MASTERS IN MANAGEMENT STUDIES Project Report on Fire Insurance Policy

Submitted by AMIT !AMRA " GR#UP

Name o$ %oordinator Pro$& '& N& Mani

Mumbai Institute o$ Mana(ement and Researc) *Appro+ed by AI%TE " A$$iliated to Uni+ersity o$ Mumbai,

September -./. Fire Insurance Policy Page 1

DE%0ARATI#N

I hereby declare that the Project Report submitted on Fire Insurance Policy, As the Partial Fulfillment of the MMS Degree Program Affiliated to !ni"ersity of Mumbai# is the original $or% of me and my group members& Group Members 1&# Amit 'amra (&# )i%hil 'esar%ar *&# +asim Shai%h ,&# Prasahnt Shirshe%ar -&# Sonal Ran%a .&# Maya 'amath /&# Shi"angi 0hatt 1&# )i%ita Shah 2&# Dayanand Palan%ar 13&# Sachin Shintre 11&# 4a5ra Shei%h 1(&# Prashant 'ole%ar

Place6 Mumbai Date6 -12.12-./.

Prof& 7&)& Mani Guest Faculty MIMR

Amit 'amra Group 0eader

A%!N#30EDGEMENT
I $ish to e8press my gratitude to Prof& 7& S& Mani 9uest Faculty MIMR +adala for gi"ing me and my group members an opportunity to $or% on the project entitled :Fire insurance Policy;& I $ish to e8press my than%s to Mr& 0hag$an Patil, Asst Manager Mar%eting# and Mrs& Anjali P& 'ar"e Admn& <fficer of =he )e$ India Assurance >o& ?td& I $ish to than% Mr& 7en%ata )& Malladi, 4ead Account @ Finance, MAS Anandji 4aridas @ >o& P"t& ?td& for gi"ing us the "aluable time and information reBuired for the project

Place6 Mumbai Date6 1( <ctober , (313

Group 0eader Amit 'amra #

Fire Insurance policy

De$inition Property insured described in the said schedule or any part of such property be destroyed or damaged by any of the perils specified here under during the period of insurance named in the said schedule or of any subseBuent period in respect of $hich the insured shall ha"e paid and the company shall ha"e accepted the premium reBuired for the rene$al of policy, the company shall pay to the insured the "alue of the property at the time of the happening of its destruction or the amount of such damage or at its auction reinstate or replace such property or any part thereof& Fire insurance is a contract by $hich the insurance company agrees on payment of premium to indemnify the insured, up to an agreed amount, against financial loss by fire $hich may arise during a particular period to the subject matter& It is a contract of indemnity $hich is usually in the form of policy& =he fire insurance contract is for a period of one year and often is cancel able by either party before the term has e8pired& Fire insurance company not only grants protection to policy holders against the fire ris% but also renders "aluable part in the reduction of fire $aste& =hey spend money on fire pre"ention techniBues and conduct research in order to find out means for minimi5ing the chances of losses& %)aracteristics o$ Fire Insurance 1& Fire insurance is a contract of indemnity& =he insurer is liable only to the e8tent of the actual loss suffered& If there is no loss there is no liability e"en if there is a fire& (& Fire insurance is a contract of good faith& =he policyCholder and the insurer must disclose all the material facts %no$n to them& *& Fire insurance policy is usually made for one year only& =he policy can be rene$ed according to the terms of the policy& ,& =he contract of insurance is embodied in a policy called the fire policy& Such policies usually co"er specific properties for a specified period& -& Insurable Interest A fire policy is "alid only if the policyCholder has an insurable interest in the property co"ered& Such interest must e8ist at the time $hen the loss occurs& In Dnglish cases it has been held that the follo$ing persons ha"e insurable interest for the purposes of fire insuranceC o$nerE tenants, bailees, including carriersE mortgages and chargeCholders& .& In case of se"eral policies for the same property, each insurer is entitled to contribution from the others& After a loss occurs and payment is made, the insurer is subrogated to the rights and interests of the policyCholder& An insurer can reinsure a part of the ris%&

/& Fire policies co"er losses caused pro8imately by fire& =he term loss by fire is interpreted liberally& D8ample6 A $omen hid her je$ellery under the coal in her fireplace& ?ater on she forgot about the je$ellery and lit the fire& =he je$ellery $as damaged& 4eld, she could reco"er under the fire policy& 1& )othing can be reco"ered under a fire policy if the fire is caused by a deliberate act of policyCholder& In such cases the policyCholder is liable to criminal prosecution& 2& Fire policies generally contain a condition that the insurer $ill not be liable if the fire is caused by riot, ci"il disturbances, $ar and e8plosions& In the absence of any specific e8pectation the insurer is liable for all losses caused by fire, $hate"er may be the causes of the fire& 13& Assignment6 According to Dnglish la$ a policy of fire insurance can be assigned only $ith the consent of the insurer& In India such consent is not necessary and the policy can be assigned as a choseCinCaction under the =ransfer of Property Act& =he insurer is bound $hen notice is gi"en to him& 0ut the assignee cannot be reco"ering damages unless he has an insurable interest in the property at the time $hen the loss occurs& A stranger cannot sue on a fire policy& 11& Payment o$ %laims Fire policies generally contain a clause pro"iding that upon the occurrence of fire the insurer shall be immediately notified so that the insurer can ta%e steps to sal"age the remainder of the property and can also determine the e8tent of the loss& Insurance companies %eep e8perts on their staff of "alue the loss& If in a policy there is an international o"er "aluation of the property by the policyC holder, the policy may be a"oided on the ground of fraud&

Essentials o$ $ire insurance contract

/& Disclosure o$ material $acts =he insured must disclose all material facts in respect of the subject matter& =he contract shall be "oidable in the e"ent of misrepresentation or non disclosing of an necessary facts& -& Insurable interest It is the essential for the insured to ha"e insurable interest in the subject matter of both $hen the policy is affected and $hen the loss ta%es place& 4& %ontract o$ indemnity =he principle of the contract of indemnity is applicable to fire insurance& =he amount can be claimed only after the loss has ta%en place during the stated period& If there is no loss no claim $ill be accepted& 5& Personal contract

Fire insurance is a personal contract bet$een the insured and insurer& =he policyholder cannot assign or transfer it $ithout the perior consent of the insurance company&

6& Duration A fire policy is issued for a period of 13 days to 1( months but it can be rene$ed after the e8piry of their period& 7& General conditions =here must be an agreement in the prescribed form& =he concerned parties must be competent to contract& =he object must be legal and not against the public interest& 8& Personal Ri()t =he person, $hose name has been mentioned in the contract, is entitled to recei"e the insured sum from the insurer at the e"ent of loss by fire on insured property& 9& %laim 0imit =he actual mar%et "alue of the goods or property destroyed by fire can be claimed only by the insurer& In such type of contract there is no profit moti"e& 1& T)e premium and %onsideration =he contract is based on the consideration $hich means the granting of protection by the insurer in e8change for the payment of premium by the insured& =he policy must mention the sum of insurance and the rate of premium& /.& Description o$ t)e subject matter It is essential part of the contract that the policy must describe the6 location of the property& It helps the insurer to determine the rate of premium& //& Scope o$ protection =he insurance company may grant the protection against all direct loss by fire lightning and other perils& =he contract must specify the description of loss in order to consider the appro8imate cause&

/-& Termination o$ t)e contract =he contract of fire insurance may be terminated due to three e"ents6

i# 7iolations of the rules ii# >ancellation iii# D8piration of the term $ithout rene$al&

/4& Subro(ation !nder this principle the insurer after paying a loss has ful1 right and pri"ileges against third party in respect of loss so paid for& =hese rights may be justified, =he problem of subrogation arises $hen a fire is caused by the negligence of the third party, for $hich negligence the party $hose property is destroyed by fire may reco"er under rules& /5& Suspension o$ t)e policy =he insurance company is empo$ered to suspend the insurance due to some reasons& =he insurer shall not be liable for loss happening if the chances of ris% increase by any means $ithin the control of the policy holder& /6& Notice o$ loss =he policy holder must ser"e immediate notice in $riting to the concerned insurance company of any loss& It enables him to ta%e action to reduce the loss, to in"estigate the reason of fire and to determine his liability& /7& Adjustment o$ loss <n recei"ing the noticeE the insurer ma%es arrangement to adjust the loss& =he company or its representati"es $ith considerable authority may enter and ta%e possession of the damaged property&

Properties t)at are co+ered

All mo"eableA immo"eable properties of the proposer on land e8cluding those in transit# broadly categorised as follo$s 6 0uilding including plinth and foundations, if reBuired#6 +hether completed or in course of construction e8cluding the "alue of land#& Interiors, Partitions and Dlectricals& Plant @ Machinery, DBuipments @ Accessories including foundations, if reBuired# 0ought Second hand& 0ought )e$ <bsolete Machinery Stoc%s6 Ra$ Material Finished 9oods In process In trade belonging to +holesaler, Manufacturer and Retailer& <ther >ontents such as Furniture, Fi8tures and Fittings >ables, Pipings Spares, =ools and Stores 4ousehold goods etc&

Specific Items such as bullion, unset precious stones, curios, $or% of arts, manuscripts, plans, dra$ings, securities, obligations or documents, stamps, coins or paper money, cheBues, boo%s of accounts, computer system records, e8plosi"es&

STANDARD FIRE AND SPE%IA0 PERI0S P#0I%:

MA=DRIA? DAMA9D# I) ><)SIDDRA=I<) <F the isured named in the schedule hereto ha"ing paid to the =he )e$ India Assurance company ?imited hereinafter called the company# the premium mentioned in the said schedule ,=he company Agrees, Subject to the condition and D8clusions contained herein or endorsed or other$ise e8pressed hereon# that if after payment of the premium the Property insured described in the said Schedule or any part of such Property be destroyed or damaged by any of the perils specified hereunder during the period of insurance named in the said schedule or of any subseBuent period in respect of $hich the insured shall ha"e paid and the >ompany shall ha"e accepted the premium reBuired for the rene$al of the policy, the company shall pay to the Insured the "alue of the Property at the time of the happening of its destruction or the amount of such damage or at its option reinstate or replace such property or any part thereof6

Fire
D8cluding destruction or damage caused to the property by a# i# its o$n fermentation, natural heating or spontaneous combustion& ii# its undergoing any heating or drying process& b# burning of property insured by order of any public Authority

0i()tnin( E;plosion<Implosion
D8cluding destruction or damage caused to the boilers other the domestics boilers#,economi5ers or other "essels in $hich steam is generated,machinery or apparatus subject to centrifugal force by its o$n e8plosionAimplosion

Aircra$t Dama(e
Destruction or damage caused by Aircraft, other aerial or space de"ices and articles and articles dropped therefrom e8cluding those caused by pressure $a"es

Riot= Stri>e= Malicious Dama(e

a# total or partial cessation of $or% or the retarding or interruption or cessation, commandeering,reBuisitng,reBuisition or destruisition or destruction or omissions of any %ind& b# permanent or temporary dispossession resulting from confiscation, commandeering , reBuisition or destruction by order of the 9o"ernment or any la$fully constituted Authority & c# Permanent or temporary dispossession of any building or plant or unit or machinery resulting from the unla$ful occupation by any person of such building or plant or unit or machinery resulting from the unla$ful occupation by any person of such building or plant or unit or machinery or pre"ention of access to the same&

d# burglary , housebrea%ing, theft ,larceny or any such attempt or any omission of any %ind of any person $hether or not act is committed in the course of a disturbance or public peace# in any malicious act& Storm, cyclone, =yphoon, =empest, 4urricane, =ornado, Flood and lnundation ?oss, destruction or damage directly caused by storm , cyclone, typhoon, tempest, hurricane, tornado, flood or inuding those resulting from earthBua%e, "olcanic eruption or other con"ulsions of nature &

Impact dama(e
?oss of or "isible physical damage or destruction caused to the property insured due to impact by any railAroad "ehicle or animal by direct contact not belonging to or o$ned by a# =he insured or any occupier of the premises b# their employees $hile acting in the course of their employment

Subsidence and landslide includin( roc> slide

a# the normal crac%ing , settlement or bedding do$n of ne$ structure 0# the settlement or mo"ement of made up ground c# coastal or ri"er erosion d# defecti"e design or $or%manship or use of defecti"e materials e# demolition, construction, structural alterations or repair of any property or ground$or%s or e8ca"ations&

?urstin( and o+er$lo@in( o$ @ater tan>s= apparatus and pipes Missile testin( operation 0ea>a(e $rom automatic sprin>ler installations
a# Repairs or alterations to the building or premises b# Repairs, remo"al or e8tension of the sprin%ler installation c# defects in construction %no$ to the insured&

?us) $ire
Pro"ided that the liability of the company shall in no case e8ceed in respect of each terms sum e8pressed in the said schedule to be insured thereon or in the $hole the total sum or sums as may be substituted therefor by memorandum hereon or attached hereto signed by or on behalf of the company&

Special types of Policies a"ailable for Stoc%s6 Declaration Policy 6 =o care care of freBuent fluctuations in Stoc%sA Stoc% 7alues Minimum Sum Insured Rs& 1 crore per location&

Monthly declaration on any one of the follo$ing basis to be submitted before the last day of the succeeding month 1&# a"erage of the highest "alues at ris% on each day or# (&# highest "alue on any day of the month& Refund of premium, on e8piry of policy, based on the a"erage declaration upto -3F of the pro"isional premium& Floatin( policy =his policy is subject to the Ga"erage clauseH& =he e8tent of co"erage e8pands to different properties belonging to the Policy holder under the same contract and one premium& =he policy may also pro"ide protection to goods %ept at t$o different stores&

Ris>s Not %o+ered First -F of A<9 PerilsARs&13,333& =heft during or after the occurrence of any insured ris%s +ar or nuclear perils Dlectrical brea%do$ns <rdered burning by a public authority Subterranean fire& ?oss or damage to property mo"ed to a different location e8cept machinery and eBuipment for cleaning, repairs or reno"ation for more than .3 days# ?oss or damage to bullion, precious stones, curios "alue more than Rs&13333#, plans, dra$ings, money, securities, cheBue boo%s, computer records e8cept if they are categorically included&

Add on co+ers
In addition to the perilsA e8penses co"ered, the proposer can opt to see% co"er in respect of the follo$ing perilsA e8penses at inception or during currency of the policy on payment of additional premium 6 Perils ?ossA damageA destruction of the property caused by

Deterioration of Stoc%s in >old Storage premises due to po$er failure follo$ing damage due to an insured peril Forest Fire Impact Damage due to InsuredIs o$n 7ehicles, For% lifts and the li%e and articles dropped therefrom Spontaneous >ombustion

<mission to insure additions, alterations or e8tensions DarthBua%e Fire and Shoc%#& Spoilage material damage co"er& ?ea%age and contamination co"er& =emporary remo"al of stoc%s&

E;penses

Architects , Sur"eyors and >onsulting DngineerIs Fees in e8cess of *F claim amount# Debris Remo"al in e8cess of 1F of claim amount# ?oss of rent& Insurance of additional e8penses of rent for alternati"e accommodation&

Start up D8penses&

Documents reAuired by insurer $or processin( t)e claim I& >ommon Documents for all claims under a Standard Fire and Special Perils Policy6 1& (& *& ,& -& >ertified =rue copy of the policy along $ith schedule and DndorsementsAclauses& >laim Form& )e$spaper reports on the incident, if any& Photographs& -&Past claims e8perience

II&

Fire >laims additional documents# 1& (& *& ,& -& .& /& Report of the Internal >ommittee constituted for the purpose of in"estigating the cause of fire& Fire 0rigade Report& First Information Report A ?etter of intimation to the Police Station duly endorsed A Police Panchnama& Forensic ?aboratory Report on samples collected at affected site& Drug InspectorIs Report on destruction of DrugsA Pharmaceutical items for claim on pharma products only#& Final In"estigation Report& Action ta%en on the suggestion of =A>A ?PA on loss minimisation of pre"ention&

III&

Flood >laims additional documents#6 Meteorological Report

I7&

D8plosion >laims additional documents#6

Factory InspectorIs Report or Report of Director of Industrial Safety and +elfare&

%#MPANIES 'ISITED

TBE NE3 INDIA ASSURAN%E %#&0TD& Bistory

Incorporated on July (*rd, 1212 Founded by the 4ouse of =ata Founder member C Sir Dorab =ata& )ationalised in 12/*&

Present Position
9ross Premium in India# of Rs& -31/&(3 crores in the year (33.C(33/, as against Rs& ,/21&,2crores in the year(33-C(33.& Assets Rs& (/,,,&-/crores as on *1st March (33/& )et$or% of <fficesC(. Regional <ffices, *2* Di"isional <ffices, .1, 0ranches and *, Direct Agent 0ranches& Ran% )o& 1 in the Indian mar%et& ?argest )onC?ife insurer in AfroCAsia e8cluding Japan& First Indian nonClife company to cross Rs& -333 crores 9ross Premium& 9lobal ReCinsurance facilities& <"erCseas presence in countries li%e Japan, !&', Middle Dast, Fiji and Australia&

International Presence
<"erseas operations commenced in 12(3& <perations in (, countries in the year (33,C3-& )et$or% of 12 0ranches, 1( Agencies, ( Associate companies and ( Subsidiary companies in the year (33,C3-& <"erseas Premium of Rs& 12(&*- crores in the year (33,C3-, $hich accounts for more than 13F of total o"erseas premium in India& Per$ormance )e$ India Assurance >ompany is the largest nonClife insurer in India& =he financial strength of the >ompany is reflected from the follo$ing figures6C

Kear (33/C(331 (33.C(33/ (33-C(33. (33,C(33(33*C(33, (33(C(33* (331C(33( (333C(331 1222C(333 1221C1222 122/C1221

9ross 9ross Premium )et Premium )et Profit =otal Assets Premium <utside 9lobal# 9lobal# 9lobal# in India# India# -(/.&21 1/,&-,21,&(1 1,31&1* *12,,&1, -31/&(3 212&-1 ,/-1&/. 1,-2&2(/,,,&-/ ,/21&,2 11,&3,*,(&.. /1.&*1 (/3(-&-1 ,(13&11 12(&**12-&11 ,3(&(* 121(/&12 ,3,-&.1 1/-&/2 *.*,&2, -23&(1 1/-13&,, *2(1&(, 121&-*-1.&,* (--&11 1(21,&/*-1(&** .1-&/* *3.1&(* 1,(&33 1((/*&3( *3,1&1/ ,-1&11 (./1&,1 1/*&-, 1(2(&33 (2/2&-* *(/&33 (,//&,- (1/&(2 /..,&/1 (/(2&,1 (11&1. (11.&2( */-&33 ./(/&/( (,**&/* (-,&3, 12,-&33 ,/3&2, .3/1&./

)et +orth 9lobal# .2/(&13 -2/(&-,/3.&1/ ,1.1&.2 */*-&(( *,3,&33 *112&*2 *3./&*2 (1-2&1. (-(,&(* 1,.(&-(

PERS#N %#NTA%TED Mr& 0hag$an Patil, Asst Manager Mar%eting# and Mrs& Anjali P& 'ar"e Admn& <fficer <f =he )e$ India Assurance >o& ?td& SA0ES PR#%ESS Sales Process includes >ontacting the client and doing analysis of the Ris%s client is e8posed to& After analysing a detailed presentation is prepared to sho$ it to the client and con"ey the client ris%s and policies $hich co"ers the ris%s the client is e8posed to& 3)o ta>es Fire insuranceC 9enerally Fire insurance is ta%en by companies $hich uses ra$ material $hich easily catches fire& >ompanies $hich uses hard metals as ra$ materials do not $ish to ta%e fire insurance& Bo@ to sell Fire insuranceC Fire insurance Products are to co"er the "arious ris%s to $hich a manufacturing firm is e8posed to& Selling procedure includes the sur"ey of these ris%s and pro"ide a$areness to the client about the ris%s& 'ie@s on $ire insurance Fire insurance an effecti"e tool for any firm or Property o$ner to minimi5e the financial loss in e"ent of loss on hisAher property& Insufficient A$areness of the policy among people is the main constraint in ma%ing positi"e perception about the policy&

ANANDDI BARIDAS " %#& P'T& 0TD& %#MPAN: Anandji 4aridas @ >o& P"t& ?td& A4>P?# started in the year 12-1, in Mumbai, India to manufacture sheet metal pressed @ fabricated components& A4>P? got its <DM supplier status in the year 12-/& =oday, A4>P? has gro$n as a leading manufacturer of critical sheet metal pressed, formed and fabricated components and spun sheet metal pulleys for passenger cars, truc%s, agricultural tractors, construction eBuipment and gensets in India& A4>P? designs and manufactures components for the specific reBuirements of the customers& A4>P? currently has manufacturing facilities at Mumbai @ Pune& =he >ompany has a team of Bualified personnel capable of in house DD7D?<PMD)= <F PR<D!>= DDSI9)S A)D =<<?I)9& =he >ompany is =IDR I S!PP?IDR to major Auto manufacturers in India $hich includes $orld leading M)>s& 13F of the products are as SI)9?D S<!R>D S!PP?IDS to our esteemed customers& =he company has successfully participated in the locali5ation and "alue engineering programs of its customers and has also proposed and successfully implemented indigenous product designs for them& =his gi"es tremendous de8terity in de"elopment of any challenging component in Buic% time& =otal turno"er of the co& is Rs& -6cr& Per annum& =he employee strength is 1-3 L (33&

Products
Sheet Metal Spun Pulleys Deep Dra$s =ools and Dies for sheet metal $or%ing >losed =olerance components Sheet Metal Stampings Stretch Dra$ Panels

Person contacted Mr& 7en%ata )& Malladi, 4ead Account @ Finance, MAS Anandji 4aridas @ >o& P"t& ?td Insurance Policies Ta>en 1& Marine >argo Policy 0ajaj Allian5 9eneral Insurance >o& ?td&# =otal Sum Insured is Rs& -,.-,.*2 (& Standard Fire @ Special Peril Policy !nited India Insurance >o& ?td&# =otal Sum Insured is * crore& %laim Record =here $ere no such claims by the >ompany& 'ie@s " E;periences about Fire Insurance Policy Policy is ta%en as it is compulsory& =hey rene$ the policy e"ery year under the guidance of an Insurance >onsultant&