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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

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

Crime Insurance

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

Crime insurance covers the losses resulting from criminal acts such as robbery, burglary and other forms of theft either by employees or third parties. It is a superior replacement for ‘Fidelity Guarantee Insurance’.

It covers acts by employees, third parties, temp or seasonal staff, contractors and outsourcing operations. Other than compensation for established losses the policy can reimburse fraud investigations costs.

This policy can cover any or all of the following risks:

  • Employee Theft
  • Forgery or Alteration
  • Inside the Premises – theft of money and securities
  • Inside the Premises – robbery or Safe burglary of other property
  • Computer Fraud
  • Funds Transfer Fraud
  • Money Orders and Counterfeit money

Some insurance companies can also provide the following extensions:

  • Client loss
- Where the insured is responsible for the care, custody and 
control of clients’ money, securities or property; and such 
has been lost under the main cover
  • Fees, costs and expenses
    • Auditor fees or investigation costs to identify covered losses
    • Legal fees in defense of demands or claims resulting from 
a covered loss
    • Fair and reasonable costs to restore the insured computers 
following a covered loss
  • Automatic Cover for Acquisitions 
- Cover provided if gross turnover and number of employees is each less than 15% and the business is not materially different from the insured’s current business
  • Discovery period
- If an insured decides to discontinue a commercial crime 
policy a discovery option is available to cover unknown loss

Standard Fire & Special Perils Policy (SFSP)

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

The major Property Insurance cover in India is Fire Insurance. Although called Fire Insurance, it is an umbrella insurance policy covering many risks. The risks covered under Fire Insurance, technically named as Standard Fire and Special Perils Policy, are:

Although called Fire Insurance, it is an umbrella insurance policy covering many risks.

The policy is technically named as Standard Fire and Special Perils Policy.

Fire Group Perils

Fire, Lightening, Explosion & Implosion, Forest Fire, Bush Fire

Act of God Perils

Storm, Tempest, Flood, Inundation, Earthquake, Landslide, Rockslide

Social Group Perils

Riot, Strike, Malicious Damage and Terrorism

Miscellaneous Perils

Impact Damage, Aircraft Damage, Bursting and/or overflowing of Water Tanks, Apparatus and Pipes, Missile Testing operations, Leakage from Automatic Sprinkler Installations

The exclusions in the policy are:

This Policy does not cover

The first 5% of each and every claim subject to a minimum of Rs.10,000 in respect of each and every loss arising out of “Act of God perils” such as Lightening, STFI, Subsidence, Landslide and Rock slide covered under the policy

The first Rs.10,000 for each and every loss arising out of other perils in respect of which the Insured is indemnified by this policy. The Excess shall apply per event per insured.

Loss, destruction or damage caused by war, invasion, act of foreign enemy hostilities or war like operations (whether war be declared or not), civil war, mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising, rebellion, revolution, insurrection or military or usurped power.

Loss, destruction or damage directly or indirectly caused to the property insured by

  • ionizing radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel
  • the radioactive toxic, explosives or other hazardous properties of any explosive nuclear assembly or nuclear component thereof

Loss, destruction or damage caused to the insured property by pollution or contamination excluding

  • pollution or contamination which itself results from a peril hereby insured against.
  • any peril hereby insured against which itself results from pollution or contamination

Loss, destruction or damage to bullion or unset precious stones, any curios or works of art for an amount exceeding Rs. 10000/-, manuscripts, plans, drawings, securities, obligations or documents of any kind, stamps, coins or paper money, cheques, books of accounts or other business books, computer systems records, explosives unless otherwise expressly stated in the policy.

Loss, destruction or damage to the stocks in Cold Storage premises caused by change of temperature.

Loss, destruction or damage to any electrical machine, apparatus, fixture, or fitting arising from or occasioned by over-running, excessive pressure, short circuiting, arcing, self heating or leakage of electricity from whatever cause (lightning included) provided that this exclusion shall apply only to the particular electrical machine, apparatus, fixture or fitting so affected and not to other machines, apparatus, fixtures or fittings which may be destroyed or damaged by fire so set up.

Expenses necessarily incurred on (i) Architects, Surveyors and Consulting Engineer’s Fees and (ii) Debris Removal by the Insured following a loss, destruction or damage to the Property insured by an insured peril in excess of 3% and 1% of the claim amount respectively.

Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.

Loss or damage by spoilage resulting from the retardation or interruption or cessation of any process or operation caused by operation of any of the perils covered.

Loss by theft during or after the occurrence of any insured peril except as provided under Riot, Strike, Malicious and Terrorism Damage cover.

Any Loss or damage occasioned by or through or in consequence directly or indirectly due to earthquake, Volcanic eruption or other convulsions of nature.

Loss or damage to property insured if removed to any building or place other than in which it is herein stated to be insured, except machinery and equipment temporarily removed for repairs, cleaning, renovation or other similar purposes for a period not exceeding 60 days.

Burglary Insurance

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

Coverage

The policy covers loss or damage caused by Burglary following upon an actual forcible and violent entry of and / or exit from the premises

Burglary Insurance policy covers property contained in business premises like furniture, fixtures, fittings, office equipment, electronic equipment, stocks owned, or for which insured is responsible or held in trust and/or commission. It can also cover cash, valuables, securities kept in a locked safe or cash box in locked steel cupboard if specifically mentioned.

The policy covers loss or damage caused by Burglary and Theft following upon an actual forcible and violent entry of and / or exit from the premises and Robbery. It also covers damage to your premises caused by burglars during burglary or attempts at burglary.

The Policy pays actual loss/damage to your insured property caused by burglary subject to the limit of Sum Insured. If Sum Insured is not adequate, Policy pays only proportionate loss.

There is also a provision in the Policy to cover bulk items on ‘first loss’ basis wherein a percentage of total stock stored can be taken as that exposed to the risk of burglary and housebreaking. The premium is charged on this percentage selected only. Policies can be issued on declaration basis and on floater basis for stocks

Extensions3

  • Loss of the insured property to cover burglary as a result of riot & strike risks
  • Theft and larceny not accompanied by violent ingress or exit
  • Costs for changing locks and cost for repair of damage caused to the insured premises after an insured event up to 10 % of the total sum insured.
  • Expenses towards restoring paper files, plans, records and drawings, data and installation costs for computer programs
  • Expenses towards clearance of debris, movement and protection thereof (normally up to 10 % of the loss subject to a maximum of Rs 10,000/-)
  • Loss or damage to the properties of the employees
  • Death or injury to employees during a burglary or attempted burglary

The Policy does not cover loss or damage arising from

  • War and warlike operation, Riot & strike, civil commotion, Terrorist activities conclusion of nature and / or Consequential loss by use of the keys to the safe unless obtained by force or threat
  • Any inmate or member of the Insured’s household or his business staff or any other person lawfully in the premises
  • Ionizing radiation or contamination by radioactivity
  • Nuclear weapons material
  • goods held in trust/commission, jewelry, curios, title deeds, business books unless specifically insured.
  • By abstraction from a safe using a key or duplicate key, unless it is obtained by violence or threat
  • Due to shop lifting, acts involving you/your family members/ your employees
  • The extension does not cover losses detected during routine stock taking/ checking.


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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