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Archive for the ‘Policy Type’ Category

Carrier’s Legal Liability

Posted on: November 13th, 2019 by shiv No Comments

The policy pays all sums for which the insured shall become legally liable as compensation for physical loss or destruction of or damage to goods or merchandisewhile in the insured’s custody, while in transit, including during loading or unloading and while temporarily housed on or off vehicles in the ordinary course of transit.

Policy Covers

  • Carrier’s liability for cargo in his custody
  • Cargo salvage, transshipment, emergency storage costs
  • Financial loss due to the lost freight in respect of the damaged part of the cargo
  • Legal and other costs, incurred in the litigation against the claimants
  • Costs of average adjusters
  • Breakage due to improper handling
  • Flood or water damage or damage by other cargo

The cover will commence with the loading of cargo on the vehicle and will be in force until unloading of the cargo at the discharging point or expiry of 7 days after the first arrival of the vehicle at the destination town whichever may first occur.

Exclusions

  • Liability under any other contract not under Carriers Act 1865
  • Liability in respect of damage to property belonging to insured or his employees or in his control
  • Inherent defect or vice, wear and tear, deterioration, spontaneous combustion or decay of perishable goods.
  • Consequential loss arising from loss or damage to goods
  • Any consequence of riots, strikes, war, ionizing radiations.
  • Goods  which may be illicit or illegal or smuggled.

Commercial General Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

What is a CGL policy?

CGL covers Third party Liabilities arising from various business exposures such as those arising from Premises, Products, Advertising and Personal injury. E.g. injury sustained by a potential customer whilst at the premises of the insured. The injury would be due to a fall on a freshly mopped floor, slipping down the stairs or due to a fire incident in the premises.

Why is Commercial General Liability (CGL) policy required?

Consumers and customers in the upper income strata are increasing getting aware of their legal rights and are exercising them without qualms.

In this scenario it becomes important for large corporations and big brands to protect themselves from alleged and real claims with can cause financial outgo.

What does the policy cover?

The policy is split up into 3 coverages as follows:

  • Coverage A – This covers the damages because of bodily injury and property damage claims that may be made on the insured.
  • Coverage B – Under this section, the insurance company pays those sums that the Insured becomes legally obligated to pay because of Personal and Advertising injury liability.
  • Coverage C – extends to Medical Payments wherein the insurance company agrees to pay medical expenses upto a particular limit for bodily injury caused by an accident on the premises owned or rented by the insured or because of his operations.  These payments are made regardless of fault.

The policy covers businesses against:

  • Legal liability of the insured towards damages to the third party in respect of accidental death, bodily injury or loss of or damage to property.
  • Legal costs and expenses incurred by the Insured with prior consent of the Company.

Limit of Liability:

The total liability of the insurer has two limits: Per Claim Limit called AOA limit (Any One Accident) and Per Annum Limit called AOY Limit (Any One Year)

Major Exclusions are:

  • Pure financial losses and insolvency
  • Product Guarantees
  • Damage to own property
  • Contractual Liability
  • Punitive & Exemplary damages
  • Political risks
  • War, civil war, terrorism & sabotage
  • Prior acts and pending litigation

Directors’ and Officers’ (D&O) Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

Directors & Officers Liability is the liability of corporate board members and officers arising out of their actions pertaining to their management duties of the company.

Directors’ & Officers’ Liability Insurance insures the personal assets of directors and officers from lawsuits arising out of their capacity as directors or officers of the company.

Some of the heads of officer liability – allegations and offences that can invite legal action are:

Hostile Work Environment
A female employee at a family-owned company claimed that a male supervisor offered to improve her performance evaluation in exchange for sexual favors. According to the employee, after she refused, her evaluations worsened and she ultimately was fired. She sued both the company and its CEO. She claimed that the CEO was personally liable for damages because he knew or should have known about past incidents of sexual harassment by the male employee, and failed to terminate or otherwise discipline him. Rather than face the expense and risk of trial, the company and the CEO settled all claims against them for Rs. 90 lakhs. In addition, defense costs incurred were Rs. 50 lakhs.
  • Breach of fiduciary duties
  • Inaccurate financial statements
  • Mismanaging corporate assets
  • Fraud and dishonesty
  • Misuse of insider information
  • Environmental and pollution claims
  • Product liability
  • Conflicts of interest
  • Wrongful dismissal of employees
  • Breach of health and safety standards
  • Anti-trust violations
  • Sexual discrimination and harassment; disability discrimination
  • Corporate Manslaughter – management failures that result in death
  • Irregularities in Securities issues
  • Tax evasion, tax liabilities and penalties
  • Unauthorized or imprudent loans and investments
  • mismanaging mergers and takeovers
  • Insolvency actions
  • Breach of minority shareholder rights

Litigation can come from:

  • Shareholders and other investors
  • Creditors
  • Lenders
  • Customers
  • Statutory Authorities
  • Employees
  • Competitors

The policy pays for the legal expenses and the court awards against the directors and officers.

Workmen’s Compensation Insurance

Posted on: November 8th, 2019 by shiv No Comments

Purpose

Employer shall be liable before the Court of Law to pay compensation, in accordance with the provisions of Workmen Compensation Act, 1923, for personal injury or death or disease contracted specified therein as an occupational disease peculiar to that employment in Part A Schedule III of Workmen Compensation Act 1923, caused to a workman by accident arising out of and in the course of employment.

‘Personal injury’ under the Act means physiological injury. It may be external, or it can be internal also.

Workmen:

All employees working for the employer/ insured. In case of contract labour the liability of the principal is absolute though he may not be the actual employer. e.g For The Security Gaurds provided by a security agency, the liability under WC Act also falls on the Principal.

Wages:

For purpose of calculating any claim the monthly wage taken into account are the actual wages subject to maximum of Rs.4,000/. Wages includes all allowances and cost of perks.

Legal Liability may arise due to:

  • Breach of, any of the, statutory regulations provided for ensuring safety to workers inside the factory premises.
  • Negligence of co-employees.
  • Injury or Accidental Injury to workers while performing their duties

Policy covers is subject to

  • Workmen’s Compensation Act, 1923
  • Fatal Accidents Act, 1855
  • Any other Common Law

Employer is liable to pay compensation for:

  • Death
  • Permanent total disablement
  • Permanent partial disablement
  • Temporary disablement whether total or partial

The Employer need not pay compensation – in respect of any injury caused by an accident which is directly attributable to

  • The workman having been at the time under the influence of drink or drugs.
    Or
  • Willful disobedience by the workman of orders and rules expressly given to secure the safety of the workmen
    Or
  • Willful removal or disregard by the workman of any safety devices provided for the safety of workmen

In cases of death or permanent Total Disablement of a workman, the above defences are not available to Employer.

If any disease is prescribed in the Act as “Occupational Disease”, the illness is deemed to be an injury. If the Employer defends the Claim, such expenses are also payable.

Extension of cover

Policy may be extended to cover Medical expenses incurred by the employer by payment of additional premium as per Workmen Compensation policy.

The Company shall not be liable under the policy in respect of:

  • Any injury by accident or disease directly attributable to war invasion act of foreign enemy hostilities (whether war be declared or not) civil war, mutiny, insurrection, rebellion, revolution or military or usurped power.
  • Liability towards employees of the contractor.
  • Liability of the insured which attaches by virtue of an agreement but which would not have attached in the absence of such agreement.
  • Sum which the Insured would have been entitled to recover from any party but for an agreement between the Insured and such party.

When does a claim arise under WC ACT:

The Claim under WC Act arises in case of any injury (fatal & non-fatal) / decease arising out of and in course of his employment.

IN case of an accident invoking liability under WC  ACT the employer/insured needs to take following steps:

  • Inform the incident to WC Commissioner in whose jurisdiction the accident occurs.
  • Inform Police of the incident.
  • Inform us of the accident.

Claims Procedure

For preferring a claim he needs to submit us the following Documents to enable us to proceed with investigation of the case:

  • Claim Form duly filled and signed (A specimen blank copy enclosed)
  • Submit proof of employee/ Employer relationship.
  • Police FIR/ PMR (In case of fatal accidents)
  • Internal/ Dept Enquiry report.
  • Report from Labour Dept.
  • Copy of letter informing WC Commissioner of Accident.
  • Medical record / reports showing nature & extent of Disability in case of Permanent Disability cases.
  • Medical records/ reports evidencing the medical expenses and period of temporary disability.
  • Leave record of the employee in case of  WC Claim.

The investigator is appointed to verify the records wage Bills/ Employment records and any shortfall  in premium (i.e under-declaration of Wage Bill or No. of employees) till date plus  a reasonable premium for future  needs to be necessarily deposited before the claim is settled. In case of glaring difference between the initial declaration and the actual figures are detected, the claim may even be prejudiced.

In the event of claim, the Insured must inform the insurer in writing & request for a Claim Form

In Case of death of employee

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Age proof for the deceased employee
  • Complete Medical Papers
  • Post Mortem Certificate
  • Copy of Order of the WC Commissioner for the award passed
  • Statement of Wages
  • Muster Roll of the employees

Proof of payment In case of Permanent Total Disablement and Permanent Partial Disablement

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Age proof for the disabled employee
  • Complete Medical Papers
  • Disability Certificate of the attending doctor
  • Copy of Order of the WC Commissioner for the award passed
  • Statement of Wages
  • Muster Roll of the employee
  • Proof for Payment.

In case of death and Permanent disablement claims, the claim would be processed only after the full compensation is deposited before the Commissioner

In case of Temporary Total Disablement

  • Claim form
  • Confirmation that the accident has happened in the course of employment
  • Complete Medical Papers
  • Fitness Certificate from the attending doctor
  • Statement of Wages
  • Muster Roll of the employee
  • Complete list of workers employed as on Date of Accident under all categories
  • The Company reserves the right for appointing of an investigator for the claim.
  • On receipt of the above documents by the Insured, the claim will be processed.
  • Earnings, Wages and Salaries

Shall mean the employees total remuneration paid or fallen due for payment including overtime, value of board and/or lodging, housing accommodation bonuses and all other perquisite privileges or benefits in kind or money, received by the employees from the employer in connection with their employment.

Or

As specified under Workmen Compensation Act, 1923.

Or

The Sum insured available under the policy. Whichever is less.

Quantum of Claim:

The amount of claim payable under WC Policy is strictly governed by the WC ACT  and depends upon two factors:

  • Monthly wages of the employee.
  • Age of the Employee. Based upon the age the WC ACT specifies a Factor Multiplier Table which is appended with this note.

When Death results from the injury:

An amount equal to 50% of the monthly wages of the deceased workman multiplied by the relevant factor.

Or

An amount of Rupees eighty thousand whichever is more.

When permanent total Disablement results from the Injury:

An amount equal to 60% of the monthly wages of the injured workman multiplied by the relevant factor.

Or

An amount of Rupees Ninety Thousand whichever is more.

When permanent Partial Disablement results from the injury:

In case of an injury specified in the ACT, such percentage of the compensation which would have been payable in case of Permanent Total Disablement as is specified therein as being the percentage of the loss of earning capacity caused by that injury.

And

In case the injury is not specified in ACT, such percentage of the compensation payable in case of permanent total disability as is proportionate to the loss of earning capacity(as assessed by the qualified medical practitioner) permanently caused by the injury.

(where more injuries than one are caused by the same accident, the amount of compensation under this head shall be aggregate but not so in any case as to exceed the amount which would have been payable if permanent total disablement had resulted from the injuries.)

Where Temporary Disablement whether total or partial results from the Injury:

A half monthly payment of the sum equivalent to 25% of the monthly wages of the workmen, if the disablement is for more than 3days. This will continue during the period of disablement or 5yrs. whichever is shorter.

THE WC Claim needs to be deposited necessarily with WC Commissioner of the Area, unless order to the contrary are obtained from him. The discharge of WC Commissioner is sufficient discharge for us.

 

 

Professional Indemnity/ Errors and Omissions

Posted on: November 8th, 2019 by shiv No Comments

Errors & Omissions Insurance is a professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions.

An error or omission, a mistake, which causes financial harm to another, can occur on almost any transaction in any profession. This type of insurance helps to protect a professional, an individual or a company, from bearing the full cost of defense for lawsuits relating to an error or omission in providing covered Professional Services.

The policy covers businesses against:

  • Legal liability of the insured towards damages to customers with respect to financial losses incurred by them due to negligence of the insured
  • Legal costs and expenses incurred by the Insured.

Limit of Liability:

The total liability of the insurer has two limits: Per Claim Limit called AOA limit (Any One Accident) and Per Annum Limit called AOY Limit (Any One Year)

Major Exclusions are:

  • Pure financial losses and insolvency
  • Libel, slander & defamation
  • Infringement of patent, copyright, trademark, IPR
  • Financial Guarantee & Insolvency
  • Damage to own property
  • Contractual Liability
  • Punitive & Exemplary damages
  • Political risks
  • War, civil war, terrorism & sabotage
  • Prior acts and pending litigation

Public Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

Most industrial and non-industrial units face the risk of becoming legally liable to pay damages to third parties as a result of accidental death of / bodily injury to third parties or loss or damage to the property belonging to a third party due to their operations.

Public Liability Insurance covers the legal liability of industrial and non-industrial establishments arising out of such events. The policy covers businesses against:

  • Legal liability of the insured towards damages to the third party in respect of accidental death, bodily injury or loss of or damage to property.
  • Legal costs and expenses incurred by the Insured with prior consent of the Company.

The policy provides for the following extensions:

  • Pollution Cover: Liability towards pollution risks in connection with pollution or contamination of atmosphere water or land or other tangible property.
  • Transportation Risk: Transportation extension for covering liability arising out of transportation of hazardous material or substance
  • Technical Collaborators’ Liability: Collaborators liability extension to cover liability arising out of accidents occurring attributable to the defects in the designs or processes supplied by the technical collaborators.
  • Effluents Risk: Extension to cover Carriage of effluents outside the premises
  • Act of God perils: Extension to cover liability arising out act of god perils depending upon the earthquake zone as per the fire insurance tariff in which the risk is situated.

Indemnity Limit:

  • Any One Accident (AOA): It is the limit of liability under the policy per accident.
  • Any One Year (AOY): It is the maximum limit of liability under the policy for any one year and is expressed in ratios in relation to AOA

Exclusion:

The policy does not cover liability arising out of

  • earthquake, earth-tremor, volcanic eruption, flood, storm, tempest, typhoon, hurricanes, tornado, cyclone or other similar convulsions of nature and atmospheric disturbance unless AOG perils add on has been specifically taken
  • deliberate, willful or intentional non-compliance of any Statutory provision or disregard of the insured’s technical or administrative management
  • loss of pure financial nature such as loss of goodwill, loss of market etc
  • all personal injuries such as libel slander, false arrest, wrongful eviction/ detention, defamation etc and mental injury, anguish or shock resulting there from
  • Infringement of plans, copyright, patent, trade name, trademark, registered design.
  • fines, penalties, punitive or exemplary damages or any other damages
  • war group nuclear group and Act of God of perils
  • transportation of materials and dangerous substances unless specifically covered
  • Ownership, possession or use by or on behalf of the insured of any aircraft, watercraft or hovercraft.
  • Injury to any person under a contract of employment or apprenticeship with the insured when such injury arises out of the execution of such contract.
  • Arising under the Public Liability Insurance act or any other statute that may come into force after the issue of this policy.
  • Assumed by the insured by any agreement and which would not have attached in the absence of such agreement.

Contractors All Risk Policy (CAR)

Posted on: November 8th, 2019 by shiv No Comments

Suitability

This policy is designed to protect the interest of civil contractors and Firms involved in construction activity against the damage or destruction of various civil engineering projects undertaken by them. The policy is suitable for all types of civil engineering construction works ranging from small buildings to massive dams as they are susceptible to damage by a variety of external and internal causes during the course of construction.

Salient Features

  • This is a comprehensive policy designed to cover all risks associated with civil works right from the time of commencement of works at site till the contract works are taken over or put into use.
  • The policy covers:
    • Fire / lightning.
    • Accidental damage during construction like dropping or falling, defective workmanship and material, lack of skill, negligence, malicious act and human error.
    • Act of God perils such as flood and inundation, earthquake.
    • Collapse, collusion, impact.
    • Theft and burglary, malicious and terrorist damage.

Extra covers

Policy may be extended to cover:

  • Air freight
  • Additional customs duty
  • Express freight
  • Over time wages
  • Expenses for clearance an removal of debris
  • Damage to surrounding property
  • Third party liability
  • Escalation in costs
  • Contractor’s plant and machinery at the construction site
  • Defects in construction, which surface during maintenance period for which the contractor is liable under the terms of agreement with the principal.

Benefits

Claims are payable at the prevailing market rates for restoration of affected property to the condition immediately before the occurrence of damage. Cost of any improvement and modifications will not be admitted. The amount of loss payable is subject to under insurance if any, and the policy excess.

Premium

Premium chargeable depends on the nature of the project, the project cost, the project period, geographic location and the period of testing. Discount in premium is allowed for large projects with sum insured more than 100 crores, the higher deductibles opted and for the fire protection available at the site. Premium may be paid in installments where the project period exceeds 1 year. In case of early completion of the project also, refund of premium may be claimed for the balance period of insurance.

Requirements

A completed proposal form giving full details of the project, its costing, details of additional covers sought.

Recommendations

Project costs are huge in view of heavy investments made by various agencies in infrastructure sector. Any loss or damage would throw the project haywire apart from causing heavy losses both financially and to human life. Defects in construction may also surface during the maintenance period. In order to safeguard the project and his own interest, a contractor should necessarily go for contractors all risk insurance.

Storage-cum-Erection/ Erection All Risks (EAR)

Posted on: November 8th, 2019 by shiv No Comments

Act of God

  • Earthquake (Add on Cover)
  • Volcanic Eruption
  • Storm / Cyclone/ Tempest /Tornado/Typhoon / Hurricane
  • Flood & Inundation

Social

  • Riot
  • Strike
  • Malicious Damage
  • Terrorism (Add on Cover)

Geological

  • Land Slide
  • Subsidence
  • Expansive Soils

Fire Group

  • Fire
  • Lightning
  • Explosion
  • Implosion
  • Impact
  • Aerial Devices & Objects Dropped There From

Engineering

  • Defective Materials
  • Defective Workmanship
  • Defective Product
  • Collapse
  • Faulty Erection
  • Collision

Others

  • Accidental damage during construction like dropping or falling
  • Burglary and Theft

 

Contractors Plant and Machinery (CPM)

Posted on: November 8th, 2019 by shiv No Comments

The policy covers loss or damage to all types of contractor’s construction equipment such as bulldozers, cranes, excavators, compressors, etc., due to an accident arising out of external perils. It covers movable equipment which is at work, at rest, is being dismantled for the purpose of cleaning or overhauling or during its subsequent re-erection.

The policy can cover all kinds losses due to accidents except:

  • Loss or damage due to any internal electrical or mechanical break down, defective lubrication, lack of oil or coolant although any consequent external damage is payable.
  • Loss or damage to replaceable parts or attachments such as bits, drills, knives, dies, moulds etc.
  • Loss or damage whilst in transit from one location to another.
  • Loss due to wear and tear, corrosion, rust, deterioration, atmospheric conditions.
  • Loss or damage during testing operating or whilst being used for a purpose other than designed for.
  • Loss or damage to machinery working under ground , unless covered by an endorsement
  • Loss or damage for which the supplier or manufacturer is responsible either by law or under contract

The policy can be made more comprehensive by adding any or all of the following extensions:

  • Owner’s surrounding policy
  • Clearance and removal of debris
  • Additional custom duty
  • Air freight
  • Express freight
  • Dismantling
  • Escalation
  • Earthquake
  • Third Party Cover
  • Floater cover
  • Terrorism

Sum Insured

The Sum Insured shall be equal to the cost of replacement of the insured property by new property of the same kind and same capacity, which shall mean its replacement cost, including freight, dues and customs duties, if any, and erection costs.

Product Liability Insurance

Posted on: November 8th, 2019 by shiv No Comments

Salient Features

  • The policy pays for damages, that the insured is legally liable to pay in consequence of accidental death/injury or disease to third parties including damage to third party property due to any defect in the products manufactured.

Additional Covers

  • Vendors’ Liability extension
  • Technical collaborators liability
  • Products manufactured by sub-contractors/licensed manufacturers on their own brand name can also be covered under the same policy.
  • Recall

Benefits

  • Claims arising out of accidents during the policy period due to defects in the products covered by the policy are payable.
  • The policy also covers injury to third party and pollution liability on account of products covered.
  • Indemnity is extended to officials of the insured in their business capacity.
  • Officers, committees and members of insured’s welfare associations personal representatives of the estate.
  • All costs, fees and expenses incurred in investigation, defense and settlement of claim made against the insured, cost of representation at any inquiry or other proceedings in respect of matters having direct relevance to the claim made against the insured are covered by the policy subject to the overall limits stated in the policy.

Premium

  • Premium is charged on the limit of indemnity and depends on the ratio of any one accident to any one year.
  • Additional premium for exports is charged based on the total exports turnover to each country.
  • All policies are subject to a minimum excess 0.5% of limit indemnity per any one accident (except for exports to USA/Canada which have double these limits).
  • All extensions carry additional rates.
  • Rates are lower if higher excess opted.

Requirements

  • Duly filled in proposal giving full details of business operations, the nature of goods, turnover, product specifications, claims history, the limits of indemnity for cover opted.


Optima’s core group has more than 100 man-years of experience in insurance. Our experience has trained us in reading the fine print of insurance policies, understanding it and applying it for the benefit of our clients.

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