requirements as to Capital, Transfer of shares, Voting Rights etc.(Sections 6, 6A to 6C)

Every insurer carrying on insurance business shall have a minimum paid up equity capital of `100 Crores for life insurance and general insurance business and `200 crores for an insurer carrying on reinsurance business.

The Act also provides for restrictions on transfer of shares in an insurance company. Before an insurance company can put through transfer of shares in excess of the following limits, prior approval of IRDA is required:

 

Deposits with Reserve Bank of India (Sections 7 to 9)

Section 7 mandates that every life insurance company shall maintain a sum equivalent to 1% of the total gross premium written in India in any financial year commending after 31 day of March 2000, but not exceeding `10 Crores with the Reserve Bank of India in the form of Cash or approved securities. In respect of general insurance business, a sum equivalent to 3% of the total gross premium written in India in any financial year commencing after 31 day of March 2000, but not exceeding `10 Crores is required to be maintained. For reinsurance companies, a flat sum of `20 Crores has been prescribed.

 

(d) Accounts, Audit and Actuarial report and Abstract (Sections 10, 11, 12)

Separate books of account are required to be maintained for each class of business. Since separate companies will have to be formed for Life, Non-Life or Reinsurance, this provision is automatically taken care for formation of separate companies and consequent maintenance of separate books of account. Further a separate fund called Life insurance fund shall be formed, the assets of which shall be separate and distinct from all other assets of the insurer. By virtue of the powers given under Section 11, IRDA have framed Regulations for Financial Statements which provides for forms of Revenue Account, Profit and Loss Account and Balance Sheet alongwith the form of Management Report and some of the documents annexed to the financial statements.

 

The accounts and the statements referred to in Section 11 shall be signed by the Chairman of the Board of the Insurance company and two other Directors, Section 12 provides for audit of the financial statements shall be audited by an auditor. Detailed guidelines have been framed by IRDA on the qualifications of persons who can be appointed as Statutory Auditors of the Company.

 

 

(e) Provisions Relating to Investments (Sections 27, 27A, 27B, 27E)

The manner in which the investment is required to be made is – not less than 50% in Government and Approved securities (out of which 25% only in Government securities) and the balance in Approved investments as specified in Section 27A. The deposits made with Reserve Bank of India under Section 7 are deemed to be Government Securities for this purpose.

 

Investment in “Other investments”

Any investment in other than Approved Investments as above is allowed upto 15% of the sum specified in Section 27, provided such investments are made with the consent of all the directors present at a Board meeting and eligible to vote, in respect of which a special notice has been given to all the Directors in India.

Prohibited Investments (Section 27A(5) and 27C)

Investments in the shares or debentures of a Private Limited Company and investments out of Policyholders funds outside India are prohibited.

Prohibition of Loans

Section 29 prohibits grant of any loans or temporary advances to any Director, Actuary or Auditor of the insurance company or to any company or firm in which any such Director, Actuary or Auditor holds the position of a Director, Actuary or partner. This prohibition is not applicable to:

Minimum insurance business under Rural and Social Sectors

Section 32B and 32C requires every insurer to undertake such minimum percentage of the insurance business for covering risks associated with persons forming part of rural or social sector, workers in the unorganized or informal sector or economically vulnerable or backward classes of society or such classes as prescribed by IRDA.