This policy is a composite package Insurance Policy devised to meet the requirement of a Householder to cover their property or contents against the peril of Fire, Burglary & House-breaking. Theft, Accidental breakage and Break-down etc.
The policy schedule contains 10 Sections out of which Section I(B) is compulsory. In addition to Section I(B), Insured may opt for either all other Sections or a minimum of Two Sections.
The theme of this policy is “utmost good faith”, it is, therefore, recommended to issue this policy to the person of sound moral hazard and repute.
The policy is issued in the form of a “Proposal-cum-policy schedule” having detail of property insured and sum set against each section and signed by insured.
From Surveyor’s point of view the loss assessment under this policy is to be carried out with positive & professional approach because in the event of a claim the policy holder becomes a very sensitive claimant. The basic approach of the Surveyor, therefore, in all cases should be to take the Insured in confidence so that he may feel that his claim is in the safe hand and he will be properly indemnified. As already iterated this policy moves around the doctrine of “UTMOST GOOD FAITH” therefore, both surveyor and insured should form a bridge of trust insured in completing the claim documents and other formalities.
SCOPE OF THE POLICY:
House-holder policy can only be issued to Householders Property including Building and Contents.
There is no limit of sum insured as each property is to be proposed for value as per requirement of the policy.
The assets relating to business such as Offices and Contents including computers for commercial purposes even lying/ installed in a house cannot be proposed for coverage under this policy.
As per Householders Policy Insurance Clause attached to and forming a part of the policy, “in the event of loss or damage to Insured property, Company will pay to the insured the value at the time of happening.”
The term VALUE is to be determined by the Surveyor looking into the nature of the property involved and the circumstances of the loss. It may be market value and/or value to the insured and/or depreciated value as the case may be but excluding any sentimental value.
The surveyors has to apply himself keeping in mind the basic principles of indemnity i.e. to place insured as far as possible in the same manner and proportion where he was just prior or the loss.
The important General Conditions as regards to the Surveyor’s point of view are discussed as below:
In the event of theft, a complaint with the police should be lodged and all practical steps should be taken to apprehend the guilty person or persons to recover the property lost.
From the above condition it is clear that FIR must be lodged in the event of theft.
The company may at its option reinstate, replace or repair the property or premises lost or damaged or any part thereof instead of paying the amount of loss or damage or may join with any other insurer in so doing but the company shall not be bound to reinstate exactly or completely but only as circumstances permit and in reasonable sufficient manner and in no case, shall the company be bound to spend more in reinstatement than it would have cost to reinstate such property as it was at the time of occurrence of such loss or damage but not more than the sum insured by the company thereon.
Although the usual method of indemnification is by cash payment but as per this condition, the insurer has option to reinstate, replace or repair the property or premises lost or damaged or any part thereof instead of paying the amount of loss and also they are not bound to replace exactly or completely the same property which is insured and lost but only as circumstances permit.
If the property hereby insured shall at the time of any loss or damage be collectively of greater value than the sum insured thereon, then the insured shall be considered as being his own insurer for the difference and shall bear a rateable proportion of the loss or damage accordingly. Every item, if more than one, of the policy shall separately subject to this condition.
The General Condition of Average is the same as in the case of Standard Fire Policy and shall not apply for Section I & V.
IMPORTANT GENERAL EXCEPTION:
Loss or damage caused by depreciation or wear and tear.
By virtue of this exclusion all losses are subject to depreciation for items of limited life and/or subjected to normal wear and tear in case they are damaged due to operation of insured peril in any one of the Section of the policy schedule.
SECTION – 1 : BUILDING & CONTENTS:
The company will indemnify the insured in respect of loss or damage to the Contents/ Building whilst contained in the Insured premises by:
Fire, Lightning, Explosion of gas in domestic appliances.
Bursting and overflowing of water tanks, apparatus or pipes.
Aircraft or articles dropped therefrom.
Riot, Strike or Malicious Act.
Earthquake, Fire and/or Shock, Subsidence and Landslide (including Rockslide) damage.
Flood, Inundation, Storm, Tempest, Typhoon, Hurricane, Tornado or Cyclone.
The coverage under impact damage is wider as copared to Fire Policy ‘A’ where impact damage is covered only by Rail, Road & Animal.
EXTENSION UNDER SECTION-1
The insurance by this Policy applies also to contents in so far as such property is not otherwise insured whilst temporarily removed and during transit as accompanied baggage anywhere in India, to other premises used for temporary residence by the insured or any member of the Insured’s family permanently residing with him or other premises wherein the insured shall have placed any of such property in safe custody during his temporary absence from the insured premises during any or periods exceeding in the aggregate One Hundred and Twenty (120) days in any one period of insurance, provided that the liability of the company in respect of property so removed shall not exceed one tenth of the total sum insured under this section.
The policy is also extended to cover the insured property temporarily removed.
During transit as accompanied baggage anywhere in India.
To premises other than insured used for temporary residence by the insured or any member of the insured family permanently residing with him.
Or other premises where the insured property is placed in safe custody during this temporary absence from the insured premises.
The total period for which the Insured property is removed under any of the above circumstances should not exceed in aggregate for 120 days during one policy period.
The liability of the company in respect of the property so removed will not exceed 1/10th of the total sum insured under the sectionI.
Loss or damage to articles of consumable nature for example – Food Stuffs, Soap, Cooking Gas etc.
Loss or damage to deeds, bonds, bills of exchange, promissory notes, shares and stock certificates, business books manuscripts, documents of any kind, precious stones and jewellery and valuable “unless separately declared”.
With the latest amendment jewellery including other valuables may be insured in this section but they should be separately mentioned.
No one article other than furniture is deemed to be more than 5% of the sum insured under this section unless separately specified and valuable stated.
Conditions of Average: If the property hereby insured shall at the breaking out of any fire or at the commencement of any destruction of or damage to the property by any other peril hereby insured against be collectively of greater value than the sum insured thereon, then the insured shall be considered as being his own insurer for the difference and shall bear a rateable proportion of the loss accordingly. Provided, however, that if the sum insured hereby on the property insured shall at the breaking out of such fire or at the commencement of such destruction or damage be not less than 85% (Eighty five percent) of the collective value of the property insured, this condition shall be of no purpose and effect.
In the case insured property at the time of loss is under insured by or less than 15% then there shall be no application of average clause. But if the percentage of under insurance is more than 15% than this condition has no effect.
Items under Section-I such as clothing, kitchenware, crockery, cutlery, furniture & fixture, electrical & mechanical appliances, valuable & jewellery (if desired) can be covered for their actual value.
As per contract underwriting practice the list of articles should be prepared giving amount for each head separately.
The valuation should be discussed with insured depending upon the year of Make/ purchase new replacement value of same type, kind and output and other similar factors.
VALUATION OF PROPERTY:
In order to compute the value of a 10 year old building of total R.C.C. construction with Mosaic flooring having ground floor construction and the total covered area of around 2000 sq.ft. We may proceed as follows considering present rate of construction @300/- per sq.ft.
Present day value of building : 2000×300
(-) 15% of foundation : 90,000
(-) 30% of Dep. @ 3% p.a. 1,53,000
Actual value 3,57,000
In case of flat of a multi storey building the market value per sq.ft. less depreciation must be considered.
For Clothing average value is considered on 50% depreciation basis on the total value of the clothing and other items of like nature.
For electrical appliances same method should be followed as in the case of Building i.e. new value less depreciation.
For jewellery rate per 10 gms. Should be checked from the market if insured desires a suitable escalation from 10 to 20% must be added to cover the price rise during the policy period. In case of jewellery more than 50,000/-, it is desirable to obtain a valuation report from an authorised valuer.
The coverage under this section may be opted also on reinstatement value basis and for this insured has to propose the new value of each item under this section.
Inspection of site to ascertain the Class of construction and occupation.
Site investigation on the cause of fire, inspection of electrical fittings, blown fuses, identify location of short circuit, fire & smoke pattern etc.
The basic idea of site inspection is to investigate the cause of fire in view of the circumstances narrated by insured.
Take physical inventory of totally and partly damaged including sound item and content left after incident. The inventory must be signed in the presence of insured and an eye witness and copy of the same should be given to the insured for their record. Surveyor should make effort to settle the issue of loss on % loss basis as quickly as possible to avoid introduction of second thoughts.
Record statement of first eye witness, local people and the local inhabitants who have participated in fire fighting including insured in detail.
Take original bills/vouchers for items under claim if available with insured.
The surveyor should not insist only on the original Purchase vouchers and in the case they are not available with the insured, they should decide the liability on the basis of description given on the face of the policy and other factors.
In the case of incomplete & description e.g. year of make etc. they should rely on the statement of the insured and confirm it with the sum insured set for that item.
Instruct the insured to clear the debris and salvage the stock as far as possible.
Contact the police station where the FIR is lodged and also fire brigade authorities for their observation on cause and quantum of loss.
The class construction is to be observed by the surveyor that whether it is in conformity with the Class ‘A’ construction.
The property belonging to the member of the family not permanently residing with the insured is to be excluded.
VALUATION & ASSESSMENT:
Loss or damage for BUILDING is to be considered for cost required to repair and/or to reinstate the building less depreciation and value of salvage if any.
In the case of partial loss and normal repairing the depreciation should only be deducted if there is any improvement in the risk.
For electrical appliances, furniture and other contents, cost of repairs / replacement less depreciation and value of salvage.
CLOTHING & HOUSEHOLD LINEN:
Value of new item less depreciation 40 to 50% less value of salvage if any.
In the case of clothing and household linen it is not correct that insured can claim only items in possession at the time of taking the policy. If any item purchased during policy period is damaged same may be considered during policy period is damaged same may be considered in the loss assessment both for indemnification and application of average clause.
If any new clothing purchased during the policy period and damaged due to fire is supported by the purchase voucher then the rate of depreciation must be considered accordingly.
The condition of average will apply in each case separately as per item of the list, therefore, list sound item in case of clothing must be prepared for each item separately under the claim in accordance to the list attached with the policy to ascertain average clause if any.
SECTION – II:
BURGLARY AND HOUSEBREAKING INCLUDING LARCENY OR THEFT
(Excluding Money and Valuables)
The company will indemnify the insured in respect of loss or damage to the contents whilst contained in the insured premises by burglary housebreaking including larceny and theft.
Special condition of average as in Section-I is not applicable in this section.
The coverage under this section is very wide as compared to shopkeepers insurance policy as all the element of theft as defined and understood in subject insurance i.e. Burglary, House breaking, Larceny and Robbery are covered. Burglary is the nearest form of cover and larceny being the widest.
The steps to be followed by the surveyor are same as mentioned in Section-I except for:
The surveyor must investigate and examine that whether the loss or damage has occurred due to operation of insured peril as per definition given below:
Burglary: Is an act of breaking and entering a dwelling house by night with intent to commit an offence therein.
Housebreaking: Is similar to burglary, but it differs from burglary in two respects. Breaking into and breaking out of a dwelling house by day is housebreaking. Breaking into or breaking out of any building other than a dwelling house is housebreaking, whether the offence is committed by day or by night.
Larceny: Is theft of property unaccompanied by any forcible entry of premises.
Robbery: Is theft accompanied by violence or threat of violence to a person but not be accompanied by any forcible entry of premises.
The amount of loss in terms of Rupees must be mentioned on FIR and if the exact quantum is ascertained after one or two days of the knowledge of the theft, then the list of stolen articles alongwith their value must be submitted to the concerned investigating officer.
The approach of surveyor in these claims should be investigative. The incident of theft must be confirmed with local people independently.
Surveyor should also carry out the explanatory exercise in order to confirm the moral hazard of insured and his status.
The surveyor should also try to contact the investigating officer of the case on the same day and gather his observation and probability of recovery of stolen articles and apprehension of culprits.
SECTION-III ALL RISKS (JEWELLERY AND VALUABLES)
The Company will indemnify the Insured or any member of the family in respect of loss of or damage to jewellery and valuables caused by Accident or Misfortune wilst anywhere in India. Provide that the liability of the Company in respect of any one item in any one period of Insurance will not exceed the sum Insured set against such item in any one period of Insurance will not exceed the sum Insured set against such item in the Schedule hereto and not exceeding in the aggregate the total sum Insured hereby. Provided further that where damaged to any item can be repaired the Company will pay expense necessarily incurred to restore the damage item to its former state of serviceability not exceeding the sum insured in respect of such item.
It is expressily declared and agreed that the condition of average in so far as this section is concerned is deemed detailed.
UNDER-WRITING CONSIDERATION :
The valuation report giving description, weight of each item in Pair and set of a authorised valuer should be normally attached with the report.
Provision of escalation of 10 to 20% to be provided to cover rise in price during Policy Period.
The source of jewellery whether Purchased or Gifted should also be mentioned in the proposal.
In case of any alteration or addition during Policy period necessary endorsement may be passed.
For coverage of Jewellery and Valuables which are occasionally taken out from bank lockers, cover may be granted under this section for certain percentage of jewellery and valuables kept in the bank lockers and cover whilst being used by the Insured. In such a situation a complete list of jewellery and valuables to be kept in the locker should be furnished with the proposal with indication as to the percentage value of the same to be used by the Insured at any point of time during the Policy period. This should be specifically included in the schedule of the policy. Premium may be charged say at 1% on the value of the jewellery and valuables to be kept outside the locker and are to be used at any point of time during the policy period.
The condition of average should be incorporated in such a situation so that Insured is penalized for taking more jewellery and valuables from the locker than what is stipulated in the policy Schedule.
Special Condition :
Where any item Insured hereunder consist of articles in pair or set, the Company’s liability in respect thereof shall not exceed the value of any particular part or parts which may be lost or damaged without reference to any special value which such article or articles may have as part of such pair of set not more than a proportionate part of the Insured value of the pair or set.
No article or pair of articles is deemed to be more than 10% of the sum Insured under this section unless separately specified and value stated.
SURVEY PROCEDURE :
The Surveyor should proceed in the same manner as in the case of theft except for :
Take physical inventory of the Jewellery left including the one warn by the house-lady and other members of the family (if Insured). In case of any doubt or apprehension, the valuation report may be obtained from a registered valuer even for the left over Insured jewellery.
Similar procedure may be followed for the jewellery kept in lockers if the cover is extended for same.
VALUATION : The valuation of both stolen as well as jewellery left after theft is to be carried out on present rate claim may be settled on market value or sum Insured which ever is less basis.
SECTION IV PLATE GLASS : Same as in shop-keepers Insurance Policy.
SECTION-V. BREAKDOWN OF DOMESTIC APPLIANCES :
The Company will indemnify the Insured against unforeseen and sudden physical damage caused by &/or solely due to mechanical and or Electrical Break-down of domestic electrical, electronic or Mechanical appliances, apperatus or gadgets specified in the schedule whilst contained in or fixed at the Insured premises. Provided that the liability of the Company in respect of any one item in any one period of Insurance will not exceed the sum Insured set against such item in the Schedule.
The coverage under this section is different from standard machinery Insurance Policy as the item is covered for unforeseen and sudden physical damage solely due to mechanical and or electrical break-down. So the Surveyor should consider the claim under this section only due to Mechanical and or Electrical Break-down.
The Scope of cover is only within the Insured premises.
BASIS OF SUM INSURED :
It is a requirement of this Insurance that the sum insured in respect of such item specified in the Schedule shall be equal to the cost of replacement of the Insured property by new property of the same kind and capacity.
Freight and cartage and installation cost should not be taken into the sum Insured.
The Insured shall bear upon himself 1% of the sum Insured in respect of each domestic separately of the sum of Rupees Twenty Five (Rs. 25/-) only which ever is higher of each and every loss or damage in respect of which a claim is admitted under the policy.
NOTE : Make, Description, Sl. No. and year of Make should be mentioned on policy.
BASIS OF INDEMNITY :
Where damage to an Insured item can be repaired the Company will pay expenses necessarily incurred to restore the damaged item to its former state of serviceability. If the cost of repairs exceeds the actual value of the Insured item immediately before the occurance of the damage the settlement shall be made on the basis provided for in(b) below :-
In case of total loss, claims will be subject to depreciation of 10% per year from the date of manufacture. The maximum depreciation, however, shall not exceed 50% of the sum Insured of the item in respect of which a total loss claim is admitted under the Policy.
EXPLANATION FOR (A)
The basis of claim settlement in case of repair should be the cost of repairing less depreciation for part of limited life, less salvage.
IMPORTANT SPECIAL EXEMPTION :
Loss or damage under warranty.
Cost of transport to & from repairer’s workshop.
SECTION VI TELEVISION SET :
The company will indemnify the Insured in respect of :
Loss of or damage to the Television Apparatus described in the Schedule whilst contained or fixed in the insured premises by :
Fire lightning, Explosion of gas in domestic appliances.
Bursting and overflowing of water tanks, apparatus or pipes.
Aircraft or articles dropped therefrom.
Earthquake fire and/or shock.
Flood, Inundation, Typhoon, Storm, Tempest, Hurricane, Tornado and Cyclone.
Riot, Strike or Malicious Act.
Burglary and/or House breaking or Theft.
Accidental external means
Mechanical or Electrical breakdown.
Provided that the liability of the Company in respect of such loss or damage in any one period of insurance is limited to the amount specified in the schedule.
UNDERWRITING CONSIDERATION :
V.C.P. & V.C.R. may also be covered in this section (not in section V).
Complete description of T.V. Set with its chassis Number and Picture tube number should be mentioned.
T.V. Set of old model and make should be discouraged for Insurance.
CLAIM SETTLEMENT :
This basis of claim settlement is cost of repair/replacement less depreciation on parts, less salvage.
In case cost of repairs exceed the value of T.V prior to the loss or T.V. is damaged beyond economic repair, claim should be settled on total loss basis.
IMPORTANT NOTE :
This section in our opinion is devised in haste without going into the detail of subject matter.
The basis of sum insured is not given in the section, therefore, in the light of GENERAL CONDITION of average, it is envisaged that the T.V. should be insured on its actual value and consequently loss or damage to parts is considered after depreciation.
SECTION-VII: PLATE GLASS INSURANCE:
SCOPE OF COVER
Loss or Insured glass occasioned by breakage. The indemnity is value of the class at the time of occurrence or loss or Insured’s estimate or value mentioned in the policy, whichever is less.
Breakage caused directly or indirectly through Fire, Gas, Heat or any loss that could be covered by a Fire Policy.
Earthquake, Volcanic eruption etc cyclone or other convulsions of nature, war and allied perils, plot and strike etc.
Loss/damaged to window frames and fittings.
Cracked or imperfect glass or scratches.
Wilfully caused by insured or his Agent.
Embossed, Silvered, lettered, Bent or any special type of glass other than ordinary glazing quality, unless declared and expressly and expressly insured by the policy.
Newly fitted glass is undesirable risk mainly on account of shrinking warping of the woodwork which takes time to settle and under the circumstances cover may be deferred for sometime to allow these adjustments.
Vacant premises provide greater hazard since damage may be affected easily without detection for longer period.
Locality factor should be taken into account viz. (a) Street corners (b) Slum area (c) Disturbed localities where children play in streets or
hoolinganism is prevalent (d) Narrow Passage with heavy traffic.
Acceptance should be restricted to insurance of fixed glass only. Glass fitted in windows or doors of any type must not be accepted.
Important points for Surveyors
The word breakage will not include scratches, disfiguration, discolouration or damage other than fracture extending through the entire thickness of the glass.
There shall be no application or depreciation.
Repairs in case of damage to the frame work has to be borne by the claimant including cost of removal/replacement of any fitting or fixtures of replacement of the glass.
However, glass fitting charges may be considered. If taken into the sum insured.
The salvage value for totally shattered glass shold be zero. However, in cases where glass is cracked in places and each piece can be used in the cut size small glasses, a reasonable salvage value must be deducted.
Glass Assessment in case of incomplete description
As per correct under-writing procedure each glass must be separately insured by giving its location. Size, thickness and type etc.
In few cases it is observed that the description and separate sum insured of the glasses is not given on the face of the policy and entire risk is covered for one capital sum insured. In such circumstances. Surveyor should not only verify the description and value of damaged glass but also verify other plate glasses installed in the risk to ascertain the adequacy and apply under insurance, if applicable.
Limit of Liability
Since the liability of the Company in respect of any loss or all losses in any one period of insurance is limited to the sum set against the Schedule.
Therefore, in above circumstances, underwriters should also deduct the amount paid earlier in this section of the policy during period and re-adjust the under insurance factor.