Earlier, we have discussed the Seventeen Easy Steps To Handle Commercial Lines Insurance Claims while discussing the Claims SOP and the relevant documents that are required to be submitted by the Insured. It’s important to know the exclusions so that the insured must have legitimate expectation while raising a claim under commercial lines insurance.
In this blog let’s discuss in a comparative study about exclusions under Fire, MBD and EEI policy:
COMPARISON OF EXCLUSIONS
The Excess shall apply per event per insured.
THE COMPANY SHALL NOT BE LIABLE UNDER THIS POLICY IN RESPECT OF
1. Loss, damage and/or liability caused by or arising from or in consequence, directly or indirectly of fire including extinguishment of a fire or clearance of debris and dismantling necessitated thereby, smoke, soot, aggressive substance, lightning, explosion of any kind (other than bursting or disruption of turbines, compressors, cylinders of steam engines, hydraulic cylinders or fly wheels or other apparatus subject to centrifugal force, internal pressure) theft, collapse of buildings, subsidence, landslide, rockslide, water which escapes from water containing apparatus, flood, inundation, storm, tempest, earthquake, volcanic eruption or other Acts of God, impact of land borne or waterborne or airborne craft or other aerial devices and/or articles dropped therefrom. Any loss or damage by fire within the electrical appliances and installation insured by this Policy arising from Or occasioned by overrunning, excessive pressure, short circuiting, arcing, self heating or leakage of electricity, from whatever cause (lightning included), is covered; provided that this extension shall apply only to the particular electrical machine; apparatus fixture fitting or portions of the electrical installation so affected and not to other machines, apparatus, fixtures fittings or portions of the electrical installation which may be destroyed or damaged by fire so set up.
2. Loss damage and/or liability caused by or arising from or in consequence, directly of
a) War, invasion, Act of Foreign Enemy, Hostilities or warlike operations (Whether war be declared or not). Civil war, rebellion, revolution, Insurrection, Mutiny, Riot, Strike, Lockout and Malicious Damage, Civil Commotion, Military or Usurped Power, Martial Law,
Conspiracy Confiscation, Commandeering by a group of malicious persons or persons acting on behalf of or in connection with any political Organization, Requisition or Destruction or damage by order of any Government de-jure or de facto or by any Public, Municipal or Local Authority.
b) Nuclear reaction, nuclear radiation or radioactive contamination.
3 Accident, Loss, damage/and/or liability resulting from overload experiments or tests requiring the imposition of abnormal conditions.
4 Gradually developing flaws, defects, cracks or partial fractures in any part not necessitating immediate stoppage, although at some future time repair or renewal of the parts affected may be necessary.
5 Deterioration of or wearing away or wearing out of any part of any machine caused by or naturally resulting from normal use or exposure.
6 Loss, damage and/or liability caused by or arising out of the willful act or willful neglect or gross negligence of the insured or his responsible representatives.
7 Liability assumed by the insured by agreement unless such liability would have attached to the insured notwithstanding such agreement.
8 Loss, damage and/or liability due to faults or defects existing at the time of commencement of this insurance and known to the insured or his responsible representative but not disclosed to the Company.
9 Loss of use of the Insured's plant or property or any other consequential loss incurred by the Insured.
10 Loss, damage/and/or liability due to explosions in Chemical Recovery Boilers, other than pressure explosions e.g. smelt, chemical, ignition, Explosions etc.
The Company shall not be liable for
1. The Excess, as stated in the Schedule, to be first borne by the insured out of each and every claim; where more than one item is damaged in one and the same occurrence, the insured shall not, however, be called upon to bear more than the highest Excess applicable to any one such item;
2. Loss of or damage to belts, ropes, chains, rubber tyres, dies, moulds, blades, cutters, knives or exchangeable tools, engraved or impression cylinders or rolls; objects made of glass, porcelain, ceramics, all operating media (e.g. lubricating oil, fuel, catalyst, refrigerant, dowtherm) felts, endless conveyor belts or wires; sieves, fabrics, heat-resisting and anticorrosive lining and parts of similar nature, packing material, parts not made of metal (except insulating material) and nonmetallic lining or coating of metal parts.
3. Loss or damage for which the manufacturer or supplier or repairer of the property is responsible either by law or contract. In any action, suit or other proceedings where the Company alleges that by reason of the provisions of the exceptions or exclusions above, any loss, destruction, damage or liability is not covered by this insurance, the burden of proving that such loss, destruction, damage or liability is covered shall be upon the Insured.
ELECTRONIC EQUIPMENT INSURANCE
The Company will not indemnify the Insured in respect of loss, damage or liability directly caused by or arising out of or aggravated by –
a) War, Invasion, Act of Foreign Enemy, Hostilities or War Like operations (whether war be declared or not), Civil War, Rebellion Revolution, Insurrection Mutiny, Civil Commotion, Confiscation, Commandeering a Group of Malicious persons or persons acting on behalf of or in connection with any political organization, requisition or destruction or damage by order of any government de-jure or de-facto or any public, municipal or local authority.
b) Nuclear Reaction, Nuclear radiation or radioactive contamination.
c) Wilful act or willful negligence of the Insured or his representative.;
d) Cessation of work whether total or partial.
e) Cost Incurred/time involved in the movement of machinery and/or any other property and/or personnel outside the territorial limits of India other than the cost of delivery of replacements for machinery lost or damaged.
f) Derangement of the Insured property not accompanied by damage otherwise covered by this policy.
g) Loss of or damage to the property covered under this policy falling under the terms of the Maintenance Agreement.
h) Loss destruction or damage directly occasioned by pressure wave caused by aircraft and other aerial devices travelling at sonic or supersonic speeds.
In any action, suit or other proceedings where the company allege that by reason of the provisions of the above exclusions any loss, destruction, damage or liability is not covered by this insurance, the burden of proving that such loss, destruction, damage or liability is covered shall be upon the Insured.
SPECIAL EXCLUSION TO SECTION - I
The Company shall not, however, be liable for -
a) The Excess stated in the Schedule to be borne by the Insured in any one occurrence; if more than one item is lost or damaged in one occurrence, the insured shall not, however, be called upon to bear more than the highest single Excess applicable to such items;
b) loss or damage caused by any faults or defects existing at the time of commencement of the present insurance within the knowledge of the insured, or his representatives, whether such faults or defects were known to the company or not;
c) loss or damage as a direct consequence of the continual influence of operation (e.g. wear and tear, cavitations, erosion, corrosion, incrustation) or of gradual deterioration due to atmospheric conditions;
d) Any costs incurred in connection with the elimination of functional failures unless such failures were caused by an identifiable loss of or damage to the insured items;
e) Any costs incurred in connection with the maintenance of the insured items, such exclusion also applying to parts exchanged in the course of such maintenance operations;
f) Loss or damage for which the manufacturer or supplier of the insured items is responsible either by law or under the contract;
g) Loss of or damage to rented or hired equipment for which the owner is responsible either by law or under a lease and/or maintenance agreement;
h) Consequential loss or liability of any kind or description;
i) Loss of or damage to bulbs, valves, tubes, ribbons, fuses, seals, belts, wires, chains, rubber tyres, exchangeable tools, engraved cylinders, objects made of glass, porcelain or ceramics sieves or fabrics, or any operating media (e.g. lubricating oil, fuel, chemicals);
j) Aesthetic defects, such as scratches on painted polished or enamelled surfaces.
In respect of the parts mentioned under i) and j) above the Company shall be liable to provide compensation in the event that such parts are affected by an indemnifiable loss or damage to the insured items.
1. This Policy does not cover (not applicable to policies covering dwellings)
1.1. Policies having Sum Inured up to INR 10 crore per location – 5% of claim amount subject to a minimum of Rs 10,000/-
1.2. Policies having Sum Insured above INR 10 crore per location up to INR 100 crore per location - 5% of claim amount subject to a minimum of INR 25,000
1.3. Policies having Sum Insured above INR 100 crore and up to INR 1500 crore per location-5% of claim amount subject to a minimum of INR 5 lakhs
1.4. Policies having Sum Insured above INR 1500 crore and up to INR 2500 crore per location - 5% of claim amount subject to a minimum of INR 25 lakhs
1.5. Policies having Sum Insured above INR 2500 crore per location - 5% of claim amount subject to a minimum of INR 50 lakhs
The Excess shall apply per event per insured.
2. Loss, destruction or damage caused by war, invasion, the act of foreign enemy hostilities or warlike 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.
3. Loss, destruction or damage directly or indirectly caused to the property insured by
(a) ionizing radiation’s or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel
(b) the radioactive toxic, explosives or other hazardous properties of any explosive nuclear assembly or nuclear component thereof
4. Loss, destruction or damage caused to the insured property by pollution or contamination excluding
(a) pollution or contamination which itself results from a peril hereby insured against
(b) any peril hereby insured against which itself results from pollution or contamination
5. Loss, destruction or damage to bullion or unset precious stones, any curios or works of art for an amount exceeding Rs.10,000/- 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.
6. Loss, destruction or damage to the stocks in Cold Storage premises caused by the change of temperature.
7. 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.
8. 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.
9. Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever.
10. Loss, or damage by spoilage resulting from the retardation or interruption or cessation of any process or operation caused by the operation of any perils covered.
11. Loss by theft during or after the occurrence of any insured peril except as provided under Riot, Strike, and Malicious Damage cover.
12. Any Loss or damage occasioned by or through or in consequence directly or indirectly due to earthquake, Volcanic eruption or other convulsions of nature.
13. 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.
Employee’s Compensation Act, 1923:-
Liability for compensation:-
(i) In order to attract sub-section (1) of section 3 three conditions must be fulfilled
(a) Personal injury;
(b) Accident; and
(c) Arising out of and in the course of employment;
Kalayni P V/s Divisional Manager, Southern Railway(Personal Branch), Divisional Office, Madras, 2004 LLR 207(Mad HC):2004 ILLJ 49
(ii) It is no doubt true that in order to succeed in an application for getting compensation under section 3 the following points are required to be established that ---
1) The accident must arise out of and in the course of the workman’s employment;
2) There must be a causal connection between the injury and the accident and the work done in the course of the employment;
3) The workmen have to say that while doing a part of his duty or incidental thereto it has resulted into an accident.
It is necessary that the workman must be actually working at the time of the injury or the accident. Therefore, the three factors that there must be an injury, which must be caused in an accident, it must be caused in the course of and out of the employment must be established;
Branch Manager, New India Assurance Co. Ltd. V/s. Siddappa, Major, 2004 LLR 731 (Kant HC).
Meaning of the expression “arising out of employment”
(i) The expression “arising out of employment” means that there must be a causal relationship between the accident and the employment. If the accident has occurred on account of the risk which is an incident of employment, it has to be held that the accident has arisen out of the employment;
Oriental Insurance Co. Ltd. V/s Nanguli Singh, 1995 LLJ HC ORS (298).
(ii) The words “out of employment” is not limited to mere nature of the employment, but (arising out of employment) applies to its nature, its conditions and obligations and its incident. An accident which occurs on account of risk, which is an incident of employment, then the claim for compensation can succeed provided the workman has not exposed himself to an added peril by his own imprudent act; Executive Engineer 19th Div. R.C.P., Bikaner V/s. Heeraram, 1982 (44) FLR 179 Raj: 1980 Raj LW 412.
Ø In this incident, the employee was not working at the time of injury. In fact, he was returning back to the residence and riding on his own motor-bike after finishing the work;
Ø There is no causal relationship between the accident and the employment as the accident is not on account of the risk which is an incident to employment; and
Ø In this case, the employee has exposed himself to an added peril by driving his own vehicle.
In view of the above, the employer cannot be held responsible to pay for injury and eventually claim is not admissible under the WC Policy.