The policy known as deterioration of stock insurance or stock spoilage insurance is a form of consequential loss cover granted in the engineering department for stocks contained in large cold stores. The cover is against the risk of deterioration and contamination following breakdown of the refrigeration plant machinery. In Indian market it is customary to have two different forms of policy one is respect of stocks of fish , prawns, frog legs and other types of sea foods, the other form of policy known as deterioration of stock in cold storage insurance is exclusively meant for the contents of potato cold storage. Although basic cover is the same in both cases two different form of insurance protection are provided.
SCOPE OF COVER
Loss or damage by deterioration or putrefaction or contamination of the contents of the cold store caused by
a) A rise in temperature resulting from : breaking of refrigeration plant equipment at the premises or damage to the said plant equipment by an accident cause.
b) Action of refrigerant escaping from the aforementioned plant and equipment.
PRINCIPAL EXCLUISON
Fire, lighting , extinguishing of fire or subsequent dismantling , chemical explosion , theft, collapse of building subsidence, cover for these perils may be obtained in the fire or miscellaneous department, consequential loss damage or liability due to or arising from the deterioration , putrefaction or contamination of the goods or third party claims for poisoning as a result of eating contaminated goods.
SUM INSURED AND AVERAGE
The sum insured should represent the maximum value of stocks in the cold store at any one time during the currency of the policy . this is very necessary as these policies are subject to the condition of average. The extent of under insurance can easily be detected from the updated stock. Register.
BASIS OF INDEMNIFICATION
The ability of the insurer is normally limited to the market value of the commodities immediately before the accident . in any event the total liability of the company will not exceed the sum insured under the policy . since claims under the deterioration of stock policy follow a breakdown covered under the standard machinery breakdown insurance policy as soon as indication ofa breakdown in a cold store is received .
TECHNICAL CONTROL
In view of the very serious loss potential it is absolutely essential that acceptance of this risk is made subject to a satisfactory inspection should also be carried out prior to each renewal mainly with a view to checking the standard of refrigeration plan addition and alterations in the storage arrangement the deterioration of the stock policy as already mentioned earlier follows a machinery insurance policy and it is condition precedent under the deterioration policy that a claim should be admitted under the machinery insurance policy. the incepting engineer will also check all the log books maintained by the store owner with a view to ascertaining the temperature by the cold store owner with a view to ascertaining the temperature reading on different dates as well as the operating of the plant machinery.
DETERIORATION OF STOCK IN COLD STORAGE INSURANCE POLICY
SCOPE OF COVER AND PRINCIPLE EXCLUSION
This form of policy has been exclusively designed for potato stocks cold stores. The cover afforded under this policy and the principle exclusions are almost identical to the standard deterioration of stock insurance policy . in addition there are certain extra conditions and warranties inserted in the policy mainly in view of the nature of the stock being covered . this class of insurance is entirely under control in India.
SUM INSURED AND AVERAGE
The sum insured under this policy should represent the value of the goods obtained by multiplying the full storage capacity of the cold store as declared by the insured by the average price of the goods at the time of storage . this agreed price should also include the storage charges for the entire season .
TECHINCAAL CONTROL
In view of very high loss potential for this class of business also rigid acceptance procedure has been introduced moral hazard of the proposal plays an important role in this class more than any other branch of engineering insurance. In almost all cases frequent mid term inspection of the cold store are carried out by the competent engineers and the follow up measures found necessary at the time of such inspection are taken . the cold store owner is also under an obligation to maintain a log book in which recording of temperature wet bulb and dry bulb readings. In addition the insured is expected to maintain a stock register in the preformed to be supplied and regular declaration of the stock position should be communicated from time to time.
UNDERWRITING CONSIDERATIONS
The underwriting considerations of this class of business are identical to those stated under the general deterioration of stock section. The facility allowed to insured for arranging a policy on declaration basis is however different from that available under the normal deterioration stock insurance policy . the rules governing sanction of declaration facilities under potato cold store policy have been laid down in detail in the relative .
CLAIM CONTROL
Whenever a machinery breakdown claim Is reported the stocks must also be inspection by the surveyor to establish stocks must also be inspected by the surveyor to establish beyond doubt that deterioration , a claim form duly competed by the claimant must be obtained
ELECTRONIC EQUIPMENT INSURANCE
Electronic equipment in particular computer installations with all the peripherals often involve a large number of high valued equipment contained in a relive small area . an accident such as impact from falling object leakage of water or steam into the equipment or damage from other extraneous causes may result in very expensive losses. This policy is available to the owner labor or hirer depending pond the responsibility or liability in each case. This policy shall apply to the insured items only after successful completion of their performance . whether they are at work or at rest or being dismantled for the purpose of cleaning or overhauling or in the course of aforesaid operations themselves or when being shifted within the praises or during subsequent re-erection.
RATING AND UNDERWRITING
A proposal form and detailed questionnaire is used to obtain full information regarding the technical details of the equipment year of manufacture working condition loss history etc . A technical survey is conducted of all electronic equipment and computer installation . a special survey report form has to be filed in by the inspection engineer. Particular attention is paid to fire water damage and malicious damage potential. Also cover for only hose equipment which have completed at least three months trouble free operation is granted.
CIVIL ENGINEERING COMPLETED RISKS INSURANCE
Owners and operations of civil engineering structures look for comprehensive insurance protection against loss or damage after the construction work has been completed and the facilities have been taken over . in such structure the fire risk is often negligible so that the standard fire plicy is unsuitable.
EXCLUSIONS
Although the CECR policy is a named perils policy special attention should be paid to the various exclusions the most important of which are :
• Loss damage or expenses arising out of inherent vice , wear and tear , gradual deterioration. Expansion or contraction due to changes of temperature
• Loss or damage caused by or aggravated by inadequate maintenance.
The underlying idea of CECR insurance Is to provide cover against external hazards for which the original contractor or the operator or owner as the insured is not responsible.
BASIS OF INDEMNITY
Cover is granted only for material damage to the property insured only the repair costs are indermnifiable . the increase in value connected with a repair will not be debited to the insured in the case of partial losses. When determining the current value of a structure at the time of a loss one must apply the depreciation rates or comparable structure . the insurers remain fully liable even if the third party has caused the loss . in such cases the insured is reimbursed but the insurers will try wherever possible to recourse against the party that caused the the loss which often proves to be difficult tedious and costly.
UNDERWRITING ASSESSMENT
Inspection reports should indicate whether or not the design and calculation make adequate allowance for the hazards to be expected such as storm insinuation and earthquake . due to advanced developments the original design may now prove faulty and inadequate although it fully complied with the latest technical standard at the time of construction with the latest technical standers at the time estimate of the repair cost to be expected for the maximum probable loss. Exact information on all previous damage caused by the hazard to be insured.All information available is to be evaluated carefully in order to ensure that the construction components are sound as far as thier design construction and condition are concerned.
