INDUSTRIAL RISKS:
Market agreement for Public Liability insurance has been effective from 1.1.88. This agreement applies to Industrial and storage risks such as godowns, depots tankfarms etc. with aggregate limits of any year during the policy upto Rs. 13 crores within Geographical limits of india.
Any proposal other than above has to be submitted to Market agreement committee prior to acceptance for rating terms and conditions.
No proposal shall be accepted unless standard proposal form is filled in. Granting cover would be subject to duly signed declaration by the proposer that all the statutory requirements related to the business activities are complied with.
Scope of cover:
Legal liability of the Insured towards damages to the third party in respect of accidental death/bodily injury/disease and loss of or damage to property arising out of such claims.
Legal costs and expenses incurred with prior consent of the Insurer are covered. All claims have to be made in writing against the Insured during policy period. Above liability is subject to limits of Indemnity and other terms and conditions of the policy.
It is not permissible to issue a Public Liability Policy with unlimited liability.
Ratio of limits of indemnity per accident to any one year would be 1:1, 1:2, 1:3, 1:4 For this ratio fractions are not allowed.
Pollution Risks:
The standard policy wording does not include to cover for Pollution Liability. It has to be specifically included by prescribed endorsement under market agreement and premium thereof is collected therefrom.
Cover is subject to following conditions:
Submission of additional information as per questionnaire appended to the proposal form.
Submission of certificate/consent letter from Pollution Control Board granting permission to the Insured to carry on their activities.
The policy does not include to cover T.P. liability arising out of and incidental to Transportation of materials (hazardous/dangerous substances) unless specifically declared, and included by endorsement prescribed with additional premium duly paid.
Single police can be issued to cover various premises of the Indured whether manufacturing process is carried on or not, or as otherwise specified in the proposal form. In case more than one unit is coverd rate has to be appropriately loaded.
Retroactive Date:
This is the date when risk is first incepted under a claims made policy and there from renewed without break in the period of cover. There will not be any liability therefore for any incident prior to inception or after expiry of the policy.
No revision in limit is allowed during currency of the Policy. However additional units can be included within same indemnity limits by charging short period premium. Retroactive date for such inclusion would be date are inception of inclusion in the policy. This remains unaltered in the event of renewal without any break in insurance.
Compulsory Excess : 1/4 % of the limit of indemnity per any one accident subject to maximum Rs. 1,00,000/-.
Voluntary Excess : Discount in premium may be allowed for excess so opted which will be in addition to compulsory excess. An excess opted per any one accident may vary from 1% to 10% for which discount would vary from 2.5% to 15% in the net premium.
Above excess is applicable to both T.P.P.I and T.P.P.D claims inclusive of defence costs arising for defending the liability.
Short period premium: It is not permissible to issue policy for more than 12 months. In case of cancellation of policy or insurance for less that 12 months, premium would be charged on short period basis. i.e. for period from 1 month to period upto 6 months is varies form 1/4 of the annual premium to 3/4th of the annual premium. It should however be noted that short period cancellation is allowed at the request of the Insured provided there is no claim under the Policy. If the policy period exceeds 6 months full annual premium is to be charged.
Risks are classified into 4 groups for rating purpose. In case risk is not classified reference has to be made agreement committee. In the meantime highest rate of group 4 has to be applied. No installment for payment of premium is allowed.
As a loss minimization measure market agreement provides special concession where Insured/ Proposer has introduced special safety measures. Generally these relate to pressure vessel and treatment of affluent plants disaster planning etc. This discount is however available for large risks where premium chargeable works out to be Rs.200,000/- and above.
The basic rate depends on (1) risk classification, (2) Limits of indemnity any one accident to any one year selected. The ratio thereof should not exceed 1:4 (i.e. it should be 1:1, 1:2, 1:3, 1:4).
Pollution cover :
The loading has to be done if Insured opts for this extension of cover. The loading varies from 10% to 50% depending on the risk group.
Transportation Risk : This is an exclusion. However in case Insured desires extension for the coverage of transportation risk separate limits of indemnity per any one Accident to Any one year have to be selected. However these limits will form part of overall limits of indemnity so stipulated in the policy.
The additional premium would be based on (i) indemnity limits for transportation cover (ii) turn-over in transit Pollution loading shall apply if opted.
Conditions:
Indemnity applicable to claims arising out of any accident during policy period only.
All intimation/communication in writing.
Excludes any liability arising out of Pollution unless specifically covered.
Notification extension clause: As regards intimation of liability, limitation period would be as laid down in limitation act in force from time to time. Any intimation of claim would be as if it is first made against the insured.
Extended claim reporting period is 90 days from expiry of the policy in case of cancellation or non-renewal, provided such event has given rise to liability during the policy period only.
Indemnity granted under this Policy extends to:
Officials of the Insured acting in the capacity of their business activity, including temporary employees of the Insured.
Officers, committee members of canteen, medical, sports, etc. organisation acting in their respective capacity as such.
Personal representative of the estate of the person due for indemnification under this policy for liability by such person acting as though they were the insured in their official capacity.
Maximum liability : Limits Any one Accident for one or series of claims out of the same occurrence.
Excess clause : 1/4% of indemnity limit any one accident, maximum Rs. 100,000
Voluntary excess : Opted by Insured. Insurer’s liability would be in excess of compulsory excess under item above.
Exclusions: Any liability:
Arising out of any agreement by the insured which would not attach in the absence of such agreement.
Arising out of convulsions of nature, atmospheric disturbances.
Arising out of deliberate willful non-compliance of any statutory provisions.
Financial loss or loss of goodwill.
Arising out of personal injury (libel, slander, false arrest, mental injury, anguish etc) or Infringement of plans, designs, patent etc.
Arising out of fines, penalities ets. of for any other damages resulting from multiplication of compensatory damages.
Man-made perils like war and allied perils, nuclear exclusions, radioactivity. This also excludes hazardous properties of any nuclear component.
Arising out of possession of any vehicle for which there is any other Insurance required by any other legislation other than the following:
Use of any tool, plant forming part of or used in connection with such vehicle/trailer; arising beyond limits of carriageway caused by loading/unloading of any vehicle; any damage to bridge, weighbridge, road caused by the weight of the vehicle or caused by any vehicle in custody of the insured for parking purpose.
Transportation of goods unless specified.
Ownership/possession of aircraft, watercraft etc.
Damage to any property owned, hired under hire purchase agreement and is under insured’s care other than premises temporarily occupied for the work thereon or property terminated for which insured would be legally liable.
Any liability to employee’s/visitor’s personal effects.
Any injury damages occurred prior retroactive date unless detailed us under:
In the event of continuous inhalation of any substance following the determined retroactive date will be either first consultation of medical practitioner or damage shall have occurred when it is first evident.
Deliberate disregard of safety measure for prevention of claim under this policy.
Any contractual liability (e.g.employer’s).
Condition after occurrence of event:
All writs, summons to be submitted in writing.
No offer/admission/promise of payment shall be made by the insured and that insured shall take all the precautions to preserve insurer’s right to assist/defend the proceedings under this policy.
Insured shall give immediate notice of any material change in the risk.
On payment of any claim under the policy company relinquishes liability under the policy due to the same event.
Insured shall maintain proper records and that company will have an access to inspect the same.
Contribution condition
The limit of indemnity per accident would stand reduced on payment of liability.
In the event of disclaimer of liability under this policy there is 12 months limitation period under the policy for insured to file a suit in the court of low.
In the event of any fraud, misrepresentation all the benefits under this policy shall be forfeited.
Geographical limits under this policy will not exceed Indian territory. Competent jurisdiction is within India subject to India law.
The policy has 30 days notice of cancellation with prorate refund of premium if cancelled by the company and short period refund in case cancelled by the insured with minimum retention of 25% of the annual premium, subject to there being no claim under the Policy.
Extensions:
Inclusion of Collaborators Liability. This Legal liability is available with respect to technical collaboration agreement between named insured and the collaborator. Cause of action must be within jurisdiction of Indian court in India except for exported product and that only Indian Law shall be applicable for actions brought in India. Proposal has to be submitted to G.I.C for rating.
Act of God Perils can be included under this class of insurance by charging extra premium ranging from 10% for Zone 1 to 2.5% for Zone IV.
Extension is also available for loading in turnover in respect of godown, warehouse whereunder loading (min) of 5% of gross premium including pollution extn. but excluding transportation extension has to be done for godowns in different locations. These godowns must connected with Insured’s business.
Maximum loading is 20% for 500 and above godowns.
Risk assessment and underwriting considerations
It is essential to have full knowledge of the risk, process involved, discharge of affluent material, release of toxic gas, type of material used on/off the site.
In case pollution extension is desired risk inspection should be carried out for and above following limits
Group 1 and 2 Rs.250,00.000
Group 3 and 4 Rs,100,00.000
Full particulars of the insured pertaining to business, process involved, technicians, safety system, repairs, upkeep, housekeeping, labour relations, number of employees, area, location surrounding properties, assets, raw material used, storage/transport system and past claims history should be procured in details.
General details as to visitors, contractors etc. should also be prescribed.
NON INDUSTRIAL RISKS:
Market agreement is introduced w.e.f. 1-12.91 for non-industrial risk such as Hotels, Club Houses, Restaurants, Boarding/Lodging Houses, Cinema Halls, Auditorium Theatres, Residential/Office Premises, Medical Establishments, Airport Premises, Warehouses, Godowns, Shops, Tank, Exhibition, Pendals and similar such non-industrial risks. Proposer would be required to fill up standard Proposal form at inception as well as subsequent renewals togher with duly signed declaration that all statutory requirements relating to business activities are complied with.
Scope of Cover : This covers legal liability to Third party on account of accidental bodily injury/death/disease & /or loss/damage to their property arising out of claim made for any incidence occurred during the policy period. This includes legal costs payable provided agreed by the company. Maximum liability being limits of indemnity under the policy. No policy can be issued with unlimited liability. The Ratio of indemnity limits. Any one Accident to any one year shall not exceed 1:4 and shall be either. 1:1, 1:2, 1:3, 1:4.
Pollution Risk : Unless specifically included this policy does not cover pollution risks and additional Premium thereof is paid as defined in the agreement. The proposer will be required to furnish consent certificate letter from pollution control Board granted permission to carry on the activities.
Multiple units can be covered in single limits by paying appropriate premium as per agreement.
Premium : Rates for premium for various categories of risks are defined in the agreement. Where turnover figures are required to be furnished the same have to be submitted accurately at the inception of the policy.
Any fluctuations must be notified immediately for necessary adjustment. In no case, any adjustment be made after expiry of the policy.
Provisions of Retroactive Data are identical as per Industrial Risk.
Revisions in Indemnity is not permissible under the agreement. However, within agreed indemnity limits additional units may be included by charging short period scale as per section II. Retroactive Date for such additions shall be the incepted date of inclusion in the policy.
Any upward Revision of Indemnity limit is allowed at the time of renewal only and Retroactive Date for increased limit shall be the inception date of renewal policy.
Excess:
All policies issued shall be subject to compulsory excess of ¼% of any one accident indemnity limit subject to minimum Rs. 1000/- and Maximum Rs.1,00,000/- and the same applies to both property damage, death/ bodily injury claims inclusive of defence cost arising out of any one accident.
In case insured opts for voluntary excess which is in addition to Compulsory Excess insured is entitled to discount in premium ranging from 2.5% to 15.0% based on opted voluntary excess ranging from 1% to 10% of limit of indemnity per A.O.A.
The agreement also provides for short period scale of premium for policies issued for less than 12 months or cancellation of policy prior to expiry.
In no case the policy be issued for more than 12 months.
Minimum retention of premium should be kept in mind where policy is cancelled on short period scale.
Rating For Non-Industrial Risk: Basis of rating is related to following aspects.
Type of Construction
Occupancy/Storage
Ratio of Indemnity limits A.O.A. : A.O.Y
Communication unless 15 metres away from main Construction Structure
Height exceeding 22 metres – loading 10% of premium.
Risk group and Turnover.
In case insured opts for Act of god perils depending on the Seismic Zone, 1 to 4, premium would be charged ranging from 10% to 2.5% respectively.
Basis of rating for different category establishment falling within the preview of this agreement varies based on nature of risk involved thereunder.