PREPARATORY MATERIAL FOR

ENGINEERING INSURANCE FOR

PROMOTIONAL EXAMINATION
2016

&
& FACULTY
FACULTY MEMBER,
MEMBER, NCIL,
NCIL, NARENDRAPUR
NARENDRAPUR
NATIONAL
NATIONALINSURANCE
INSURANCE COMPANY
COMPANY LIMITED,
LIMITED,
79,
79, [Link],
[Link],
16-02-2016. KOLKATA
KOLKATA -700
-700 103.
103. 1
 ERECTION ALL RISK
INSURANCE
The basic concept of EAR
insurance is to offer
comprehensive adequate
protection against all the
site risks involved in the
erection of machinery
and plant as well as steel
structure of any kind.
16-02-2016. 2
 THE INSURED OBJECTS
( Insured Interest)
1. Structures, machines,
installations, temporary
installations forming part of the
erection contract.
2. Contractor’s plant and equipment.
3. Other property on or near the site
for which the contractor is
responsible during erection.
4. Other insurable items. 16-02-2016. 3
 THE INSURED PARTIES
The EAR policy offers the possibility of
including all parties to the contract in
the same policy. The Only
Conditions Are:-
1. There names must be
shown on the policy
Principal
Contractor
Sub-contractor
Manufacturer etc.
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.

[Link] object insured

must be identified :
[Link] works to be
erected.
[Link]’s plant and
equipment
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The Erection ALL risk policies
consist of the two following
sections:
A. SECTION 1- MATERIAL DAMAGE
B. SECTION 2- THIRD PARTY LIABILITY
Section 1:- Scope of cover offered under
the material damage section of the Ear
policy.A sudden and unforseen loss or
damage occuring to the property insured
on the erection site during the period of
insurance will be indemnified. Normally
the insurers will be liable for loss or
damage due to the following causes:-
16-02-2016. 6
1. Fire
2. Lightning
3. Explosion/ Implosion
4. Flood, Inundation, Cyclone,
Storm,
Tempest, Hurricane, Tornado
5. Earthquake(Fire and Shock)
6. Rock slide, Land slide, and
Subsidence

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 Damage
8. Impact by any Rail/Road
vehicle
or animal
9. Burglary
10. Fault in erection
11. Negligence, lack of skill and

carelessness

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12. Short circuiting, arcing,
excess voltage,Excess pressure
or vacuum.

13. Tearing apart on account of

centrifugal force
14. Any other sudden and
unforeseen events, such as loss
or damage due to collapse,
foreign objects, on-site transport
of items to be erected etc.
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 GENERAL EXCLUSIONS
APPLICABLE TO SECTION I &
(II)
1. War and war group of perils
2. Nuclear radiation and radio active
contamination
3. Due to falling aircraft or other aerial
devices
4. Wilful act or wilful negligence of the
insured or of his responsible
representative.
5. Cessation of work whether total or
partial 16-02-2016. 10
PERIOD OF INSURANCE
The contractor is fully responsible for the
works from the commencement date
until the certificate of completion is
issued. This period includes the erection
works period including the functional or
mechanical tests, the so-called cold
tests, followed by the operational tests
and finally the acceptance or
performance tests, the called hot-tests.

16-02-2016. 11
SUM INSURED AND PREMIUM
ADJUSTMENT CLAUSE MATERIAL
DAMAGE SECTION
The sum insured under a standard EAR policy
should represent the completely erected
value of the property inclusive of freights,
customs duty, and erection cost. The
insured should undertake to increase or
decrease the amount of insurance in the
event of material fluctuations in the level of
wages or prices. This precaution is specially
necessary in cases of long term projects
and it would be advisible for the insured
having such long term policies to review the
sum insured atleast annually.

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According to memo 1 under
section 1, of the EAR policy the
sum insured should represent
the completely erected value of
the property and in the event of
loss if the sum insured is less
than the amount required to be
insured. The memo 2, Under
section 1, provides for the
premium adjustment condition.
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According to this, the sum insured
under the policy representing the
completely erected value of the
plant & machinery/project shall be
adjustable at completion of erection
on the basis the actual values to be
declared by the Insured in respect of
freight and handling charges,
customs dues and costs of erection
and difference in premium shall be
met with by payments, at the rate
agreed to or by the Insured as the
case may be.
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Any increase or decrease in
prime cost of plant and
equipment shall not be the
subject matter of premium
adjustment.
In addition to the sum insured,
for material damage to the plant
and equipment to be erected
separate sums should be fixed
in respect of the following
optional extensions:
16-02-2016. 15
 [Link] WORKS
On buildings in which the above plant and
machinery is to be erected.
1) PERMANENT CIVIL ENGINEERING WORKS:
Civil Engineering works necessary for the
project to be erected can be included in
the EAR Policy by this item.
2) TEMPORARY WORKS: These are temporary
structures erected in the project site for
keeping the high valued project materials.
Once the project is over these structures
will be dismantled. These items also can
be included under the sum insured.

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B. CLEARANCE AND REMOVAL OF DEBRIS
C. CONSTRUCTION PLANT AND MACHINERY
D. SURROUNDING PROPERTY
E. EXPEDITING COSTS: Additional expenses
incurred for overtime, nightwork, works on
public holidays as well as express freight
following a loss indemnifiable under the policy
can be included under this item.
F. AIR FREIGHT
G. ADDITIONAL CUSTOM DUTY
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COVERAGE AVAILABLE UNDER
SECTION II THIRD PARTY LIABILITY
A) Legal liability for accidental
loss/damage caused to property of
other persons including property
held in trust or under custody of the
insured for which he is responsible.
B) Legal liability for fatal or non-fatal
injury to any persons other that the
insured's own employees or
workmen.
C) All costs and expenses of litigation
recovered by any claimant from the
Insured. 16-02-2016. 18
MARINE CUM ERECTION
INSURANCE
Normally erection insurance
cover starts after the
Marine/Transit Insurance
cover ends. In India it has
become the normal practice
to issue composite insurance
policy to cover Marine/Inland
transit risks and Erection
Risk all under one policy.
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..
Under a composite Marine-cum-
erection policy cover starts from
the moment the materials and
equipment leaves the
Manufacturers/Suppliers warehouse
in a foreign country or in India and
remain in force during the voyage
and during inland journey to the
site of erection, during storage,
assembly and erection until final
completion of test run.

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SCOPE AND EXCLUSIONS
Under the composite policy the
Marine/Inland transit cover will be
against all risks of physical loss or
damage governed by the standard
Marine Insurance Policy and the
Storage-cum-Erection cover will be
as per standard EAR Policy. civil
engineering works necessary for the
project to be erected could be
included in the EAR section of the
composite policy. 16-02-2016. 21
SUM INSURED
The sum insured under the
composite policy will have to be
fixed on the basis of estimated
total completely erected value
of the project, it is necessary to
nominate a basis of valuation of
the Marine/Transit section of the
cover.

16-02-2016. 22
BASIS OF INDEMNIFICATION
All claims relating to materials
in the course of transit will be
dealt with in the normal
manner as in the practice
followed in the Marine
Department. All claims under
the erection section will be
subject to the same
observations as are contained
under EAR section.
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EXCESS APPLICABLE
Whereas Marine Transit
section of the policy is free
of any excess, erection
section of the policy is
subject to minimum excess
as appropriate in respect of
each and every claim.

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CONTRACTORS ALL RISK INSURANCE
The basic difference between the contractors all
risk insurance and erection all risk insurance.
The CAR policy is designed to cater for such
projects where the major portion of the risk
(Not less than 50% of the total project cost)
pertains to civil engineering works in nature.
This includes construction of buildings, laying of
pipelines, roads, railway constructions, water
ways, drainage scheme, sewage works,
irrigation canals, bridge constructions,
erection of docks, piers(structure leading out
to sea and used as landing stage for boats)
dams and reservoirs [Link] these are
examples of civil engineering contract works,
which can be covered under a CAR policy.
16-02-2016. 25
On the other hand EAR policy (also known
as Machinery Erection Insurance Policy)
basically provides coverage for electrical
and mechanical plant and machinery risks
as they present their own special
underwriting features; notably as regards
operational and testing risks. Whereas
there is a risk of structural failure to a
greator degree with civil engineering
contracts, the risk during test run is more
in the case of plant and machinery
covered under Ear Policy. Also civil
engineering projects are more exposed to
natural perils.
16-02-2016. 26
THE INSURED
It is common for most contracts for civil
engineering works to stipulate that the
contractor wll be responsible for the loss or
damage to works until they are handed over to
the principals. This liability can be insured
under CAR Policy. Even where insurance is not
compulsary by virtue of the contract it is
important that the contractor has adequate
insurance cover for his heavy financial
responsibilities. Like EAR insurance CAR policy
may be effected by the principal, contractor or
sub contractors involved in the project. It is
also permissible to issue the policy in the joint
names of one or more parties such as
principals, contractors, and sub-contractors. A
CAR policy does not cover the interest of
proffessional advisors namely architects,
consulting engineers [Link] their liabilities
arising out of professional negligence. 27
16-02-2016.
SCOPE OF COVER
CAR policy provides virtually a
comprehensive cover for the entire
civil engineering project from the
time of arrival of the first lot of
materials at site and continuous
while the work is in progress till such
time it is completed.
The CAR Policy consist of the following
two sections:
Section-1 : MATERIAL DAMAGE
Section-2 : THIRD PARTY LIABILITY
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MATERIAL DAMAGE SECTION
AND THIRD PARTY LIABILITY
The scope of insurance is virtually the
same as that of EAR insurance.

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 PERIOD OF COVER
The liability of the insurer shall commence, only
from the time of commencement of work or
after the unloading of the property specified in
the schedule from any conveyance at the site
specified in the schedule whichever is earlier
and shall expire on the date specified in the
schedule. However, the insurers' liability
expires for parts of insured contract works
taken over or put into service by the principal
prior to the expiry date specified in the policy
whichever shall be earlier. If the actual
construction period is shorter than the period
indicated in the schedule, no refund of
premium shall be allowed. Though phased
handing over is quite common in civil
Engineering projects, there is hardly any
testing involved in CAR insurance.
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CONTRACTORS' PLANT AND
MACHINERY INSURANCE
This insurance is generally required by contractors
and industrial firms engaged in major
construction projects. The major types of
contractors plant and machinery can be broadly
divided as shown below:
1) Mobile construction machinery, e.g. scrapors,
buildozers, graders, dumpers, mobile drilling
units, automobile cranes etc.,
2) Stationary machinery and plant, e.g. cement
mixers, fixed cranes, conveyer belt systems etc.
3) Other mobile or portable machinery and plant,
e.g. diesel generators, compressors, pumps,
welding units, control equipment.

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 CONTRACTORS' PLANT AND
MACHINERY INSURANCE
This class of insurance may be arranged
as a separate policy on an annual basis to
be renewed periodically. It is also
permissible to insure such equipments at
the project site as an item in the schedule
of EAR or CAR policy, provided the total
value of construction equipment is less
5% of the sum insured under the CAR/EAR
policy in which case the period of
insurance will be concurrent to the project
period.
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SCOPE AVAILABLE UNDER CPM
POLICY
The contractor's Plant and Machinery insurance comes
under the policies available under the project insurance
and like the EAR/CAR Policy offers a comprehensive
cover as given below:
1) Fire, lightning, external explosion, earthquake, flood,
inundation, sudsidence, landslide and rockslide.
2) Storm, tempest, hurricane, typhooon and tornado.
3) Burglary, theft, riot and strike and malicious damage.
4) Accidental damage while at work due to faulty man-
handling, dropping or falling, collapse, collision and
impact.
This policy shall apply to the insured items whether they
are at work or at rest or being dismantled for the
purpose of cleaning or overhauling or when being
shifted within the premises or during subsequent re-
erection.
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 PERIOD OF INSURANCE
CPM policies are normally
issued on annual basis. In
case the CPM equipments are
covered under an EAR/CAR
Policy, the period provided
for the EAR/CAR policy will
become applicable for the
Contractor's Plant and
Machinery policy also.
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34
 EXTENSION AVAILABLE
1) Third party personal injury and
property risk upto the limit of
indemnity as chosen by the insured.
2) Expenses incurred for overtime,
Express freight, holiday wages etc.
3) Loss or damage to the existing
surrounding property.
4) Cost incurred in the clearance and
removal of debris following an
accident.
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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.
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 BASIS OF INDEMNITY
A) PARTIAL LOSS BASIS :
In cases where the damage can be
repaired, the basis of indeminification
is the cost of restoration to working
order based on the Customary daily
rates together with normal freight
and erection cost and other duties
and taxes. In such cases, of all
repairable damage, no deduction is
made for depreciation in respect of
parts replaced, except those with
limited life, but the value of the
salvage is taken into account.
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B) TOTAL LOSS:
An insured item is regarded as totally destroyed
if the repair costs as described under partial loss
basis equals or exceeds its value immediately
before the accident. Where the insured item is
totally destroyed or is a constructive total loss
the basis of indemnification is the market value
of the item immediately before the accident plus
the cost of removing the damaged machinery less
the value of the salvage.
Any extra charges incurred towards repairs, such
as Express Delivery, Air Freight, overtime and
holiday rates of wages are payable only if special
provision for these items has been made in the
policy in consideration of which an additional
premium is charged. All costs of alterations,
additions, improvements are to be borne by
insured. 16-02-2016. 38
MLOP
16-02-2016. 39
 MACHINERY BREAKDOWN INSURANCE

AN INSURANCE PRODUCT DESIGNED FOR EXPENSIVE

PLANT, MACHINERY & MECHANICAL EQUIPMENTS.

IN ADDITION TO ITS PRIMARY INTENTION TO

PROTECT THE INSURED AGAINST THE FINANCIAL
RISK OF UNFORESEEN AND SUDDEN DAMAGE THIS
COVER PERMITS PLANT OWNERS TO DISPENSE WITH
SETTING UP LOSS RESERVES.

ALL TYPE OF MACHINERY, PLANT, MECHANICAL

EQUIPMENT & APPARATUS MAY BE COVERED SUCH AS
POWER GENERATING UNITS, POWER DISTRIBUTION
PLANT, PRODUCTION MACHINERY & AUXILIARY
EQUIPMENTS.
16-02-2016. 40
 MACHINERY BREAKDOWN INSURANCE

By nature Machinery Insurance is an ACCIDENT INSURANCE

for machinery. It covers unforeseen & sudden physical loss
of or damage to the insured items by any means not
specifically excluded in the policy which necessitates their
repair or replacement.

Plants & Machineries after successful completion of

performance test whether they are at work or at rest or
being dismantled for cleaning or overhauling or in the
course of aforesaid operations themselves or when
being shifted within the premises or during re-erection.
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 MACHINERY BREAKDOWN INSURANCE

FAULTY DESIGN, FAULTS AT WORKSHOP OR IN ERECTION,

DEFECTS IN CASTING & MATERIAL:

Frequently such faults are only discovered when the

manufacturer’s guarantee has expired and there is no
possibility of recourse against the manufacturer. Even if
world-class testing methods are used, these faults can
not always be avoided.

16-02-2016. 42
 MACHINERY BREAKDOWN INSURANCE

FAULTY OPERATION, FAILURE OF SAFETY SYSTEM,

LUBRICATION SYSTEM OR CONTROL SYSTEM, LACK OF
SKILL, NEGLIGENCE OR MALICIOUS ACTS

Losses arising from these causes are constantly increasing.

In spite of adequate precautions, faults in operation may
occur at any time and cause severe damage

16-02-2016. 43
 MACHINERY BREAKDOWN INSURANCE

SHORT CIRCUIT & OTHER ELECTRICAL CAUSES

Electrical equipments may suffer serious damage due to

short circuit, excess voltage, defective insulations, corona
discharge or mechanical stress emanating from the current
flow

16-02-2016. 44
 MACHINERY BREAKDOWN INSURANCE

TEARING APART ON ACCOUNT OF CENTRIFUGAL

FORCE

SHORTAGE OF WATER IN BOILERS

DAMAGE DUE TO HUMAN ELEMENT

16-02-2016. 45
 MACHINERY BREAKDOWN INSURANCE

FIRE & ALLIED PERILS

BURGLARY AND THEFT

INHERENT VICE- WEAR & TEAR LOSSES AS A

CONSEQUENCE OF USE AND ALSO THE LOSSES
DUE TO DEFECTS KNOWN TO INSURED AT THE
TIME OF INCEPTION OF RISK.
MANUFACTURER’S RESPONSIBILITY- LOSSES
UNDER WARRANTY.
WAR , CIVIL COMMOTION AND NUCLEAR PERILS

WILFUL ACT OR GROSS NEGLIGENCE

16-02-2016. 46
 MACHINERY BREAKDOWN INSURANCE

THE SUM INSURED SHOULD ALWAYS BE

THE PRESENT DAY NEW REPLACEMENT
VALUE OF THE INSURED MACHINERY
( Value of the new item plus customs duties plus
transportation and installation charge)

Foundations and Oil in Transformers are property

excluded from the standard cover but may be covered on
payment of additional premium.

16-02-2016. 47
 MACHINERY BREAKDOWN INSURANCE

EXPENSES INCURRED FOR RESTORING THE

DAMAGED MACHINERY TO ITS WORKING
CONDITION PRIOR TO DAMAGE
THOSE EXPENSES MAINLY INCLUDE COSTS FOR
REPAIR WORK & THE NECESSARY SPARES,
DISASSEMBLY & REASSEMBLY COSTS, ORDINARY
FREIGHT,CUSTOM DUTIES, EXPENSES FOR
ENGAGING SPECILISTS & OTHER CHARGES
INCLUDED IN THE SUM INSURED.
NO DEDUCTION IS MADE FOR DEPRECIATION IN
RESPECT OF PARTS REPLACED, EXCEPT THOSE
WITH LIMITED LIFE, BUT THE VALUE OF SALVAGE
IS TAKEN INTO ACCOUNT. 48
16-02-2016.
 MACHINERY BREAKDOWN INSURANCE

ANY EXTRA CHARGES INCURRED FOR OVERTIME,

NIGHT-WORK, WORK ON PUBLIC HOLIDAYS, EXPRESS
FREIGHT ARE PAID IF INSURED SPECIFICALLY

THE EXPENSES INCURRED FOR PROVISIONAL REPAIRS

ARE ONLY INDEMNIFIED IF THE TOTAL AMOUNT OF
REPAIR COSTS IS NOT INCREASED THEREBY.

INSURERS ARE NOT LIABLE FOR COST OF MAKING

ANY DRAWINGS, PATTERNS & CORE BOXES EVEN IF
MAKERS DRAWINGS PATTERN & CORE BOXES ARE
NOT AVAILABLE FOR EXECUTION OF REPAIR.
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MACHINERY BREAKDOWN INSURANCE

THE COST OF ANY ALTERATION, IMPROVEMENTS

OR OVERHAULS SHALL NOT BE RECOVERABLE
UNDER THE MBD POLICY.

IF THE REPAIRS ARE EXECUTED AT A WORKSHOP

OWNED BY THE INSURED- THE COST OF MATERIAL &
WAGES plus REASONABLE % TO COVER
OVERHEADS.

IF THE COST OF REPAIRS IS EQUAL OR EXCEED THE

ACTUAL VALUE OF THE MACHINERY INSURED
IMMEDIATELY BEFORE THE OCCURRENCE OF
DAMAGE CLAIM IS SETTLED ON TOTAL LOSS BASIS
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MACHINERY BREAKDOWN INSURANCE

INDEMNITY IS BASED ON MARKET VALUE OF THE

ITEM ON THE DATE WHEN LOSS OCCURRED.
INSURERS PAY ACTUAL VALUE OF THE ITEM
IMMEDIATELY BEFORE THE OCCURRENCE OF THE
LOSS, INCLUDING COSTS FOR ORDINARY FREIGHT,
ERECTION & CUSTOM DUTIES IF INCLUDED IN THE
SUM INSURED.

SUCH ACTUAL VALUE IS TO BE CALCULATED BY

DEDUCTING PROPER DEPRECIATION FROM THE
REPLACEMENT VALUE OF THE ITEM
NORMAL CHARGES FOR DISMANTLING THE MACHINE ARE
ALSO PAID BUT SALVAGE IS TAKEN INTO ACCOUNT.
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 MACHINERY BREAKDOWN INSURANCE

SURROUNDING PROPERTIES AT 25% OF GROSS

AVERAGE [Link] ON THE LIMIT OF LIABILITY
SELECTED.

THIRD PARTY LIABILTY COVER AT 25% OF GROSS

AVERAGE [Link] ON THE LIMIT OF LIABILITY
CHOSEN.

PURE GLASS EQUIPMENTS & APPARATUS USED

FOR INDUSTRIAL PURPOSE- OTHER THAN THOSE
USED FOR LABORATORY EXPERIMENTS & FOR
STORAGE OF CHEMICALS.

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MACHINERY BREAKDOWN INSURANCE

SELECTION OF MACHINERY IS
PERMITTED BUT NO M.B.D. COVER CAN
BE GRANTED ON FIRST LOSS BASIS

M.B.D. INSURANCE CAN NOT BE

ISSUED ON AGREED VALUE BASIS.

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MACHINERY BREAKDOWN INSURANCE

M.B.D. POLICY IS NOT ISSUED TO COVER ELECTRONIC

EQUIPMENTS.

PARTS OF MACHINES ARE NOT INSURED SEPARATELY

BUT THE VALUE OF SUCH PARTS SHOULD BE INCLUDED
IN THE VALUE OF MACHINE.

FIRE & ALLIED PERILS, TERRORISM, RSMD &

BURGLARY ARE NOT IN THE SCOPE OF THIS COVER.

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 ELECTRONIC EQUIPMENT INSURANCE

THE POLICY COVERS ENTIRE RANGE OF ELECTRONIC

EQUIPMENTS FROM PERSONAL COMPUTERS TO
SOPHISTICATED GADGETRY.

E.E.I. IS ESSENTIALLY AN ACCIDENT INSURANCE

ON AN ALL-RISK BASIS AND COVERS LOSSES
THAT ARISE SUDDENLY AND UNFORESEEABLY.

ELCTRONIC EQUIPMENT

SEC. SEC.2 SEC. 3

1
MATERIAL INCREASED
DAMAGE EXTERNAL COST OF
DATA WORKING
16-02-2016. MEDIA 55
 ELECTRONIC EQUIPMENT INSURANCE

LOCATION FIRE & ALLIED PERILS

PERILS
BREAK-DOWNS ANY ELECTRICAL OR MECHANICAL
BREAKDOWN
FAULTS FAULTS IN MANUFACTURING,
ERECTION; FAULTY DESIGN & FAULTY
MATERIALS
MOISTURE MOISTURE & HUMIDITY LOSSES
EFFECT
CARELESSNESS CARELESS, FAULTY & NEGLIGENT
OPERATIONS OF EMPLOYEES
RIOT & STRIKE RIOT STRIKE & MALICIOUS DAMAGE
BURGLARY BURGLARY & HOUSE BREAKING
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 ELECTRONIC EQUIPMENT INSURANCE

MATERIAL DAMAGE

New Replacement Value - Property of same kind and

same capacity. Replacement cost should include
freight, custom duties plus erection charges if any.

EXTERNAL DATA MEDIA

The sum insured should correspond to market value

of the insured data media and the expected cost of
restoring the data. This is fixed on first loss basis.

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 ELECTRONIC EQUIPMENT INSURANCE

INCREASED COST OF WORKING

If electronic system breakdown for more than just a

brief stoppage, this can lead to serious disruption &
considerable loss of turnover. The sum insured
under this section should be the amount that the
insured would have to pay as additional expenditure
for 12 months using substitute EDP equipment of
similar performance to the EDP Equipment insured.

16-02-2016. 58
 ELECTRONIC EQUIPMENT INSURANCE

INHERENT-VICE: WEAR & TEAR LOSSES & LOSSES

DUE TO DEFECTS KNOWN TO INSURED AT THE TIME
OF COMMENCEMENT OF RISK.
MANUFACTURER’S RESPONSIBILITY: WARRANTY
PERIOD LOSSES
WILFUL ACT OR NEGLIGENCE
CESSATION OF WORK WHETHER TOTAL OR PARTIAL
INTERRUPTION- LOSS OR DAMAGE DUE TO
INTERRUPTION CAUSED BY THE FAILURE OF ANY
GAS WATER ELECTRICITY SERVICE OR SUPPLY.
FUNCTIONAL FAILURE- MAINTENANCE COSTS.
EXCEPTED PERILS- WAR INVASION AND NUCLEAR
CONSEQUENTIAL LOSSES OF ANY NATURE
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 ELECTRONIC EQUIPMENT INSURANCE

MATERIAL DAMAGE

EXPENSES NECESSARILY INCURRED TO RESTORE THE

DAMAGE EQUIPMENT TO ITS FORMER STATE OF
SERVICEABILITY PLUS THE COST OF DISMANTLING
AND REERECTION INCURRED FOR THE PURPOSE OF
EFFECTING THE REPAIRS AS WELL AS ORDINARY
FREIGHT TO & FROM A REPIAR-SHOP, CUSTOM DUTIES
AND DUES IF ANY TO THE EXTENT SUCH EXPENSES
HAVE BEEN INCLUDED IN THE SUM INSURED.

NO DEDUCTION SHALL BE MADE FOR DEPRECIATION

IN RESPECT OF PARTS REPLACED EXCEPT THOSE WITH
LIMITED LIFE BUT SALVAGE VLAUE TO BE TAKEN INTO
ACCOUNT. 60
16-02-2016.
 ELECTRONIC EQUIPMENT INSURANCE

MATERIAL DAMAGE

IN CASE EQUIPMENT IS DESTROYED, THE INSURER

WILL PAY ACTUAL VALUE OF THE ITEM IMMEDIATELY
BEFORE THE OCCURRENCE OF THE LOSS, INCLUDING
ORDINARY FREIGHT & ERECTION CHARGES. SUCH
ACTUAL VALUE SHOULD BE CALCULATED BY
DEDUCTING PROPER DEPRECIATION FROM THE
REPLACEMENT VALUE OF THE ITEM.

NORMAL CHARGES FOR THE DISMANTLING OF THE

MACHINERY ARE ALSO PAYABLE BUT SALVAGE WILL
BE TAKEN INTO ACCOUNT.
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 ELECTRONIC EQUIPMENT INSURANCE

MATERIAL DAMAGE

IN THE EVENT OF THE MAKERS DRAWINGS,

PATTERNS & CORE BOXES NECESSARY FOR THE
EXECUTION OF A REPAIR NOT BEING AVAILABLE,
THE INSURER SHALL NOT BE LIABLE FOR THE COST
OF MAKING ANY SUCH DRAWINGS, PATTERNS AND
CORE BOXES.

THE COST OF IMPROVEMENTS & ALTERATIONS OR

OVERHAULS ARE NOT PAYABLE.
COST OF PROVISIONAL REPAIRS WILL BE BORNE BY
THE INSURER IF SUCH REPIRS CONSTITUTE PART OF
THE FINAL REPAIRS & DOESNOT EXCEED THE TOTAL
REPAIR COST 62
16-02-2016.
16-02-2016.

ELECTRONIC EQUIPMENT INSURANCE

EXTERNAL DATA MEDIA

DATA MEDIA INSURANCE COVERS THE MATERIAL

COST OF DATA MEDIUM AS WELL AS THE COST OF
RESTORING THE DATA IT CONTAINED.

EXPENSES THAT CAN BE PROVED TO HAVE BEEN

INCURRED BY THE INSURED WITHIN A PERIOD OF 12
MONTHS AS FROM THE DATE OF THE OCCURRENCE
STRICTLY FOR TE PURPOSE OF RESTORING THE
INSURED EXTERNAL DATA TO A CONDITION
EQUIVALENT TO THE EXISITING PRIOR TO THE
OCCURRENCE AND NECESSARY FOR PERMITTING
DATA PROCESSING OPERATIONS TO BE CONTINUED
IN THE NORMAL MANNER. 63
 ELECTRONIC EQUIPMENT INSURANCE

EXTERNAL DATA MEDIA

IF IT IS NOT NECESSARY TO REPRODUCE LOST DATA

OR INFORMATION OR IF SUCH REPRODUCTION IS
NOT EFFECTED WITHIN 12 MONTHS AFTER THE
OCCURRENCE, THE INSURER SHALL ONLY BE LIABLE
TO INDEMNIFY THE EXPENSES INCURRED FOR
REPLACING THE LOSS OR DAMAGE DATA MEDIA
THEMSELVES BY NEW MATERIAL.

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 ELECTRONIC EQUIPMENT INSURANCE

INCREASED COST OF WORKING

IN THE EVENT OF FAILURE OF THE EDP EQUIPMENT

OF INSURED THE INSURER SHALL BE LIABLE FOR
THE ADDITIONAL EXPENDITURE THAT CAN BE
PROVED TO HAVE BEEN INCURRED FOR THE PERIOD
DURING WHICH THE USE OF SUBSTITUTE EDP
EQUIPMENT IS ESSENTIAL, BUT AT THE MOST FOR
THE INDEMNITY PERIOD AGREED.
THE INDEMNITY PERIOD SHALL COMMENCE AS
SOON AS THE SUBSTITUTE EQUIPMENT IS PUT INTO
USE.

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 CONTRACTORS PLANT & MACHINERY

THIS IS A COMPREHENSIVE ALL RISK COVER WHICH

COVERS THE PLANTS AND MACHINES AGAINST ALL
UNFORESEEN AND SUDDEN PHYSICAL DAMAGES BY ANY
CAUSE NOT SPECIFICALLY EXCLUDED.

THE MACHINES MAY BE AT WORK, OR BEING

DISMANTLED FOR THE PURPOSE OF CLEANING OR
OVERHAULING OR IN THE COURSE OF AFORESAID
OPERATIONS THEMSELVES OR WHEN BEING SHIFTED
WITHIN THE PREMISES, OR DURING SUBSEQUENT RE-
ERECTION.

BUT IN ANY CASE ONLY AFTER SUCCESSFUL

COMMISSIONING 16-02-2016. 66
 CONTRACTORS PLANT & MACHINERY

ELECTRICAL OR MECHANICAL BREAKDOWN, FAILURE,

BREAKAGE , DERANGEMENT, FREEZING OF COOLANT
ETC- BUT IF AS A CONSEQUENCE OF SUCH
BREAKDOWN ACCIDENT OCCURS CAUSING EXTERNAL
DAMAGES SUCH CONSEQUENTIAL LOSSES ARE
PAYABLE.
REPLACEABLE PARTS SUCH AS BITS, KNIVES, ROPES,
BELTS, CHAINS , DIES, MOULDS, CONNECTING WIRES
& CABLES ,TYRES, BATTERIES ETC- UNLESS LOSS OR
DAMAGE TO EQUIPMENTS/ MACHINERY IS
INDEMNIFIABLE IN TERMS OF POLICY.

VEHICLES DESIGNED & LICENCED FOR GENERAL ROAD

USE UNLESS EXCLUSIVELY USED ON CONSTRUCTION
SITES. 16-02-2016. 67
 CONTRACTORS PLANT & MACHINERY

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 WILL INCLUDE FREIGHT, CUSTOM DUTIES AND
ERECTION COSTS.

EXTRA CHARGES TOWARDS OVERTIME, WORK

ON PUBLIC HOLIDAYS, EXPRESS FREIGHT OR
AIR FREIGHT,SURROUNDING PROPERTY &
THIRD PARTY LIABILITY RISKS CAN ALSO BE
COVERED ON EXTRA PAYMENT OF PREMIUM.
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 CONTRACTORS PLANT & MACHINERY

REPAIR

NECESSARY REPAIR CHARGES PLUS COST OF

DISMANTLING AND ERECTION INCURRED FOR THE
PURPOSE AND COST OF MATERIALS AND ORDINARY
FREIGHT.
TOTAL LOSS

ACTUAL VALUE AFTER DEDUCTING PROPER

DEPRECIATION FROM REPLACEMENT VALUE PLUS
FREIGHT & DUTY TO THE EXTENT INCLUDED IN THE
SUM INSURED.

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 BOILER INSURANCE

AN ACCIDENT
A boiler exploded under apparently normal
operating conditions. It was projected by
explosion through the rear of boiler and
eventually came to rest some 100 m away.
During its movement, it struck & destroyed
an electric substation. Debris fell out
adjoining road which a few hours later would
have been busy with commuter traffic.
Damage sustained up to a radius of 500 m.
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 BOILER INSURANCE

Covers both Fired & Unfired pressure vessels against

the risk of explosion and collapse & indemnify the
insured against

1. DAMAGE TO BOILERS & PRESSURE PLANTS.

2. DAMAGE TO SURROUNDING PROPERTIES.
3. THIRD PARTY LIABILITY

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 BOILER INSURANCE

PRESENT DAY NEW REPLACEMENT VALUE OF

PLANT THAT IS INCLUSIVE OF FREIGHT DUES AND
CUSTOM DUTIES, IF ANY AND ERECTION COSTS.

EVERY ITEM IF MORE THAN ONE OF THIS POLICY

SHALL BE SUBJECT TO THIS CONDITION.
20% ESCALATION IS PERMISSIBLE AT 50%
PREMIUM RATE. DIFFERENT ESCATION
PERCENTAGES FOR DIFFERENT BOILERS AND
PRESSURE PLANTS ARE PERMISSIBLE.
IN ADDITION, COVER AGIANST DAMAGE TO
OWNER’S EXISTING SURROUNDING PROPERTY,
THIRD PARTY PROPERTY & PESONAL INJURY IS
ALSO AVAILABLE. 72
16-02-2016.
 BOILER INSURANCE

IN CASE OF REPAIRS ALL EXPENSES NECESSARILY

INCURRED TO RESTORE THE DAMAGED MACHINE TO
ITS FORMER STATE OF SERVICEABILITY PLUS THE COST
OF DISMANTLING AND REERECTION INCURRED FOR
EFFECTING REPAIRS AS WELL AS ORDINARY FREIGHT
TO & FROM REPAIR SHOP PLUS CUSTOM DUTIES AND
DUES TO THE EXTENT INCLUDED IN SUM INSURED ARE
PAYABLE. NO DEDUCTION FOR DEPRECIATION BUT
SALVAGE IS TAKEN INTO ACCOUNT.

IN CASE OF TOTAL LOSS- ACTUAL VALUE OF ITEM

BEFORE OCCURRENCE OF LOSS INCLUDING
ORDINARY FREIGHT, DUTY & ERECTION COST.
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MACHINERY LOSS OF PROFIT INSURANCE
(M.L.O.P. POLICY)

CONSEQUENTIAL LOSS SUFFERED BY INSURED AS AN

INEVITABLE CONSEQUENCE OF BREAKDOWN OF
MACHINERY & BOILER DUE TO AN ACCIDENT.
ADMISSION OF CLAIM UNDER MBD OR BOILER POLICY
IS PRE-REQUISITE FOR ADMISSION OF CLAIM.
UNLIKE FIRE LOP COVER THE INSURED HAS OPTION TO
INSURE ONLY PART OF HIS MACHINERY & THE I.P. MAY
ALSO BE COMPARATIVELY LESS- FROM 3 TO 12
MONTHS.
MLOP COVERS

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MACHINERY LOSS OF PROFIT INSURANCE
(M.L.O.P. POLICY)
MLOP IS GRANTED ONLY IF THE FACTORY HAS
COMPLETED AT LEAST ONE YEAR OF TROUBLE FREE
COMMERCIAL PRODUCTION.
UNLIKE FIRE COVERS MACHINERY LOP ARE SUBJECT
TO TIME-EXCESS. FOR EXPLOSIVE FACTORIES, PETRO
CHEMICAL PLANTS, FERTILIZER PLANTS- 14 DAYS &
FOR OTHER FACTORIES- 7 DAYS.
SUM INSURED IS EXPECTED FUTURE EARNINGS-
GROSS PROFIT COMPRISING OF NET PROFIT BEFORE
TAX AND THE CONTINUING EXPENSES AS STANDING
CHARGES.
FOR SINGLE PRODUCTS POLICIES MAY BE ISSUED ON
OUTPUT BASIS AND FOR MULTIPLE PRODUCTS ON
TURNOVER BASIS.
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16-02-2016. 76