13.2 Exam Book PDF

standard spl pe- policy Flop policy
Flop policy MD policy must

Petro- chemical tarrif Annual Turn over/ standing charges
IAR policy extn- cover
period of indemnity
dewelling- long term/ normal

specific policy- bld
Ssi- unit
plant & machinery-
manufacturing unit
reinstatement basis
Stocks and Utilities
stocks- floater & Dec- Policy
Utilities out side Premises
buld- regulation
building/fff/contents
FEA- condition.
plant & machinery
pre-accpatnce Provisional
stocks- raw or finished
basisi of premium- for large risk
FLERIA- fire, lightn,explosion
RSMD,Impact, Aircraft Damge 14/21-

Add on
cove
12-risk
Flame-
Ignition-Air 15-Policy
13- conditions
exclusion
BOPAT- Bursting &

over flowing-BF- Bush
fire
B
LASI- Leakage of automatic sprinkler.
MTO- Missile Testing—STFI- S&LS- subside

land slide
Fire Insurance
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Standard Fire and Special Perils Policy
Salient Feature
Any one who gains by the preservation of the property and loses by its destruction i.e. a person having insurable
interest can take out such insurance.
i) Individuals e.g. House owner, Shop owner, Warehouse owner etc.
ii) Body Corporate e.g. Manufactures, Trading, Industry etc.
iii) Boilers, Lessee etc.
Scope of Cover
The policy provides protection against damages/fortuities triggered by the following perils:
I. Fire
Excluding destruction or damage caused to the property insured by
(a) (i) its own 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.
II. Lightning
III. Explosion/Implosion
Excluding loss, destruction of or damage
a) to boilers (other than domestic boilers), economizers or other vessels, machinery or apparatus( in which
steam is generated) or their contents resulting from their own explosion/implosion,
b) caused by centrifugal forces.
IV. Aircraft Damage
Loss, Destruction or damage caused by Aircraft, other aerial or space devices and articles dropped there from
excluding those caused by pressure waves.
V. Riot, Strike and Malicious Damage
Loss of or visible physical damage or destruction by external violent means directly caused to the property
insured but excluding those caused by
a) total or partial cessation of work or the retardation or interruption or cessation of any process or
operations or omissions of any kind.
b) Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or
destruction by order of the Government or any lawfully constituted Authority.
c) Permanent or temporary dispossession of any building or plant or unit of machinery resulting from the
unlawful occupation by any person of such building or plant or unit or machinery or prevention of access
to the same.
d) Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person
(whether or not such act is committed in the course of a disturbance of public peace) in any malicious act.
If the Company alleges that the loss/damage is not caused by any malicious act, the burden of proving the
contrary shall be upon the insured.
Terrorism Damage Exclusion Warranty:
Notwithstanding any provision to the contrary within this insurance it is agreed that this insurance excludes
loss, damage cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in
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connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any
other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act, including but not limited to the use of
force or violence and / or the threat thereof, of any person or group(s) of persons whether acting alone or on
behalf of or in connection with any organisation(s) or government(s), committed for political, religious,
ideological or similar purpose including the intention to influence any government and/or to put the public,
or any section of the public in fear.
The warranty also excludes loss, damage, cost or expenses of whatsoever nature directly or indirectly caused
by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way
relating to action taken in respect of any act of terrorism.
If the Company alleges that by reason of this exclusion, any loss, damage, cost or expenses is not covered by
this insurance the burden of proving the contrary shall be upon the insured.
In the event any portion of this endorsement is found to be invalid or unenforceable, the remainder shall
remain in full force and effect.
VI. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
Loss, destruction or damage directly caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado,
Flood or Inundation excluding those resulting from earthquake, Volcanic eruption or other convulsions of
nature. (Wherever earthquake cover is given as an “add on cover” the words “excluding those resulting from
earthquake volcanic eruption or other convulsions of nature” shall stand deleted).
VII. Impact Damage

Loss of or visible physical damage or destruction caused to the property insured due to impact by any Rail/
Road vehicle or animal by direct contact not belonging to or owned by
a) the Insured or any occupier of the premises or
b) their employees while acting in the course of their employment.
VIII. Subsidence and Landslide including Rock slide

Loss, destruction or damage directly caused by Subsidence of part of the site on which the property stands or
Land slide/Rock slide excluding:
a) the normal cracking, settlement or bedding down of new structures
b) the settlement or movement of made up ground
c) coastal or river erosion
d) defective design or workmanship or use of defective materials
e) demolition, construction, structural alterations or repair of any property or groundwork or excavations.
IX. Bursting and/or overflowing of Water Tanks, Apparatus and Pipes
IX. Missile Testing operations
X. Leakage from Automatic Sprinkler Installations

Excluding loss, destruction or damage caused by
a) Repairs or alterations to the buildings or premises
b) Repairs, Removal or Extension of the Sprinkler Installation
c) Defects in construction known to the Insured.
XII. Bush Fire

Excluding loss, destruction or damage caused by Forest Fire.
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Exclusions
i) 5% of each and every claim resulting from the operation of Lightning. STFI (Storm, Tempest, Flood and
Inundation) and Subsidence & Landslide including Rockslide covered under this Policy.
ii) Loss, destruction or damage caused by war.
iii) Loss, destruction or damage directly or indirectly caused to the property insured by nuclear forms.
iv) Loss, destruction or damage caused to the insured property by pollution or contamination.
v) Loss, destruction or damage to bullion or unset precious stones, any curios or works of art for small
amount exceeding Rs.10000/-, manuscripts, plans, etc.
vi) Loss, destruction or damage to the stocks in Cold Storage premises caused by change of temperature.
vii) Loss, destruction or damage to any electrical and/or electronic machine, apparatus, fixture or fitting
(excluding fans and electrical wiring in dwellings) arising from or occasioned by over running, excessive
pressure, short circuiting, arcing, self-heating, or leakage of electricity, from whatever cause (lightning
included)
viii) Expenses necessarily, incurred on
a Architects, Surveyors and Consulting Engineer’ Fees and
b 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.
ix) Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind
or description whatsoever.
Duration of Cover
i) Fire Policies are generally issued for one year.
ii) Long term Fire Policies to cover ”Buildings in course of construction” or for Houses/Flats subject to certain
conditions.
III) Long term policies dwelling houses
Sum Insured
BASIS OF SUM INSURED (Standard to be adopted for valuation of assets proposed for Fire Insurance)
MARKET VALUE BASIS ( for both Current & Fixed Assets )This is determined by the amount at which property of the
same age and condition can be bought or sold. This value takes into account both depreciation due to age and
appreciation due to inflation. In case of reinstatement value policy, the basis of loss settlement is the value of new property
without taking any depreciation into account. Pricing/ExcessThe rates for Fire Insurance are practically one of the
lowest in all Branches of Insurance and therefore always expressed in per mille and as prescribed in the ALL INDIA FIRE
TARIFF brought out by the TARIFF ADVISORY COMMITTEE
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GENERAL CONDITIONS OF FIRE AND SPECIALPERILS POLICY:
1. Misrepresentation, non-discloser of material facts by the insured makes
the policy voidable
2. Cessation of cover on fall or displacement (other than by an insured peril)
of insured property on expiry of 7 days
3. Cessation of cover on material alteration, if unoccupied for more than 30
days or passage of insurable interest
4. Loss covered under any marine policy is not payable
5. Cancellation
6. Duties of the Insured in the event of an occurrence giving rise to a claim
7. Rights of the Insurer in the event of a claim
8. Fraudulent means by Insured forfeits all benefits under the policy
9. Insurer's rights to reinstate or replace the property in case of a claim
10. Average clause
11. Contribution
12. Subrogation
13. Arbitration
14. All communications by insured to be in writing
15. Reinstatement of Sum Insured after a claim
CLAUSES
OMISSION TO INSURE, ALTERATIONS, EXTENSIONS CLAUSE
·Buildings, plant & machinery, furniture, fixtures and fittings can be
covered up to 5% of the sum insured without specific insurance.
·5% additional premium to be paid at inception.
·Within 30 days of expiry of policy all such additions, etc. to be declared
and premium on this account to be adjusted.
TEMPORARY REMOVAL OF STOCKS- CLAUSE

·Up to 10% of stocks in process can be covered whilst lying at un specified
locations undergoing process.
·10% extra premium to be paid in advance.
·No adjustment of premium.
·Stocks in excess of 10% of sum insured to be covered specifically.
REINSTATEMENT VALUE CLAUSE
·For building, plant & machinery, electric installations, F/F/F only.
·Sum Insured to represent Reinstatement value of the property insured.
·In the event of loss payment for Reinstatement Value of property of same
kind or type, improvements, if any, to be borne by the insured.
·Depreciation not to be deducted.
·Average clause is still applicable
·Reinstatement of property is compulsory.
·Within 6 months intimation to reinstate to be given to insurer & actual
Reinstatement to be completed within 12 months- extension possible with prior
approval of insurer. Otherwise it will follow normal indemnity without RIVbasis.
·Reinstatement possible at other site provided liability of the insurers is not
increased.
LOCAL AUTHORITIES CLAUSE

·Extension for Reinstatement Value policies endorsed by Local Authority
Clause. Wherever RIV Clause is attached Local Authority Clause is a
must to attach.
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·No additional premium for this extension.
·Covers additional cost to comply with local regulations in reinstating the
property.
·Liability if reduced under policy, it is reduced proportionately under Clause also..
·Applies only to the damaged property, prior to extension losses not covered,
additional tax, duty etc. not payable.
AGREED BANK CLAUSE

·To be applied when financial institution is interested.
·Any money payable to be paid to ‘Bank’.
·Notice by Co. to 'Bank' sufficient.
·Adjustment, settlement, arbitration- if made by 'Bank' binding on the insured.
·Alteration etc. in risk not to prejudice 'Bank' interest.
·Co. will be subrogated of 'Bank's rights of recovery from insured on payment.
DESIGNATION OF PROPERTY CLAUSE

·Available without additional premium
·Whatever designation is given to a particular item of property in Insured's
books of accounts is accepted as such by the Insurers.
DECLARATION POLICY
·Applicable for policy covering stocks only. To take care of frequent
fluctuations in stocks/stock values, Declaration Policy can be granted
subject to the following conditions (Standard Declaration Clause J to be
inserted).
·To take care of frequent fluctuations in the SI of stock (i.e. current asset)
this policy is issued.
·The minimum sum insured shall be Rs 1 crore in one or more locations
and the sum insured shall not be less than Rs. 25 lakhs in atleast one of
these locations. It is necessary that the declared values should
approximate to this figure at sometime during the policy year.
·Reduction in SI not allowed during the currency of policy.
·Maximum refund on downward adjustment 50% and no upward adjustment is
allowed.
·Basis of valuation- The basis of value for declaration shall be the Market
Value only anterior to the loss.
·If after occurrence of any loss it is found that the amount of last
declaration previous to the loss is less than the amount that ought to have
been declared, then the amount which would have been recoverable by
the insured shall be reduced in such proportion as the amount of said last
declaration bears to the amount that ought to have been declared.
Basis- Monthly declarations based on either
o The average of the values at risk on each day of the month or
o The highest value at risk during the month shall be submitted by the
Insured
latest by the last day of the succeeding month.
If declarations are not received within the specified period, the full sum insured
under the policy shall be deemed to have been declared. It is not permissible to
issue declaration policy in respect of: 1)·Insurance required for a short period.
·2)Stocks undergoing process.3)·Stocks at Railway sidings
FLOATER POLICY
·Floater Policy can be issued for stocks at various locations under one
Sum Insured (The Standard Floater Clause I, Annexure A shall be
attached to such policies).
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·Unspecified locations are not allowed.
·Premium= Highest rate applicable to any of such locations +10%
·Presence of "Kutcha" construction under any location may be ignored for rating.
·If stocks are in godown/ process blocks in same compound, no floater extra
premium.
·In case Stocks in a process block are covered under the Floater Policy and
the rate for the process block is higher than the storage rate, the process
rate plus 10% loading shall apply.
FLOATER DECLARATION POLICIES

·Floater Declaration policy (ies) can be issued subject to a minimum sum
insured of Rs 2 Crores and compliance with the Rules for Floater and
Declaration Policies respectively.
·The minimum retention shall be 80% of the annual provisional premium.
·Standard Floater Clause I and Declaration Clause J – both shall be
attached to Floater Declaration policy.
VALUED POLICY
When market value cannot be ascertained, agreed value policy can be issued for
work of art, curious, etc.
LONG TERM POLICY

It can be issued only for dwellings insured for minimum period of three years and
maximum can be for any number of years but discount is for maximum of 10
years .
Mid-term Cover may be granted for the deleted perils of STFI &/or RSMD.
Generally, it is not permissible to grant mid-term cover for STFI and/or RSMTD
perils. The following provisions shall apply, where such covers are granted
midterm:
Insurers must receive specific advice from the insured accompanied by payment
of the required additional premium in cash or by draft. This additional premium
shall not be adjusted against existing Cash deposits or debited to Bank
guarantee.
Mid-term cover shall be granted for the entire property at one complex
/compound/location covering the entire interest of the Insured under one or more
policy(ies). Insured shall not have any option for selection.
Cover shall commence 15 days after the receipt of the premium.
The premium rates as under shall be charged on short period scale (as per Rule
8)on full sum insured at one complex/compound/location covering the entire
interest of the insured for the balance period i.e. up to the expiry of the policy.
Payment of Premium: Premium shall be paid in full and shall not be accepted in
installments or by deferred payments in any form.
N.B:- It is not permissible to split sum insured of the same property under various
policies for different periods of insurance to derive advantage of deferred
installments for payment of premium. Notwithstanding the above, different
policies may be issued for stocks where circumstances necessitate issuance
ofsuch policies.
Minimum premium shall be Rs.100/- per policy except for risks ratable under
Section III and 'Tiny Sector Industries' under Section IV where
the minimum premium shall be Rs. 50/ per policy.
PARTIAL INSURANCE :
It is not permissible-
·to issue a policy covering only certain portions of a building.
Notwithstanding this, the plinth and foundations or only the foundation
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of a building may be excluded.·to issue a policy covering only specified
machinery (except Boilers),
parts of machine or accessories thereof housed in the same block/building.
·N.B. Where portions of a building and/or machinery therein are under
different ownership, it is permissible for each owner to insure separately
but to the full extent of his interest on the building and/or machinery
therein. In such cases, the Insured's interest shall be clearly defined in the
policy.
·Rates for Short Period Insurance: Premium on Pro-rata Basis+10%

N.B.: Extension of short period policy (ies) shall not be permitted..
CANCELLATION OF POLICY:·
At insured's option – Refund of Premium on Short period scale, provided there is NO
claim.
.At Insurance Company`s Option: Refund of Premium on Pro-rata.
FIXATION OF SUM INSURED:
·Finished goods –- Cost of manufacturing.
·Wholesaler - Purchase price from manufacturer.
·Retailer- purchase price from wholesaler
·Profit not to be included -
TARIFF PROVISIONS
·Section I--A·General Rules & Regulations
·Section II Standard Fire and Special Perils Policy—Section
·Section III Dwellings, Offices, Hotels, Shops Located outside the compounds of
Section IV Industrial/Manufacturing Risks
Section V ·Utilities located outside the compound of Industrial/Mfg. Risks
Section VI Storage Risks (Godown &/or in Open) outside the compound of
industrial/mfg. Risks.
·Section VII Tank Farms/Gas Holders outside the compound of
Industrial/MFG.Risks
Section VIII Add-on Covers
Annexure A—Standard Clauses.
Annexure B : Proposal Form
RATING OFSTADARD FIRE & SPECIALPERILPOLICY
RATING UNDER THE POLICY DEPENDS UPON THE FOLLOWING
FACTORS:-
·Occupancy
·Construction
·Fire Extinguishing Appliances.
·Option to delete RSMD &/or STFI Add on covers.
·Voluntary Higher Deductible (Excess) opted by Insureds.
·Claims experience
·Principle of 'One Risk One Rate' –whichever will be higher of Process
(Mfg.) risks, or ii) Storage risk,
·Entire property in one complex/ compound will attract the same rate
irrespective of kind of occupancy (Mfg./ storage/ utilities etc.).
·Dwelling exempted from the above rule.
·Two or more factories in the same compound /independent products – per
se rating if detached, otherwise the highest rate.
·At Insurer's option – Pro-rata.
·Replacement of policy by new annual policy with same or higher S.I.-Pro-rata
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SUM INSURED
FIRE INSURANCE POLICY-
S.I. represents the limit of liability under the policy.
·S.I. is the amount on which the premium is charged.
·Consequences of insuring for < or > than actual value of property is
underinsurance or over insurance.
SUM INSURED FOR BUILDINGS:·
Original cost- Inadequate for insurance purpose except when new.
·Book value- Not considered in Insurance (Adequate only for the first
year and not for succeeding years- considering the depreciation aspect).
·Market value- Present cost less depreciation for age and/ or usage.
·Reinstatement value- Present cost of replacement ( No depreciation applied)
Formulae: Market Value = Reinstatement Value less Depreciation.
·Land value not to be included.
·No fixed rate of depreciation- it depends upon the age and future expected life.
·Items like electrical installations and fittings to be included in the building value.
SUM INSURED FOR PLANT& MACHINERY:
·SI = Landed cost at site + installation charges.
·Reasonable depreciation depending upon the age and future life to be deducted.
·RIV policy has no depreciation.
·Items like accessories, electrical fittings and other things which are necessary
for running of the machinery to be included in the machinery value.
SUM INSURED FOR STOCKS
· Raw materials- Cost price including all the expenses like octroi, freight etc. to
bring up to the place.
FOR STORAGE RISKS RATING DEPENDS UPON OCCUPANCY- TYPE OF STORAGE

·Non- hazardous
·Category I goods
·Category II goods
·Category III goods
·Open storage
·Tank farms, etc.
For simple risk like dwellings, offices, hotels, shops etc. rating Per Se i.e. on its
own without considering other occupancies in the building.
FOR MULTIPLE OCCUPANCIES:-

·For Entire Building Tariff Rate Rs. 1.80%o less De-Tariff Discount.
·For Contents of individual owner - Per Se (Partially on-merit).
DISCOUNTS APPLICABLE
·For fire fighting appliances.
·For deletion of certain perils like STFI & RSMD
·If sum insured is more than 50 Crores – for claim experience.
·For opting voluntary deductibles.
·Discount for paid up capital.
·De-Tariff Discounts for good features/ technical features/ ISO
Certification or other Accreditations.
RATING OF RISKS IN MULTIPLE OCCUPANCIES
One of the principles of rating in fire insurance is that if risks with different degrees
of fire hazards are close to one another then the higher hazard risk may cause
spread of fire to other risks close by. Hence this factor should be considered while
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rating a risk. For simplification the tariff has allowed per se rating for contents ofeach insured as per their
occupancy.
SILENTRISK:
·Factories where no manufacturing / storage activities are carried out
continuously for 30 days or more.
·Premium rate is lower than working rate.
·The silent rates are not applicable if a risk goes silent following a loss under the
policy.
·Though it is cost saving it is not advisable to go for deletion of flood, etc.
unless the unit is situated in area where chances of flood are NILHowever this
should be a thoughtful decision.
·Riot etc. perils not to be deleted.
·Premium can be saved by deleting from the cover the value of plinths and
foundations of the buildings.
CLAIMS
DUTIES & RESPONSIBILITIES BEFORE LOSS:
·To intimate insurer-
·In case of any fall / displacement of building or any part without
operation of any insured peril within 7 days.
·Alterations of trade, manufacturing, occupational change immediately.
·If un-occupancy for more than 30 days.
·Change of interest by sale etc.
DUTIES & RESPONSIBILITIES AFTER LOSS (CLAIM PROCEDURE):

·Intimation to fire brigade, police, etc.
·Loss minimization exercise to be taken by the insured.
·Notice to insurer within 14 days.
·Co operation with surveyor when appointed.
·Lodge claim within 15 days with supporting documents.
·Furnish particulars of other insurances available with the affected properties.
·Enforce rights against third parties.
COST REDUCTION MEASURES

·Opt for clause like Designation of Property clause- No Extra premium.
·Insure non-stock items on Reinstatement Value basis.
·For non-stocks items opt for 'Omission to insure …. Clause' and see that
at the end of policy within 30 days the insured send the declaration.
·Go for stocks declaration policy for finished goods and raw materials,
send declarations in time to take the maximum advantage.
·Floater cum declaration policy decision depends upon the fluctuations in
the stock levels.
·When many locations are covered and when it is not possible to keep a
track of sum insured at every location, better to go for a floater policy.
·Opt for suitable voluntary excess.
·Keep fire fighting system in good working condition, obtain periodical certificates.
·Intimate to the insurer when in any unit production stops for more than 30 days.
·Advice decrease in sum insured immediately.
·As far as possible go for annual cover- avoid short period covers they are costly.
ISSUES RELATED TO FIRE CLAIMS:

·The processing and settlement of claims constitute one of the most
important functions in an insurance organization. Indeed, the payment of claims
may be regarded as the primary service of insurance to the client. The prompt
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and fair settlement of claims is the hall mark of good service to the insuring
public.
·The proper settlement of claim requires a sound knowledge of the law, principles
and practices governing insurance contracts and in particular, a thorough
knowledge of the terms and conditions of the standard policies and various
extensions and modifications there under. ·Finally we can conclude that prudent
underwriting of the policy ensures prompt settlement of claims which is main
stream to satisfy the insured.
INTIMATION OFCLAIM:
· Claim intimation is to be given in time along with estimated amount of
loss. In case, claim intimation is delayed, proper clarification is required
to be obtained. Further, amount of loss is not ascertainable instantly, then
sum insured of the affected property may be the point of consideration for
the purpose of appointment of surveyor.
·On receipt of claim intimation, the first step is to examine the policy from the
underwriting point of view to confirm the acceptance of liability under the policy.
·Claim is registered and claim no. is allotted and surveyor is appointed based on
the estimated amount of loss declared.
·As per present practice, the financial authority for appointment of surveyor is
same as the financial authority for settlement of claim.
·As per IRDAguide line, the surveyors are categorized as'A', 'B' and 'C' to survey
and assess the loss under Fire and Engineering Deptt. with the limit of under
noted estimated amount of loss.
·Category 'A' : Above Rs. 20.00 lacs (LOP-above 50.00 lacs)
·Category 'B' : Above Rs. 5.00 lacs ( do -upto 50.00 lacs)
·Category 'C' : Upto Rs. 5.00 lacs (no provision)
In case, Interruption Loss is reported, estimate amount of loss is to be added with
estimate amt. of loss under M.D. Policy and then surveyor would be appointed.
NOTE:
Under Fire Insurance variety of buildings, machinery, equipments and stocks are involved. In addition to a
competent surveyor it is recommended that the Company officials should visit the site of loss as far as
possible.If the estimated loss is within Rs.20,000/- and loss of profits claim is not involved, the
underwriting office shall have the discretion to waive an independent survey and settle the claim on the
basis of the claim form and other supporting documents after being satisfied that it is admissible under
the policy and that the amountclaimed is reasonable and consistent with the extent of damage. Where
necessary, an official in the underwriting office may inspect the damage.
PROCESSING OFCLAIMS:
The documents generally required for processing fire claims:
·Copy of the policy complete with term, conditions and ·warranties
·Section 64VB compliance confirmation
·(iii) Claim form duly completed by the insured
·(iv) Survey report which should include:
·Occurrence of loss ·Indication of the cause of loss Establishment of liability
Assessment of loss Confirmation of compliance of policy terms, conditions
Warranties Admissibility of the claim
Loss Assessment:
Gross Assessed Loss ·Less: Under insurance ·Less: Excess=·Net Loss Payable
C. Market Value Basis (Stock) –
·Gross Loss ·Less: Salvage ·Gross Assessed Loss ·Less: Under insurance
Less: Excess=·Net Loss Payable.
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Note: Under single loss, if Buildings, Machinery and Stocks are affected, only
ONE excess will be applicable. In other words, excess is applicable “per event
per Insured.
DISPOSALOFSALVAGE:
·Salvage is deteriorated faster. Therefore, disposal of salvage should be
undertaken on priority basis for and on behalf of the concerned parties without
waiting for the liability to be established with the help & under supervision of the
surveyor. This disposal of salvage guidelines should always be followed.
·Insured officials also need to visit the site of loss and hasten disposal of salvage.
It will also give moral support to the clients at the time of need.
·When the surveyor is required to undertake reconditioning and sale of salvage
on behalf of the Account/interest concerned, he may be paid fees and actual
expenses maximum up to 5% of value realized.
SETTLEMENT OF CLAIM WHERE ALL RECORDS REQUIRED FOR

THE ASSESSMENT OF THE CLAIMS ARE DESTROYED IN FIRE &/OR ALLIED PERILS RISK:
·In all such cases like what happened in Mumbai during July 2005 flood –settlement was generally be a
negotiated one because of non-availability of accounting records and other evidences.
·The surveyors should be advised to assess such losses on a realistic and reasonable basis after
the discussions with the insured (even with the
·Photographs
·Police Report* (i) Fire Brigade Report *
*these two reports may be waived if the survey report is clear and does not cause and doubt on
the occurrence as well as extent of loss.
CLAIMS ARISING OUT OF ACT OF GOD PERILS:
Documents like newspaper cuttings, photographs and meteorological reports are/helpful in substantiating
such losses. Where the incident is localized, not reported in the media, the surveyor should enquire about
the incident from local government/statutory authorities and is required to be supported by photographs
of the damage.
LOSSES REPORTED UNDER THE RSMD & TERRORISM.

·In case of isolated losses under the above endorsements, copy of the FIR lodged with the police
is required to be furnished.
Settlement in these circumstances would generally be a negotiated one because of non-
availability of accounting records and other evidences.Therefore, the surveyor should be advised
to assess such losses on a realistic and reasonable basis after discussions with the
insured/Bank/Financial Institution (if involved), and if required with suppliers/customers/statutory
bodies like tax authorities, excise authorities etc.
·At present post-loss inspection by LPA is not required. Instead Company Engineer/Officers may
carry out such inspection.
CLAIMS ASSESSMENT:
Market Value Basis: ·Gross Loss ·Less: Depreciation ·Less: Salvage ·Less: Under Insurance ·Less:
Excess.=·Net Loss Payable.
B. Reinstatement Value Basis:
Gross Loss ·Less: Salvage
Bank/ other Financial Institutions whenever involved).
If required with suppliers/ customers/ statutory bodies like Tax Authorities etc.
and definitely with the Insurers.
BUSINESS INTERRUPTION LOSSES:

·Claims need to be monitored regularly by the insurer to ensure that the
insured is doing the needful to minimize the period of indemnity as much
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as possible. If the insured has opted for more indemnity period more isthe likely
chances of higher liability for the insurers.
·In case the surveyor for MD loss is different from the LOP policy, coordination
between both the surveyors is definitely needed and effective control is to be
maintained by the insurer.
SURVEYOR APPOINTMENT:
·Points to be noted
·The surveyor must be holding a valid license
·Selection of surveyor should be restricted depending on the type of loss and the
nature of the subject matter involved
·When for assessment of some losses specific technical expertise is required -
consultants having such technical expertise normally areassociated with the
usual surveyors. The consultants' remuneration needs to be negotiated in
advance bearing the expertise in mind and the same will be in addition to the
survey fee payable to the surveyor.
·Category of Surveyors (i.e. A,B,C) will be checked and appointment of surveyor
must commensurate with this category & quantum of loss
·Appointment of joint surveyor may be done on the merits of the claim.
·No second surveyor may be deputed.
·Wherever the Loss of Profit losses are involved, the surveyors for the material
damage and the business interruption losses, if several, should be competent to
complement one another. One surveyor can be utilized for both the material
damage
Guidelines on the financial authority for appointment of surveyor ( i.e. H.O. /R.O./
D.O./ B.O.) will be as per scale followed by each insurer.
DOCUMENTS REQUIRED FOR PROCESSING OFCLAIMS:

·Policy copy complete with terms, conditions and warranties.
·Claim form duly completed by the insured
·Survey report indicating-·Cause of loss;·Establishment of liability ·Assessment of
loss ·Confirmation of compliance of policy terms& conditions, warranties and
endorsements.·Admissibility of the claim ·Photographs/ Bills & vouchers/ Police
report/ Fire brigade report may be submitted along with the survey report
Since under Fire Insurance variety of buildings, machineries, equipments and
stocks are involved, in addition to a competent surveyor it is recommended that
the insurer should visit site of losses reported as far as possible.
FOR CLAIMS ARISING OUT OF AOG PERILS:
·In addition to the documents specified earlier, other documents like
newspaper cuttings, photographs of the devastating damage and
meteorological reports are normally required in substantiating such
losses. When the incident is localized, not reported in the media or not
recorded by any Meteorological Department, the surveyor should
enquire about the incident from local Government / statutory authorities
and support the description of the occurrence and the loss by taking the
photographs of the damage.
·The surveyor should cover in his report the vivid details of the loss, confirm the
incident clearly & unambiguously - then only the documents of Meteorological
Report may be waived. Attention must be paid for concurrent policies & Agreed
Bank (Financial Institute) Clause
LOSSES REPORTED UNDER THE RSMD PERILS:

·In case of isolated losses under the RSMD Perils, copy of the first information lodged with the
police and their Final Investigation Report of police must be furnished. ·The surveyor needs to
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give detailed report on the occurrence and confirm that the loss/damage is admissible under the
policy.
·Loss / damage, if any, arising out of omission or commission not involving physical damage must
be segregated.
FOR “ON ACCOUNT” PAYMENTTO BE MADE:

Pending final assessment of a claim an “On Account” payment may be considered
subject to confirmation of the following:
·Loss due to occurrence of a peril covered by the policy .
·The establishment of liability leaves no doubt.
·The minimum liability based on assessment on market value basis (in
case of Building, P&M and accessories) that arises under the policy has been
specifically examined & stated by the surveyor.
PROCEDURES FOR FINAL PAYMENT:

·When the Final Survey Report is submitted by the surveyor the Claim Processing Official / Authority will
process and recommend the exact claim amount for approval by the Competent Authority (as per the
Financial Settlement Authority of various claims laid down by each insurer).·The insured / claimant should
be advised of the final amount of claim approved, with details thereof. ·The full & final discharge by the
insured (The bank/ financial institution's discharge – where required) must be obtained before release of
theamount of claim. ·If the loss or any part thereof is recoverable from a Third Party, a letter of
subrogation and/or assignment and Special Power of Attorney, to suit special cases, is to be sent to the
insured for completion on requisite stamp paper and return before settlement. ·In case of Close Proximity
Cases detailed investigation should be immediately instituted when a loss occurs in close proximity, i.e.
within 5 days for all classes of insurance under Fire & Engg. Dept. of the date of i nception of risk. The
close proximity mentioned here is in reference to new insurance or where there has been a break in
insurance. Close
proximity investigation should also be carried out in cases where it is found that insurance has been taken
out significantly later than it ought to have been taken, i.e. the risk has remained un-insured or
inadequately
insured prior to the insurance cover under reference.
PROCESS OF CLAIM SETTLEMENT IN CASE OF CO-INSURANCE:
·The leader will process the claim on behalf of all the co-insurers. A decision by the leader regarding
claim settlement, taken at the appropriate level according to the existing tenets of delegation of financial
authority, shall be final and binding on all the co-insurers. Claims decided at the appropriate level by the
leader will not be processed again by co-insurers, regardless of the amount. The leader will intimate to
the co-insurer details of a claim settled by him with copies of all relevant reports and documents. The
coinsurer will settle his share of the claim within 15 days from the date of receipt of such intimation from
the leader without any delay.
·In case of a claim requiring Board decision the decision taken by the Board of the leader shall be binding
on the other co-insurers. There shall be no separate need for the co-insurers to approach their respective
Boards for decision in respect of such claims. A suitable note may, however, be placed by the co-insurers
before their respective Boards for information in such cases.
APPOINTMENT OF INVESTIGATOR:
·Depending on the circumstances it may be necessary to appoint an investigator to verify the claimed
version of a loss. A separate surveyor appointment may be considered if any actual physical survey/
assessment are possible and called for. While referring such matter to R.O. from DO/BO, specific terms
of references must be mentioned clearly to justify its necessity. ·The letter appointing the investigator
should mention the terms ofreference and make it clear that the report should contain no references or
doubts unless these are well documented and substantiated and can stand the scrutiny of a court, if so
required. ·In the absence of any laid down schedule of fees for investigators, it is advisable to negotiate
and decide the fees to be paid in addition to expenses actually incurred before formally appointing the
investigator and that decided fee to be recorded in the letter of appointment. ·Investigator's fees are
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required to be negotiated and are to be paid in addition to the expenses actually incurred. The negotiated
fees to be recorded in the letter of appointment to avoid any dispute in future.
CLOSE PROXIMITY CLAIM:

Detailed investigation should be initiated immediately when a loss close proximity i.e. within 5
days of the date of occurs in inception of the risk. Reference is to be made to R.O. along with
underwriting details to verify the close proximity aspect. The Close Proximity aspect is applicable
for new business or where there has been a break in insurance.
RECTIFICATION OF POLICY AFTER A LOSS:

·When collection of additional premium is required, the same is to be charged on the affected
policy period only in which the claim has arisen. Rectification can be done by the authority
competent for settlement of the claim.
·Rectification of a policy after a loss is reported for reasons other than breach of condition/
warranty should be carried out as under: ·Where rectification involves collection of additional
premium, the additional premium may be charged only on the affected policy period in which the
claim has arisen.
·Rectification can be done by the Authority Competent for settlement of the claim.
REPUDIATION OF CLAIM:
If a claim warrants repudiation, the competent authority would be the authority competent to settle
the claim. Letter of repudiation must state the reasons and/or the policy condition under which it is
repudiated.
RE-OPENING OF CLAIM FILES:

Re-opening of the claim file can be done by the authority one step higher than the appropriate
claim settlement authority
Fire Loss of Profit (FLOP)
The Consequential Loss (fire) policy covers Loss of Gross Profit and /or increase in cost of working due to reduction in
turnover / output due to operation of peril covered in the Standard Fire & Special Perils Policy.
The material damage Policy indemnifies the loss to the property insured due to the operation of insured perils. Even if the coverage is
adequate and the claim settled on reinstatement value basis the insured still has other losses which may ruin him. These losses are the
loss of business and financial loss as the consequence of operation of the peril and at times are larger than the material damage loss.
In case of a major fire the insured that has opted for a policy on market value basis has to contribute a sizeable part of the reconstruction
cost due to:
Deduction on account of depreciation

Under insurance if the value at risk is more than the Sum insured
Items not covered in the policy
Excess as applicable
In addition to the above exclusion number 9 of Fire policy excludes “Loss of earnings, loss by delay, loss of market or other
consequential or indirect loss or damage of any kind or description whatsoever”.
Hence the need for Business Interruption Insurance or Fire Loss of Profit PolicyIt is very important to select the correct Period, Sum
Insured and excess after understanding the cover and due deliberation and debate.
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COVERAGES INCLUDES
Loss of Net Trading Profit

Standing Charges
Loss in Respect of Wages other than those covered by the Standing Charges
Increased Cost of Working
Auditor’s Fees
GENERAL EXCLUSIONS:
War, invasion, Act of foreign enemy, Hostilities or Warlike Operations (whether war be declared or not), Civil W ar
Mutiny, Civil Commotion assuming the proportion of or amounting to a popular rising, military rising, insurrection, rebellion, revolution, &
military usurped power.
Nuclear power reactions and Radiations.
EXTENSIONS
Suppliers Premises.
Customers Premises.
Failure of Public utility of power / gas/water supply
RATES
Rating depends on the
Average rate of contents of the process blocks under MD Policy

Type of process whether continuous or Batch type
Indemnity Period
To understand the policy we have to go to the basic economy of the business cycle:
Each unit of output or sale contributes towards recovery of fixed cost. These are the costs which keep on being incurred whet her the
business produces or not. In other words these are standing charges which shall continue to be incurred even if no output is being
achieved. Any output below this level would yield into a loss .The level at which these costs are recovered fully is the breakeven point.
Thereafter if higher output is achieved would business start making a profit? This can be denoted by the equation as under:
Sales – Variable Cost = Fixed cost + Profit
For each business the interest, depreciation and some other expenses like commitment charges for power, utilities services salary,
wages etc shall continue to be incurred during the period production is restored. In addition there are part of variable costs in the form of
commitment charges, security and salary of maintenance staff and other expenses which continue to be incurred.
1. The fixing of sum insures and percentage of semi variable costs included in arriving of Sum Insured has to be declared. The Sum
Insured is estimated and adjustable at the end of the policy period and is subject to Under Insurance.
2. The perils that can be covered under the policy have to be covered under a material damage policy. The policy has a condition that the
liability under this cover would be admitted only if the same has been admitted in the material damage policy.
The policy can be extended to cover:
Insured Property at other locations

Damage at the suppliers premises
Insurance Of wages
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Lay off / retrenchment compensation
Auditors fees
New Business clause
3. The period selected for this policy has to be selected with due care as the time taken to reinstate a loss after a major incident may
differ from industry to industry and the period selected should be adequate for the worst case scenario.
4. The policy has a standard excess and discount is available for opting for higher voluntary excess.
5. The rate charged for annual cover is 125% of the material damage rate for plants other than continuous process where the premium is
to be loaded with additional 25%.
NB: With one industry one rate the rating becomes simple but in case of per se rating or Petro Chemical Tariff the basic rate would be
the weighted average rate of the process blocks only
Special Exclusions to Business Interruption Policy
1. This Policy does not cover loss resulting from interruption of or interference with the business directly or indirectly attributable to :
1.1 Any restrictions on reconstruction or operation imposed by any public authority.

1.2 The lack of sufficient capital or funds with the insured for timely restoration or replacement of property lost destroyed or
damaged.
1.3 Loss of business due to causes such as suspension lapse or cancellation of a lease licence or order etc. which occurs after the
date when the items lost destroyed or damaged are again in operating condition and the business could have been resumed, if said
lease licence order etc. had not lapsed or had not been suspended or cancelled.
1.4 Damage to boilers economiser’s turbines or other vessels machinery or apparatus in which pressure is used or their contents
resulting from their explosion or rupture.
1.5 Electronic installations, computers and data processing equipment.
1.6 Damage resulting from :
a) Deliberate erasure loss distortion or corruption of information on computer systems or other records programs or software.
b) Other erasure loss distortion or corruption of information on computer systems or other records programs of software unless
resulting from an insured peril.
1.7 Mechanical or electrical breakdown or derangement of machinery or equipment.
2. This Policy does not cover the deductible stated in the Schedule which is to be borne by the Insured.
Basis of Insurance:
The cover provided under this Section shall be limited to loss of Gross Profit due to (a) Reduction in Turnover and (b) Increase in
Cost of Working and the amount payable as indemnity hereunder shall be
(a) In respect of Reduction in Turnover :
The sum produced by applying the Rate of Gross Profit to the amount by which the Turnover during the Indemnity Period shall fall
short of the Standard Turnover in consequence of the loss destruction or damage.
(b) In respect of Increase in Cost of Working:
The additional expenditure necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the Reduction in
Turnover which but for that expenditure would have taken place during the Indemnity Period in consequence of loss destruction or
damage, but not exceeding the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided
less any sum saved during the indemnity Period in respect of such of the charges and expenses of the business payable out of Gross
Profit as may cease or be reduced in consequence of loss destruction or damage.
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Industrial All Risk Insurance Policy
A comprehensive coverage for the Industrial risks having overall Sum Insured of Rs. 100 crores and above
in one or more locations in India. The Policy covers not only the Physical Losses or damage but also
consequential losses arising out of the business interruption due to accidental unforeseen physical loss or
damage to property.
Coverage Includes
Fire and Special Perils including Earthquake

Consequential Loss (Fire)
Machinery Breakdown, Boilers Explosion, Electronic Equipment
Machinery Loss of profit (optional)
Terrorism Damage (optional)
General Exclusions
Exclusion under Section 1 (Material Damage)
Faulty or defective design material or workmanship

Interruption of the water supply, gas, electricity or fuel system or failure of the effluent disposal system
Collapse or cracking of building
Act of fraud or dishonesty
Larceny
Coastal or river erosion
Normal settlement or bedding down of new structures
Any wilful act or wilful negligence on the part of the insured
Cessation of work, delay
War invasion or war like situation
Nuclear weapons/ionising radiations or contamination by radioactivity.
B. EXCLUDED PROPERTY
This Policy does not cover :
1) Money cheques stamps bonds credit cards securities of any description jewellery precious stones precious metals
bullion furs curiosities rare books or works of art unless specifically mentioned as insured by this policy.
2) Unless specifically mentioned as insured by this Policy goods held in trust or on commission documents manuscripts
business books computer systems records patterns models moulds plans designs explosives
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3) a) vehicles licensed for road use (including accessories thereon) caravans trailers railway locomotives or rolling stock
watercraft aircraft spacecraft or the like
b) property in transit other than within the premises specified in the Schedule
c) property or structures in course of demolition construction or erection and materials or supplies in connection therewith
d) land (including top-soil back-fill drainage or culverts) driveways pavements roads runways railway lines dams
reservoirs canals rigs wells pipelines tunnels bridges docks piers jetties excavations wharves mining property
underground off-shore property unless specifically covered.
e) livestock growing crops or trees
f) property damaged as a result of its undergoing any process
g) property undergoing alteration repair testing installation or servicing including materials and supplies therefore if
directly attributable to the operations of work being performed thereon unless Damage by a cause not otherwise
excluded ensues and then the Insurer will be liable only for such ensuing loss
h) property more specifically insured
i) property insured if removed to any building or place other than in which it is herein stated to be insured, except
machinery and equipements temporarily removed for repairs, cleaning, renovation or other similar purpose for a period
not exceeding 60 days.
j) damage to property which at the time of the happening of such damage is insured by or would for the existence of this
policy be insured by any marine policy or policies except in respect of any excess beyond the amount which would have
been payable under the marine policy or policies had this insurance not been effected
Exclusion under Section 2 (Business Interruption)

This policy doesn't cover loss resulting from interruption of or interference with business directly or indirectly
attributable to:
Any restriction or reconstruction or operation imposed by any public authority

The insured's lack of sufficient capital for timely restoration or replacement of property lost destroyed or
damaged
Electronic installation computer and data processing equipment
Deliberate erasure loss distortion or corruption of the information
Deductible stated in the schedule.
Special Exclusions to Section II :
1. This Policy does not cover loss resulting from interruption of or interference with the business directly or
indirectly attributable to
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1.1. any restrictions on reconstruction or operation imposed by any public authority
1.2. the Insured's lack of sufficient capital for timely restoration or replacement of property lost destroyed or
damaged
1.3. loss of business due to causes such as suspension lapse or cancellation of a lease licence or order etc.
which occurs after the date when the items lost destroyed or damaged are again in operating condition and
the business could have been resumed, if said lease licence order etc. had not lapsed or had not been
suspended or cancelled.
1.4. damage to boilers economisers turbines or other vessels machinery or apparatus in which pressure is
used or their contents resulting from their explosion or rupture.
1.5. electronic installations, computers and data processing equipment.
1.6. Damage resulting from :
a) deliberate erasure loss distortion or corruption of information on computer systems or other records
programs or software.
b) Other erasure loss distortion or corruption of information on computer systems or other records programs
of software unless resulting from fire lightning explosion aircraft, impact by any road vehicle or animals
earthquake, hurricane, windstrom flood, brusting overflowing discharging or leaking of water tanks apparatus
or pipes in so far as it is not otherwise excluded
unless caused by Damage to the machine or apparatus in which the records are mounted.
1.7. mechanical or electrical breakdown or derangement of machinery or equipment.
2. This Policy does not cover the deductible stated in the Schedule to be borne by the Insured.
Excess
Compulsory Excess
Material Damage Claims-Deductibles shall be 5% of the claim amount subject to minimum of Rs.5 Lakhs and Maximum
of Rs. 50 Lakhs.
Business Interruption Claims- Deductibles shall be three days Gross Profit subject to minimum of Rs. 5 Lakhs and
maximum of Rs. 50 lakhs.
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Voluntary Excess
Material Damage Claims- Insured may opt for higher excess for which suitable discounts in premium may be considered
ranging from 10% to 25%
Business Interruption Claims- Range for the discounts is from 5% to 25% for opting higher excess.
Rating
Material Damage Section:
FIRE - Rates as per the Standard Fire Special Perils Policy

Machinery Breakdown - 2.50%o.
Loss Of profit Section:
FLOP - as per Fire (LOP) Tariff less 10% discount

MLOP - to be referred to TAC.
NB: Based on favourable claims ratio, a discount upto 25% can be allowed.
a) Material Damage Claims
Deductible Discount
5% of the claim amount subject to minimum of Rs. 10 lakhs 10%
5% of the claim amount subject to minimum of Rs.15 lakhs 15%
b) Business Interruption Claims
Deductible Discount
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7 days Gross Profit subject to minimum of Rs.10 lakhs 5%
14 days Gross Profit subject to minimum of Rs. 15 lakhs 10%
1. Gross Profit
The amount by which
exceed
Working Expenses.
Note : The amounts of the opening and closing stocks and work in progress shall be arrived at in
accordance with the Insured's normal accountancy methods, due provision being made for depreciation.
2. Uninsured Working Expenses
The following variable expenses of the business are not covered by this policy :
A. turnover and purchase taxes
B. purchases (less discounts received)
C. carriage, packing and freight.
3. Turnover
The money (less discounts allowed) paid or payable to the Insured for goods sold and delivered and for
services rendered in the course of the business at the Premises.
4. Indemnity Period
The period beginning with the occurrence of loss destruction or damage and ending not later than the
22
Maximum Indemnity Period thereafter during which the results of the Business shall be affected in
consequence thereof. Provided always that the Company is not liable for the amount equivalent to the rate of
gross profit applied to the standard turnover during the period of Time Exclusion of ______ days stated in the
schedule.
5. Rate of Gross Profit
The Rate of Gross Profit earned on the turnover during the financial year immediately before the date of loss
destruction or damage
Annual Turnover
The Turnover during the twelve months immediately before the date of loss destruction or damage
Standard Turnover
The urnover during that period in the twelve months immediately before the date of loss destruction or
damage which corresponds with the Indemnity Period appropriately adjusted where the indemnity Period
exceeds twelve months to which such adjustments shall be made as may be necessary to provide for the
trend of business and for variations in or other circumstances affecting the Business either before or after
loss destruction or damage or which would have affected the Business had the loss destruction or damage
not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable
the results which but for the loss destruction or damage would have been obtained during the relative period
after the loss destruction or damage.
Provisions
Memo 1 - Benefits from Other Premises
If during the indemnity period goods are sold or services are rendered elsewhere than at the premises for the
benefit of the Business either by the Insured or by others acting on his behalf, the money paid or payable in
respect of such sales, or services shall be taken into account in arriving at the Turnover during the Indemnity
Period.
Memo 2 - Return of Premium
If the Insured declares at the latest nine months after the expiry of any policy year that the Gross Profit
earned during the accounting period of twelve months most nearly concurrent with any period of insurance,
23
was less than the sum insured thereon a pro rata return of premium not exceeding one third of the premium
paid on such sum insured for such period of insurance shall be made in respect of difference.
If any loss destruction or damage has concurred giving rise to a claim under this policy, such return shall be
made in respect only of so much of said difference as is not due to such loss destruction or damage
PETRO CHEMICAL TARIFF
Standard Fire and Special perils Policy shall be issued to cover manufacturing risks,
storage risks and miscellaneous blocks rateable under this Tariff.
Scope This Tariff is applicable for risks using Class A and/or Class B hydrocarbon/natural gas as basic
raw materials andb) where the total sum insured in one compound/complex exceeds Rs. 50 crores
andthe sum insured of plant(s) using hydrocarbon (Class A/Class B) /natural gas as basic raw materials
is in excess of 35% of the total sum insured of the risk.
Note 1: “Urea Synthesis Plant “ shall be rated under this Tariff and a basic rate
of Rs. 2.75%o shall apply. This rate is subject to warranties given under section 6 .
Note 2 : Following types of risks are excluded from the scope of this tariff :
(a) Plants whose basic raw materials are not hydrocarbons although
the units constituting the plant may be manufacturing Class A/B hydrocarbons or further processing them
to make a final product
(b) Bottling plants of LPG and similar materials located outside the refinery premises.
Note 3 : Risk(s) which was (were) rateable under erstwhile petrochemical tariff prior to the introduction
of revised petrochemical tariff (2001) may continue to be rated under this tariff if the insured so desire, as
a one time option.
1.2 All premises and/or goods rateable under this Tariff are subject to the provisions of All India Fire Tariff
unless otherwise specifically provided for..
2. Excess Clause :
This insurance does not cover 5% of the claim amount subject to minimum of Rs. 5 lakhs resulting from
each and every loss in Material Damage Insurance for all perils. The excess is applicable per event per
insured.
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2.1 Definitions
2.1.1 Plant:
The physical equipment required to produce a principal product and
the related by-products. A plant may consist of one or more number of
processing units to achieve the above objective.PETROCHEMICAL TARIFF 3
2.1.2 Process Unit:
Part of the plant that can be logically characterised as a separate entity with identifiable boundaries
separated from neighbouring areas either by a road or a stretch of land in which there are no other
processing equipment (like vessels, reactors, columns, pumps, compressors, etc.) excepting pipe racks
carrying process fluids from one block to another; and consisting of an integrated group of reactors,
heaters, furnaces and distillation columns together with their supports and enclosures, if any, and
including related appurtenances, compressors, control rooms, pumps, etc., all designed to perform an
unified processing operation.
2.1.3 Bulk Tankage/Tank Farms:
Tanks or group of tanks for bulk storage of raw or finished products. These shall not include intermediate
tanks which are those tied on with the process flow of the plant. In case the intermediate tanks are
separated by an adequate distance from the plant as stipulated in this Tariff, they should be treated at par
with bulk Tankage.
2.1.4 Utilities or Auxiliaries:
Plants such as Boilers, Water Pumps, Cooling Towers, Electric Generating Sets and Substations, Air-
conditioning or Refrigeration Units, Air or Inert Gas Compressors, Water Treatment Plants, Effluent
Treatment Plants and Air Liquefaction Plants shall be treated as Utilities or Auxiliaries.Note: Inert gas
plants excluding air Liquification plant and refrigeration units using flammable hydrocarbons (class A/B)
as refrigerants shall be treated as Plants.
2.1.5 Miscellaneous Buildings:
Offices, Canteen, Mechanical and Electrical Workshops, Storage, Laboratories, Bagging and Filling
Stations, Fire Stations, Change Rooms and open storage.
2.1.6 Flash Point: The minimum temperature at which a flammable liquid gives off flammable vapour as
determined by means of Abel/Pensky Martin closed cup method unless otherwise specified
.2.1.7 Classification of Flammable Materials
2.1.7.1 Class `A' Products are those having flash point below and upto 23 deg/centeg
2.1.7.2 Class `B' products are those having flash point above 23 deg.cC and upto 65
.2.1.7.3 Class `C' products are those having flash point above 65 C and upto 93C.
25
2.1.7.4 Class `D' products are those having flash point above 9C.
2.1.8 Unstable liquids/ Gases:
A liquid or gas may be termed as unstable if it has known characteristics of being readily subjected to
rapid chemical change under industrially approved storage or handling practices. Examples are
PETROCHEMICAL TARIFF-4 Ethylene Oxide, Acrylonitrite, Acrilene , Hydrogen Cyanide and the like.
However, substances which are subject to simple and harmless decomposition or polymerisation should
not be considered as unstable for the above purpose.
3. Silent Risks
The risk shall be deemed to be `silent' only if all hydrocarbons/flammable materials/combustible materials
have been removed and it has been purged (i.e. all apparatus and piping have been thoroughly cleaned)
before the inception of the silent period and would continue to be so throughout the silent period. The
plant is thus completely empty of hydrocarbons/flammable materials/combustible materials and is

completely out of use. This requirement shall be complied with by all the plants which are linked to
one another and which are not separated by a minimum distance specified in this Tariff. The silent period
excluding the period required to purge the plant of hydrocarbons/flammable materials/combustible
materials and the period of start-up, shall be atleast a continuous period of 60 days.
Note - For rating of `Silent risks', please refer Section 5 (5.4)
4. Minimum requirements for granting cover
4.1 Unless there are any extenuating circumstances, no insurance cover should be granted to risks falling
to be rated under this Tariff unless the following minimum requirements are fulfilled:
4.1.1 Fire Protection: Plant area should be protected with hand appliances in accordance with Section 4
of the Fire Protection Manual and hydrant service complying with rules for Ordinary Hazard Classification
of Fire Protection Manual.
Note 1 : Non-Petrochemical plants, which are constructed prior to 1.1.96 and do not comply with the
above Warranty may be exempted therefrom.
Note 2 : All hazardous storage areas and tank farms should be protected by hydrant service as above.
4.1.2 Electrical Installation throughout the premises should comply with Committee’s Regulation
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ENGINEERING INSURANCE
INTRODUCTION
The purpose of these Engineering Underwriting Guidelines is to provide the following:
A definition of Engineering Business.

Our underwriting philosophy and risk acceptance criteria.
The rules by which this business is to be underwritten.
PRODUCTS
Following is the list of products under Engineering Insurance, which are prevailing in the Market.
ERECTION ALL RISKS (EAR) INSURANCE

The Erection All Risks policy is a comprehensive insurance, which provides complete protection against all types of
risks associated with erection, testing, commissioning of machinery, plant and equipment during constructional stage.
Erection All Risks Insurance embraces a wide variety of plant and machinery at all levels of complexity, ranging from
the relatively straight forward positioning and connecting up of single manufactured items of equipment such as small
pumps or electric motors to complete major industrial complex such as a large power station or manufacturing facility.
The cover starts from the time of arrival of first consignment at site, normal storage and thereafter during erection,
testing, commissioning until the plant is successfully commissioned and handed over.
Insurance is on an 'all-risks' basis and in particular includes
Fire, lightning, explosion, aircraft damage

Riot, strike, malicious acts
Flood, inundation, storm, cyclone and allied perils
Landslide, subsidence and rockslide
Burglary and theft
Faults in erection
Human errors, negligence
Short circuiting, arcing, excess voltage
Electrical and mechanical breakdown
Collapse, damage due to foreign objects, impact damages
Any other sudden, unforeseen, accidental damages not explicitly excluded
The Sum Insured for the insurance should not be less than the Completely erected value of the property inclusive of
freight, customs duty and erection cost. Basically, insurance should be for the contract price.
Cover can be extended to include up to a limit chosen by you on the following on payment of additional premium
Third party liability

Cross liability
Earthquake
Cost of removal of debrisExpress freight, overtime charges
Air freight
27
Additional customs dutyEscalationOwner's surrounding property
Storage risk at Fabricator's PremisesMaintenance cover-Visits, Extended maintenance Dismantling
Terrorism.
GENERAL EXCLUSIONS:
War Invasion
Nuclear Reaction Nuclear Radiation or Radioactive Contamination
Insured's Contribution - Deductible

Willful Act or Willful Negligence of the Insured
Cessation of Work
Defective Material or Bad workmanship
Wear Tear Corrosion Oxidation Deterioration
Breakage of Glass
Disappearance or Shortage (Inventory Losses)
Design Defects
Loss of files, drawings, cash, cheques etc,.
Consequential Loss
It is standard to apply excess to claims as neither the client nor the insurer wishes to be troubled with handling small
losses.
To comply with a client's wishes (e.g. contract conditions, financial policy or risk management programme), higher
excess may be applied, with a suitable reduction in premium.
CONTRACTOR’S ALL RISKS (CAR)

Although a CAR policy may be taken by the principal or by the contractor, but usually, under the terms of
the agreement between the contractor and the principal, it is obligatory on part of the contractor to effect a
CAR insurance in their joint names before the commencement of the project.
The sum insured under the policy must not be less than the full value of the contract works at the
completion of contract inclusive of all materials, wages, freight, custom duties, construction cost and
material or items supplied by the principal.
TYPE OF PROJECTS
The CAR insurance policies generally issued for all types of Civil Engineering projects like dwellings, office
building, commercial building, go downs and warehouses, hospitals, schools, silos, steel structure, roads,
water supply lines, construction work, etc.
EXTENSION OF COVER
While the standard policy include all Acts of God perils, it has to be noted that the earthquake peril
is covered at an appropriate additional premium as per the erection tariff.
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Extension of basic cover to provide for extension of the policy period itself can be given at additional
premium per erection tariff.
Dismantling cover in case of already erected second hand plant can be given at an appropriate
additional premium as per tariff.
Additional premium are also chargeable for the removal of debris, contractor’s plant and equipment,
third party liability, if they are to be included in the sum insured.
MATERIAL DAMAGE SECTION
The Scope of insurance is virtually the same as that of EAR insurance. Under this section the insurer agreed
to indemnify for any loss or damage to the insured property by any cause other than those specifically given
under the exclusions.
The various exclusions under the CAR policy:
General exclusions (applicable to Section I and Section II).

Exclusions applicable to Section II - Third Party liability.
Exclusions applicable to Section I - Material Damage
are exactly the same as under EAR Policy.
MACHINERY BREAKDOWN (MB)

Machinery Breakdown insurance was developed to grant industry effective insurance cover for expensive
plant, machinery and mechanical equipment. This insurance is important for everyone who operates the
machines. This policy should support our property insurance and hence this insurance must not be granted
on a stand - alone basis.
SUBJECT MATTER INSURED
All types of machinery, plant, mechanical equipment and apparatus may be covered under MBD insurance,
such as for example power generating units, power distributing plant as well as production machinery and
auxiliary equipment, etc.
SCOPE OF COVER
By its nature, Machinery Breakdown Insurance is an “accident” insurance on machinery. Thus,
It covers unforeseen and sudden physical loss of or damage to the insured items.
Faulty design faults at workshop or in erection, defects in casting and material.
Faulty operations, failure of safety system / lubrication system / control system, lack of skill,
negligence.
EXTENSION AVAILABLE UNDER THIS POLICY
Third party liability.

Expediting costs.
Additional customs duty.
CLAIM PROCEDURE
The policy condition clearly lays down the procedure to be followed by an insured in the event of damage to
the insured machinery.
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It would be desirable to obtain a claim from duly completed and signed and to check that both the item and
the risk involved are insured under the policy. It is also essential at the outset to check whether there is any
machinery Loss of Profits insurance in force covering the damaged machinery. If so, immediate action is
necessary for minimizing the loss under the Machinery Breakdown policy.
A qualified engineer surveyor is generally deputed to assess the loss who will then scrutinize claims
estimates, determine the cause of the accident and certify that the charges claimed for repairs are
reasonable. An up - to - date copy of the policy should be made available to the Independent Surveyor, if
engaged in the initial stage so that he is fully acquainted with the terms, conditions and excess under the
policy.
LOSS SETTLEMENT PROCEDURE
Partial Loss Basis
In cases where the damage can be repaired, the basis of indemnification is the cost of restoration to working
order based on the customary daily rates of wages together with normal freight and erection costs and other
duties. Customs duties and dues, if any have been included in the sum insured. In such cases of repairable
damage, no deduction is made for wear and tear, depreciation, etc.
For parts with limited life, depreciation factor has to be taken into consideration.
Total Loss Basis
If the cost of the repair as mentioned above equals or exceeds the actual value of the machinery insured
immediately before the occurrence of the damage the settlement shall be made on Total Loss Basis.
Under total loss basis, 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, Overtime and holiday rates and
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 and overhauls carried out on the occasion of a repair are to
be borne by the insured. The Cost of provisional repairs will be borne by the insure if such repairs constitute
part of the final repairs and do not increase total repair expenses. The insurer will make payments only after
being satisfied by production of the necessary bills and documents, that the repairs have been effected or
replacement have taken place as the case may be.
POSITION AFTER A CLAIM
The insured is not entitled to abandon any property to the insured whether taken possession of by
the insurer or not.
From the day of the loss the sum insured for the remainder period of insurance is reduced by the
amount of compensation. To prevent under insurance during the remaining period of insurance the
sum insured must be reinstated. The premium will be calculated pro - rata from the day the
repaired item is again put to work up to the date of expiry of the policy.
BOILER AND PRESSURE PLANT (BPP)

This policy covers explosion of boilers and pressure plants but does not cover rupture of tubes inside the
boilers. Both these perils can be covered under MB policy and hence we should wherever possible include
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this in our MB portfolio since it would practically mean granting extra cover within the scope of tariff
provisions.
TYPES OF EXPLOSIONS
It can be broadly classified under two categories for the purpose of insurance cover.
Chemical Explosions
It is a matter of common knowledge that gun powder, similar explosive compound could cause explosion
under the influence of mechanical or thermal shocks. Highly inflammable fluids and dusts can cause
explosions if their concentration in the atmosphere exceeds the explosive limits. From the insurance
concept, these explosions are considered as very rapid form of combustion.
Physical Explosions
In respect of pressure vessels handling inert fluids such as steam, explosion can occur due to variation in
fluid pressure. The variation being only in physical form and there no chemical reaction or changes
responsible for such explosions as such these are classified as Physical Explosions.
SCOPE OF COVER
The policy covers pressure vessels both fired & unfired against the risk of explosion and collapse and
indemnified the insured against:
Damage to the boilers & / or other pressure plant.

Damage to surrounding property of the insured or the property held by the insured in trust for
which he is responsible.
Death or bodily injury to any person.
Damage to property not belonging to the insured or held in trust or on commission for which he is
responsible.
EXCEPTIONS OF POLICY
Loss or damage raising from fire and allied perils which can be covered separately.
Damage by chemical explosion except in recovery boilers and waste heat boiler.
Contractual liability, manufacturer’s supplier’s liability.
Loss arising from an existing defect.
War group of perils, social group of perils.
Nuclear perils.
Loss due to gross negligence.
Failure of individual tubes.
WARRANTIES
Under the BPP insurance the following warranties will be incorporated during the currency of the policy:
The Boilers and Pressure Plants described in the schedule are annually inspected by inspectors
appointed by the Government except where there is no statutory requirement for Government
inspection; the inspections are to be carried out by independent competent persons.
The Boilers and pressure plant described in the schedule shall only be operated by attendants
holding a valid certificate of competency issued under the appropriate Boiler Act.
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The insured shall be in possession of the unqualified permission in writing of the competent
inspecting authority to operate the said boilers and pressure plant. If the maximum pressure of load
upon safety valve immediately prior to any explosion or collapse was in excess of that stipulated by
the said authority the insured shall not be entitled to any compensation or indemnity under this
policy in respect of such explosion or collapse.
OTHER EXTENSIONS AVAILABLE UNDER THIS POLICY
Steam Pipes
The portion of the steam pipe up to the safety valve alone is deemed to form integral part with boiler. The
remaining portions of the steam pipes can be included under this extension.
Expediting Costs
Expenses towards overtime, night work, work on public holidays, express freight can be included under this
extension. The same will be indemnified after a loss provided these expenses are incurred following a loss
due to an insured peril under this policy.
Air Freight
Expenses towards air - lifting parts of the boiler following a loss can be included under this extension.
Policy Period
This policy is issued on annual basis.
CLAIM PROCEDURE
In the event of a loss the insured should comply with the following:
Immediately notify the insurer giving an indication as to the nature and extent of loss.
Take all reasonable loss minimization steps.
Preserve the salvage.
Furnish all information and documentary evidence as required by the insurer.
The insured may proceed with the repair of any minor damage not exceeding Rs.2500/-.
Claim form duly completed and signed should be sent to the insurer.
Generally, claims are for substantial amounts and require great care during investigation and negotiations.
It is necessary to investigate the cause of the damage and ascertain whether the claim falls under the policy
definition of 'Explosion' or 'Collapse'. The certificate issued by the Government Inspector of Boiler must be
checked to ensure that the accident occurred within its validity period and that all its terms and conditions
have been complied with. It is preferable to have assessments of Boiler Explosion claims carried out by
qualified engineer surveyor who can determine the exact cause of the loss and arrive at a fair assessment as
to the quantum of claim payable.
CONTRACTOR’S PLANT & MACHINERY (CPM)

Whilst it is possible to have the Contractor’s plant and machinery covered under an EAR or CAR policy at
specific project sites, CPM policy has been designed to provide a cover on an annual basis to a contractor
who may be using his plant and machinery at different projects during the course of the year. The cover
under a CPM policy is not limited to a specific project site and is operative at all sites wherever the plant and
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machinery is in use and even while the same is lying at the contractor’s own premises. We therefore have to
ensure that all the sites where the insured items are being used are mentioned on the face of the policy.
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:
Fire, lightning, external explosion, earthquake, flood, inundation, subsidence, landslide and
rockslide.
Storm, tempest, hurricane, typhoon and tornado.
Burglary, theft, riot and strike and malicious damage.
Accidental damage while at work due to faulty man - handling, dropping or falling, collapse, collision
and impact.
EXCLUSIONS
The insurer will not indemnify in respect of loss or damage given below:
Excess as stated in the policy schedule, which has to be borne by the insured in any one
occurrence. If more than one item is lost or damaged in one the occurrence insured has to bear the
highest single excess applicable to such items.
Loss or damage due to electrical or mechanical breakdown, failure breakage or derangement
freezing of coolant or other fluid, defective lubrication or lack of oil or coolant, but if as a
consequence of such breakdown or derangement an accident occurs causing external damage, such
consequential damage will be indemnifiable.
Loss of or damage to replaceable parts and attachments such as bits, drills, knives or other cutting
edges, saw blades, dies, moulds, patterns, pulverizing and crushing surfaces, screens and sieves,
ropes, belts, chains, elevator, and conveyor bands, batteries, tyres, connecting wires and cables,
flexible pipes, joining and packing material.
Loss or damage due to explosion of any boiler or pressure vessel subject to internal steam or fluid
pressure or of any internal combustion engine.
Loss of or damage to vehicles designed and licensed for general road use unless these vehicles are
exclusively used on construction sites.
Loss or damage to the hull and machinery of water borne vessels.
Loss or damage while in transit from one location to another location.
Loss or damage due to wear and tear corrosion, rust etc.
Loss occurring while an insured item is undergoing any test.
Loss to any plant or machinery working underground.
Losses arising out of war and war like perils and due to nuclear radiation or radio active
contamination.
Damage due to faults or defects existing at the time of commencement of the policy with the
knowledge of the insured.
Any willful act or gross negligence of the insured resulting in a loss.
Loss for which the supplier or the manufacturer is responsible.
Loss discovered only at the time of taking the inventory or during routine servicing.
Loss to plant and machinery mounted or operated on a floating vessel / barge.
CLAIM PROCEDURE
Claims under this policy may arise due to many causes, e.g. fire, riot, flood, storm, earthquake, theft,
accidental damage to contractors plant and machinery. Proper claims forms should be used when processing
the claims. The insurer is not liable for additional cost incurred for alteration or improvement carried out at
the time of repairs.
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Insurers generally insist upon immediate notification of any claim for this class of insurance in order that the
cause and circumstances of the loss may be ascertained and repair / replacement costs checked.
All theft claims require careful investigation conjunction with the local police authority. Losses discovered
only at the time of taking inventory are not covered under this policy. Salvage materials should be disposed
off, preferably on 'as is where is' basis at best available prices and this will minimize the loss to a certain
extent.
ELECTRONIC EQUIPMENT INSURANCE (EEI)

The Electronic Equipments such as computers, Micro - processors, Word - processors, Tele - communication
equipments. Machine meant for medical use and other misc. Equipments like films, television studio
equipments can be covered under this policy. This scope of this policy is ALL RISK.
SCOPE OF COVER
This insurance indemnifies the insured against any physical loss or damage due to following
Location Perils
Fire, lighting, explosion, flood, storm, etc.
Break Down
Any electrical / mechanical breakdown.
Faults
Faulty design, faulty materials, faults in manufacturing / assembly erection.
Effect of Moisture
Damage due to moisture and humidity.
Carelessness
Damage due to faulty / careless / negligent operation by employees.
Riot & Strike
Riot & strike damage and malicious damage.
Burglary
Loss or damage due to theft or burglary / house breaking.
SUBJECT MATTER INSURED
This policy is recommended for the following instruments:
Electronic data processing equipment comprising central processor with flexible programmability.
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Peripheral equipments such as readers, printers, tape or card punchers or sorters.
Tapes, and discs.
Auxiliary equipment such as air conditioning, heating and power conversion or main power control
plant.
Electronic office equipments, material testing and research equipment.
Electro medical installations.
Telecommunication equipment, etc.
Computerized numerical control system used in connection with production machinery.
INSURED PARTIES
The insured can be either the owner or the hirer of the electronic equipment. The insurance protects, on the
basis of the insurance conditions.
The Owner
As operator against material damage, for which the manufacturer is not responsible under a guarantee.
The Hirer
Against material damage for which, he is responsible either legally or through a leasing agreement.
GENERAL EXCLUSIONS
Inherent Vice
Wear & tear, loss due to defects known to the insured at the time of commencement of the policy.
Manufacturers responsibility:
The loss / damage for which the suppliers are responsible under guarantee.
Willful Act
Due to any willful act or willful negligence of the insured or his representatives.
Cessation
Cessation of work whether total or partial.
Expected Perils
War, invasion and the like, nuclear reaction / radiation, loss or damage due to interruption caused by the
failure of any gas, water or electricity service or supply.
Functional Failure
Maintenance costs.
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Hired Equipments
For the equipment hired for which the owner is responsible.
Minimum Deductibles applicable for Fire and Engg Policies
With business incepting from 1stApril’2011. In case of new business and renewals the minimum
deductibles under the policies in fire and engg portfolio would be as under:
FIRE INSURANCE:-
1.1. SF &SP Policy ( except dwelling with Individual Owners ).
1.2. Policies having Sum Insured up to INR ….. crs per location- 5% of the claim amount subject to
minimum of RS. ………./-
1.3.
Fire and FLOP IAR- Per PD & BI
Up to -10 crs Min- Rs. 10000 FLOP:petro/non petro MLOP
>10 crs -100 crs Min- Rs. 25 000 Mini- 5 lacs 7-days / 14 days 14 days
>100 crs -1500 crs Min. Rs. 5 Lacs Mini- 10 Lacs 7-days / 14 days 14 days
>1500 CRS -2500CRS Mini.Rs. 25 Lacs Mini-25 lacs 7-days / 14 days 14 days
> 2500 CRS Min.Rs. 50 lacs Mini-50 lacs 14 days 21days
Other – Petro Chemicals
Petro Chemicals
PD- property damage
BI- business interruption
Business Interruption ( FLOP).

Other than Petro Chemical Risks- 7 days of Gross Profit
Petro Chemical Risks - 14 days of Gross Profit.
*The limit for sum insured SI combined limit for MD + BI per location.
Cellular Network Policies.
Material damage -50% of claim amount subject to a minimum of INR 5 LACS.
Business Interruption :- 3 Days of Gross Profit.
CAR –INSURANCE/EAR- Insurance (other than combined cycle power plants/gas based power plant)
SI- up to 1500 crs All deductible appearin g in TAC tariff would be Increased 5 times min- amt
SI > 1500 crs- 2500 crs All deductible appearin g in TAC tariff would be Increased 10 times min-amt
SI> 2500 crs. All deductible appearin g in TAC tariff would be Increased 15 times min-amt
ALOPs.Time excess 30 days for 1styear 1 day for each erection month In + 12 mns not exceed 60day
Specialized Risk = All works- water, dam Hydro power projects Tunnel, irrigation systm-15 ti
ALOPs.Time excess 45 days for 1styear 1 day for each erection month In + 12 mns not exceed 75day
combined cycle power plants/gas based power plant

50 MW- 200MW 5% of claim amount subject to minimum For TEST- 60 lacs- &20 Lacs for Normal exe
200 - 300 5% of claim amount subject to minimum For TEST- 100 lacs &50 Lacs for Normal exe
 300 5% of claim amount subject to minimum For TEST- 125lacs-&75 Lacs for Normal exe
ALOPs.Time 45 days for 1styear 1 day for each erection month In + 12 mns not exceed 75days
excess
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MACHINERY BREAK DOWN
1% of SI for each machine subject to minimum of RS. 2,500/-
Note:- SI of the machine should be declared as a whole and should not be apportioned towards parts of
machine.
Business Interruption ( MLOP)- 14 days of Standard Gross Profit.
Contractors plant & Machinery- For all Machinery under Group . I.II,II,IV including cranes above 10
tonne capacity under- Group III.
EXCESSES
Value of Equipments For Claims arising out of AOG perils For Claims arising out of other than AOG perils
Individual value upto1 lac 10% of SI subject minimum Rs. 5000 2% of SI subject minimum Rs.1500
IV > 1 lacs- upto 5 lacs 5 % of SI subject minimum Rs.10000 1.50%of SI subject minimum Rs.2000
IV > 5 lacs-uptp10 lacs 3 % of SI subject minimum Rs. 25000 1.25%of SI subject minimum Rs.7 500
IV > 10 lacs- upto 25 lacs 2% of SI subject minimum Rs. 30000 1.00%of SI subject minimum Rs.12 500
IV > 25 lacs- upto 50 lacs 1 % of SI subject minimum Rs. 50000 1.00%of SI subject minimum Rs. 50 000
IV > - 5 0 lacs 1 % of SI subject minimum Rs. 50000 1.00%of SI subject minimum Rs. 50 000
Boom Section- 20% of claim amount subject to minimum of Rs. 25,000/-
For machinery Under the group V Rs. 2,500/- Flat excess.
Electronic Equipment Insurance- As per Tariff.
Boiler insurance- 5% of claim amount subject to a minimum of Rs. 10,000/-
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MARINE CARGO INSURANCE
(The Marine Insurance Act, 1963)
The fundamental principles of Marine Insurance are drawn from the Marine Insurance
Act, 1963*
As in all contracts of insurance on property, the contract of Marine Insurance is based on
the
fundamental principles of Indemnity, Insurable Interest, Utmost Good Faith, Proximate
Cause, Subrogation and Contribution. Practitioners of Marine Insurance must familiarize
themselves with the Act and uphold these Principles when negotiating Contracts and
settling claims under the contract.
INDEMNITY:
The object of an insurance contract is to place the assured after a loss in the same
relative financial position in which he would have stood had no loss occurred. By the
Marine Insurance Act, the indemnity that is provided is “in manner and to the extent
agreed.”
A “commercial” indemnity is thus provided. Because insurers cannot undertake to
reinstate or replace cargo in the event of loss or damage, they pay a sum of money,
agreed in advance,
that will provide reasonable compensation. In practice, this is achieved by agreeing in
advance the insured value, based on C.I.F., value of the goods to which it is customary
to add an agreed ten percent which is intended to include the general overheads and
perhaps a margin of profit on the transaction. Upon total loss of the entire cargo by an
insured peril the sum insured is paid in full, and if part of the cargo is a total loss, the
appropriate proportion of the insured value is paid.
Claims for damage are settled by ascertaining the percentage of depreciation and
applying this percentage to the insured value. The percentage of depreciation is calculated by
comparing the No table of authorities entries found.
value the goods would realize in their damaged state with their gross sound value on the
date of the sale. The same date is used for both values in order to avoid distortion of the
result arising from fluctuations in the market prices.
In Marine insurance it is customary to issue agreed value policies. The agreed value is
conclusive between the Insurer and the Assured except in the event of the unintentional
38
error or where fraud is alleged. “Duty” and “Increased Value” policies are not agreed
value policies. They provide pure indemnity only.
INSURABLE INTEREST:The Marine Insurance Act contains a very clear definition of insurable
interest. It states that there must be a physical object exposed to marine perils and that the
insured must have some legal relationship to the object, in consequence of which he benefits by
its preservation and is prejudiced by loss or damage happening to it or where he may incur
liability in respect thereof.
Whereas in fire and accident insurance an insurable interest must exist both at inception
of the * Refer Marine Insurance Act, 1963 in Appendix ‘A’
contract and at the time of loss, the interest in respect of a marine contract must exist at
the time of loss, though it may not have existed when the insurance was effected. This is
necessary when one considers the mercantile practice under which there is every
possibility of sale and purchase of goods in the course of transit. However, the MIA has
provided that where the goods are insured “lost or not lost” the assured may recover the
loss, although he may not have acquired his interest until after the loss, unless at the
time of effecting insurance he was aware of the loss and the
insurer was not. If the assured had no interest at the time of the loss, he cannot acquire
interest by any act or election after he is aware of the loss. Arising from this, both a
contingent and a
defeasible interest are insurable. A partial interest is also insurable.
A marine cargo policy is freely assignable either before or after loss provided of course
the
assignee has acquired insurable interest.
The type of sale contract also determines the Insurable Interest. A separate chapter has
been devoted to most common terms of contracts known as “Inco Terms”. The terms
dictate which of the two parties to the contract, is responsible to insure the goods.
GOOD FAITH:
Every contract of insurance is a contract “uberrimae fidei” i.e. one which requires utmost
good faith on the part of both the insurer and the assured. In Marine Insurance, it is the
duty of the
proposer to disclose clearly and accurately all material facts related to the risk. A
material fact is a fact, which would affect the judgement of a prudent Underwriter in
39
considering whether he would enter into a contract at all, or enter into it at one rate of
premium or another and subject to what terms. Apart from the duty of disclosure, the
insured must act towards the insurer in good faith throughout the duration of the
contract. It is customary to classify breaches of the duty of utmost good faith under four
headings: nondisclosure, concealment, innocent misrepresentation and fraudulent
misrepresentation. The first
two are termed passive breaches and the other two are termed active breaches. The
Marine
Insurance Act places a statutory duty on the assured to disclose to the insurer all
material
circumstances known to him or which he should know in the ordinary course of his
business.
Whether non-disclosure is intentional or inadvertent, the effect is the same and the
policy may be avoided, although deliberate and material non-disclosure would usually
amount to fraud and
render the policy void. Over-valuation, for example, must be communicated to the
insurers; if it is not so communicated, it is a concealment of a material fact and voids the
insurance.
PROXIMATE CAUSE:
“Proximate cause means the active, efficient cause that sets in motion a train of events
which brings about a result, without the intervention of any force started and working
actively from a new and independent source.”
Insurers are liable if an insured peril is the proximate cause of the loss. If an insured peril
is only the remote cause of the loss, the proximate cause being an uninsured or
excepted peril, the insurers are not liable.
The proximate cause is not necessarily that which is proximate in time, but that which is
proximate in efficiency. It is the dominant, effective and operative cause of the loss.
In case of concurrent causes, following rules apply: -
a) If one of the causes contributing to the loss is an insured peril, and no excepted peril
is
involved, the loss is covered.
b) If one of the causes is an excepted peril, the loss is not covered at all, unless the
consequences
40
of the insured peril can be separated from those of the uninsured peril, in which event
the
former, but not the latter, is cover.
SUBROGATION:
“Subrogation is the right which one person has of standing in place of another and
availing himself of all the rights and remedies of the other, whether already enforced or
not.”
Subrogation is a corollary of the principle of indemnity and the right of subrogation
therefore
applies only to policies, which are contracts of indemnity. Subrogation is a matter of
equity, the purpose of which is to ensure that the insured is not over-indemnified for the
same loss.
(a) In Marine insurance, where an insurer pays for a total loss:
i) he is entitled to take over the interest of the assured in whatever may remain of the
subject-matter so paid for (abandonment);
ii) and he is subrogated to all the rights and remedies of the assured as from the time of
the loss (subrogation)
(b) Where an insurer pays for a partial loss, he acquires no title to the subject-matter
insured or to such part of it as may remain, but he is subrogated to all the rights and
remedies of the
assured as from the time of the loss, and in so far as the assured has been indemnified.
In marine insurance subrogation applies only after payment of a loss. The insurer is
entitled to recover only up to the amount, which he has paid, in respect of rights and
remedies.
On payment of a total loss, the insurer is entitled to assume rights of ownership of the
subject matter
insured. The right is conferred upon him by virtue of abandonment (not by rights of
subrogation) and the effect is that if the property is subsequently salvaged or recovered
the
insurer is entitled to retain the whole of the proceeds of sale even though they may
exceed the sum paid out under the policy, always assuming the property is fully
insured and that the assured was not bearing part of the risk himself.
In addition to this right of exercising ownership of the property, the insurer is subrogated
to “all rights and remedies of the assured” as from the time of casualty causing the loss.
This simply means that if the loss has been caused by the negligence of a third party,
against whom the
41
assured has the right of action in tort – say, against a carrier or bailee – then the Insurer
is entitled to succeed to any recovery (whereby the loss is reduced) the assured may
effect from such third party. This principle applies equally to total and partial losses and
has nothing whatever to do with the doctrine of abandonment.
0
CONTRIBUTION:
Sometimes one risk may be covered by more than one insurer. In that case it is
desirable not only
to ensure that the insured does not receive more than an indemnity but that any loss is
fairly
spread between all the insurers involved. The principle of contribution is a method of
distributing
fairly among insurers the burden of claims for which each shares some responsibility.
Following factors are required to exist before a loss is shared among the insurers
a) There must be at least two policies of insurance.
b) All insurances must be policies of indemnity.
c) The policies must cover: -
i) The same interest
ii) The same subject matter
iii) The same peril
d) A loss must occur.
e) The policies must be in force at the time of loss.
f) All policies must cover the loss.
g) The policies must be legally enforceable.
Marine Insurance Act provides that –

a) Were the assured is over-insured by double insurance, each insurer is bound, as
between
him and the other insurers, to contribute rateably to the loss in proportion of the amount
for
which he is liable under his contract.
b) If any insurer pays more than his proportion of the loss, he is entitled to maintain an
action for contribution against the other insurers, and is entitled to recovery from them of
their share of the loss.
c) Where the assured receives any sum in excess of the indemnity allowed, he is
deemed to
42
hold such sum in trust for the Insurers, according to their right of contribution among
themselves.
THE SUBJECT MATTER OF INSURANCE:
The subject matter of insurance may be any property of intrinsic value, or any event the
happening
of which will cause the loss of a legal right or the creation of a legal liability. The subject matter
is
described in the policy but it should be remembered that insurance is operative is respect of the
interest of the assured in the property concerned and it is this interest which is the subject
matter
of the insurance contract. It is the pecuniary interest of the insured in the property exposed to
peril
that is insured. Therefore, while the subject matter of the insurance may be property or liability,
the
subject matter of the contract is the insurable interest therein.
INSTITUTE CARGO CLAUSES (A), (B) and (C)

RISK COVERED (Clause No. 1)
Summary of Institute Cargo Clauses Coverage
Loss or Damage Caused by: Clause A Clause B Clause C
General Average   
Both to Blame Collision   
Fire or explosion   
Vessel or craft being stranded   
Overturning or derailment of land conveyance   
Collision or contact of vessel, craft or conveyance with any
  
external object other than water
Discharge of cargo at a port of distress   
General average sacrifice   
Jettison   
Earthquake, volcanic eruption or lightning  
Washing overboard  
Entry of sea, lake or river water into vessel, craft, hold,
 
conveyance, container, liftvan or place of storage
Total Loss of any package lost overboard or dropped whilst
 
loading on to, or unloading from, vessel of craft
Theft or Pilferage 
Contamination (own damage) 
43
Rain &/or fresh water damage 
EXPLANATION FOR THE TABLE.

1. - Risks Clause PLEASE REFERE ABOVE TABLE.
2 - This insurance covers general average and salvage charges,
adjusted or determined according to the contract of affreightment
2. - General Average
and/or the governing law and practice, incurred to avoid or in
Clause
connection with the avoidance of loss from any cause except those
excluded in Clauses 4, 5, 6 and 7 or elsewhere in this insurance.
3 - This insurance is extended to indemnify the Assured against such
proportion of liability under the contract of affreightment "Both to Blame
3. - "Both to Blame Collision" Clause as is in respect of a loss recoverable hereunder. In
Collision" Clause the event of any claim by shipowners under the said Clause the
Assured agree to notify the Underwriters who shall have the right, at
their own cost and expense, to defend the Assured against such claim.
EXCLUSIONS
4. - In no case shall this insurance cover
4.1 loss, damage, or expense attributable to willful misconduct of the
Assured
4.2 ordinary leakage, ordinary loss in weight or volume, or ordinary
wear and tear of the subject-matter insured
4.3 loss damage or expense caused by insufficiency or unsuitability of
packing or preparation of the subject-matter insured (for the purpose of
this Clause 4.3 "packing" shall be deemed to include stowage in a
container or liftvan but only when such stowage is carried out prior to
4. - General attachment of this insurance or by the Assured or their servants)
Exclusion Clause 4.4 loss damage or expense caused by inherent vice or nature of the
subject-matter insured
4.5 loss damage or expense proximately caused by delay, even though
the delay be caused by a risk insured against (except expenses
payable under Clause 2 above)
4.6 loss damage or expense arising from insolvency or financial default
of the owners managers charterers or operators of the vessel
4.7 loss damage or expense arising from the use of any weapon of war
employing atomic or nuclear fission and/or fusion or other like reaction
or radioactive force or matter.
5.1 In no case shall this insurance cover loss damage or expense

5. - Unseaworthiness
arising from unseaworthiness of vessel or craft, unfitness of vessel craft
and Unfitness
conveyance container or liftvan for the safe carriage of the subject-
Exclusion Clause
matter insured, where the Assured or their servants are privy to such
44
unseaworthiness or unfitness, at the time the subject-matter insured is
loaded therein.
5.2 The Underwriters waive any breach of the implied warranties of
seaworthiness of the ship and fitness of the ship to carry the subject-
matter insured to destination, unless the Assured or their servants are
privy to such unseaworthiness or unfitness.
6 In no case shall this insurance cover loss damage or expense caused

by
6.1 war civil war revolution rebellion insurrection, or civil strife arising
6. - War Exclusion therefrom, or any hostile act by or against a belligerent power
Clause
6.2 capture seizure arrest restraint or detainment (piracy excepted),
and the consequences thereof or any attempt thereat
6.3 derelict mines torpedoes bombs or other derelict weapons of war.
7. - In no case shall this insurance cover loss damage or expense

7.1 caused by strikers, locked-out workmen, or persons taking part in
7. - Strikes Exclusion labour disturbances, riots or civil commotions
Clause 7.2 resulting from strikes, lock-outs, labour disturbances, riots or civil
commotions
7.3 caused by any terrorist or any person acting from a political motive.
DURATION
8. - This insurance attaches from the time the goods leave the
warehouse or place of storage at the place named herein for the
commencement of the transit, continues during the ordinary course of
transit and terminates either
8.1.1 on delivery to the Consignees' or other final warehouse or place
of storage at the destination named herein,
8.1.2 on delivery to any other warehouse or place of storage, whether
prior to or at the destination named herein, which the Assured elect to
use either
8.1.2.1 for storage other than in the ordinary course of transit or
8. - Transit Clause 8.1.2.2 for allocation or distribution, or
8.1. on the expiry of 60 days after completion of discharge overside of
the goods hereby insured from the oversea vessel at the final port of
discharge, whichever shall first occur.
8.2 If, after discharge overside from the oversea vessel at the final port
of discharge, but prior to termination of this insurance, the goods are to
be forwarded to a destination other than that to which they are insured
hereunder, this insurance, whilst remaining subject to termination as
provided for above, shall not extend beyond the commencement of
transit to such other destination.
8.3 This insurance shall remain in force (subject to termination as
45
provided for above and to the provisions of Clause 9 below) during
delay beyond the control of the Assured, any deviation, forced
discharge, reshipment or transhipment and during any variation of the
adventure arising from the exercise of a liberty granted to shipowners
or charterers under the contract of affreightment.
9 If owing to circumstances beyond the control of the Assured either the

contract of carriage is terminated at a port or place other than the
destination named therein or the transit is otherwise terminated before
delivery of the goods as provided for in Clause 8 above, then this
insurance shall also terminate unless prompt notice is given to the
Underwriters and continuation of cover is requested when the
insurance shall remain in force, subject to an additional premium if
9. - Termination of required by the Underwriters, either e§46
Contract of Carriage 9.1 until the goods are sold and delivered at such port or place, or
Clause unless otherwise specially agreed, until the expiry of 60 days after
arrival of the goods hereby insured at such port or place, whichever
shall first occur, or
9.2 if the goods are forwarded within the said period of 60 days (or any
agreed extension thereof) to the destination named herein or to any
other destination, until terminated in accordance with the provisions of
Clause 8 above.
10 Where, after attachment of this insurance, the destination is

10. - Change of changed by the Assured, held covered at a premium and on conditions
Voyage Clause to be arranged subject to prompt notice being given to the
Underwriters.
CLAIMS
11.1 In order to recover under this insurance the Assured must have an
insurable interest in the subject-matter insured at the time of the loss.
11.2 Subject to 11.1 above, the Assured shall be entitled to recover for
11. - Insurable
insured loss occurring during the period covered by this insurance,
Interest Clause
notwithstanding that the loss occurred before the contract of insurance
was concluded, unless the Assured were aware of the loss and the
Underwriters were not.
12 - Where, as a result of the operation of a risk covered by this

insurance, the insured transit is terminated at a port or place other than
that to which the subject-matter is covered under this insurance, the
Underwriters will reimburse the Assured for any extra charges properly
and reasonably incurred in unloading storing and forwarding the
12. - Forwarding
subject-matter to the destination to which it is insured hereunder. This
Charges Clause
Clause 12, which does not apply to general average or salvage
charges, shall be subject to the exclusions contained in Clauses 4, 5, 6
and 7 above, and shall not include charges arising from the fault
negligence insolvency or financial default of the Assured or their
servants.
46
13 - No claim for Constructive Total Loss shall be recoverable
hereunder unless the subject-matter insured is reasonably abandoned
13. - Constructive either on account of its actual total loss appearing to be unavoidable or
Total Loss Clause because the cost of recovering, reconditioning and forwarding the
subject-matter to the destination to which it is insured would exceed its
value on arrival.
14.1 If any Increased Value insurance is effected by the Assured on the
cargo insured herein the agreed value of the cargo shall be deemed to
be increased to the total amount insured under this insurance and all
Increased Value insurances covering the loss, and liability under this
insurance shall be in such proportion as the sum insured herein bears
to such total amount insured. In the event of claim the Assured shall
provide the Underwriters with evidence of the amounts insured under
all other insurances.
14. - Increased Value
14.2 Where this insurance is on Increased Value the following clause
Clause
shall apply: The agreed value of the cargo shall be deemed to be equal
to the total amount insured under the primary insurance and all
Increased Value insurances covering the loss and effected on the cargo
by the Assured, and liability under this insurance shall be in such
proportion as the sum insured herein bears to such total amount
insured. In the event of claim the Assured shall provide the
Underwriters with evidence of the amounts insured under all other
insurances.
BENEFIT OF INSURANCE
15. - Not to Inure 15. - This insurance shall not inure to the benefit of the carrier or other
Clause bailee.
MINIMISING LOSSES
16. - It is the duty of the Assured and their servants and agents in
respect of loss recoverable hereunder
16.1 to take such measures as may be reasonable for the purpose of
averting or minimising such loss, and
16. - Duty of Assured
Clause 16.2 to ensure that all rights against carriers, bailees or other third
parties are properly preserved and exercised and the Underwriters will,
in addition to any loss recoverable hereunder, reimburse the Assured
for any charges properly and reasonably incurred in pursuance of these
duties.
17. - Measures taken by the Assured or the Underwriters with the

object of saving, protecting or recovering the subject-matter insured
17. - Waiver Clause
shall not be considered as a waiver or acceptance of abandonment or
otherwise prejudice the rights of either party.
AVOIDANCE OF DELAY
47
18. - Reasonable 18. - It is a condition of this insurance that the Assured shall act with
Despatch Clause reasonable despatch in all circumstances within their control.
LAW AND PRACTICE

19. - English Law and
19. - This insurance is subject to English law and practice.
Practice Clause
NOTE: It is necessary for the Assured when they become aware of an event which is "held
covered" under this insurance to give prompt notice to the Underwriters and the right to such
cover is dependent upon compliance with this obligation.
NOTES ON RISKS COVERED BY THE ICC (B) AND ICC(C) (Clause No.1)
Fire or explosion: Not only fire and explosion damage is covered but also damage by smoke
and
by water used to extinguish fire. However, if fire is occasioned by spontaneous combustion, the
law holds that the proximate cause of loss is inherent vice or nature of the subject matter
insured.
Any damage to other (“inoffensive”) cargo in consequence may be regarded as loss within the
policy terms. The cause of the fire or explosion is immaterial, provided it is not caused by one
of the excepted perils (e.g. war risks or willful misconduct of the assured). Loss arising from
efforts to extinguish fire to cargo which itself is not ignited is in nature of general average and,
as will be subsequently observed, forms a direct claim admissible under the cover for general
average sacrifice.
Vessel or craft being stranded, grounded, sunk or capsized: “Stranded” refers to contact
with
the seabed or other obstruction and the vessel or craft must remain for a reasonable period of
time hard and fast. To be “sunk”, the vessel must have been effectively sunk. If she could have
been further immersed, she is not “sunk”. Capsized means “upset or overturned”.
The insured could recover for seawater damage under ICC (C) when loss is reasonably
attributable
to the sinking or capsizing of the vessel or craft. In other circumstances, seawater damage
would not be recoverable under ICC (C) except in the event of collision or contact of vessel or
craft with any external object when the vessel or craft may be holed thus making entry of
seawater possible.
Overturning or derailment of land conveyance: The SG Policy did not contemplate overland
risks, and the cargo clauses attached thereto did not make it clear that underwriters were
prepared
to extend the policy perils to embrace loss or damage resulting from accidents to land
conveyances.
48
The ICC (B) and ICC (C) now clarify the situation, making the underwriter liable for such loss or
damage.
Collision or contact of vessel, craft or conveyance with any external object other than
water: It is obviously the intention to pay claims for loss or damage to the goods when it is
reasonably attributable to the carrying vessel, craft or conveyance striking anything; but it would
not include loss or damage resulting from movement of the cargo in the ship’s hold during heavy
weather, nor loss or damage resulting from jolting inside a road conveyance during transit.
Discharge of cargo at a port of distress: The intention is to cover discharge of the insured
cargo at a port of distress. The latter term relates to any port, short of the intended port of
discharge, at which the carrier discharges the cargo because the ship has encountered
problems,
which prevent her from continuing transit of the goods. When the cargo finally arrives at its
destination it may be difficult to tell whether loss or damage was actually caused by the forced
discharge. For example, it may have happened during reloading, onward carriage or unloading
at
the final port of discharge. Evidence must show that the loss or damage is reasonably
attributable
to discharge of cargo at the port of distress.
General Average Sacrifice:
This occurs when the insured goods are partly or totally sacrificed
in a general average act. Provided the GA act does not arise from any of the exclusions
expressed
in the relevant ICC, the underwriter is liable for the sum insured if the sacrifice results in
total loss of the goods, or the proportion of the sum insured produced by applying the
percentage of depreciation caused by the sacrifice to the sum insured, if only part of the
goods is sacrificed.
Jettison:
The term relates to property that is thrown overboard in time of peril to save the
adventure from a total loss. When the ship and cargo are separately owned there are two
parties
to the adventure, and jettison of the cargo or part thereof would constitute a general average
sacrifice. However, when a ship owner is carrying his own cargo only one interest is involved, so
there would be no grounds for claiming a general average act, and no claim could be made on
the
policy for GA sacrifice. Nevertheless, the ICC provides that jettisoned cargo is covered, and this
would still be the case without a GA act.
49
NOTES ON ADDITIONAL RISKS COVERED BY ICC (B)
Earthquake, Volcanic eruption and Lightning:

Since the SG policy did not cover overland risks,
earthquake and volcanic eruptions were not considered by the policy, these not being embraced
within terms ‘perils of the seas’. The old ICC extended the SG policy to cover overland risks, but
did not specify that earthquake or volcanic eruptions were covered (except with the term ‘all
risks’). These risks have been introduced into the new ICC as a possible cause of loss, but the
test of proximate cause is not applied. Whilst the goods were undergoing sea transit ‘lightning’
would be embraced in the SG policy as a peril of the sea during heavy weather, and if a fire
resulted from lightning striking a warehouse or the goods during land transit, such loss would be
treated as a loss by fire, and would be recoverable under the old ICC. The new ICC do not
cover
‘all other perils’ (this term being interpreted in law to apply to perils similar in kind to those
expressed in the SG policy), so it is necessary to specify these risks. Under the ICC (B)
lightning
damage to the goods, provided it is proximately caused thereby, would be covered whether or
not
a fire resulted from the lightning, and the cover applies to both sea and land transit
.
Washing overboard - The assured is required to prove that the cargo is actually washed
overboard,
and not simply lost overboard. ICC (B) covers sling loss during loading or discharge (cl.1.3), but
does
not extend this to cover cargo that may be lost overboard when the ship rolls in heavy weather.
Entry of water into vessel etc:

This is the major difference in the cover provided by ICC (B) in
comparison with the cover provided by ICC(C). ICC(C) provide no cover for water damage or
loss,
except when the ship or craft is stranded, grounded, sunk or has capsized and the loss is
reasonably attributable thereto, or where the water damage or loss may be reasonably attributed
to collision or contact of the vessel or craft with an external object, or in the case of the loss or
damage being proximately caused by GA sacrifice or jettison. ICC (B) on the other hand, provide
considerable cover for loss or damage caused by seawater, lake water or river water, but only
when the water actually enters into a place where the goods are stored or stowed during transit.
It
is not necessary for heavy weather to exist for seawater, lake water or river water covers to
exist.
This may appear to provide wider cover than under the old ICC, until one realizes that ICC (B)
does not cover other forms of heavy weather. For example, there is no cover for windstorm
50
damage, or for cargo lost overboard other than when it is washed overboard. Further, there is
no
cover for damage or loss caused by shifting of cargo in the ship’s hold during heavy weather,
nor
for water damage to goods not stowed inside the ship or craft, or in a container, lift van or place
of
storage. The extension of cover to embrace river water, whilst it is intended, no doubt, to relate
to
transit by river, can be interpreted to embrace flood water that enters a place of storage where
the
goods, having commenced transit at an earlier point, are awaiting onward transit by river. Water
damage or loss to goods not in a container etc. would not be covered, so floodwater damage to
goods waiting on a quay would not be covered. One can see that contentious opinions will be
expressed in interpretation of the terms ‘container’ and a ‘place of storage.’ A ‘container’ in this
context is, obviously intended to mean the type of container that is used for unit carriage, and
does not mean the packing case or box in which the goods are contained. It is not clear what
interpretation should be placed on the term ‘place of storage’. No doubt, the drafters of the
clause
meant it to be a warehouse, or similar covered area; but when goods are customarily stored in
enclosed uncovered spaces it might be considered that such place is a ‘place of storage’. There
is
no cover for rainwater damage under ICC (B).
Sling Loss - There should be total loss of entire package(s). The term “loading / unloading”
would
not be restricted to the original port of loading and the final port of discharge; it would embrace
also, loading and unloading during transshipment.
GENERAL AVERAGE CLAUSE (Clause No. 2):

The General Average Act can occur, “when, and only when, any extraordinary sacrifice or
expenditure is voluntarily and reasonably made or incurred for the common safety for the
purpose
of preserving from peril the property involved in common maritime adventure”
The most common types of casualties giving rise to General Average and/or salvage services
are -
Jettison of cargo;
Sacrifice of the vessel’s equipment and stores;
Refloating operations following a stranding when ship and cargo are in a position of
common
peril;
Damage to ship and/or cargo during operations to extinguish a fire on board a ship;
Salvage and/or towage assistance as a result of grounding, machinery breakdown and
other
casualties.
51
o Expenses of putting into a port of refuge for the common safety.
BOTH TO BLAME COLLISION CLAUSES(BTBC): (Clause No.3)

The clause appears in the ICC due to the peculiarities of the American Law governing the
liability
for collision. In U.S.A. when both vessels are to blame for a collision, they are adjudged equally
to
blame, but cargo owners can recover in full from the other vessel for any damage sustained.
This vessel then may include one-half of such amounts so paid in her claim for damages
against
the ship carrying the cargo. So, despite the immunity in the contract of carriage, which invariably
provides that the carrier is not liable for damage to cargo caused by a peril of the sea or neglect
in
navigation or management of the vessel-the carrying vessel does in effect pay indirectly one-
half
of damage to cargo carried by her.
Owing to the exceptions in the Running Down Clause, these liabilities are not recoverable from
hull underwriters, nor are P&I Associations liable. Therefore the carrier has inserted Both to
Blame
llision Clauses in his Bill of Lading stipulating that the cargo owners must indemnify him from
any amounts so paid. Cargo underwriters then agreed to assume this liability by a clause of the
same name in the Cargo Policy.
A theoretical illustration of how things might occur in sequence is as follows:

(a) Cargo owner suffers Rs.50,000 damage in consequence of a collision between vessels
A and B.
(b) He claims Rs.50,000 from his underwriter under say ICC(A).
(c) The underwriter meets that claim.
(d) Pursuing his rights of subrogation against vessel B, the underwriter recovers the full
Rs.50,000.
(e) Vessel B then proceeds against Vessel A and liability is apportioned 2/5 to Vessel A and 3/5
to Vessel B, so that Vessel B recovers Rs.20,000 from Vessel A. (2/5 x 50,000 = Rs.20,000/-)
(f) Under COGSA and Bill of Lading terms the carrier is not responsible for negligence in the
navigation and management of the vessel.
(g) Vessel A therefore seeks to recover such Rs.20,000 from the Cargo owner under the BTBC
clause.
(h) By Clause 3 of the ICC, the underwriter accepts liability for this claim. However this is not a
situation, which exists under the law of most of the maritime nations. For instance, by Sec.1
of the Maritime Conventions Act, 1911 a cargo owner will only recover in direct action against
vessel ‘B’ an amount that is in proportion to the vessel ‘A’ and ‘B’. Thus, where the Maritime
Conventions Act, 1911 applies, the chance of a carrier wishing to invoke the BTBC Clause is
much reduced.
52
EXCLUSIONS (Clause Nos. 4, 5 & 6)
There are three types of exclusions in the Institute Cargo Clauses:
General Exclusions
Unseaworthiness and unfitness Exclusion
War and Strikes Exclusion
Risks Excluded By Statute

The Marine Insurance Act (1963) states that, unless policy provides otherwise, a loss must be
proximately caused by an insured peril (risk) to be covered by the policy. In practice, the test of
proximate cause is waived only in respect of the risks listed in clause 1.1 of ICC (B) and ICC(C),
which provide that the loss need only be reasonably attributable to the named risk to be
covered.
Thus the test of proximate cause is applied to any claim made under ICC (A) to ensure that the
loss is not caused by an inevitable circumstance. One must remember that the term “All Risks”
does not embrace inevitable loss, even if such loss is not mentioned in the specified exclusions.
Section 55 of the Marine Insurance act (1963) reads as under:

Included And Excluded Losses.
(1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is
liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he
is not liable for any loss which is not proximately caused by a peril insured against.
(2) In Particular –
(a) The insurer is not liable for any loss attributable to the willful misconduct of the assured,
but, unless the policy otherwise provides, he is liable for any loss proximately caused by
a peril insured against, even though the loss would not have happened but for the
misconduct or negligence of the master or crew;
(b) Unless the policy otherwise provides, the insurer on ship or goods is not liable for any
loss proximately caused by delay, although the delay be caused by a peril insured
against;
(c) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear,
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or
for any loss proximately caused by rats or vermin, or for any injury to machinery not
proximately caused by maritime perils.
While most of the statutory exclusions are included in Clause No. 4 of the ICC, it must not be
assumed that because any of the exclusions is not included in this clause the underwriters are
prepared to waive statutory exclusions. For example, the underwriters are not liable for any loss
proximately caused by rats or vermin under ICC(C) or ICC (B), even though these are not
mentioned in the respective clauses. Similarly ordinary leakage would not be covered even
under
an ‘All Risks’ policy, because it is an inevitable loss.
53
GENERAL EXCLUSIONS (Clause No.4)
The general exclusion clause is common to all the three Institute Cargo Clauses.
Willful misconduct of the assured (4.1) –

It is included in section 55 of MIA (1963). Even a loss
damage or expense proximately caused by an insured risk is excluded if it is attributable to the
willful misconduct of the assured.
Ordinary leakage/loss in weight or volume/wear and tear (4.2) –

Ordinary leakage refers to
evaporation of cargoes that have a liquid content. Ordinary loss in weight or volume is
complementary to the ordinary leakage exclusion and ensures that all forms of trade loss are
excluded from the policy. Ordinary wear and tear applies to second-hand goods and enables
theunderwriters to make a deduction from the cost of repairs or depreciation allowance for a
betterment
(new for old) enjoyed by the assured.
I
Improper packing (4.3) – A claim would not be recoverable under the policy if it can be shown
that any loss, damage or expense was actually caused by insufficiency or inadequacy of
packing.
This exclusion is also applicable to improper preparation of the goods and to stowage of the
goods in containers or lift vans. The exclusion however does not apply to losses caused by poor
stowage of the goods by container operator other than the assured, after commencement of
risk.
Inherent vice (4.4) – it appears in Section 55 of the MIA (1963). Perishable goods are
particularly
subject to loss by inherent vice following delay in delivery or even otherwise. A loss due to fire
resulting from spontaneous combustion in the insured goods would not be covered but fire
damage to the insured goods due to fire in some other goods which are stowed nearer them
and
are subject to spontaneous combustion would be recoverable.
Delay (4.5) – The MIA (1963) provides that the insurers shall not be liable for loss proximately
caused by delay although the delay is caused by an insured peril. The words ‘damage or
expense’
are added to this sentence in the cargo clauses. If the carrying vessel was delayed by a
collision,
and the delay caused the cargo to deteriorate, there would be no claim for deterioration on
ground
that it was reasonably attributable to collision. It is necessary to refer in this connection to
subclause
3 of the Transit Clause of ICC, which provides that the insurance shall remain in force
54
during delay beyond the control of the assured (but subject to 60-day limit). Such delay may
occur
due to (a) port labour strike (b) cargo missing after landing (c) Customs calling for additional
information or chemical test. In respect of circumstances beyond the control of the assured, the
insurers may upon request, grant continuation of cover by charging additional premium (subject
of
course to termination of cover as provided in the Transit Clause and provisions of Clause No.
9).
(f) Insolvency or financial default of carriers, owners, managers, charterers, operators of

the vessel (4.6) –
This clause was introduced in 1982 to discourage the assured from shipping
his goods on a vessel whose operator is in financial difficulties. If the carrier is unable to
complete
the voyage and discharges goods at an intermediate port, the insurers would not be liable for
any
loss or damage to the goods caused by such discharge or by reloading into another ship nor for
any forwarding expenses.
Deliberate damage or destruction (4.7 – ICC(C) & ICC (B) only) –

Insurers will not cover any
form of deliberate damage or destruction under ICC(C) or ICC (B) clauses, without due
consideration
and additional premium. If cover is granted the following clause is attached to the policy.
1/1/82
(FOR USE ONLY WITH THE NEW MARINE POLICY FORM)
MALICIOUS DAMAGE CLAUSE
For use with Institute Cargo Clauses (B) and (C)
“In consideration of an additional premium, it is hereby agreed that clause 4.7 of the
Institute Cargo Clauses is deemed to be deleted and further that this insurance covers
loss of or damage to the subject-matter insured caused by malicious acts, vandalism
or sabotage, subject always to the other exclusions contained in this insurance.”
It is necessary to note that in addition to malicious damage the clause also covers loss or
damage
caused by vandalism or sabotage.
This exclusion (4.7) is absent in ICC (A) because the risks of deliberate damage or destruction
would be embraced within the term ‘All Risks.’
Nuclear Weapons [4.7 in ICC (A) and 4.8 in ICC (B) & ICC(C)] – Any loss arising from the use
of nuclear and similar weapons is excluded in all forms of insurance. The exclusion is more
relevant in ICC (A) as it may not be interpreted as excluding loss arising from the use of a
nuclear
weapon with no hostile intention (for example during a test).
55
UNSEAWORTHINESS AND UNFITNESS EXCLUSION (Clause No.5)
In every voyage policy (a cargo policy is normally a voyage policy) there is an implied warranty
that the ship be seaworthy at the commencement of each stage of the voyage. In the absence
of
any provision to the contrary in the policy, the underwriter is discharged from liability for all
losses
as from the date of breach of warranty if the ship sails in an unseaworthy condition. This applies
to all losses, not just to any loss connected with the unseaworthiness. The MIA (1963) in which
this
provision appears (section 41) does not require any craft that carries the goods to be seaworthy.
The MIA also provides that the ship must be reasonably fit in all respects.
This exclusion is common to ICC (A), (B) and (C). Where the goods are carried, in an
unseaworthy
ship or in a ship not fit to carry the goods, and the insured is unaware of the circumstances or
does not consent to such carriage the ICC waive the breach of this warranty by clause 5.2. It
must
however be made clear that if the insured is privy to the fact that the goods are carried in an
unseaworthy ship or ship not fit to carry the goods, the breach of warranty will apply. Further,
there
is no waiver of the breach of warranty if the goods are carried in an unseaworthy or unfit craft,
as
clause 5.2 makes no reference to “craft” for this reason.
Although the underwriters are prepared to waive any breach of warranty where the insured is
unaware that the vessel is unseaworthy or unfit to carry the goods, they are not prepared to
cover
loss arising from such unseaworthiness or unfitness of the vessel or craft if the assured is aware
of such unseaworthiness or unfitness at the time the goods are loaded in the vessel or craft.
It is important to note that the unfitness exclusion applies also to conveyance, container
or lift van.
In regard to container and liftvan the term “servants” would not include “container operators,”
who
are agents rather than servants. Nor would the term include shipping agents, stevedores,
shipowners, craft operators and their servants, provided their actions are not directly controlled
by
the insured.
Many claims for water damage might not have occurred were it not for the poor and
substandard
condition of the container or lift van. Containers carried on deck are subjected to waves that
break
56
over the ship during heavy weather. Water enters through holes in the roof of the container or
through cracks or loose worn-out fittings and remains inside the container, thus soaking the
contents until the container is stripped after arrival at destination. In the absence of exclusion
under clause 5.1 such loss would be recoverable under ICC (A) and ICC (B), which cover sea/
lake/river water damage. Of course the exclusion would apply if the insured or their servants
were
privy, not otherwise.
Note that the seaworthiness/fitness warranty under clause 5.2 applies to the commencement of
each stage of the voyage, whereas the exclusion under clause 5.1 applies solely to
circumstances
where the assured or his servants are privy at the time of loading.
Claim in respect of a G.A. sacrifice or G.A. contribution would not be recoverable if it arises from
unseaworthiness of the vessel to which the assured was privy at the time the goods were
loaded
on the vessel. The same principles apply to any other insured loss.
WAR AND STRIKES EXCLUSION (Clause Nos. 6 and 7)
These are common to all three sets of the Institute Cargo Clauses. It is important to note that
their
deletion would not automatically incorporate war and strikes cover into ICC (B) or ICC(C).
Similarly,
in absence of these two exclusion clauses, war and strike risks would be embraced within the
term ‘all risks’. Clause No. 7.3 is a new clause and excludes loss caused by any person acting
from a political motive and is not confined to detonation of explosives but would also include
loss
caused by the goods being seized by terrorists etc. It is also necessary to note that expenses
incurred by the assured in connection with the excluded risks are not covered.
DURATION (Clause No. 8)

If the risk is covered under a specific policy, transit must commence within a reasonable time
after
the insurers accept it. Even in this case the cover does not attach until the goods leave the
premises for commencement of transit. There is no cover during loading into conveyance at the
warehouse or during any period before transit actually commences. However, transit to a
container
terminal for stuffing into a container would be considered as part of the overseas transit.
The insurance continues during ordinary course of transit. The term ‘ordinary’ is deemed to
embrace (1) customary method of carriage relevant to the type of goods and (2) the most direct
route to destination. It would include delays during or pending customs inspection and awaiting
arrival of the carrying conveyance or overseas vessel. But it would not include any delay that
the
assured could avoid. Thus, if the assured elects to use a port warehouse for storage, this would
57
be outside the ordinary course of transit.
The insurance terminates either:
on delivery to the consignee’s warehouse or other final warehouse at destination named

in
the policy, or
on delivery to any other warehouse whether prior to or at destination which the insured
may
elect for storage other than in ordinary course of transit or for allocation or distribution; or
on the expiry of 60 days after discharge over side of the insured goods from the
overseas
vessel at the final port of discharge;
Whichever shall first occur
It is intended to cover the goods until they are delivered to the final warehouse at the destination
named in the policy. This is subject to transit being within ‘Ordinary course’, which would include
normal delays at the port of discharge. It would not include delay within the control of the
assured.
The time limit commences from completion of discharge, and if the goods are not delivered
within
the time limit, cover ceases on expiry of 60 days unless the assured has negotiated an
extension
of the time limit with the insurer. Sixty days are the limit and not a period of cover; so, once the
goods are delivered to the final warehouse, cover ceases, even if the 60 days have not expired.
There is no cover whilst the goods are in store at the final warehouse.
Sometimes, goods intended for a variety of destinations are shipped as one consignment to a
central point after discharge. From there, they are allocated / distributed to individual
destinations.
In the absence of any prior arrangement to continue the cover to the final destination or
individual
destinations on allotment from the central point, the cover will terminate as the goods are
delivered
to the place where they are to be allocated and distributed. In such case, it is important to
provide
evidence that the loss occurred prior to delivery at the point of allocation/distribution.
Change of destination may occur after discharge at the port of destination. In which event the
insurance shall not extend beyond the commencement of transit to such other destination,
subject,
of course, to 60-day time limit, and restriction regarding storage and allocation or distribution.
If the destination is changed before the goods are discharged, this would be a “change of
voyage”
and would be “held covered” by clause 10 of ICC.
58
If the carrier terminates the contract of carriage, at an intermediate port or place (in
circumstances
beyond the control of the assured) clause 9 comes into effect. One example of such a
circumstance
would be where a strike at the destination port compels the carrier to frustrate the voyage and
discharge the goods at an alternative port and thus terminate the contract of carriage, a
consequence which would exempt him from liability under COGSA as there is no actual fault or
privity on his part. In such an event, the insurance terminates automatically unless the assured
takes prompt and positive action to continue the insurance. As soon as the insured becomes
aware of the circumstance, he must promptly request insurers for continuation of the cover and
pay additional premium.
The insured must take prompt action to dispose off the goods, or to forward them to original
destination else the cover will cease on expiry of 60 days after arrival at such intermediate port
or
place. The time limit may be extended subject to underwriter’s approval.
If the assured decides to sell the goods at the intermediate port or place, cover terminates when
goods are delivered to the buyer at such port or place subject to 60 days time limit.
If the goods are forwarded within the said period of 60 days to the destination named in the
policy
or to any other destination – provided the assured has obtained insurer’s agreement to continue
the cover and transit to the alternate destination commences within time limit-cover continues
without interruption to terminate in accordance with the provisions of clause 8 (transit clause). It
must be remembered that all this apples only to discharge following frustration of a voyage, that
is,
as a result of the carrier terminating the contract. This must not be confused with circumstances
where the assured elects to send the goods to an alternative destination following discharge at
the destination port. The latter is governed by clause 8.2 discussed above.
It is important to note that if the reason to resort to the intermediate port or place-where the
contract of carriage is terminated – is due to the operation of an insured peril, the insurers would
be liable for unloading, storing and forwarding charges.
Delay in Transit:
Section 50 of the MIA provides that the voyage must be prosecuted with
reasonable dispatch and the insurer is discharged from liability from the time any delay
becomes
unreasonable. MIA is confined to the sea voyage only and therefore, the ICC incorporate the
following clause ensuring that the condition applies throughout the transit period:
Clause 18 – “It is a condition of this insurance that the assured shall act with reasonable
dispatch
in all circumstances within their control.”
Provided delay is beyond the control of the assured, the cover continues during such delay.
However, loss proximately caused by delay is not covered, even if delay were caused by an
59
insured peril.
Deviation:
A ‘deviation’ occurs when the route of transit is changed from the direct route
contemplated by the Policy but with the intention of returning to the direct or original route and
completing transit to the destination named in the Policy.
Clause 8.3 provides that the insurance remains in force during:
Delay beyond the control of the assured;
any deviation;
forced discharge;
reshipment;
transhipment;
any variation of the adventure arising out of the ‘Liberties Clause’ in the Bill of Lading.
Notice from the assured is neither required, nor is any additional premium charged.
Change of Voyage (Clause No. 10):

Change of voyage occurs where, after attachment of the
insurance, destination is changed by the assured. This is a ‘held covered’ situation provided for by
Clause No.10 of the ICC.
Subject to prompt notice, the insurers will continue the cover or may decide whether the increase
in risk justifies changes in the policy cover at a reasonable additional premium.
Transshipment/Reshipment etc.:
Under the MIA (Sec.59) cover continues during tran-shipment /

reshipment only following the operation of an insured peril.
Clause 8.3 provides automatic cover under the six contingencies described above. It will be
noted
that neither the MIA nor clause 8.3 provide for circumstances where goods are transferred from
any conveyance to another conveyance (for example aircraft), other than a ship. Whilst any
variation of the adventure that is within the control of the assured to avoid, would be treated as
outside the ‘Ordinary course of transit’, transfer of goods from one conveyance to another which
is
customary-that is from road to rail; craft to ship etc., would be considered as being within
‘Ordinary
course of transit.’
It is important to bear in mind that an assured who is aware that a transhipment etc. will take
place other than in the ordinary course of transit must disclose this to the insurer while
effecting insurance, else, he will be guilty of breach of good faith and the contract could be
avoided entirely.
Inland Transit:
The scope of ICC is not restricted to voyage from port to port only. Inland transit in conjunction
with overseas voyage prior to shipment on vessel or after goods are discharged at the port of
60
destination can also be covered under the ICC. The Inland Transit Clause therefore should not
be
attached to such policy.
Insurable Interest (Clause No.11):
Although the assured need not have an insurable interest at the time the insurance contract is
effected, it is necessary for him to have such interest at the time of loss. This is provided for by
Section 8 of the MIA and also by clause 11.1 of ICC.
Therefore, in the event of a claim being preferred, the insurer may require the assured to prove
his
insurable interest in the subject matter of insurance at the time of the loss and if such interest
cannot be proved, the claim will not be met.
“
Lost or not lost” (Clause No. 11.2):
this relates to a long-standing practice under which
cover may be granted for shipments which had commenced transit and may have already
been lost, provided that neither the assured nor insurer is aware of the loss at the time of
effecting
the insurance.
The importance of this provision lies in the fact that a contract of insurance may be effected
after
the actual commencement of the risk. In such a case, the cover is retrospective to the
commencement of the risk as set out in the policy.
This provision is subject to the requirement that the assured and the insurer shall be in an equal
state of knowledge or ignorance.
The person effecting the insurance must be without any information that a loss had occurred.
If he did know of the happening of a loss and the underwriter did not, it would be concealment of
a
material fact and a breach of good faith which would render the insurance contract void.
Or, conversely, if a person effected an insurance when the underwriter knew that the vessel has
safely arrived, though the person was ignorant of the fact, the premium is such a case would be
returnable.
The cover envisaged under this clause should also be examined in the light of section 64-VB of
the Insurance Act, 1938.
Expenses incurred by the assured (Clause Nos.12 and 16):
The Insurer is not concerned with the ordinary expenses incurred in connection with the transit.
But where an expense is incurred relating to a loss recoverable or to prevent or minimize an
insured loss, the insurer pays such expenses as follows:
(a) Extra Charges: Also called “particular charges”, they would include ‘survey fees’ and
‘reconditioning costs’. These are recoverable as part of a claim for partial loss. In any event –
and this is important – the insurer’s liability does not exceed the sum insured under the Policy
61
for both the loss and the expenses.
(b) Sue and Labour Charges (Clause No.16) – “Duty of the Assured”: It provides that the
Insurer would pay particular charges incurred by the assured – reasonably incurred – during
transit to prevent or minimize loss / damage to goods for which Insurers would be liable. A
duty is imposed on the assured to take all reasonable measures to protect the goods from
the loss. Provided the assured carries out his duty, charges properly and reasonably incurred
would be paid in addition to any claim, even a total loss claim.
(c) Forwarding Expenses (Clause No. 12):
These expenses are reimbursed only when transit is frustrated (that is terminated short of
destination) by an insured peril, but such reimbursement is subject to the exclusions specified
in ICC.
“Not to Inure” (Clause No. 15):
The Carriage of Goods by Sea Act provides that the carrier may not exempt himself from liability
beyond the limits permitted to him by the Act. This prevents him from incorporating any clause
in
the Bill of Lading that gives him benefit of the cargo owners’ insurance policy. In fact, the Act
states that any “benefit of insurance” clause in the contract of carriage is void.
This does not prevent any other carrier or bailee (whose contract is not subject to Carriage of
Goods by Sea Act) from inserting a “benefit of insurance” clause. So, the ICC provides that the
Insurance cannot be used for the benefit of the carrier or other bailee.
Increased Value (Clause No. 14):
The MIA – section 29 provides that ‘in absence of fraud, the value fixed by the policy is, as
between the Insurer and the Assured, conclusive of the insurable value of the subject matter
insured’. If the assured effects two policies, both of which are agreed value policies, on the
same
interest it would become necessary to make sure that the ‘insurance value’ embraces the value
stated in both policies. This is made possible by the clause.
The clause is in two parts. The first part (14.1) applies to marine policy whilst the second part
(14.2) applies to increased value policy. Both clauses have the same effect. The assured must
add
together values expressed in each policy to provide one insured value to apply to both policies.
The claim will be settled proportionately.
Constructive Total Loss (Clause No. 13) and Waiver (Clause No. 17)
The right to claim CTL is given to the assured by the Marine Insurance Act, 1963. to avoid
misunderstanding the clause is incorporated in ICC.
To substantiate a claim for CTL the assured must give notice of his intention to abandon the
goods and claim a CTL from the insurer. The notice must be given without delay. If the insurer
accepts the notice formally, he admits liability for the claim and accepts responsibility for
whatever
may remain of the goods. In practice, the insurer always rejects in the first instance, thereby
reserving his position until all facts are to hand.
Action taken by the insurer to reduce or prevent the loss may be construed as an acceptance of
abandonment, but, to prevent this from happening, a ‘waiver clause’ is incorporated in the ICC.
62
Carrier’s/Bailee’s Liability (Clause No. 16)
The ICC has imposed a duty on the assured to properly preserve and exercise all rights against
carriers etc. who may be responsible for loss/damage to the goods. The insurers would have no
right to proceed against those responsible for loss/damage to the goods until claim under the
policy is settled under a Letter of Subrogation. Moreover, the contracts of carriage are subject to
statutory time limits. Clause No. 16 therefore provides that in the event the assured incurs
expenses
in pursuing these duties, the insurers will reimburse charges properly and reasonably incurred
by
him to ensure that all rights against carriers, bailees and other parties are properly preserved
and
exercised.
If the assured incurs expenses in performing this duty he may claim such expenses from the
insurers who will reimburse the same.
English Law and Practice (Clause No. 19)

The purpose is to provide a basis in law and practice that is compatible with the intentions of the
Technical & Clauses Committee of the I.L.U. who have drafted the ICC. To try to interpret the
clauses in conjunction with any other law and practice might lead to ambiguity, which the
drafters
of the clauses have sought to avoid.
The ICC (A), (B) or (C) may be used in policies covering (a) imports to/exports from India and
(b)
coastal shipments in India by classed vessels.
Though War & Strike risks are specifically excluded in ICC, it is customary under the cargo
policy
to grant War/Strike risks cover by charging additional premium and attaching the relevant
Institute
War and Strike clauses to the policy.
THE INSTITUTE STRIKES CLAUSES (CARGO)
RISKS COVERED
(a) Loss or damage caused by:
i) Strikers, Locked-out workmen or persons taking part in labour disturbances (for example
political activists who join picket lines) riots or civil commotions.
ii) Any terrorist or any person acting from a political motive.
(b) General average or salvage charges incurred to avoid loss from a risk in covered.
EXCLUSIONS
They are as in ICC with the addition of three sub-clauses, which read as under: -
3.7 Loss, damage or expense arising from the absence shortage or withholding of labour of any
description whatsoever resulting from any strike, lock-out, labour disturbance, riot or civil
63
commotion.
3.8 Any claim based upon loss of or frustration of the voyage or adventure.
3.9 Loss, damage or expense caused by war, civil war, revolution, rebellion insurrection or civil
strife arising there from or any hostile act by or against a belligerent power.
COMMENTS
Cover is limited to physical loss or damage to the insured goods. It does not extend to cover
expenses incurred by the insured arising from the risks covered (except sue and labour charges
and recovery of expenses under clause 11 relating to minimizing losses) Nor does it cover any
consequential loss suffered, nor are “forwarding charges” covered.
DURATION OF STRIKES RISK COVER
Unlike the war risk cover, the strike risk cover is ‘warehouse to warehouse’ and exists
throughout
the whole period of transit on lines identical to the Transit Clause of the Marine Covers.
Therefore,
the clauses relating to transit are identical to the Marine ICC and same comments apply.
The remaining clauses are identical to their counterparts in ICC. Hence they do not require
special comments.
The rates of premium for strikes risks are additional for all voyages.
THE INSTITUTE CARGO CLAUSES (AIR)

(excluding sending by post)
These clauses are intended to cover carriage of goods by airfreight and therefore, postal
sending
by air is excluded from the scope of the cover.
RISKS COVERED
The cover is against ‘all risks’ as in ICC (A). There is no Institute Clause for restricted cover
such
as ICC(C) or ICC (B).
There is no ‘Both to Blame Collision’ and General Average & Salvage Charges Clause.
EXCLUSIONS
Willful misconduct of the assured.
Ordinary (inevitable) loss.
Insufficiency/unsuitability of packing etc.
Inherent vice.
Delay even if delay is caused by an insured peril.
Insolvency or financial default of the owners, managers, charterers and operators of
aircraft.
Nuclear Weapons.
Unfitness of aircraft, conveyance, container, or lift van where the assured or their
servants
64
are privy at the time of loading.
War and Strikes Risks.
War & Strikes risks can be covered by charging additional premium and attaching the relevant
clauses to the policy.
DURATION
The insurance attaches from the time the goods leave the warehouse for commencement of
transit, continues during the ordinary course of transit and terminates on delivery to the final
warehouse. Same provisions apply as in ICC as to allocation and distribution of the goods prior
to
delivery, the only difference being in the time limit. The ICC (Air) provides a 3-day time limit after
unloading from the aircraft as compared to the 60-day time limit after completion of discharge
from overseas vessel in the ICC. The time limit of 30 days also applies to ‘termination of
contract
of carriage’ clause, which otherwise, is the same as in ICC. For the type of goods sent by
airfreight
(high value/less weight, susceptible to pilferage, urgent delivery, minimum handling) it is but
natural that the period of 60 days is reduced to 30 days.
The remaining clauses are identical with their counterparts in ICC and therefore need no further
comments.
THE INSTITUTE CLASSIFICATION CLAUSE (1-1-2001)
QUALIFYING VESSELS
1. This insurance and the marine transit rates as agreed in the policy or open cover apply only
to cargos and / or interests carried by mechanically self-propelled vessels of steel construction
classed with a Classification Society which is:
1.1 a Member of Associate Member of the International Association of Classification Societies
(IACS)*, or
1.2 a National Flag Society as defined in Clause 4 below, but only where the vessel is
engaged exclusively in the coastal trading of that nation (including trading on an interisland
route within an archipelago of which that nation forms part).
Cargos and / or interests carried by vessels not classed as above must be notified promptly to
underwriters for rates and conditions to be agreed. Should a loss occur prior to such agreement
being obtained cover may be provided but only if cover would have been available at a
reasonable
commercial market rate on reasonable commercial market terms.
AGE LIMITATION
2 Cargos and / or interests carried by Qualifying Vessels (as defined above) which exceed the
following age limits will be insured on the policy or open cover conditions subject to an
additional premium to be agreed.
Bulk or combination carriers over 10 years of age or
65
Other vessels over 15 years of age unless they :
2.1 have been used for the carriage of general cargo on an established and regular pattern
of trading between a range of specified ports, and do not exceed 25 years of age, or
2.2 were constructed as containerships, vehicle carriers or double-skin open-hatch gantry
crane vessels (OHGCs) and have been continuously used as such on an established
and regular pattern of trading between a range of specified ports, and do not exceed 30
years of age.
CRAFT CLAUSE
3 The requirements of this Clause do not apply to any craft used to load or unload the vessel
within the port area.
NATIONAL FLAG SOCIETY

4 A National Flag Society is a Classification Society, which is domiciled in the same country as
the owner of the vessel in question, which must also operate under the flag of that country.
PROMPT NOTICE
5 Where this insurance requires the assured to give prompt notice to the Underwriters, the right
to cover is dependent upon compliance with that obligation.
LAW AND PRACTICE

6 This insurance is subject to English law and practice.
Current IACS Members and Associate Members are as under:
(A) Members of the International Association of Classification Society :
AB American Bureau
BV Bureau Veritas
CS China Classification Society
GL Germanischer Lloyd
KR Korean Register of Shipping
LR Lloyd’s Register of Shipping
NKK Nippon Kaiji Kyokai
NV Norske Veritas
RI Registro Italiano
RS Maritime Register of Russia
(B) Associate Members of the International Association of Classification Society (IACS)
HV Croatian Register of Shipping
IR Indian Register of Shipping
The Indian Register of Shipping (IRS) is considered as an approved Classification Society
and hence Indian Flag vessels classed by the IRS do not attract non-classification additional
premium for vessels not classed as per the Institute Classification Clause (01/01/2001)
* For a current list of IACS Members and Associate Members please refer to the IACS website at www.iacs.org.
CONTAINERISATION, VESSEL, BILLS OF LADING
66
The use of intermodal containers for the transport of a great variety of cargo has become
increasingly popular in recent years. Intermodalism – a concept which embraces the movement
and transfer of standardized cargo container by sea, air and land – has reduced cargo handling,
particularly in Door to Door shipments. Development of specialized containers has provided the
modern shipper with wide range of types, sizes and configurations, which permits
containerization
of most cargo.
The chassis of an standard container is a fully-enclosed and rigid rectangular box 20ft. in length
and of 8ft. x 8ft. or 8 ½ ft. height fitted with a pair of hinged doors at the rear end. The container
may also have a length of 30ft. or 40ft. Such a container may be constructed of various
materials,
for example :
entirely of steel sides, ends, roof and floor constructed of flat panels or corrugated
sheets (general containers usually have a wooden floor);
of various aluminium alloys in similar flats or profiles;
of marine plywood of various thickness;
of glass-reinforced plastic (GRP);
of two or more materials.
A normal 20ft. Container has a tare weight of between 2 and 2.5 tonnes, a cargo weight
(payload)
capacity of between 17.5 tonnes and 18.5 tonnes, with a maximum gross weight of about 22
tonnes. A 40ft. unit has a tare weight of between 3.5 tonnes and 4 tonnes, a cargo weight
(payload) capacity of about 26 to 27 tonnes, with a maximum gross weight of 30 to 31 tonnes.
Special 20ft. containers, are able to carry cargo of up to 27 tonnes weight. It is important that
the
relevant recommended gross weights are not exceeded.
Once the shipper has decided on the container service with type best suited to his needs, he
must
inspect the container to be sure of the following :-
Interior
free from splinters, snags, dents or bulges
free from residues from previous cargo particularly odours which may taint the cargo.
It is watertight and
Fittings are in good condition.
Exterior
a) free from dents, bulges or other damage
b) doors can be securely locked and sealed
c) fittings are in working order and in use and
d) covers / panels are in good condition.
The container is essentially a ship’s hold on a reduced scale. The cargo stored in a container is
subject to the same motion forces and damage hazards while at sea that affect cargo shipped in
break-bulk fashion. Hence, the same principles and techniques which govern export packing is
applicable to cargo for container shipment and when stowing it in the container.
67
Most containers are designed to stock nine feet high when loaded and it is very rare that a
sound
container will suffer a structural collapse. Occasionally however, container stows collapse when
the weight of containers and their contents placed in the upper layers of the stacks exceeds the
permissible limit and produces unacceptable loads on the containers in the bottom tier.
The stuffing of containers is not just a ship operator’s or the shipper’s problem. Containers are
often packed at places which may be many miles and sometimes even several days’ journey
from
the port of shipment. It is therefore, important that everyone involved with containers (including
cargo insurers) at whatever stage in transit should be fully aware of the stresses that may be
generated in the structure of the container itself and in and around the cargo within it, during
transportation by road, rail or ship.
When a container is on road or rail it is subjected to forward, reverse and transverse movement
which in normal circumstances take place in the horizontal plane. A fast moving rail or road
vehicle breaking very suddenly can subject the contents of the container to stresses well in
excess of those to be expected from the normal handling operations.
Aboard a ship the stresses are generated in all directions included by the wave motion. A ship
at
sea may move in six different directions simultaneously and the containers aboard the ship may
be rolling through arcs of as many as 70° or so, therefore, it is to be realized that securing of the
cargo within the container is as important as its stuffing / packing inside the container.
SPECIAL PURPOSE CONTAINERS

Refrigerated : They are used for carrying chilled cargo and to a more limited extent,
living
cargo such as fruits and vegetables.
Following types of claims may occur when frozen / chilled meat and its by-products are
transported in containers.
Contamination by odour
Soft condition – usually brought about by incomplete closure of the vents at the
connection
point when the ship’s refrigeration has been disconnected.
(b) Dry bulk : Designed for carriage of dry bulk cargoes such as dry chemicals and
grains.
(c) Liquid bulk : Tank type containers for carriage of liquids.
(d) Flat rack : They are used for timber, milk products, large heavy or bulky
items,machinery
and vehicles.
(e) Automotive : Used for carriage of vehicles. Available in enclosed or open versions.
(f) Livestock : Made to order for the nature of livestock carried.
(g) Ventilated : Their use is restricted to cargoes which have a negligible moisture
content or for hygroscopic cargoes carried on short voyages.
CONTAINER SECURITY :
68
A notable difficulty sometimes experienced in containerization is in identifying where
losses occur during transit. These losses may not be discovered until a container is unpacked
at the final destination after having traveled hundreds, may be thousands of miles through
several countries.
The most valuable aid in identifying the location where a loss occurred and indeed in deferring
potential thieves is an effective sealing system. Sealing can be effective, if the right type of seal
for
the operation is chosen and certainly before stripping at final destination are implemented.
The following guidelines may be of assistance in obtaining the maximum benefit from the use of
seals.
Use stronger seals on containers carrying high value and high rate cargoes.
Seals should be numbered and identified. It should be impossible to alter the
identification
marks in order to prevent the substitution of one seal for another.
One of the characteristics of a seal should be that any forceful removal would bring
disintegration of the seal or obvious mutilation.
CARRIERS LIABILITY :
Three problems arise where containers are involved :
The per package limitation.
Carriage on deck.
The condition of the contents.
The container is a package, so is a carton of books. So, it is necessary to define if a package as
referred in the Hague Rules (4.5) for purpose of limitation, is the container itself or the
package/s
inside.
Art, 4 (3) (b) of the Rules, enables the shipper and the carrier to decide the correct position. If
the
number of packages or pieces inside the container are listed in the Bill of Lading or the attached
sheet then the pkgs/pcs inside are the basis for the limitation.
The same ruling may also hold good if the packages are listed on some document other than
the
B/L, such as the shipping note. But if the B/L only mentions the container, then the container is
the
package for limitation purposes.
A container carried on deck without a declaration to that effect on the B/L is a violation of the
Hague Rules and a fundamental breach of contract of carriage. But courts have held that this
was
not an unreasonable deviation of COGSA. There are also two reasons for this view, viz;
a) There is no greater risk for containers on deck in a container ship than in the holds.
b) Technology innovation and vessel design may justify stowage other than below deck.
The Hague-Visby Rules have solved the per package limitation by stipulating that if the
packages
69
are enumerated on the B/L, each object so enumerated is a package for limitation.
THE VESSEL:
The ship (or vessel) may be described as a floating box made of steel in such a manner that it
can
safely travel in water in most weather conditions when carrying her load or empty.
The front end of the ship which facilitates forward movement is called the Bow and her
rear end which may be further blunter, rounded or squared off is called the Stern. The flat
roof over the ship’s hull (body) is known as the Deck which may have one or more openings
called
as Hatches. Below the Hatches are Holds or cargo spaces. The Stern is fitted with the Rudder
which provides steering control and the propeller or screw which rotates at great speed to drive
the ship.
There are ocean going vessels which carry cargo or passengers or both. Cargo ships may be
Liners or Tramp (a ship having no regular sailing or route). Tankers are designed to carry liquid
cargoes, colliers to carry full cargo of coal in bulk, Ore carriers to carry ores, and grain-carriers
to
carry grain.
Vessels may be employed on Liner Trade, where the owner retains full control over the ship or
under a voyage charter, time charter, Bareboat or Demise Charter.
A marine underwriter may be convinced about seaworthiness of a vessel from its classification
certificate. There are many classification societies in the world. (every maritime country may
have
one but only those societies which are members of the International Association of
Classification
Society are included in the institute Classification Clause (01/01/2001)
LASH / RO-RO VESSEL :

Since 1969, a new method of carriage of cargo overseas has been developed. Large capacity
sealed barges are loaded at river, lake or smaller ports and then towed to ocean ports where
they
are lifted abroad an ocean going mother vessel for the trip overseas. On arrival at the
destination
ocean port the barges are unloaded by the mother vessel and towed to their destinations
(inland)
where they are opened for discharge of cargo. After the cargo is discharged, the barges are
ready
to load export cargo.
This type of service called LASH (Lighter aboard ship) is available for the movement of a wide
range of cargo. A typical Lighter or barge measuring approximately 60 feet x 30 feet x 11.5 feet
has a cargo capacity of 375 tonnes / 550 cubic meters and the mother vessel may
accommodate
upto 90 such barges. LASH barges can only be lifted by an identical LASH vessel.
Yet another method of cargo movement is called “RO-RO” (Roll On, Roll Off) in which wheeled
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cargo vehicles are directly driven on and driven off on specially designed ocean going vessels.
By
rolling cargo on board these vessel, and rolling it off at its destination, shippers can reduce not
only the handling of cargo but speed up the loading and unloading process.
BILL OF LADING :
The Bill of Lading is a document under which cargo is carried on board the vessel. It contains
certain admissions by the carrier as to the quantity and condition of goods when they were put
on
board. It is a receipt for goods signed by the Master of the Vessel or other duly authorized
person
on behalf of the shipowner and constitutes a document of title to the goods specified therein.
The Bill of Lading is a commercially negotiable document which can be bought and sold in
exactly the same manner as the goods themselves. It is a document by means of which
property
in the goods may be transferred and money advanced by the bankers, etc. It contains the terms
of
the contract itself. The contract is made when the shipper offers the cargo for shipment and its
acceptance by the carrier. Delivery of goods cannot normally be obtained without the Bill of
Lading.
The Bill of Lading contains particulars of goods shipped (Marks and Numbers, No. of packages,
Description of goods and their weight / measurement), Vessel’s name and her voyage
number, Port of Loading and Discharge, Port of Transhipment if any, Shipper’s name,
Consignee’s
name or Order of, Notify party, Statement regarding payment of freight, Number of negotiable
Bills of Lading issued and Master’s / Authorised person’s signature with date and place of
issue.
Bill of Lading is prepared from the Mate’s Receipt given to shipper when goods are actually
loaded on board. The Mate’s Receipt is signed by Chief Officer of the vessel. If goods are in
imperfect or damaged condition when loaded, the fact is noted on the Mate’s Receipt and
thereafter
on the Bill of Lading.
If a Bill of Lading is issued stating that the goods are in apparent good order and condition with
out qualification, it will be called a clean Bill of Lading.
The Bills of Lading are signed in ‘sets’ and the number of negotiable Bills of Lading constituting
a
set is mention in the Bill of Lading. There is a clause in every Bill of Lading to the effect that the
Master has signed three Bills of Lading, all of which are of same tenor and date, one of which
being accomplished, the other stands void. Non-negotiable copies of Bill of Lading have no
value
at all and are only for record purposes.
TYPES OF BILL OF LADING :

There are various types of Bills of Lading such as :-
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Combined transport document – when several modes of transport are used or ‘Door
to
Door’ delivery is given for containers.
Direct bill of lading – It does not mention that the goods will be transhipped.
Through bill of lading – States that transhipment is required enroute. Journey may be
by
sea and then by rail or road or sea.
Received for shipment bill of lading – It is issued when cargo is still in the shed
awaiting
loading. When cargo is loaded on board it will be converted into a ‘shipped’ Bill of Lading.
Such Bills of Lading are issued for goods emanating from land-locked countries, and they are
as legal as the shipped Bill of Lading.
An Under-Deck Bill of Lading is issued for cargo shipped under-deck and an On-Deck Bill of
Lading is issued for cargo shipped on deck.
TERMS & CONDITIONS OF CARRIAGE

Though the general terms and conditions of carriage are set out in a Bill of Lading, the most
important amongst them are :-
Paramount Clause – States that the Bill of Lading will be subject to the Carriage of
Goods
by Sea Act of a particular country. Normally, the shipping company will prefer to apply
the law of the country of shipment.
Limitation of liability – It enables the claimant to ascertain the shipping company’s
liability
based on package / unit limitation.
Jurisdiction clause – states name of country in which disputes arising under the Bill of
Lading are to be decided.
It is also necessary to examine whether the Bill of Lading was issued subject to any Charter
Party
Agreement.
Short Form of Bill of Lading

The ‘Short Form’ or ‘Blank back’ Bill of Lading is printed on one side of the paper only and can
be
used by any shipping company accepting goods for carriage from country which has accepted
this
type of Bill of Lading. The principal benefit is that instead of using the carriers own pre-printed
form, the shipper has only to type the name of the contracting carrier in the space provided. The
terms and conditions of the carrier’s Bill of Lading are applied to the contract of affreightment by
means of an ‘Incorporation’ clause. The text of this clause appearing on the document is
common
to many carriers who will individually provide, on request, full details of their standard terms and
conditions. In general, it is no different from any other Bill of Lading except that the conditions
are
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not printed on the reverse side.
This type of Bill of Lading was developed to facilitate the shipper’s requirement of a number of
its
copies which if necessary, he can print on his own, under license.
INCO TERMS
INCOTERMS 2000 are internationally accepted commercial terms defining the respective roles
of
the buyer and seller in the arrangement of transportation and other responsibilities and clarify
when the ownership of the merchandise takes place. They are used in conjunction with a sales
agreement or other method of transacting the sale. Some of the most commonly used Incoterms
are given below :
_ EXW – EX Works – Title and risk pass to buyer including payment of all transportation
and
insurance cost from the seller’s door. Used for any mode of transportation.
_ FCA – Free Carrier – Title and risk pass to buyer including transportation and
insurance cost when the seller delivers goods cleared for export to the carrier. Seller is
obligated to load the goods on the Buyer’s collecting vehicle; it is the Buyer’s obligation
to receive the Seller’s arriving vehicle unloaded.
_ FAS – Free Alongside Ship – Title and risk pass to buyer including payment of all
transportation and insurance cost once delivered alongside ship by the seller. Used for
sea or inland waterway transportation. The export clearance obligation rests with the
seller.
_ FOB – Free On Board and risk pass to buyer including payment of all transportation
and
insurance cost once delivered on board the ship by the seller. Used for sea or inland
waterway
transportation.
_ CFR – Cost and Freight – Title, risk and insurance cost pass to buyer when delivered
on
board the ship by seller who pays transportation cost to the destination port. Used for
sea or
inland waterway transportation.
_ CIF – Cost, Insurance and Freight – Title and risk pass to buyer when delivered on
board the ship by seller who pays the transportation and insurance cost to the
destination port. Used for sea or inland waterway transportation.
_ CPT – Carriage Paid To – Title, risk and insurance cost pass to buyer when delivered
to carrier by seller who pays transportation cost to destination. Used for any mode
of transportation.
_ CIP – Carriage and Insurance Paid To – Title and risk pass to buyer when delivered
to carrier by seller who pays transportation and insurance cost to destination. Used for
any mode of transportation.
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_ DAF – Delivered at Frontier – Title, risk and responsibility for import clearance pass
to buyer when delivered to named border point by seller. Used for any mode of
transportation.
_ DES – Delivered Ex Ship – Title, risk, responsibility for vessel discharge and import
clearance pass to buyer when seller delivers goods on board the ship to destination port.
Used for sea or inland waterway transportation.
_ DEQ – Delivered Ex Quay (Duty Paid) – Title and risk pass to buyer when delivered
on board the ship at the destination point by the seller who delivers goods on dock at
destination point cleared for import. Used for sea or inland waterway transportation.
_ DDU – Delivered Duty Unpaid – Seller fulfills his obligation when goods have been
made
available at the named place in the country of importation.
_ DDP – Delivered Duty Paid – Title and risk pass to buyer when seller delivers goods
to
named destination point cleared for import. Used for any mode of transportation.
_ Note : EXW, CPT, CIP, DAF, DDU and DDP are commonly used for any mode of
transportation.
FAS, FOB, CFR, CIF, DES and DEQ are used for sea or inland waterway.
For more Inco terms visit www.incoterms.com
MARINE CARGO UNDERWRITING DOCUMENTS
While granting cover and before the policy is issued, every underwriting office should ensure
that
they have complied with the relevant provisions of the following :-
a) The Marine Insurance Act, 1963
b) The Insurance Act, 1938
The Insurance Rules, 1939
c) Exchange Control Regulations
d) The Stamp Act
The documents used for marine underwriting are :
1) Declaration Form, 2) Policy, 3) Cover Note,
4) Open Cover, 5) Open Policy, 6) Certificate of Insurance, and 7)
Endorsements.
1. DECLARATION FORM
There is no standard proposal form for Marine Cargo Insurance. The risk is assessed on the
basis of the information given on the Declaration Form which is to be completed and signed
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by the proposer. A duly signed letter, giving all relevant details mentioned in the Declaration
Form, will also serve the purpose.
Declaration Form is not useful to consider proposal for issue of an Open Cover or an Open
Policy, but the insured may be allowed to make declarations thereunder by using the
Declaration
Form separately for each shipment or despatch. In such cases, the Insured should be
advised to make sure that numbered Declaration Forms are used in their serial order, that is,
in the same order as that of the shipments or despatches.
In the column for “sum insured” the amount for which the goods are to be insured must be
clearly detailed. The amount of C.I.F. value should be shown separately from Duty and
Increased Value if they are also to be covered. If different commodities are declared, separate
values should be given for each with basic CIF value shown separately from the percentage
to be covered over and above the C.I.F. value.
2. POLICY
There is only one- the standardized MAR form for marine cargo insurance. The policy form
does not cover any risk on its own. The clauses, conditions and warranties attached to and/or
mentioned on the form determine the scope of cover. The policy form is suitable for insurance
of all types of goods, whether in transit by vessel, aircraft or on land. The policy will be issued
only when full details to insure the consignment are obtained and stamped as required under
The Stamp Act. The minimum premium for the policy inclusive of all extras and war/strikes,
S.R.C.C. risks is Rs.50/- but does not include the stamp fee which is separately charged and
recovered from the assured. When the policy is issued to cover a single consignment, it is
termed as the ‘Specific Policy’.
Section nos. 24 to 33 of the Marine Insurance Act are devoted to the policy.
3. COVER NOTE
It may happen that the proposer is interested in a policy but is unable to provide all details
required to issue the policy. For example, he has placed or is about to place an order on a
shipper abroad for some goods which he wants to import to India, but is not aware when they
will be shipped. He may be an upcountry exporter in India, who is not likely to know, when the
goods leave his warehouse, name of the vessel and the bill of lading number. In such cases a
policy cannot be issued but the proposer’s interest may be protected under a Cover Note.
Cover Note is normally issued for a single consignment and not a series of shipments. It
should have a validity period, which reflects in case of imports, the time limit within which the
proposer expects that the goods will be despatched by the shipper. Validity period means that
the transit must commence during the said period. It is possible to extend the validity period,
for which no extra premium need to be charged, provided the assured requests in writing to
extend the period before its expiry and the underwriting office is satisfied that the reasons for
which the extension is required are genuine and beyond his control.
The underwriting office must remember that cover note is an unstamped temporary document,
granted provisionally, pending issue of the policy. The assured must submit the remaining
details to the insurers and get it replaced by a duly stamped policy. Cover note affords cover
to the assured if the shipment materializes and conforms in all respects with its details.
If it is intended to cover an overseas voyage by a classed vessel, the conveyance should not
75
be described as ‘first class’, ‘approved’, ‘conference’, or ‘G.I.C. approved’ vessel or by any
similar description. The correct method is to state, “vessel classed as per the Institute
Classification Clause (1.1.2001)”. A copy of the said clause should also be attached to the
cover note.
4. OPEN COVER
An open cover is an agreement (not a policy) whereby the insurer will accept insurance of all
shipments made by the assured, within the terms of the cover for a fixed period, usually for
12 months. Being an agreement, it is not stamped. However, stamped policies or certificates
of insurance are issued against the declaration made by the assured. The open cover is of
great convenience to the clients engaged in regular import/export trade.
An important difference between a cover note and an open cover is in respect of the sum
insured which is mentioned in the former but is absent in the latter. In absence of the sum
insured, which gets exhausted by declarations, the open cover will remain in force uninterrupted
during its period of one year, unless terminated by either side by a notice for cancellation.
The scope of open cover is very wide. It covers all shipments made by or to the assured for
their own account as principals or as agents for others and in which they have an insurable
interest.
Though the insurers are bound to accept all declarations falling within the terms of the open
cover, they would not like to be exposed to heavy commitments without prior notice from the
assured. Liability under the open cover is, therefore, restricted to a fixed maximum amount
under two clauses, namely (i) Limit per bottom and (ii) Limit per location.
The limit per bottom for each type of conveyance (vessel, aircraft, post etc.) is determined
keeping in mind the assured’s requirements and the limits given to the underwriting office. If
higher limits are required, reference either to the Regional Office or Head Office of the
company, as the case may be and their prior approval is necessary. The limit per bottom
stands for the sum insured per declaration or consignment and not total value of the assured’s
declarations for more than one consignment shipped on the same conveyance. It means any
one vessel/conveyance under which the insurers liability is limited to an amount for any one
declaration.
The ‘Location Clause’ is used in the open cover, which is subject to a provision with regard to
value of each shipment, that is the ‘Limit per Bottom’. The per bottom limit arrangement works
satisfactorily but in the event of delay in arrival of the carrying vessels, strikes at the ports etc.
and because of extension of cargo cover from ‘warehouse to warehouse’, more than one
consignment, each within sum insured of ‘Limit per Bottom’ could be accumulated at the port
(location) awaiting shipment or delivery. In these circumstances, the insurers are faced with
the prospect of heavy liability in the event of a major fire or catastrophe occurring at the port
resulting in total loss of cargo stored therein. The insurers therefore avoid such exposure
under the ‘Location Clause’. The limit under the clause is fixed in consultation with the
assured but it should not be less than the limit per bottom.
It is necessary to be specific and precise in describing the subject matter insured. As the
rates, terms and conditions are agreed in advance, care should be taken to attach a ‘schedule’
to the open cover describing therein all commodities insured in serial order and for each
commodity, its nature of packing, voyage, terms and conditions of insurance and the rate of
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premium.
Company’s form No. M20 (R) should be used to issue the open cover. Do not use the policy
form for this purpose.
All open covers are subject to the standard clauses, conditions and warranties and most of
them are printed on the form. When it is necessary to identify the applicable clauses, conditions
and warranties, they should be carefully selected and mentioned in the columns provided in
the form.
One of the most important conditions of the open cover is that the assured is bound to
declare to the insurers each and every shipment, whether arrived or not, but should he
willfully fail to report the shipments, then the open cover, as to all subsequent shipments, at
the insurers option, will become null and void. However, shipments which the assured fails to
declare unintentionally are held covered subject to open cover conditions.
The open cover format makes it necessary for the assured to declare each shipment
immediately upon receipt of the shipping documents. However, to comply with section 64-VB
of the Insurance Act, 1938, the assured is required to furnish declaration within 15 days from
the date of shipment in the case of imports and 72 hours of sailing of the vessel in the case
of exports from India.
It is advisable to issue a specific policy against each declaration for insurance of an export
shipment and a certificate of insurance for an import shipment. Minimum premium under the
policy is Rs.50/- and the certificate of insurance, Rs.30/-.
The basis of valuation is C.I.F. cost of the goods plus 10% but in the event of loss prior to
declaration and / or shipment on board the vessel, it is limited to prime cost of the goods plus
charges actually incurred and for which the assured is liable. The open cover can be cancelled
by either side by giving 30 days notice in writing.
An open cover can be issued after collecting adequate provisional premium for compliance of
section 64-VB of the Insurance Act, 1938.
5. OPEN POLICY :
It is a long-term-usually 12 months Cargo Insurance Contract expressed in general terms
and effected for a round sum sufficient to cover a number of despatches until the sum insured
is exhausted by declarations. The Open Policy, also known as the Floating Policy, saves the
assured the inconvenience of effecting individually the insurance of goods despatched within
the country. The policy may cover both incoming and outgoing consignments from anywhere
in India to anywhere in India. The sum insured under the policy should ordinarily represent
the assured’s estimated annual turnover of the goods.
The Open Policy will expire when the sum insured thereunder is exhausted by declarations or
upon expiry of the 12 months period, whichever occurs earlier. If the sum insured is likely to
get exhausted before expiry of the policy period, the assured may increase the sum insured
suitably upon payment of additional premium. If the sum insured remains unutilized at the end
of the policy period, proportionate refund of premium is given to the assured.
An Open Policy is to be fully stamped. Therefore, Certificate of Insurance if issued thereunder,
need not be stamped. An open policy can be issued after collecting adequate provisional
premium for compliance of section 64-VB of the Insurance Act, 1938.
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Open Policy Conditions
“Attaching to and forming part of Open Policy No. …….
1) Declaration :
It is a condition of this insurance that assured is bound and will declare each and every
despatch coming under the scope of the Open Policy without any exception within 24
hours or as may be agreed from the time of issue of the Railway Receipt / Lorry Receipt
/ Postal Receipt / Airway Bill.
2) Basis of Valuation :
Invoice cost of goods, the freight for which the insured is liable and the cost of insurance
plus ten percent.
3) Inspection of Records :
The Company and/or its Agents will have the right at any time during business hours to
inspect the insured’s record of despatches made within the term of the policy.
4) Notice of Cancellation :
This Open Policy is subject to cancellation by either party after giving 30 days notice in
writing, for transit risks and notice for S.R.C.C. risks without prejudice to any risk which
has already attached.
5) Limit of Company’s Liability :
Warranted that the limit of Company’s liability in respect of any one accident or series of
accidents arising from the same event shall not exceed:-
By Rail ——————— Rs.—————-
By Road ——————— Rs.—————-
Per Registered Post——— Rs.—————-
Per Air Freight ————— Rs.—————-
6) Policy Period :
This Open Policy is to remain in force for a period of 12 months from ____ to ___ unless
the sum insured is previously exhausted by declarations.
7) This contract is subject to such rates, rules and regulations in force at the time the risk
on each despatch attaches hereunder, subject also to the terms and condition of the
open policy.
NOTE :
A) Declarations received from the Insured should be promptly entered in serial order in the
Open Policy Control Book, after verifying that each declaration corresponds in all respects
with the scope of cover granted under the open policy i.e. interest, nature of packing, transit,
etc; that the date of despatch is within the open policy period; that there is adequate balance
of the sum insured to cover the risk and that the sum insured under the declaration is within
the prescribed limit.
B) In the event the assured is allowed to submit periodical declarations, amend the period is
clause no. (1) ‘Declaration’ suitably.
6. CERTIFICATE OF INSURANCE :
The Certificate of Insurance may be issued under an Open Cover or an Open Policy. If
issued
under an Open Cover, it will have to be stamped, as the Open Cover is an unstamped
document. It may also be issued under an Open Policy to meet the banker’s requirements or
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for accounting purposes.
Service Tax
Service Tax need not be charged for any export consignments.
7. ENDORSEMENTS :
Endorsements may have to be passed for the following reasons :
1) To incorporate certain additional conditions in the contract of Insurance.
2) To exclude or cancel certain portions from the contract of insurance.
3) To rectify any omission or error on the part of Insurer/Assured/to allow refund of
premium.
Before agreeing to issue an Endorsement the reason why an alteration in the terms of contract
is
necessary should be carefully ascertained. There are two forms of Endorsements viz. Extra
Endorsement and Refund Endorsement. Any Endorsement must be attached to the original
document as otherwise the holder thereof who may be someone other than the original assured
will have no knowledge of the changes effected.
However, no office of the Company is authorized and should not endorse and/or alter Policy,
Certificate of Insurance or Endorsement issued by other office of the Company, unless written
permission of the Policy issuing office is obtained in advance
RECOMMENDED CONDITIONS AND WARRANTIES

The All India Marine Cargo Tariff became redundant with effect from 01/04/94.At present the
rates
are market driven. However it is the responsibility of every ‘New Indian ‘ underwriting marine
business to maintain profitability of the portfolio by proper underwriting. To assist the marine
underwriter towards meaningful underwriting we give below recommended warranties
/conditions
applicable vis-à-vis type of commodity. It is strongly recommended that each office creates a
database on the types of commodities underwritten by them; evolves its own warranties /
conditions
based on experience.
RECOMMENDED WARRANTIES / CLAUSES (for any Cargo)
1. For C.I.F value insurance : “Warranted insured value herein does not exceed c.i.f cost plus
ten percent.”
2. For shipments per vessel :
a) “Warranted shipped under deck.”
b) “Warranted shipped under a clean Bill of Lading”
3. For containerized shipments per vessel / aircraft : “Warranted number of packages
stuffed
in the container and / or their weight is clearly stated in the Bill of Lading / Air Waybill.”
4. For insurance of foodstuffs, meat, fish and similar edible items : “Warranted excluding
the risks of rejection by government authorities at port of destination”
5. For insurance of grains, seeds and similar cargo: “Warranted excluding natural loss in
weight and/or trade shortage.”
6. For insurance of fragile goods such as glass, fabrics etc. : “Warranted excluding the
risks
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of loss or damage due to chipping, denting and scratching.”
7. For bagged cargo : “Excluding the risks of shortage from sound bags.”
8. Liability Termination Warranty for unattractive port of destination : “Notwithstanding any
provision contained in or endorsed on the policy/certificate of insurance, it is hereby expressly
warranted that the liability of the insurer terminates upon discharge overside of the goods
hereby insured from the overseas vessel at the port of destination stated therein.”
9. Cutting clause for goods such as cast iron pipes, asbestos sheets, etc. : “Warranted
that
the damaged portion should be cut off and the balance utilized.”
10. Label clause for bottled, tinned, canned goods : “Excluding damage to labels unless the
goods themselves are damaged at the same time.”
11. Replacement Clause for insurance on machinery : “In the event of claim for loss or
damage recoverable hereunder, the Company only to pay the cost of repairing, or if necessary,
replacing the damaged part or parts, but such cost in no case to exceed the insured value of
the part or parts so damaged.”
12. Pair and Set Clause : “Where any item insured under this policy consists of articles in a
pair
or set, the Company’s liability 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 or set nor more than a proportionate part of the insured value
of the pair or set.”
13. Double Insurance Clause : “Warranted that no other insurance is or will be effected by or
on
behalf of the insured on the same interest.”
14. For insurance of valuables: “Warranted insured with carrier for not less than Rs. ………
per
package or …… percent value per package, whichever is lower.”
15. Comprehensive Clause : “Including the risks of theft, pilferage, non-delivery, fresh water
and
rain water damage, hooks, oils, mud, acid and other extraneous substances or heating and
sweating and damage by other cargo.”
16. “Warranted not shipped on board a vessel under the Flag of Convenience.”
17. “Warranted this contract is subject to such rates and regulations in force at the time the risk
on each despatch attaches hereunder.”
18. For Second-hand goods : “Where goods lost or damage are second-hand this insurance is
only to pay such proportion of the cost of repair or replacement plus charges for forwarding
and refitting if incurred as the insured value bears to cost of the goods when new based on
present values.”
19. For acceptance under a specific policy :
a) “Warranted to sail within . . . .days.”
b) “Warranted the vessel has not sailed before date of issue of the Cover Note/Policy.”
20. For unattractive ports of call of the vessel : “Warranted not calling at ports or places in. .
.
(mention here names of ports or countries).”
21. For shipment per vessel, if name of the vessel is not available : “Warranted shipped per
vessel classed as per the Institute Classification Clause (1-1-2001) (attach the said clause to
the document).”
22. If rate of Premium is applicable to goods despatched in closed wagons/covered
vehicles :
“Warranted despatched in closed wagons/covered vehicles only.”
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STANDARD ENDORSEMENT
As far as possible the following standard endorsement wordings should be used :
1) Correction in Assured’s Name :
It is hereby noted that the name of the assured under the above policy is . . . . . . . . and not as
mentioned originally therein.
2) Change in the description of goods :
It is hereby noted that the correct description of the goods insured under the above policy
should be . . . . . . . . . . and not as stated originally therein.
3) Change in Steamer’s Name :
The correct name of the Steamer under the above Policy should be S.S./M.V. . . . . . . . . . . . .
and not as originally mentioned therein.
4) Change in Destination :
It is hereby noted that the destination under the above policy is . . . . . . . . . . . . . . .and not as
mentioned originally therein.
5) Shut out Cargo :
It is hereby noted that the goods insured under the above policy have been shut out per S.S./
M.V. . . . . . . . . . . . . . . and the same have been shipped per S.S./M.V. . . . . . . . . . . under Bill of
Lading No. . . . . . . . dated.
Including Securities and valuables POLICY

Bullion means raw gold or silver lump. Specie means metal in the form of minted pieces (e.g.
gold
coins)
Great underwriting care should be exercised in the insuring of these risks and particular
attention
should be paid to the security aspects of the risk and moral hazard of the assured.
In case of transit by air, the same is subject to at least 5% valuation charges are paid by the
Insured to the air carriers. It would be advisable to insist of export of such commodities through
reputed couriers like Brink’s Arya, Lemuir etc
In case of sending by registered insured post a minimum of Rs.500/- per package shall be
insured
with postal authorities and the liability under the policy shall be subject to admission of liability
by
Postal Authorities. The insurance should be made subject to the following clause: -
“This policy covers all risk from the time the parcel is delivered at the Post Office and
ceases immediately the same is delivered to the consignee at destination by the
Postal Authorities.”
Securities shall be insured for their face value or market value whichever is lower and the policy
shall include the following warranty: -
“Warranted that in the event of loss or damage to the securities, the indemnity will be
limited to the cost of obtaining duplicate securities unless it is established that the lost
securities have been encashed fraudulently.”
When door-to-door cover is required in conjunction with the transit risk, additional premium rates
to be charged.
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Where the sum insured in any one transit is Rs.25,00,000/- and above, cover is to be provided if
carried under armed escort only.
Cover does not include the risk of infidelity of the assured’s employees. This may, however, be
covered at an extra premium.
ANNUAL POLICY
General Rules and Regulations
1. Cover is granted in respect of goods belonging to the Assured and or held in trust by
the
assured and not under contract of sale and or purchase which are in transit by road or
rail
from specified depots /processing units to other specified depots /processing units.
2. Insurable interest to remain with insured
3. Policy not assignable or transferable
4. Issue of Annual policy to transport operators/contractors, clearing and forwarding
agents
prohibited
5. Policy is subject to the condition of average
Basis of Sum Insured
1. The Sum Insured should represent maximum value of goods on risk at any one time during
the Policy Period and remains constant in the event of no claim.
2. The aggregate Maximum estimated value on rail/road at any one time of all insured goods in
respect of each specified transit.
3. If several specified transits are involved the aggregate sum insured shall be the sum total the
aggregate maximum estimated value at any one time for each of the specified transits.
4. Specified Transits is the transit that commences from a named place and terminates also in a
named place.
5. The above is subject to minimum limits of Sum insured as stated below:
_ Incase distance is 80 km or less, sum insured will be twice the single carrying limit
subject to a minimum of 1% of estimated annual turnover.
_ Incase distance is more than 80 km and less than 500 km, sum insured will be four times
the single carrying limit subject to minimum of 2% of estimated annual turn over.
_ Incase distance is more than 500 km sum insured will be 6 times the single carrying limit
subject to minimum of 3% of estimated annual turn over.
REINSTATEMENT
The sum insured shall stand reinstated on a valid claim arising subject to payment of pro-rata
additional premium on the reinstated amount by the assured counting from the date of the loss
till the expiry of the insurance.
Total Liability of the insurer of the policy period shall not exceed twice the sum insured stated in
the policy.
CANCELLATION
30 days notice for transit risks and 48 hours notice for SRCC cover providing for pro rata refund
of premium
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BASIS OF VALUATION
Prime cost plus expenses incidental to transit and charges of insurance.
IMPORTANT
Annual Policies should be accepted only at Regional Office.
NEED FOR ANNUAL POLICY

This policy is ideal for industries who have voluminous inter depot transfers of their stocks, raw
material, finished, semi finished products for reasons like processing, allocation, distribution –
most important in the course of such transits/operations ownership does not change hands.
The movement of goods is so organized that it is possible to identify the transits, the distance of
each transit and the value of goods at risk per transit, for a specified period. The value of goods
at risk at any one time is supposed to remain constant for a given transit and forms the basis of
the sum insured under the Annual Policy. The sum insured remains fixed during the policy
period and will not get exhausted by declarations in any form to the insurers. This policy is
suited for clients having large turnover but limited to number of specified transits
SENDINGS BY COURIER
The sendings by courier can be divided into two categories.
1) UNACCOMPANIED BAGGAGE :
Insurance Cover against despatches made through couriers as unaccompanied baggages
may be granted only when courier has a Legal Liability Policy (Professional Indemnity Policy).
Marine Cargo Insurance Policy covering such despatches to the owners of cargo can be
granted only subject to the couriers complying with the following minimum requirements :
(a) The courier company must take out legal Liability / Professional Indemnity Policy for a
minimum Indemnity limit of Rs.2 lakhs for any one event.
(b) The cargo owners will not contract out with the courier allowing the courier to restrict his
liability to any amount less than the statutory liability of original carriers.
(c) Courier’s receipt issued to cargo owner should also contain the original carrier’s
consignment note / way bill / airway bill number and date or it can be agreed to be
declared later.
2) ACCOMPANIED BAGGAGE :
It was decided not to grant marine insurance cover for despatches made through couriers
carrying the cargo as Accompanied Baggage. If cargo was to be carried by courier as
Accompanied Baggage, the same could be considered by the Miscellaneous Department
and a suitable Baggage Policy be given. Such Policy may be given in the name of the Courier
itself.
GENERAL :
No Marine Cargo Insurance Policy can be issued in the name of courier company in
respect of either accompanied or unaccompanied baggage.
(b) As far as Marine Insurance Cover for despatches sent as unaccompanied baggage is
concerned, whilst cargo can be insured on an agreed value basis, letter / documents and
similar items are to be insured only for reimbursement of the expenses reasonable
incurred for remaking such documents / such items. For documents / instruments the
following warranty will have to be incorporated in the Marine Cargo Policy :-
“Warranted that in the event of claim for loss or damage to documents or instruments
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insured hereunder, the liability of the Insurer will be limited to the actual expenses
reasonably incurred for remaking such documents / instruments.”
(c) Miscellaneous Accident Deptt. can cover accompanied cargo sent through couriers,
as
per usual conditions; if approached by cargo interests.
(d) No claim for consequential loss will be considered
CLAIMS MANAGEMENT
PREAMBLE
Marine Cargo Department, unlike other Departments of Insurance, is very complex as one
single
risk may involve multiplicity of type of transits, modes of conveyance, wide locational and
climatic
variations and is involved with various segments of markets. Claims arising out of policies
issued
by this Department cannot, therefore, be completely bound by specific Guidelines. Guidelines,
whenever essential have therefore, to be of a general nature and cannot be exhaustive by any
means. Focus should however be in general on the following areas :
o Proper underwriting
o Establishment of liability
o Expeditious settlement
o Preservation of rights of recovery
o Loss minimisation
For considering a claim arising under a Cargo policy, some basic documents are obviously
necessary to substantiate the loss. There is no short-cut to this requirement except with certain
specified documents, which, if not available, may be substituted by others to meet the
requirements
of the Insurers.
In some cases, it may not be possible to comply with the requirements laid down due to the
peculiar character of a case or the particular circumstances of it. The resultant non-compliance
should not, therefore, render the claim non-payable and the claim settling authority may use his
discretion to dispose it on merits.
INTIMATION OF CLAIM
On receipt of intimation of loss, two things are of immediate importance :
To ascertain whether a valid insurance policy is in existence.
ii. Whether the statutory provisions for payment of premium have been complied with.
APPOINTMENT OF SURVEYORS
Marine Cargo claims have a peculiarity and survey by Licensed Surveyors may not be
necessary
in respect of some of the following categories of losses :
Claims where documentary evidence of the loss is available, in the form of
shortlanding
or non-delivery certificates issued by Port Trusts, Railways or other public or
Semi-Government authorities or claims in respect of which Excise authorities give a
certificate for dutiable items and sling loss claims certified by Harbour authorities.
ii. General Average Claims. Please also refer to separate para on GA claims.
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iii. Total loss
iv. Claims, the amount of which has been adjudicated upon or decreed by
Courts.
v. Claims in respect of loss or damage to tea in transit from gardens in India.
vi. Claims in respect of which the amount is determined by recognized and well
established conventions or under agreements.
Independent Surveyors to be engaged in all other cases

If the estimate of loss is below Rs.20,000/- the minimum amount qualifying for survey may be
decided by the dealing office as per guidelines issued by HO. Where the requirement is waived
a completed claim form may be obtained from the claimant and the dealing office should satisfy
itself that the claim is genuine and admissible under the policy.
If the estimate of loss is considered to qualify for survey, the dealing office may appoint a
surveyor competent for conducting a survey for the type of cargo and nature of loss concerned.
Self survey facilities may be specially agreed with important and reliable clients for amount not
exceeding that where the appointment of licensed surveyor is a statutory requirement.
Technical/professional experts may also be appointed as consultants to licensed surveyors
where necessary (eg. Mechanical Engineers for machinery surveyors/Chemical Engineer for
Chemical risks, Experts from tea industry/trade for tea surveys, etc.)
In Marine insurance, unlike other classes of insurance, Survey fee is generally required to be
paid by the claimant initially. It is of course, reimbursable to the claimant along with the claim
amount if the claim is found admissible under the policy. However, this practice may be varied
at Insurers discretion on the basis of an understanding with regular clients where the survey fee
is paid by the Insurers direct, but in case the loss is found to be inadmissible, the claimant
undertakes to take the responsibility for such payment/reimbursement.
The schedule of survey fees for Marine Claims agreed by all Public Sector Insurance
Companies is available on page no. 157.
DOCUMENTATION TO SUPPORT CLAIMS
EX : Ship, Air, Port, Multimodal Transport

Documents generally required for settlement of various types of claims are as under. Keeping in
view the purpose of calling for the claim documents and depending on circumstances,
submission
of certain documents may be waived recording the reasons for the same.
General
Original insurance policy/declaration under the open policy duly endorsed by the
insured. A
letter of indemnity may be furnished if the original is lost.
ii) Original or a signed copy of sale invoice along with packing list wherever available.
iii) Signed copy of Bill of Lading (in case of sea voyage)/Air Consignment Note (for air
cargo) /
MTD/CTD (for multimodal transport) / postal receipt for sendings by post.
iv) Triplicate or exchange control copy of Bill of Entry (to facilitate verification of the
date of filing
to ascertain whether there has been any delay and also check duty payment details).
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v) In case of General Average, G.A. Guarantee and Counter Guarantee or original
Cash Deposit
Receipt with Letter of Transfer as the case may be. Reference be made to the separate para
on G.A.
vi) Letter of Subrogation duly stamped and executed (only where recovery from
carriers/other
third parties is possible).
vii) Special Power of Attorney (wherever recovery from Railway/other carriers is
involved. In other
cases as required).
viii) Lost Over Board Certificate where loss has taken place during loading / unloading.
ix) Copies of claim notice served on carriers and correspondence exchanged with
them alongwith
the registered A/D cards or any other valid evidence of service of claim notice within the
statutory time limits.
x) In case of shortlanding / non-delivery of complete consignment :
Full set of original Bill of lading / Air Consignment Note/Postal Receipt etc. as applicable
endorsed in favour of insurers. The original contract of affreightment should be endorsed by
the carrier confirming shortlanding / non-delivery of the entire consignment by them or with a
separate shortlanding/non-delivery certificate. An undertaking to be obtained from the
claimant
that he would take delivery of the cargo, if traced, under an insurance survey.
xi) In case of partial non-delivery/shortlanding :
Non-delivery and / or landed but missing certificate from the sea-air/CTO carrier/postal
authority/
Port Trust, is applicable.
xii) In case of partial loss or damage :
a. Assessment report by sea/air/CTO carrier/postal authority
b. Survey Report of independent surveyor (if survey has not been waived)
c. Claim form/claim bill.
xiii) Banker’s Certificate confirming non-receipt of export proceeds in India in an
approved manner
(in case of claims under export policies to be settled in India).
Non-delivery (shortlanding or landed but missing)
Specific documentation – The claimant should be requested to apply for either shortlanding
certificate or landed but missing certificate from the port authorities or the steamer company
within the period allowed under statute/Port Rules. When the short landing or landed but
missing certificate is obtained, the claimant should be asked to send notice to the carrier or
the Port authorities, as the case may be for the value of the lost cargo (CIF value and / or
duty and / or profit) and obtain their acknowledgements : A claim on the carrier or the port
authorities should be accompanied by
i. Photocopy of Shortlanding or landed but missing certificate.
ii. Copy of Bill of Lading.
iii. Copy of Invoice.
Individuals or agencies specialized in the work of tracing missing cargo should be engaged to
trace the missing cargo of very high values. Where such certificates are not forthcoming in
time, notice to carriers and port authorities etc. must be served within the statutory time
limits.
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Total and/or constructive total loss
(where total and/or constructive total loss of the cargo has been caused whilst in the custody of
the steamer company or port authorities) :
i. Copy of monetary claim on the carrier/port authorities (as the case may be) and
acknowledgement.
ii. Open assessment/delivery certificate.
Particular Average (partial loss i.e. theft, pilferage, shortage and other damages) (in
cases
when loss or damage is reported before clearance from the dock) :
i. Steamer/port survey report.
ii. Customs examination certificate before clearance of consignment from docks.
iii. Independent survey report.
As regards claim for shortage from externally sound cases, it is essential to ask claimants to
refer the matter to their suppliers about the possibility of short packing at their end. Only on
receipt of confirmation from the suppliers about correct packing as per invoice, further
processing of claim on merits should be done. Surveyors should be asked to examine
whether there was sufficient empty space in the case to hold the missing items or whether
the missing items were replaced by some foreign materials in order to determine skilful
pilferage in transit. It may also be checked as to whether the missing items had been
extracted by Customs for examination or other purposes.
Claim under Duty and Increased Value Insurance Policy.
In the case of shortlanding, no duty is payable. Claims other than shortlanding have to be
scrutinized with due regard to the basis of duty insurance and may be authorized for payment
for the actual value of the loss including the actual customs duty paid but not exceeding the
proportionate insured value on duty.
As regards Increased Value Insurance, the claim would be payable for proportionate increased
value insured under the policy as per the Increased Value Insurance Clause.
A claim under ‘duty/increased value’ policy is payable only if claim on the relative cargo policy is
payable. The most important document is, therefore, the original settlement letter from the cargo
insurers. (If cargo and duty/increased value, are insured with the same insurers, then this
requirement will not obviously apply).
The other documents required are :
i. Original Insurance Policy duly endorsed
ii. Copy of Bill of Lading
iii. Copy of invoice
iv. Bill of Entry
v. Survey Report
vi. Copies of correspondence exchanged with carriers relating to the claim lodged
with
them.
GENERAL AVERAGE
In the event of the steamer company declaring General Average, the consignees will be called
upon by steamer agents to make cash deposit before delivery of the consignment at destination.
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The consignees should be asked not to comply with this normally, without prior concurrence of
the dealing office. The concurrence can be given after ensuring that Lloyd’s form of bond or
similarly
worded form is used and the deposit to be collected by the Steamer Company would be
credited into a properly constituted Trust Account jointly with the Average Adjusters.
In lieu of cash deposit, steamer companies often accept unlimited guarantee of the Insurance
Company covering the goods. As far as possible the dealing office shall arrange for the General
Average Guarantee to be given subject to approval of CMD as per FSO – 1991.
As soon as any intimation is received regarding GA and any request from the Insured for
issuance of GA Guarantee is received, H.O – MCTD should be intimated with full details. For
issuance of
GA Guarantee approval of CMD is necessary as stated in the financial order – 1991.
Operating
offices should not make any commitment with regard to such guarantee. MCTD on examining
the facts would advise them in the matter.
Documents for General Average Claims

1. Original policy or certificate of Insurance duly endorsed
2. Bill of Lading (signed copy)
3. Invoice (original or signed copy)
4. A copy of Notice declaring General Average by the Shipowner/Agent.
5. General Average Deposit Receipt on Lloyd’s Form duly endorsed.
(This document indicates the name of the steamer, details of the casualty, the B/L no., the
provisional net arrived value of the Goods, description of the goods, the name of the GA
Adjusters, the amount of the deposit by the consignees etc.)
The Steamer Company is responsible for the adjustment of the GA Loss. For this purpose,
GA Adjusters, who are experts in this field, are appointed. Those Adjusters determine, initially
on estimated basis, the contribution to be made by the several interests, viz. ship, cargo etc.
the shipowner has a lien on the cargo to enforce contribution from the cargo interests.
Therefore, cargo will not be released until a cash deposit is paid by the consignee, or G.A
guarantee is furnished.
This cash deposit is refunded to the consignees by the Insurers and the Deposit Receipt is
retained by them so that any recovery to the credit of cargo interests after the final adjustment
will be to the credit of insurers.
6. General Average Counter Guarantee

As an alternative to cash deposit shipowners are willing to accept a Guarantee from a bank
or, if the goods are insured, from the insurers. Insurers grant this Guarantee on behalf of the
insured in terms of which they agree to pay the General Average Contribution. In such cases,
a Counter Guarantee is obtained from the insured. The Counter Guarantee is required because
the General Average adjustment may be based on a contributory value of the cargo which is
higher than its insured value. It will be appreciated that insurers are liable on the basis of the
insured value and hence the insured guarantees that he will reimburse the insurers with any
excess General Average contribution.
7. Letter of Transfer
This letter is signed by the consignees whereby they
i. Surrender their rights in respect of the deposit paid to shipowners by the insurers;
ii. Agree to transfer the deposit amount to the credit of the insurers;
iii. Authorize the insurers to receive from the shipowners the difference between the
amount of general average as adjusted and the amount of the deposit;
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iv. Undertake to refund to the insurers any sum deducted by the shipowners from the
deposit which may not be recoverable under the insurance policy; and
v. Undertake to repay to the insurers, if the contributory value exceeds the insured
value the proportion of general average applying to such value.
If it is reported that the General Average act has included sacrifice of cargo, then the
consignee should clear the damaged cargo only after the General Average Survey is conducted
by the ship’s Surveyors.
CLAIMS ON CONSIGNMENTS BY RAIL/ROAD
A. Railway Transit Claims

In the mutual interest of the insurers and the insured, the later should undertake the following
measures;
On receipt of the Railway Receipt, the consignees should arrange immediate clearance of
the goods as soon as they arrive at the destination station and, in any case, within the free
period of 7 days which is reckoned from the date of arrival of the consignment.
Even if the Railway Receipt has not reached the consignee he may, if he is aware that the
goods have arrived, arrange clearance on the basis of an Indemnity bond furnished to the
Railways. This is, of course, possible only when the ‘interest’ or the ‘property’ on the goods
has passed to the consignee under the provisions of the Sale of Goods Act.
Where an entire consignment has not arrived, say after two months from the date of booking,
the consignor and consignee should write to the Railway Administration to enable it to trace
the consignment. Registered (A/D) letters are to be addressed to the General Managers of
the Railways at the forwarding and destination stations, with copies to the respective Chief
Commercial Superintendents.
Where an entire consignments is not received within say 3 to 4 months of the date of
booking, a ‘non-delivery’ certificate should be demanded. In any case a Claim for
Compensation,
under Section 106 of the Railways Act, must be filed by Registered (A/D) letters on the
General Managers of the concerned Railways within 6 months of the date of Railway Receipt.
The original Railway Receipts are not to be surrendered to the Railways unless agreed to by
the Insurers. Where apparent loss or damage is noticed on the consignment received the
consignee should demand in writing, from the Station Master an Open Delivery or Assessment
Delivery Certificate. A copy of the demand should be sent to the General Manager of the
destination Railway. The original Open Delivery/Assessments Delivery Certificate should be
retained to be eventually submitted to the insurers. A copy of the Certificate should be sent to
the Railways in support of the claim preferred against them.
If the assessment made by the Railways is not reasonable, insurers should be notified so that
they may arrange for a joint survey before the goods are cleared.
If this certificate is not granted by the Station Master, appropriate remarks should be inserted
in the Delivery Book regarding damage and a certified copy of the remarks should be
obtained from the Station Master.
A consignment may well be contained in a full wagon (Wagon Load Consignment). In such
cases, if wagon seals and labels are found tampered with, Open/Assessment Delivery should
be applied for.
This procedure also applies to delivery at the consignee’s own Railway sidings. If any tampering
of the wagon seals/labels is detected a suspected qualified delivery should be taken by
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inserting remarks in the ‘OPT-18’ receipt to the effect that wagons are received subject to
inspection and checking at the siding in the presence of railway staff. Assessed delivery
should be thereafter applied for within 24 hours of unloading.
B. Road Transit Claims
The legal rights and liabilities in respect of carriage of goods by road are governed by the
provisions of the Carriers’ Act, 1865.
In the event of loss or damage a written notice giving particulars of the loss or damage
should be given to the carrier within 6 months of the time of loss or injury first comes to the
knowledge of the claimant. This notice is to be served by Registered Post with
Acknowledgement Due. The serving of such notice is a pre-requisite for filing of a suit
against the carrier.
It may also be noted that the carriers’ liability as common carrier ends and he becomes liable
only as a bailee of the goods in the following circumstances :
i. Delivery of goods offered to and not accepted by the consignee;
or
ii. Goods booked to ‘self’ reach the destination and the free period allowed for taking
delivery expires.
C. Claims Documents (Rail / Road)

As in the case of sea/air/multimodal transport/postal claims, the insured has to furnish evidence
of
(i) insurance, (ii) transit, (iii) value, and (iv) loss.
The following documents are required to be submitted to insurers in support of claim under
rail/road transit policies :
General documents :
1. Original Policy or certificate of insurance duly endorsed in blank.
2. Invoice (original or copy) / packing list/weight specifications.
3. Independent Surveyor’s Report, if any.
4. Letter of Subrogation (if recovery is possible).
Other documents depending on the nature of claim :
1. Original Railway Receipt (Non-delivery cases)
2. Copy of Railway Receipt (damage claim)
3. Original Consignment Note (Non-delivery cases – Road transit claims)
4. A copy of Consignment Note (Damage claim – Road transit claims)
5. ‘Non-delivery’ or ‘partial delivery’ certificate from the Railways / Road Transport
Operators.
6. Open Delivery / Assessment Delivery Certificate (Rail / Road)
7. Certified copy of the Remarks in the Railway Delivery Book (Damage Claims).
8. Certified copy of the Remarks in the delivery challan (Road Transit Claims)
9. Copy of (a) Notice of claim lodged on the carriers (Rail/Road);
(b) Acknowledgement
(c) Subsequent correspondence with the carriers.
10. Special Power of Attorney (Rail Transit Claims)
11. Letter of Authority (Rail Transit Claims)
Non-co-operation of carriers
Unfortunately, at times, no co-operation is extended to the clients by the Carriers/Bailees. For
90
example, if in spite of a timely application for survey, the Steamer Agents do not depute their
Surveyors to assess any loss/damage in respect of packages discharged from the vessel with
outward damage to the packages. Notice may be served with them, mentioning clearly that, in
case they do not depute their surveyors immediately, the loss as assessed by the Licensed
Surveyors will be binding on them and claim will be lodged accordingly. Likewise, if Inland Road
Carriers do not allow any assessed delivery in respect of damaged package/refuse to issue any
shortage/damage certificate, a Notice may be served on them, indicating that, if in spite of the
request made to them, they do not comply with the requirement, the findings of the survey
carried out by the Licensed Surveyors will be binding on them and claim on them will be lodged
accordingly.
In those cases where recovery suits are ultimately required to be filed against the Road Carriers
who are either proprietary or Partnership Firms, apart from the firm, the partners/proprietor
should also be separately impleaded in the case so that, if the time the judgement is
pronounced by the Court the firm ceases to exist, the personal property of the
Partners/Proprietor may be attempted to be attached while executing Decree.
CARGO LOSS MINIMISATION AND RECOVERY ACTION AGAINST CARRIERS / BAILEES

In Marine Cargo Insurance, like in all other classes of insurance, it is our business to ensure that
at the end of the day we are left with a reasonable underwriting surplus. To achieve this, not
only proper underwriting control is necessary but it is also of utmost importance that necessary
steps are taken to minimize the losses. A good many losses arise through careless handling by
Carriers who are primarily responsible for safe delivery of cargo entrusted to their care and
custody.
Therefore, unless they are made conscious of their obligations and liabilities, they may not take
adequate steps to protect the cargo entrusted to them. Liability under the policy of insurance
succeeds and not supercedes liability of carriers.
With a view to achieving loss minimization, the following aspects be kept in view :
1. Proper Packing :
Packing should be such as would withstand the stress and strains of normal transit. If it is
apparent that the packing employed is not suitable or insufficient, improvement should be
suggested to the shippers, having regard to the type of goods, transit and handling involved.
2. Proper Marking :
The packages should be so marked that identification is made easy. Suitable instructive
markings with indelible ink on the package tend to avoid mishandling. It is necessary that the
gross and net weights of the packages are marked, and a copy of the packing list is kept
inside the package. In respect of sensitive cargoes markings by codes are recommended to
avoid possible pilferage.
3. Selection of Carrier (Vessel / Vehicle) :

Shippers should be urged to utilize vessels whose operations are approved by GIC and also
comply with the provisions of Institute Classification Clause and shipments by vessels carrying
‘Flags of Convenience’ should be avoided.
Similarly, only reputable Transport Companies, preferably the ones which are approved by the
Banks, should be utilized for inland transit despatches to the extent possible.
4. Supervised discharge of overseas cargo :

Arrangements for supervision of discharge of valuable, delicate and sophisticated cargoes at
Indian Ports may be made, as and when required. In addition to supervision of discharge,
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follow up regarding early clearance, tracing out landed but missing consignments,
recommendation to repair and recondition defective and broken cases, and assistance in
arranging survey at docks are other areas where cargo supervisors may play an active role.
5. Prompt clearance from the docks & follow up action :

a) For prompt clearance of the cargo from the docks, documents should be filed with the
Customs under ‘prior entry’, i.e. 15 days before the arrival of the vessel. Customs
formalities and assessment of duty, should be completed before-hand so that clearance
of cargo could be effected soon after discharge from the vessel. Prompt clearance not
only minimizes the chances of theft and / or pilferage in the docks, but also avoids
payment of heavy demurrage to Port Authorities. It should be kept in mind that the cover
for 60 days from the date of landing of the cargo from the overseas vessel is not an
automatic cover. The inland transit, if involved, should be completed within this period
and once the goods reach the interior destination before the expiry 60 days, the cover
under the policy ceases automatically on arrival of the goods at the final destination. In
case of any delay in clearance of cargo, if it is found that the delay is within the control of
the consignee, the cover ceases from the time the delay is manifested. The Insured
should, therefore, approach the insurers for suitable extension on payment of additional
premium before the expiry of the cover.
When clearance is delayed for some reason or other, the consignment should be kept in
the lockfast/bonded warehouse. Defective packages should be reconditioned to avoid
further loss.
b) If the consignment, or a part thereof, is found missing, a ‘not found’ application should be
made forthwith to the Port Trust and shortlanding/landed but missing certificate should
be obtained from them.
6. Prompt disposal of salvage (particularly in respect of perishable commodities) is necessary

to realize maximum salvage recovery.
The salvage disposal procedure as laid down by the Company should be strictly adhered.
7. To ensure that the maximum quantum of recovery can be effected can be from the Carriers
the full value of the cargo should be declared to them. This is applicable to all types of
carriers in general and to Railways and Air Carriers in particular.
8. In view of the highly competitive marine cargo market following detariffing it is of utmost
importance to take all possible measures to protect the rights of maximum recovery from
carrier so that the cargo portfolio can continue to produce a healthy commercial surplus.
The procedures to be followed for protecting the recovery rights have been dealt along with
the time limits for filing claims and suits, whenever necessary, against the various types of
carriers in the next chapter.
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93
Marine Hull Insurance
Description
Marine Hull Insurance covers loss or damage to hull and machinery. The hull is the structure of the vessel.
Machinery is the equipment that generates the power to move the vessel and control the lighting and
temperature system such as boiler, engine, cooler and electricity generator.
Scope of Cover
Institute Time Clauses

These are the main clauses and most important in Marine Hull policies. Time Clauses covers for a specific
period usually 12 months. As the nature and degree of risks which the Insurer run vary according to the
kind of vessel, there exists a number of categories in the Time Clauses. They are : -
Institute Time Clauses (Hull)

Institute Time Clauses (FPA)
Institute Time Clauses (Total Loss Only)
1. Institute Time Clauses (Hull)

Provides the maximum coverage offered by hull insurance.
Perils Covered
a. Perils of the sea

b. Fire & explosion
c. Violent theft
d. Piracy
e. Breakdown of accident to nuclear installations etc.
f. Contact with aircraft
g. Earthquake, volcanic eruptions or lightning
h. Accidents in loading etc.
i. Bursting of boilers
j. Breakage of shaft
k. Latent of defect
l. Negligence of masters etc.
m. Negligence of repairers etc.
n. Negligence of charterers etc.
o. Barratry
Excluded Perils
p. Wilful misconduct of the Assured

q. Loss caused by delays
r. Wear and tear
s. Rats and/or vermin
t. Injury to machine not proximately caused by maritime peril
Paramount Exclusions In The Policy
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u. War
v. Strikes
w. Malicious acts
x. Nuclear exclusion
Other Losses & Expenses Covered
y. Pollution Hazard
z. 3/4th Collision Liability
aa. General Average and Salvage
ab. Sue and Labour
ac. Constructive Total Loss
2. Institute Time Clauses (FPA)

The coverage of these clauses are similar to that of Hulls Clauses but excludes coverage on
machinery damages in all respects.
It is advised that all vessels which exceed 15 years of age or older, if the risk accepted, to give this
coverage only. Past experience shows that older vessels suffer serious casualties due to machinery
damage. If machinery damage is excluded due to limitation of this clause, there is a better chance
of making hull underwriting profit.
3. Institute Time Clauses Hulls (Total Loss Only)

As the name suggested, this clause only covers in the event of it becoming a total loss by
arrangement, actual, compromised or constructive total loss. The rate for this cover is low and
usually this cover is only extended to old vessel (but not more than 20 years) or on accommodation
only.
Institute Yacht Clauses

This clause are basically Institute Hull clauses amended for yachts and include all damages to hull, masts,
spars, sails and other equipment on board the yacht but does not include damage whilst the yacht is racing.
Caution should be taken with regard to charter yachts and if the risk is accepted, the following warranty
must be included into the policy conditions, namely:
‘Warranted that professional skipper & crew is in attendance at all times’

Full details of the Skipper and Crew’s experience must be obtained.
Institute Voyage Clauses

This insurance covers risks during a voyage from one port or place to another or a round voyage. In so far
as ordinary vessels are concerned, as most of them are usually insured under a time policy, voyage
insurance is effected only in such cases as delivery voyage of a new vessel to buyer from the shipyard or a
voyage of a vessel to be repaired at shipyard. The period of coverage is usually less than a year and the
scope of coverage is almost identical that of time policy. In which case, there are also the FPA and Total
Loss cover.
Builders’ Risk Insurance

This type of insurance covers whilst vessel is under construction. During that period, it is exposed to risks
such as fire, tidal wave, capsize or failure in launch. It is also exposed to collision, and sinking on a trial trip.
The builder’s risk insurance effected by shipyards provides cover against all such risks. The insured value is
the contract price or the estimated completed value of the vessel if there is no contract price. The period of
insurance should be from the time of inception of the construction to the time of delivery. Hence, the period
can well exceed 12 months.
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Hull War And Strike Risks Insurance
War and strike risks are usually excluded from the cover of ordinary marine insurance policies in any market
throughout the world. This insurance covers exclusions under Article 11 of the Institute Time Clauses. It can
only be effected on vessels which are insured against ordinary marine risks. The rate of premium fluctuates
frequently reflecting the climate of world politics at the time of inception of the risk.
Terrorism Insurance
Terrorism cover is an excluded risk world-wide. There will be no consideration for acceptance if this
coverage is required.
Loss of Time Insurance

This insurance indemnifies a ship-owner for loss of anticipated profits or operating costs where the insured
vessel is forced to be out of commission in consequence of damage caused by maritime accident. The period
of insurance is one year and the insurable value is calculated based on the following: -
estimated operating costs

estimated chartering to be earned
estimated gross income of freight
The loss of time is covered on the basis of the number of days required for the completion of the repairs,
counting from the day following the day of the accident. The Insurer’s liability per any one accident is limited
to certain number of days up to 180 days throughout the year.
INSTITUTE VOYAGE CLAUSES-- HULLS

This insurance is subject to English law and practice
1. NAVIGATION
1.1 The vessel is covered subject to the provisions of this insurance at all times and has leave to sail
or navigate with or without pilots, to go on trial trips and to assist and tow vessels or craft in
distress, but it is warranted that the vessel shall not be towed, except as is customary or to the
first safe port or place when in need of assistance, or undertake towage or salvage services
under a contract previously arranged by the Assured and/or Owners and/or Managers and/or
Charterers. This Clause 1.1 shall not exclude customary towage in connection with loading and
discharging.
1.2 This insurance shall not be prejudiced by reason of the Assured entering into any contract with
pilots or for customary towage which limits or exempts the liability of the pilots and/or tugs and/or
towboats and/or their owners when the Assured or their agents accept or are compelled to accept
such contracts in accordance with established local law or practice.
1.3 The practice of engaging helicopters for the transportation of personnel, supplies and equipment
to and/or from the vessel shall not prejudice this insurance.
1.4 In the event of the vessel being employed in trading operations which entail cargo loading or
discharging at sea from or into another vessel (not being a harbour or inshore craft) no claim
shall be recoverable under this insurance for loss of or damage to the vessel or liability to any
other vessel arising from such loading or discharging operations, including whilst approaching,
lying alongside and leaving, unless previous notice that the vessel is to be employed in such
operations has been given to the Underwriters and any amended terms of cover and any
additional premium required by them have been agreed.
2. CHANGE OF VOYAGE
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Held covered in case of deviation or change or voyage or any breach of warranty as to towage or salvage
services, provided notice be given to the Underwriters immediately after receipt of advices and any
amended terms of cover and any additional premium required by them be agreed.
3. CLASSIFICATION
3.1 It is the duty of the Assured, Owners and Managers at the inception of and throughout the period of
this insurance to ensure that
3.1.1 the vessel is classed with a Classification Society agreed by the Underwriters and that her
class within that Society is maintained,
3.1.2 any recommendations requirements or restrictions imposed by the vessel's Classification

Society which relate to the vessel's seaworthiness or to her maintenance in a seaworthy
condition are complied with by the dates required by that Society.
3.2 In the event of any breach of the duties set out in Clause 3.1 above, unless the Underwriters agree to
the contrary in writing, they will be discharged from liability under this insurance as from the date of the
breach provided that if the vessel is at sea at such date the Underwriters' discharge from liability is
deferred until arrival at her next port.
3.3 Any incident condition or damage in respect of which the vessel's Classification Society might make
recommendations as to repairs or other action to be taken by the Assured, Owners and Managers must
be promptly reported to the Classification Society.
3.4 Should the Underwriters wish to approach the Classification Society directly for information
and/or documents, the Assured will provide the necessary authorization.
4. PERILS
4.1 This insurance covers loss of or damage to the subject-matter insured caused by
4.1.1 perils of the seas rivers lakes or other navigable waters

4.1.2 fire, explosion
4.1.3 violent theft by persons from outside the vessel

4.1.4 jettison
4.1.5 piracy
4.1.6 contact with land conveyance, dock or harbour equipment or installation
4.1.7 earthquake volcanic eruption or lightning
4.1.8 accidents in loading discharging or shifting cargo or fuel.
4.2 This insurance covers loss of or damage to the subject-matter insured caused by
4.2.1 bursting of boilers breakage of shafts or any latent defect in the machinery or hull
4.2.2 negligence of Master Officers Crew or Pilots
4.2.3 negligence of repairers or charterers provided such repairers or charterers are not an
Assured hereunder
4.2.4 barratry of Master Officers or Crew
4.2.5 contact with aircraft, helicopters or similar objects, or objects falling therefrom,
provided such loss or damage has not resulted from want of due diligence by the Assured
Owners, Managers or Superintendents or any of their onshore management
,
.
4.3 Master Officers Crew or Pilots not to be considered Owners within the meaning of this Clause 4
should they hold shares in the vessel.
5. POLLUTION HAZARD
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This insurance covers loss of or damage to the vessel caused by any governmental authority acting
under the powers vested in it to prevent or mitigate a pollution hazard or damage to the environment or
threat thereof, resulting directly from damage to the vessel for which the Underwriters are liable under this
insurance, provided that such act of governmental authority has not resulted from want of due diligence
by the Assured, Owners or Managers to prevent or mitigate such hazard or damage, or threat thereof.
Master Officers Crew or Pilots not to be considered Owners within the meaning of this Clause 5 should
they hold shares in the vessel.
6. 3/4THS COLLISION LIABILITY
6.1 The Underwriters agree to indemnify the Assured for three-fourths of any sum or sums paid by
the Assured to any other person or persons by reason of the Assured becoming legally liable by
way of damages for
6.1.1 loss of or damage to any other vessel or property on any other vessel
6.1.2 delay to or loss of use of any such other vessel or property thereon
6.1.3 general average of, salvage of, or salvage under contract of, any such other vessel or
property thereon, where such payment by the Assured is in consequence of the vessel hereby insured coming
into collision with any other vessel.
6.2 The indemnity provided by this Clause 6 shall be in addition to the indemnity provided by the
other terms and conditions of this insurance and shall be subject to the following provisions:
6.2.1 where the insured vessel is in collision with another vessel and both vessels are to blame
then, unless the liability of one or both vessels becomes limited by law, the indemnity under this
Clause 6 shall be calculated on the principle of cross-liabilities as if the respective Owners had been
compelled to pay to each other such proportion of each other's damages as may have been properly
allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the
collision,
6.2.2 in no case shall the Underwriters' total liability under Clauses 6.1 and 6.2 exceed their
proportionate part of three-fourths of the insured value of the vessel hereby insured in respect of
any one collision.
6.3 The Underwriters will also pay three-fourths of the legal costs incurred by the Assured or which the
Assured may be compelled to pay in contesting liability or taking proceedings to limit liability, with the
prior written consent of the Underwriters.
EXCLUSIONS
6.4 Provided always that this Clause 6 shall in no case extend to any sum which the Assured shall pay
for or in respect of
6.4.1 removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever
6.4.2 any real or personal property or thing whatsoever except other vessels or property on other
vessels
6.4.3 the cargo or other property on, or the engagements of, the insured vessel
6.4.4 loss of life, personal injury or illness
6.4.5 pollution or contamination, or threats thereof, of any real or personal property or thing
whatsoever (except other vessels with which the insured vessel is in collision or property on
such other vessels) or damage to the environment, or threat thereof, save that this exclusion
shall not extend to any sum which the Assured shall pay for or in respect of salvage,
remuneration in which the skill and efforts of the salvors in preventing or minimising damage to
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the environment as is referred to in Article 13 paragraph 1(b) of the International Convention on
Salvage, 1989 have been taken into account.
7. SISTERSHIP
Should the vessel hereby insured come into collision with or receive salvage services from another vessel
belonging wholly or in part to the same Owners or under the same management, the Assured shall have
the same rights under this insurance as they would have were the other vessel entirely the property of
Owners not interested in the vessel hereby insured; but in such cases the liability for the collision or the
amount payable for the services rendered shall be referred to a sole arbitrator to be agreed upon
between the Underwriters and the Assured.
8. GENERAL AVERAGE AND SALVAGE
8.1 This insurance covers the vessel's proportion of salvage, salvage charges and/or general average,
reduced in respect of any under-insurance, but in case of general average sacrifice of the vessel the
Assured may recover in respect of the whole loss without first enforcing their right of contribution from
other parties.
8.2 Adjustment to be according to the law and practice obtaining at the place where the adventure
ends, as if the contract of affreightment contained no special terms upon the subject; but where
the contract of affreightment so provides the adjustment shall be according to the York-Antwerp
Rules.
8.3 When the vessel sails in ballast, not under charter, the provisions of the York-Antwerp Rules,
1994 (excluding Rules XI(d), XX and XXI) shall be applicable, and the voyage for this purpose
shall be deemed to continue from the port or place of departure until the arrival of the vessel at
the first port or place thereafter other than a port or place of refuge or a port or place of call for
bunkering only. If at any such intermediate port or place there is an abandonment of the
adventure originally contemplated the voyage shall thereupon be deemed to be terminated.
8.4 No claim under this Clause 8 shall in any case be allowed where the loss was not incurred to
avoid or in connection with the avoidance of a peril insured against.
8.5 No claim under this Clause 8 shall in any case be allowed for or in respect of
8.5.1 special compensation payable to a salvor under Article 14 of the International Convention
on Salvage, 1989 or under any other provision in any statute, rule, law or contract which
is similar in substance
8.5.2 expenses or liabilities incurred in respect of damage to the environment, or the threat of
such damage, or as a consequence of the escape or release of pollutant substances
from the vessel, or the threat of such escape or release.
8.6 Clause 8.5 shall not however exclude any sum which the Assured shall pay to salvors for
or in respect of salvage remuneration in which the skill and efforts of the salvors in
preventing or minimising damage to the environment as is referred to in Article 13
paragraph 1(b) of the International Convention on Salvage, 1989 have been taken into
account.
9. DUTY OF ASSURED (SUE AND LABOUR)
9.1 In case of any loss or misfortune it is the duty of the Assured and their servants and agents to
take such measures as may be reasonable for the purpose of averting or minimising a loss
which would be recoverable under this insurance.
9.2 Subject to the provisions below and to Clause 10 the Underwriters will contribute to charges
properly and reasonably incurred by the Assured their servants or agents for such measures.
General average, salvage charges (except as provided for in Clause 9.5), special compensation
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and expenses as referred to in Clause 8.5, and collision defence or attack costs are not
recoverable under this Clause 9.
9.3 Measures taken by the Assured or the Underwriters with the object of saving, protecting or
recovering the subject-matter insured shall not be considered as a waiver or acceptance of
abandonment or otherwise prejudice the rights of either party.
9.4 When expenses are incurred pursuant to this Clause 9 the liability under this insurance shall not
exceed the proportion of such expenses that the amount insured hereunder bears to the value of
the vessel as stated herein, or to the sound value of the vessel at the time of the occurrence
giving rise to the expenditure if the sound value exceeds that value. Where the Underwriters
have admitted a claim for total loss and property insured by this insurance is saved, the
foregoing provisions shall not apply unless the expenses of suing and labouring exceed the
value of such property saved and then shall apply only to the amount of the expenses which is in
excess of such value.
9.5 When a claim for total loss of the vessel is admitted under this insurance and expenses have
been reasonably incurred in saving or attempting to save the vessel and other property and there
are no proceeds, or the expenses exceed the proceeds, then this insurance shall bear its pro
rata share of such proportion of the expenses, or of the expenses in excess of the proceeds, as
the case may be, as may reasonably be regarded as having been incurred in respect of the
vessel, excluding all special compensation and expenses referred to in Clause 8.5; but if the
vessel be insured for less than its sound value at the time of the occurrence giving rise to the
expenditure, the amount recoverable under this clause shall be reduced in proportion to the
under-insurance.
9.6 The sum recoverable under this Clause 9 shall be in addition to the loss otherwise recoverable
under this insurance but shall in no circumstances exceed the amount insured under this
insurance in respect of the vessel.
10. DEDUCTIBLE
10.1 No claim arising from a peril insured against shall be payable under this insurance unless the
aggregate of all such claims arising out of each separate accident or occurrence (including claims
under Clauses 6, 8 and 9) exceeds the deductible amount agreed in which case this sum shall be
deducted. Nevertheless the expense of sighting the bottom after stranding, if reasonably
incurred specially for that purpose shall be paid even if no damage be found. This Clause 10.1
shall not apply to a claim for total or constructive total loss of the vessel or, in the event of such a
claim, to any associated claim under Clause 9 arising from the same accident or occurrence.
10.2 Claims for damage by heavy weather occurring during a single sea passage between two
successive ports shall be treated as being due to one accident. In the case of such heavy
weather extending over a period not wholly covered by this insurance the deductible to be
applied to the claim recoverable hereunder shall be the proportion of the above deductible that
the number of days of such heavy weather falling within the period of this insurance bears to the
number of days of heavy weather during the single sea passage. The expression "heavy
weather" in this Clause 10.2 shall be deemed to include contact with floating ice.
10.3 Excluding any interest comprised therein, recoveries against any claim which is subject to the
above deductible shall be credited to the Underwriters in full to the extent of the sum by which the
aggregate of the claim unreduced by any recoveries exceeds the above deductible.
10.4 Interest comprised in recoveries shall be apportioned between the Assured and the Underwriters,
taking into account the sums paid by the Underwriters and the dates when such payments were
made, notwithstanding that by the addition of interest the Underwriters may receive a larger sum
than they have paid.
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11. NOTICE OF CLAIM AND TENDERS
11.1 In the event of accident whereby loss or damage may result in a claim under this insurance,
notice must be given to the Underwriters promptly after the date on which the Assured, Owners
or Managers become or should have become aware of the loss or damage and prior to survey so
that a surveyor may be appointed if the Underwriters so desire.
If notice is not given to the Underwriters within twelve months of that date, unless the
Underwriters agree to the contrary in writing, the Underwriters will be automatically discharged
from liability for any claim under this insurance in respect of or arising out of such accident or the
loss or damage.
11.2 The Underwriters shall be entitled to decide the port to which the vessel shall proceed for docking
or repair (the actual additional expense of the voyage arising from compliance with the
Underwriters' requirements being refunded to the Assured) and shall have a right of veto
concerning a place of repair or a repairing firm.
11.3 The Underwriters may also take tenders or may require further tenders to be taken for the repair
of the vessel. Where such a tender has been taken and a tender is accepted with the approval of
the Underwriters, an allowance shall be made at the rate of 30% per annum on the insured value
for time lost between the despatch of the invitations to tender required by the Underwriters and
the acceptance of a tender to the extent that such time is lost solely as the result of tenders
having been taken and provided that the tender is accepted without delay after receipt of the
Underwriters' approval.
Due credit shall be given against the allowance as above for any amounts recovered in respect
of fuel and stores and wages and maintenance of the Master Officers and Crew or any member
thereof, including amounts allowed in general average, and for any amounts recovered from
third parties in respect of damages for detention and/or loss of profit and/or running expenses,
for the period covered by the tender allowance or any part thereof.
Where a part of the cost of the repair of damage other than a fixed deductible is not recoverable
from the Underwriters the allowance shall be reduced by a similar proportion.
11.4 In the event of failure by the Assured to comply with the conditions of Clauses 11.2 and/or 11.3 a
deduction of 15% shall be made from the amount of the ascertained claim.
12. NEW FOR OLD

Claims payable without deduction new for old.
13. BOTTOM TREATMENT

In no case shall a claim be allowed in respect of scraping gritblasting and/or other surface preparation or
painting of the vessel's bottom except that
13.1 gritblasting and/or other surface preparation of new bottom plates ashore and supplying and
applying any "shop" primer thereto,
13.2 gritblasting and/or other surface preparation of:
the butts or area of plating immediately adjacent to any renewed or refitted plating damaged
during the course of welding and/or repairs,
areas of plating damaged during the course of fairing, either in place or ashore,
13.3 supplying and applying the first coat of primer/anti-corrosive to those particular areas mentioned
in 13.1 and 13.2 above,
shall be allowed as part of the reasonable cost of repairs in respect of bottom plating damaged by an
insured peril.
14. WAGES AND MAINTENANCE
No claim shall be allowed, other than in general average, for wages and maintenance of the Master
Officers and Crew or any member thereof, except when incurred solely for the necessary removal of the
vessel from one port to another for the repair of damage covered by the Underwriters, or for trial trips for
such repairs, and then only for such wages and maintenance as are incurred whilst the vessel is under
way.
15. AGENCY COMMISSION
In no case shall any sum be allowed under this insurance either by way of remuneration of the Assured
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for time and trouble taken to obtain and supply information or documents or in respect of the commission
or charges of any manager, agent, managing or agency company or the like, appointed by or on behalf of
the Assured to perform such services.
16. UNREPAIRED DAMAGE
16.1 The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable
depreciation in the market value of the vessel at the time this insurance terminates arising from
such unrepaired damage, but not exceeding the reasonable cost of repairs.
16.2 In no case shall the Underwriters be liable for unrepaired damage in the event of a subsequent
total loss (whether or not covered under this insurance) sustained during the period covered by
this insurance or any extension thereof.
16.3 The Underwriters shall not be liable in respect of unrepaired damage for more than the insured
value at the time this insurance terminates.
17. CONSTRUCTIVE TOTAL LOSS
17.1 In ascertaining whether the vessel is a constructive total loss, the insured value shall be taken as
the repaired value and nothing in respect of the damaged or break-up value of the vessel or
wreck shall be taken into account.
17.2 No claim for constructive total loss based upon the cost of recovery and/or repair of the vessel
shall be recoverable hereunder unless such cost would exceed the insured value. In making this
determination, only the cost relating to a single accident or sequence of damages arising from the
same accident shall be taken into account.
18. FREIGHT WAIVER

In the event of total or constructive total loss no claim to be made by the Underwriters for freight whether
notice of abandonment has been given or not.
19. ASSIGNMENT
No assignment of or interest in this insurance or in any moneys which may be or become payable
thereunder is to be binding on or recognised by the Underwriters unless a dated notice of such
assignment or interest signed by the Assured, and by the assignor in the case of subsequent assignment,
is endorsed on the Policy and the Policy with such endorsement is produced before payment of any claim
or return of premium thereunder.
20. DISBURSEMENTS WARRANTY
20.1 Additional insurances as follows are permitted:
20.1.1 Disbursements, Managers' Commissions, Profits or Excess or Increased Value of Hull and
Machinery. A sum not exceeding 25% of the value stated herein.
20.1.2 Freight, Chartered Freight or Anticipated Freight, insured for time. A sum not exceeding 25% of
the value as stated herein less any sum insured, however described, under 20.1.1
20.1.3 Freight or Hire, under contracts for voyage. A sum not exceeding the gross freight or hire for the
current cargo passage and next succeeding cargo passage (such insurance to include, if
required, a preliminary and an intermediate ballast passage) plus the charges of insurance. In
the case of a voyage charter where payment is made on a time basis, the sum permitted for
insurance shall be calculated on the estimated duration of the voyage, subject to the limitation of
two cargo passages as laid down herein. Any sum insured under 20.1.2 to be taken into
account and only the excess thereof may be insured, which excess shall be reduced as the
freight or hire is advanced or earned by the gross amount so advanced or earned.
20.1.4 Anticipated Freight if the vessel sails in ballast and not under Charter. A sum not exceeding the
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anticipated gross freight on next cargo passage, such sum to be reasonably estimated on the
basis of the current rate of freight at time of insurance plus the charges of insurance. Any sum
insured under 20.1.2 to be taken into account and only the excess thereof may be insured.
20.1.5 Time Charter Hire or Charter Hire for Series of Voyages. A sum not exceeding 50% of the gross
hire which is to be earned under the charter in a period not exceeding 18 months. Any sum
insured under 20.1.2 to be taken into account and only the excess thereof may be insured, which
excess shall be reduced as the hire is advanced or earned under the charter by 50% of the
gross amount so advanced or earned but the sum insured need not to be reduced while the total
of the sums insured under 20.1.2 and 20.1.5 does not exceed 50% of the gross hire still to be
earned under the charter. An insurance under this Section may begin on the signing of the
charter.
20.1.6 Premiums. A sum not exceeding the actual premiums of all interests insured for a period not
exceeding 12 months (excluding premiums insured under the foregoing sections but including, if
required, the premium or estimated calls on any Club or War etc. Risk insurance) reducing pro
rata monthly.
20.1.7 Returns of Premium. A sum not exceeding the actual returns which are allowable under any
insurance but which would not be recoverable thereunder in the event of a total loss of the
vessel whether by insured perils or otherwise.
20.1.8 Insurance irrespective of amount against:

Any risks excluded by Clauses 21, 22, 23 and 24 below.
20.2 Warranted that no insurance on any interests enumerated in the foregoing 20.1.1 to 20.1.7 in
excess of the amounts permitted therein and no other insurance which includes total loss of the
vessel P.P.I., F.I.A., or subject to any other like term, is or shall be effected to operate during the
currency of this insurance by or for account of the Assured, Owners, Managers or Mortgagees.
Provided always that a breach of this warranty shall not afford the Underwriters any defence to a
claim by a Mortgagee who has accepted this insurance without knowledge of such breach.
The following clauses shall be paramount and shall override anything contained in this insurance
inconsistent therewith.
21. WAR EXCLUSION

In no case shall this insurance cover loss damage liability or expense caused by
21.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by
or against a belligerent power
21.2 capture seizure arrest restraint or detainment (barratry and piracy excepted), and the
consequences thereof or any attempt thereat
21.3 derelict mines torpedoes bombs or other derelict weapons of war.
22. STRIKES EXCLUSION

In no case shall this insurance cover loss damage liability or expense caused by
22.1 strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil
commotions
22.2 any terrorist or any person acting from a political motive.
23. MALICIOUS ACTS EXCLUSION

In no case shall this insurance cover loss damage liability or expense arising from
23.1 the detonation of an explosive
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23.2 any weapon of war
and caused by any person acting maliciously or from a political motive.
24. RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE

In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by or
contributed to by or arising from
24.1 ionising radiations from or contamination by radioactivity from any nuclear fuel or from any
nuclear waste or from the combustion of nuclear fuel
24.2 the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear
installation, reactor or other nuclear assembly or nuclear component thereof
24.3 any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or
radioactive force or matter.
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LIABILITY INSURANCE
1. INTRODUCTION TO LIABILITY INSURANCE
The Liability Insurance is a very vast and important subject. Prima facie, it is felt that since it is a
legal liability, it is the easiest form of insurance to tackle, but this relation with the law itself has brought
into picture the various complexities involved in Liability Insurance.
The current scenario worldwide is that very few underwriters are writing the liability portfolio and lot of
restrictions and conditions are imposed to control the frivolous litigations.
In general it has been observed that the US exposure followed by US jurisdiction and Australian
jurisdiction
is viewed with utmost care as the courts there are considered liberal towards the litigants and hence
underwriting and drafting of the liability policies is very crucial.
The class action suits filed in US and Australia and the current trend is of deep concern to insurers
worldwide.
As a matter of caution, we should consider the following aspects before issuing any policy:
The countries of exposure.
The judicial approach in such countries.
The type of product or service and type of litigation that may commonly be faced.
The reasons why the proposer is seeking insurance.

The above aspects will throw light on the legal issues that we are likely to encounter and other
underwriting
aspects also need to be verified.
Such insurance can not be finalized without the thorough study of the proposal and its implications.
Most of the proposals barring Professional Liability & Public & Product Liability need to be referred
to Head Office and premium should not be hastily collected as, if the re-insurance cannot be arranged
in the available premium a very precarious condition is triggered. Same applies to Professional/ Public/
Product Liability proposals above the acceptance limits of R.O.s.
The claims on such policies are of greater magnitude and may involve representation in courts abroad.
Hence, the policy should be carefully drafted. The beneficiaries are the third parties and total sympathy
is shown towards them. The claim as and when intimated should be immediately informed to Head Office
as, some investigation, if required, can be arranged. Also a legal opinion can be sought on the basis
of the facts and legal provisions. Our claim settlement normally follows the Court Awards subject to
the policy limits.
To cater to the various requirements different products are available in the market. For the various
professionals we have the Professional Indemnity policy and Errors and Omissions policy for firms. The
Directors & Officers insurance shields the personal fortunes of the Directors & Officers. For the
manufacturing
units the Public Liability and Product or a Commercial or Common General Liability Insurance is the
basic insurance. The Non industrial Public Liability virtually encompasses all facets of industry.
The Workmen’s Compensation Liability and Carriers Legal Liability have been there for a long time and
105
mostly all are conversant with them.
The Stevedores Liability provides coverage to the logistics liability.

The Prospectus Liability is a new entrant in the Indian Insurance Market and caters to the Liability of
Director in context of IPO’s. The Clinical Trials insurance is growing at fast speed and takes care of
the Pharma companies and organizations conducting the trials.
The Liability Insurance is constantly evolving and lot of changes and variants are found in the
International
Market. All such policies revolve round the basic policies and offer different packages and combinations.
Thereby every policy almost is tailor made to suit the requirements, maintaining the basic principles.
In this manual, a brief write-up on each policy and the clause has been incorporated.
2. IMPORTANT TERMS IN LIABILITY INSURANCE
In Liability Insurance some terms are used frequently and have a specific meaning. Proper understanding
of these terms is essential to avoid any legal hassles. The explanations below are just indicatory and
for legal interpretation the wordings and definitions in the clause should prevail.
CLAIMS MADE BASIS:
The policy is issued on Claims Made Basis which has a retroactive date and it covers losses occurring
after that date and reported during the policy period, provided there has been uninterrupted insurance
cover. This type is mostly used worldwide and is different from the Occurrence Basis where the claims
that occur during the policy get covered irrespective of when they get reported. The Occurrence Basis
form should not be issued, and care should be taken that all Liability policies are issued on Claims
Made Basis Only.
RETROACTIVE DATE:
This is the date when the policy is taken first time and this date remains same if the policy is renewed
without any break. It gives the continuity benefit and if there is any change in the terms of coverage,
limits or jurisdiction then the retroactive date for such changes needs to be changed.
The implication of this date is that any loss after this date can be considered provided it satisfies the
other requirements of claims reporting as well as scope of cover and there has been a continuous
insurance without any break.
ANY ONE ACCIDENT LIMIT:
This is the limit of indemnity chosen by the proposer and denotes the maximum liability in case of
any one accident. The issues such as the complete batch of products or series of accidents can be
understood in relation to the Proximate Cause and all such claims for purpose of Insurance are treated
as Single Event.
ANY ONE YEAR LIMIT:
This is the limit on maximum amount payable in the entire policy period on basis of the Ratio chosen
by the proposer. The proposer can choose ratio 1:1, 1:2, 1:3 and 1:4
AGGREGATE LIMIT:
It is necessary to mention the ANY ONE YEAR LIMIT as also the aggregate limit as it clearly states
that in no event our liability would exceed the AOY Limit. For example in case of AOY limit of Rs.
10 crores, it is expressed as Rs 10 crores AOY and in the Aggregate.
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RIGHT TO DEFEND:
This is opposed to the Duty to Defend. By right to defend it is meant that the Insurance Company
if desires may take up the defence and it is not mandatory. In Duty to Defend, the defence necessarily
has to be arranged by the Insurance Company. In our policies we are considering Right to Defend
and while issuing the policy this has to be taken care of.
DEFENCE COSTS:
The legal costs directly related to the claim get covered subject to the overall limit and it should be
understood that these expenses are not over and above the Indemnity Limit under the policy.
. *CARRIER’S LEGAL LIABILITY INSURANCE POLICY
This insurance cover has been designed to indemnify the insured against his legal liability for actual
physical loss or damage to goods or merchandise caused by fire or accident to the carrying vehicle. The
company will also pay all legal costs and expenses incurred with its written consent in defending any
claim made against the insured.
There is a limit of liability per event and another limit for the entire policy period.
SCOPE OF COVER
The Policy provides indemnity against insured’s legal liability for actual physical loss or damages of goods
carried caused directly by fire, explosion and/or accident to the carrying vehicle on account of negligence
of the insured and/or negligence/criminal act of insured’s servant, subject to vehicle being damaged at the
same time due to above causes and claim thereof is admitted under Motor Policy. In addition to the above
basic cover, the following risks may be covered to varying extent at the discretion of the Insurer.
● Damage to cargo as in the basic cover in respect of goods carried in hired vehicles.
● Damage to the goods by fire, burglary, riot and strike and malicious damage at the
warehouses or transshipment yards whilst in the custody of the carrier.
● Shortage of contents due to theft or pilferage of cargo at any time whilst in the custody of the
carrier.
● Flood or water damage or damage by other cargo.
● Breakage, leakage and damage due to improper handling.
The cover will commence with the loading of cargo on the vehicle and will be in force until unloading of
the cargo at the discharging point or expiry of 7 days after the first arrival of the vehicle at the destination
town whichever may first occur.
UNDERWRITING CONSIDERATIONS
1 .Wording of consignment note used by the carrier should be scrutinized to confirm that
proper provision is
made for mentioning adequacy of packing, weight of goods etc.
2. It should be ascertained that provisions conferred by legislation are not waived.
3. Maintenance of log book for each vehicle since this determines measures of
maintenance condition of each
vehicle as well as skill of drivers.
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4 .Fleet of vehicles, its age, condition, insurance of vehicles, area of operation and
nature. of goods carried.
5 .Previous claims history.
6 .Moral Hazard of transport operators
7. Wider cover to be rated at the discretion of the underwriter subject to the condition that
the premium charged
must not be less than the premium required for basic cover irrespective of the coverage, number of
vehicles owned or operated by him. While wider cover may only be available to some transport operators
considered acceptable by the underwriter, the basic cover will be available to the owner or operator of
even one vehicle (subject to the proposal being acceptable) and is linked to the vehicle. the basic cover
may be given to the charterer of a vehicle where the period of hire is at least 3 months.
Where a transport operator requires cover in respect of vehicles hired by him even for one trip, such
cover can be provided under the wider cover described above at the discretion of the insurer.
PREMIUM AND DEDUCTIBLE
Premium for basic policy as per existing guidelines. Other - To be decided on case to case basis.
Exclusions
1 Liability under any contract or agreement unless arising under Carrier’s Act 1965.
2 Damage to property belonging to the insured or his servant, agent or sub-contractor.
3 Inherent vice, damage by insects, moth, vermin, mould, mildew, damp, deterioration,
spontaneous combustion.
4 Decay of perishable goods.
5 Depreciation, wear and tear.
6 Delay, Loss of Market.
7 Confiscation by Public Authority.
8 Consequential loss arising from loss/damage to goods.
9 War and Allied Perils, SRCC.
10 Nuclear perils, Radioactive contamination.
11 Illicit and Illegal contraband or smuggled goods.
CONDITIONS
● Details of all contracts of carriage issued, freight earned and of all vehicles utilised to discharge such
contracts should be properly recorded by the insured and such records should be made available for
examination by the company, if required.
● The insured should exercise reasonable care in employing only steady, sober and competent
employees
including drivers and upkeep of vehicles, equipment and premises in properly repaired and fit condition.
● The policy shall stand cancelled with immediate effect if any laws relating to carriage of goods are
altered,
any change occurs in the ownership or arrangement of the insured organisation or the area of operation,
any material change occurs in the information provided in the proposal form.
● The insured shall maintain a written record at each of its depots of delivery stations where under the
conditions and nature of goods received in apparently damaged condition are entered promptly.
● The Insured or his Agent should take all necessary steps for the safety of the goods and discovery of
guilty person.
RO/DO to ensure no breach of tariff components.
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Documents to be obtained from the Proposer
1) Duly filled and signed Proposal Form.
2) Copy of Contract of Carriage.
CLINICAL TRIALS LIABILITY INSURANCE
This insurance cover has been designed to address the Research and Development needs of the fast
emerging clinical trials segment of the pharmaceutical industry.
SCOPE OF COVER :
This cover seeks to indemnify the insured (the institution or organisation conducting clinical trial) against
legal liability arising out of clinical trials on claims-made basis. The legal liabilities may arise out of death
and bodily injury or disease to volunteers while undergoing clinical trials of a product specifically named
and insured. The cover is available for bio-equivalence or bio-availability tests as well as for new
drugs/products.
Underwriting consideration :
Documents/Information to be obtained prior to the issue of the policy :
● Duly completed proposal form.
● Copy of approval given by the regulatory authority for conducting the test, viz. Ministry of
Health, Drugs
Controller General of India, Ethics Committee, etc. to conduct the clinical trials.
● The protocol of the study i.e. the blue-print of the procedure to be followed is to be minutely
scrutinized to
assess the risk with the help of information provided which includes anticipated benefits and/or
adverse or
other side-effects of the product to be tested.
● The number of volunteers to be tested and the duration of the test
● The eligibility criteria of the volunteers for the test viz. age, gender, diseased or healthy
● The mode of test administration
● Phase of the test viz. phase I, II, etc.
● Past results of similar tests if conducted elsewhere
● Details of past losses.
Premium rate and Deductible :
To be agreed on a case to case basis.
Guidelines for settlement of claims :
The policy seeks to indemnify the insured against all sums in excess of the deductible that the insured
shall become legally liable to pay as damages and claimants’ costs and expenses in respect of any claim
made by ‘research subject’ for bodily injury caused by an occurrence happening after the retroactive date
within the policy territory in India and arising out of the clinical trial being conducted by the insured .
A. Upon intimation of an occurrence likely to give rise to a claim under the policy, the following has to be
examined at the first instance :
1. Compliance of Section 64 VB.
2. Whether the event/damage took place during the period of insurance.
3. The limit of indemnity applicable under the policy.
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B. The full details of the event (if not already provided) should be called for immediately. Depending upon
the circumstances and extent of injuries/loss reported to have been caused, an independent/in-house
agency may be appointed “without prejudice” to verify the facts and collect all evidences for defence in a
discreet manner without alerting the affected parties or other agencies to lodge claim which otherwise
may not have been lodged.
C. In cases wherein notices or summons are received directly from the court whether or not any intimation
has been made directly by the insured, a competent advocate should be engaged to defend the case
effectively. Generally, defence is taken on lack of privity of contract between the claimants and insurer as
the insurer is liable to indemnify the insured only subject to the terms and conditions of policy of
insurance.
D. It should also be examined whether the claim is barred by limitation placed by statute or by policy
conditions.
E. Documents to be obtained and scrutinized (This is not an exhaustive list. Additional documents may be
called for, depending upon the circumstances and nature of the case) :—
I. Detailed version about the incident.
II. Details of loss caused viz bodily injury/death/disease including all available information on
victims
as well as estimated quantum of liability.
III. Steps taken by the insured to mitigate the loss.
IV. Medical reports
V. Press reports, statements of the victims/witnesses, records of evidence, photographs, etc. and
all
other evidences
VI. All notices/summons of the court
VII. Legal opinion /Expert’s opinion on admission of liability/appeal.
VIII. Details of other insurance
IX. Details of claims, if any, preferred by the affected party/insured for the same loss from any
other
source
X. Evidence of legal liability of the insured.
F. In the event of an Award being passed by the appropriate authority, a copy of the Award may be
obtained immediately. A legal opinion may , thereafter , be obtained and the merits of the case examined
as regards to filing an appeal.
G. In the event of evidence of prima-facie liability supported by a legal opinion, the company, may, at its
discretion make an offer of compensation to the Research.
GENERAL :
1. This insurance shall be governed by Indian Law.

2. The above are general guidelines. The underwriting and claim settlement procedure are
subject to
other factors such as the circumstances and individual merits of the case. Therefore the advices
of
the Technical Dept, Head Office, are to be sought in respect of the same.
3. Compensation will not be paid for the failure of a drug or product under trial to perform its
intended
purpose.
4. Compensation will not be unreasonably withheld from a ‘Research Subject’ not receiving the
drug of
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product under Trial treatment or other drugs normally used in relieving any conditions for which
the
‘Research Subject was undergoing treatment were withheld or caused by the administration of a
placebo.
5. The amount of compensation may be reduced, denied or affected by the following
circumstances:
a. Negligence of the ‘Research Subject’ or (where the ‘Research Subject’ is under the age of
majority)
the ‘Research Subject’s parents or legal guardian.
b. The seriousness of the injury treated in the Trial and the degree of probability that adverse
reaction would occur and any warning the ‘ Research Subject’ received.
c. The comparison of risk between established treatments & those that are used or researched
in a trial.
d. The availability and efficacy of alternative treatments, which would have been available to a
‘Research Subject’, had that person not agreed to participate in the trial.
6. The amount of compensation shall be paid as a lump sum.
5. , ,COMMERCIAL GENERAL LIABILITY INSURANCE

Introduction :
Commercial General Liability or Common General Liability as it is called offers a combined policy
covering the Public as well as Product liability along with some additional covers such as Personal and
Advertising injury Liability. The policy provides for the legal liability towards damages to the third party for
accidental death/bodily injury/disease and loss of or damage to third party property. The legal costs are
included in the indemnity limits.
Applicability :
The companies providing services and products in India as well as abroad are the target market. Since
this is one of the basic insurance, it is essential for any and every concern. Most of the business contracts
contain a clause on need for general liability.
Scope of Cover :
The policy covers legal liability arising out of bodily injury and property damage. The policy is divided into
2
sections :
Section A :
Public Liability :
provides indemnity for legal liability to pay compensation for bodily injury and property damage to third
party.
Major exclusions.
Other than the common exclusions following exclusions are important
● Contractual liability.
● Advertising Injury
● Liquidated Damages
● Employers’ Liability
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● Ownership, possession or use of any motor vehicle.
● Ownership, possession or use of any aircraft, watercraft or hovercraft.
● Owned property.
● Product Liability.
● Pollution
Section B :
Product Liability :
provides indemnity for legal liability arising out of defective products manufactured and have left the
premises. It covers the domestic as well as export sales.
Major Exclusions :
Product Recall, Product Guarantee and Financial Loss (this can be covered as an extension on payment
of additional premium. Reference to H.O. is mandatory.)
● Avionics or parts related to Aircrafts.

● Costs of Repair, reconditioning, modifications etc.
Pollution Liability offers cover provided it has been a accidental, sudden, specific and identifiable event
beyond the control of the insured and provided the insured has taken all reasonable precautions to
prevent such pollution.
General Conditions :
Notice of Claim
Examinations of Books and Accounts
Cancellation
Rights and Duties of Insured.
Compliance of all Statutory Requirements
Right To Defend.
Documents required for underwriting :
● Client Profile
● Exposure
● Turnover Region-wise
● Major clients if any
● Proposal form
● Risk assessment Report
● Annual Report
MAJOR EXTENSIONS
Product Guarantee
Product Recall
Personal & Advertising Injury means injury, including consequential bodily injury, arising out of False
arrest,
detention or imprisonment, Malicious prosecution. The wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a room, dwelling or premises that a person occupies,
committed by or on behalf of its owner, landlord or lessor. Oral or written publication of material that
slanders or libels a person or
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organization or disparages a person’s or organization’s goods, products or services. Oral or written
publication of material that violates a person’s right of privacy. The use of another’s advertising idea.
Infringing upon another’s copyright, trade dress or slogan. Additional premium has to be charged and
reference to HO is mandatory.
UNDERWRITING CONSIDERATIONS
The policy may be granted with Product Liability Extension only where the proposer is a Manufacturer.
The
proposals having U.S.A, Canada & Australia exposure need to be examined carefully and deductibles
and special conditions should be carefully incorporated in the policy document. Proposals with long past
Retroactive dates
should be thoroughly checked for known cases or circumstances known to the proposer. The type of
clients and their past record can also be examined to assess loss probability. The indemnity limit vis-a-vis
the turnover should be examined. The proposals from IT, Pharma and Auto Companies should be
carefully scrutinised.
RATING
Depends on limits, type of industry, area of exposure, jurisdiction and revenues.
7. INFORMATION TECHNOLOGY ERRORS & OMISSIONS INSURANCE
Information Technology Errors & Omissions Liability Policy is an ideal policy for organisations that are
proactive in their approach towards liability issues. It is a complete policy to provide seamless protection
to the Insured and covers losses by reasons of negligent act/s, error/s & omission/s.
It indemnifies the insured for the amounts which he is legally liable to pay, to compensate his clients for
loss resulting from insured’s wrongful act or that of others for whom the insured is legally responsible.
Need for Insurance
● Variety and complexity of Products/Services.
● Rising Contract Prices
● Increase in time span of contracts.
● Fierce competition and thrust on USP.
● American Exposure.
● Rising Litigations.
Target Market
The following type of organisations would appreciate the availability of this policy within India.
● Indian Software Companies who have global operations and thus are exposed to
legal claims world-wide.
● Companies who are bound by their contract to take the policy.
● Software Exporting companies who would like to have insurance coverage in all major
jurisdictions.
Scope of cover
The policy covers negligent acts, errors & omissions whilst rendering professional and technology
services to
others for a fee. Only Contracts entered into subsequent to Retroactive Date/s are covered. Further, the
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negligent act should be committed after the Retroactive Date and reported during the Policy
Period/Extended
Reporting Period. Once the liability is admitted, the Insured is indemnified for :
● Judicial Awards
● Defense Costs
upto the extent of Indemnity Limit chosen.
The total liability under this policy for any one claim and in respect of all claims during any one period of
insurance will not exceed the limit of indemnity specified in the schedule. All connected or inter-related
acts, errors or omissions will jointly constitute a single act, error or omission under this policy
Extensions
● Infringement of copyright, trademarks
● Consultants, Sub-contractors, Agents.
● Joint-Venture
● Outgoing Principals,
● Unauthorised Access.
● Extended Claims Reporting.
● Dishonesty of Employees.
● Loss of Documents.
Covered Territory
The Policy can be issued covering world-wide operations including USA/Canada.
Exclusions
1) Product Liability, Guarantee, Recall, Inspection, rectification, replacement, adjustment, removal
or disposal of product/service.
2) Financial injury arising out of any aircraft/aircraft product/s or any missile, spacecraft and
watercraft.
3) Financial injury arising out of hazardous properties of asbestos.
4) Physical injury, sickness, disease or death
5) Assumed liability in a contract or agreement by way of guarantee, warranty, penalty, clause or
any obligation deemed uninsurable under law.
6) Costs and expenses incurred by the insured to comply with any warranties, guarantees,
representations in respect of insured’s software products.
7) Dishonest, criminal, fraudulent or malicious conduct.
8) Employment-Related Practices.
9) Bankruptcy, Insolvency or other financial impairment.
10) Damages, loss, cost or expense arising out of any claim or proceeding made by or on behalf
of any governmental authority.
11) Claim brought or maintained by or on behalf of insured/insured organisation/subsidiary
organisation, member or partner, director, officer, shareholder, employee, custodian of property
or legal representative, spouse of any person described above.
12) Actual or alleged financial injury arising out of infringement or violation of any intellectual
property right, patents, copyright, trademark, service mark. (can be covered as extending
provided it is unintentional).
13) Exemplary or punitive damages, fines, penalties.
14) Lonizing radiations or contamination by radioactivity from any nuclear fuel or nuclear waste.
15) Pollution.
16) Security Breach or Unauthorised Access.
17) Terrorism
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18) War and/or civil War and War-like operations.
19) Property on which the insured is or has been working where the property damage arises from
the work of insured.
20) Delay in performance or failure of insured to perform any contract unless arising out of error
or omission.
21) Actual or alleged intentional non-performance or default of any of the insured’s contractual
obligations.
22) Consequential Loss.
23) Any notice, claim or legal proceeding which is known or pending prior to the policy period.
24) Violation of any securities, anti-trust, restraint of trade, unfair trade practices, any guarantee
of or the exceeding of cost estimates.
25) Electrical failure, including any electrical power interruption, surge, brownout or blackout.
26) Gains/personal profit or advantage to which the insured is not legally entitled or arising out of
any disputes or differences regarding the insured’s fees, charges, commissions or for the return
of money paid to insured.
27) Trading Debts.
Conditions
1) Reporting and Notice
2) Audit of Books and Records.
3) Alteration to Risk.
4) Territorial & Jurisdictional Limits.
5) Records.
6) Cancellation.
7) Inspection of Property.
8) Newly created or acquired Entity or Subsidiary.
9) Estate and Legal Representatives.
10) No Assignment of Interest.
11) Deductible.
12) Defense and Settlement.
13) Claims Co-operation.
14) Discharge of Liabilities.
15) Subrogation.
16) Notices – Any notice given in writing by the insurer to the first named insured specified in the
schedule will
be treated as notice to each of the parities comprising the insured.
17) Due Observance.
18) Legal Counsel Clause.
19) Arbitration
Claim
The insured shall give the Company written notice immediately in case;
1) an incident which may give rise to a claim, occurs
2) a written notice/summons is received claiming compensation.
An Advocate would be appointed to defend the case. The appointment could be made by the
insured/insurer
depending on the place where the claim is lodged and other circumstances.
The Insured shall investigate into the allegation to determine whether the claim is genuine.
The insured shall disclose to the company all relevant information and documentation and, in addition
shall
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provide assistance to the company to enable the company or their agents to investigate any claim and
determine their liability under the policy. In case of notification of claim under (2) above, the insured shall
additionally give reasons for the anticipation of a claim(s), in each case with full particulars including the
circumstances, dates and persons involved.
The Notice of suspected wrongful act(s) which might give rise to a claim must include;
● How, when and where the wrongful act took place.
● Name and addresses of any witnesses.
● Nature and location of any injury or damage.
● Potential claim amount.
● Date when the insured first became aware of the potential loss.
● Copies of all demands, suit papers or other legal documents the insured receives as soon as
possible.
Conditions precedent to liability
1. The company shall have the right to conduct defense or settlement of any claims. Any amount incurred
by
the company on its behalf or on behalf of the insured shall form part of the defense expenses.
2. The insured should not admit liability for or attempt to settle the claim or incur any defense expenses or
assume any contractual obligation with respect to any claim without company’s prior written consent.
3. The Insured shall use due diligence and ensure that all reasonable and practicable steps are taken to
avoid
or diminish any liability which may give rise to or has given rise to a claim.
4. Due observance of and compliance with the terms, provisions, warranties and conditions of the policy.
The Company will not settle any claim without the insured’s consent. But, if the insured refuses to consent
to anysettlement or compromise recommended by the company and acceptable to the claimant and
elects to contest the claim, then the company’s liability shall not exceed the amount for which the
company would have been liable if the claim had been so settled or compromised when and as so
recommended. The company shall have the right to withdraw from the claim by tendering control of it to
the insured.
The company shall not be obliged to make any payments under the policy or continue defense or
settlement of the claim, once the company’s limits of liability have been exhausted by making any earlier
payments in respect of damages or defense expense. In such a case the company shall have the right to
withdraw from the claim by tendering control of it to the insured.
Documents Required
From Client
● Duly filled and Signed Proposal form
● Company Profile
● List of Directors/Partners together with their Profile.
● List of Clientele
● Copy of Contract entered into / to be entered into with clients.
● Annual Report/Financial Results for past 3 years.
● Copy of Expiring Policy.
● Average contract period & contract price.
From RO
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● Brief details of cover required & recommendations for premium/excess duly signed by
DGM/CRM
● Department-wise Premium/claims experience for past 3 years.
● Ensure that all the questions in the proposal form is answered and relevant enclosures are
enclosed. The above documents should come both in Hard and Soft copy form.
8. PUBLIC LIABILITY INSURANCE (ACT ONLY) POLICY
Public Liability Insurance (Act Only) Policy is issued in terms of the insurance provisions of the Public
Liability Insurance Act 1991. As per this Act, all companies/individual/persons owning/dealing in
hazardous goods arerequired to take insurance policy satisfying the limits specified in the Act.
Under PLI Act the owner’s fault or negligence causing the accident is not required to be proved.
Workmen of the Employer – Insured is excluded from compensation under this Act.
Limits of Policy - AOA – Paid Up Capital – Minimum and Rs. 5 crs Maximum.AOY – Three times AOA
Limit – Minimum and Rs. 15 crs Maximum Premium The premium depends upon the Limit of Indemnity
‘Any one Accident’ and the Turnover. The Premium is as per TAC Circular No. PLI (ACT) – 91 DT. 25-11-
1992
Environment Relief Fund
An amount equal to the premium of the insurance will be collected along with the premium from the
proposer and deposited with ERF which contributes to compensation in case the total compensation
exceeds policy limit.Claim Settling Authority – District Collector
Exclusions
1) Arising out of wilful or intentional non-compliance of any Statutory Provisions.
2) In respect of fines, penalties, punitive and/or exemplary damages.
3) Arising under any other legislation except the following;
a) right to claim relief under the Act is in addition to any other right to claim compensation under any
other law.
b) where the owner is liable to give claim for relief under the Act, is also liable to pay compensation
under any other law, the amt. of such compensation shall be reduced by the amount of relief paid
under the Act.
4) In respect of damage to property owned, leased or hired or under hire purchase or on loan to
the Insured or otherwise in the Insured owner’s control, care or custody.
5) Accident by reason of War or Radioactivity.
Conditions
1) Written Notice to the Company as soon as reasonably practicable along with copies of notice
of application forwarded by the Collector and also give all such additional information and/or
assistance that company may require.
2) Insured Owner not to admit liability for or make any offer or promise of payment unless the
consent of the insurers is obtained.
3) Claim to be made within five years of the occurrence of the accident.
4) Insured Owner to maintain record of annual turnover and declare it at the time of renewal of the policy.
5) The amount of claim payable is apportioned pro-rata among all the policies covering the statutory
liability.
6) Cancellation at the option of the Insured. Company to retain premium on Short Premium Scale
7) Cancellation by the Company. Company to retain minimum 25% of the annual premium.
8) Liability disclaimed by the Company shall be made a subject matter of suit within 12 calender months.
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9) No liability for fraudulent claim. Similarly claim in consequence of material mis-statement or non-
disclosure not payable. In such a case if the company pays any amount due to any statutory provision,
such amt. shall be recoverable from Insured Owner.
10) Interpretation Clause – The words used in the Policy and the Schedule forming part of it shall bear
their specific meaning assigned under the Act and the Rules framed thereunder.
11) Any dispute relating to interpretation of the terms, exceptions and conditions shall be resolved
according to the law and practice of a competent court within India.If the Insured Owner purchases Public
Liability Policy on the same premises, a discount on the premium under this policy is allowable.
.
9. PUBLIC LIABILITY INSURANCE INDUSTRIAL RISKS
This insurance applies to Industrial and storage risks such a godowns, depots tankfarms etc.
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:
(a) 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 a such claims.
(b) 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.
(c ) Pollution Risks
: The standard policy wording does not include to cover for pollution Liability. It has to be specifically
included by prescribed endorsement and premium thereof is collected therefrom Cover is subject to
following conditions:
i) Submission of additional information as per questionnaire appended to the proposal form.
(ii) 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 policy can be issued to cover various premises of the
Insured whether manufacturing process is carried on or not, or as otherwise specified in the proposal
form. In case more than one unit is covered, rate has to be appropriately loaded.
(d) Retroactive Date:
This is the date when risk is first incepted under a claims made policy and there from renewed without
break in their period of cover. There will not be any liability therefore for any incident prior to inception or
after expiry of the policy.
(e) 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 of inclusion in the policy. This remains unaltered in the event of renewal without
any break in Insurance.
(f) Compulsory Excess : ¼% of the limit of indemnity per any one accident subject to maximum as
stated in the Schedule.
(g) 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
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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.
(h) 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 than 12 months, premium would be charged on short period
basis i.e. for period from 1 month to period upto 6 months it varies from ¼ 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 not classified reference hasto be made
to market agreement committed. In the meantime highest rate of group 4 has to be applied. No instalment
for payment of premium is allowed.
As a loss minimisation measure, guideline 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
work out to be Rs. 2,00,000/- & 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).
(i) 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.
(j) 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 if indemnity is 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 :
(a) Indemnity applicable to claims arising out of any accident during policy period only.
(b) All intimation/communication in writing.
(c) Excludes any liability arising out of Pollution unless specifically covered.
(d) 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 first
made against theinsured.
(e) Extended claim reporting period is 90 days from expiry of the policy in case of cancellation or
non-renewal, provided such event has given risk to liability during the policy period only.
(f) Indemnity granted under this Policy extends to :-
(i) Officials of the Insured acting in the capacity of their business activity, including temporary
employees of the Insured.
(ii) Officers, committee members of canteen, medical, sports, etc. organisation acting in their respective
capacity as such.(iii) Personal representative of the estate of the person due for indemnification under
this policy for liability incurred by such person acting as though they were the insured in their official
capacity.(g) Maximum liability : Limits Any one Accident for one or series of claims out of the same
occurrence.(h) Excess clause : ¼% of indemnity limit any one accident, maximum as stated in the
Schedule.(i) Voluntary excess : Opted by Insured. Insurer’s liability would be in excess of compulsory
excess under item above.
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Exclusions : Any liability :
(a) Arising out of any agreement by the insured which would not attach in the absence of such
agreement.
(b) Arising out of convulsions of nature, atmospheric disturbances.
(c) Arising out of deliberate wilful non-compliance of any statutory provisions.
(d) Financial loss or loss of goodwill.
(e) Arising out of personal injury libel, slander, false arrest, mental injury, anguish etc. or infringement of
plans, designs, patent etc.
(f) Arising out of fines, penalties etc. or for any other damages resulting from multiplication of
compensatory damages.
(g) Man-made perils like war and allied perils, nuclear exclusions, radioactivity. This also excludes
hazardous properties of any nuclear component.
(h) 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.(i) Transportation of goods unless specified.
(j) Ownership/possession of aircraft, watercraft etc.
(k) 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.
(l) Any liability to employee’s /visitor’s personal effects.
(m) Any injured damages occurred prior to retroactive date unless detailed as 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.
(n) Deliberate disregard of safety measure for prevention of claim under this policy.
(p) Any contractual liability (e.g. employer’s).
Conditions after occurrence of event:

a) All writs, summons to be submitted in writing.
(b) 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.
(c) Insured shall give immediate notice of any material change in the risk.
(d) On payment of any claim under the policy company relinquishes liability under the policy due to the
same event.
(e) Insured shall maintain proper records and that company will have an access to inspect the same.
(f) Contribution condition.
(g) The limit of indemnity per accident would stand reduced on payment of liability.
(h) 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 law.
(i) In the event of any fraud, misrepresentation all the benefits under this policy shall be forfeited.
(j) Geographical limits under this policy will not exceed Indian territory. Competent Jurisdiction is within
India subject to Indian law.
The policy has 30 days notice of cancellation with prorata 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.
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Exclusions :
a) 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.
b) Act of God Perils can be included under this class of insurance by charging extra premium as per
Earthquake and FST extensions under Fire Tariff.
c) 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 be connected with insured’s
business.Maximum loading is 20% for 500 and above godowns.
Risk assessment and underwriting considerations

a) 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/of the site.
b) In case pollution extension is desired risk inspection should be carried out for and above following
limits.
Group 1 and 2 Rs. 2,50,00,000/-
Group 3 and 4 Rs. 1,00,00,000/-
c) Full particulars of the insured pertaining to business, process involved, technicians, safety system,
repairs,unkeep, housekeeping, labour relation number of employees, area, location, surrounding
properties, assets,raw material used, Storage/ transport system and past claims history should be
procured in details
d) General details as to visitors, contractors etc. should also be prescribed..
10. PUBLIC LIABILITY-NON INDUSTRIAL RISKS

This provides for non-industrial risk such as Hotels, Club Houses, Restaurants, Boarding/Loading,
Houses, Cinema Halls, Auditorium, Theatres, Residential/Office Premises, Medical Establishments,
Airport Premises, Warehouses, Godowns, Shops, Tank Exhibition, Pandals and similar such non-
industrial risks.
Proposer would be required to fill up standard proposal form at inception as well as subsequent renewals
together 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 and/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 be either 1:1, 1:2, 1:3, 1:4.
POLLUTION RISK :
Unless specifically included this policy does not cover accidental pollution risks unless additional premium
thereof is paid as defined in the agreed and declared that the insurance agreement. The proposer will be
required to furnish consent certificate letter from Pollution Control Board granting permission to carry on
the activities.
Multiple units can be covered in single limits by paying appropriate premium as per agreement.
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PREMIUM :
Rates of premium for various categories of risks are defined in the Guidelines . 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 Date 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 maximum & minimum amount stated in Schedue 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% based on opted voluntary excess ranging from 1% to 10%
of limit of indemnity per A.O.A.The guidelines also provide for short period scale of premium for policies
issued for less than 12 months of cancellation of policy period to expiry.In no case can 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.

i) Type of construction.
ii) Occupancy / Storage.
iii) Ratio of indemnity limits A.O.A. : A.O.Y.
iv) Communication unless 15 meters away from main Construction Structure.
v) Height exceeding 22 metres – loading 10% of premium.
vi) 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 as per the Fire Tariff.
PAYMENT OF ADDITIONAL PREMIUM AND SPECIFIC COVERAGE FOR THE

SAME BEING SPECIFIED IN THE POLICY SCHEDULE.
APPLICABLE TO HOTELS/MOTELS/CLUB HOUSES RESTAURANTS
BOARDING AND LODGING HOUSES/FLIGHT KITCHENS
ENDORSEMENT FOR COVERING GOODS KEPT IN CUSTODY OF INSURED:
NOTWITHSTANDING anything herein contained to the contrary and in consideration of an additional

premium of Rs. ______, it is hereby agreed and declared that the Insurance under this policy shall extend
to include legal liability of the insured for loss/damage to property of residents/bonafide guests whilst they
are under care control and custody of the insured in the premises referred to in the Schedule subject to
limit of indemnity not exceeding the following which shall form part of the overall limit of indemnity as
mentioned in the Schedule of the policy.
Any one accident - Rs.
Aggregate during the policy period = Rs.
It is expressly agreed and understood that the cover granted under this endorsement shall not apply to
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legal liability arising out of loss or damage to valuables of residents/bonafide guests unless they are kept
in the strong room/cloak room maintained by the insured for safe keeping and the insured maintains
proper records showing the items deposited therein by each resident/bonafide guest. IN NO CASE THE
POLICY COVER LOSS OF MONIES, SECURITIES, DOCUMENTS (INCLUDING CREDIT CARDS) AND
PLANS.
Each claim under this extension shall be subject to an excess of 0.25% of any one accident limit
of indemnity specified in the Schedule of the policy subject to a minimum of Rs.1000/- and a maximum of
Rs. 1,00,000/-.
Also provided always that all other terms, conditions, provisos and exceptions of the policy shall
apply to this extension as if they have been incorporated herein.
Dated at ____________________ this ___________________ day of ____________________ 19 ____
APPLICABLE TO HOTELS/MOTELS/CLUB HOUSES/RESTAURANTS/BOARDING

AND LODGING HOUSES/SCHOOLS/EDUCATIONAL INSTITUTIONS.
SPORTS FACILITIES COVERED BY THE INSURED AS LISTED BELOW:
Notwithstanding anything herein contained to the contrary and in consideration of an additional premium
of Rs. _________ it is hereby agreed and declared that the insurance under this policy shall extend to
include
legal liability of the insured for death bodily injury or loss of or damage to or loss of use of property arising
out of use of sport facilities subject to compliance of the conditions that:
i) the equipments are kept in a state of good and proper maintenance.
ii) adequate guards and experienced trainers are on duty, where necessary.
iii) the premises/places used for sports/games are kept in a state of proper maintenance.
subject to limit of indemnity not exceeding the following which shall form part of the overall limit of
indemnity as mentioned in the schedule of the policy.
Dated at ____________________ this ___________________ day of ____________________ 19
__________.
APPLICABLE TO ALL NON-INDUSTRIAL RISKS
EXCEPT SHOPS AND GODOWNS ENDORSEMENT FOR COVERING FOOD AND
BEVERAGES
premium of Rs. __________ it is hereby agreed and declared that the insurance under this policy shall
extend to include legal liability of insured for death and/or bodily injury and/or loss of or damage to or loss
of use of property arising out of poisoning by foreign or deleterious matter in food, beverages and/or any
other edible items supplied by the insured, provided always that the insured shall take every possible
precaution to prevent supply of any food/beverages/edible items which are not in good condition or free
from contamination or fit for human consumption subject to limit of indemnity not exceeding the following
which shall form part of the overall limit as mentioned in the schedule of the policy.
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__________.
APPLICABLE TO ALL NON-INDUSTRIAL RISKS EXCEPT SHOPS AND GODOWNS

OTHER FACILITIES EXTENSIONS COVERED BY INSURED AS LISTED BELOW:**
premium of Rs. __________ it is hereby agreed and declared that the insurance under this policy shall
extend to include legal liability of the insured for death or bodily injury or loss of or damage to or loss of
use of propertyarising out of accidents caused by the use of such facilities subject to the conditions that:
i) the premises/places are kept in state of good repair/maintenance ii) properly trained personnel take
care of operation of such facilities iii) the materials used are proper and free of defects
Any One Accident – Rs.
Aggregate during the policy period - Rs.
** Name of facilities -
APPLICABLE TO ALL NON-INDUSTRIAL RISKS EXCEPT SHOPS AND GODOWNS
SWIMMING POOL EXTENSION
premium of Rs. __________ it is hereby under this policy shall extend
to include legal liability of the insured for death or bodily injury or loss of or damage to or loss of use of
property
arising out of accidents (including accidents arising out of contamination of water) in connection with the
use of
the Swimming Pool in the insured’s premises subject to the compliance of the following conditions:
i) Swimming Pools in hygienic conditions with regular cleaning/maintenance
ii) Sanitary arrangements are proper
iii) Life guards/Attendants are on duty when the pools are in use
indemnity
as mentioned in the schedule of the policy.
Also provided always that all other terms, conditions, provisos and exceptions of the policy shall apply to
this extension as if they have been incorporated herein.
ENDORSEMENT TO BE ATTACHED TO AND FORMING PART OF

POLLUTION LIABILITY ENDORSEMENT
INDUSTRIAL SEEPAGE, POLLUTION AND CONTAMINATION
This Insurance does not cover any liability for:
1. Death or bodily injury or loss of, damage to, or loss of use of property directly or indirectly caused by
seepage, pollution or contamination, provided always that this paragraph (1) shall not apply to liability for
death or bodily injury or loss of physical damage to or destruction of tangible property, or loss of use such
property damaged or destroyed, where such seepage, pollution or contamination is caused by a sudden,
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unintended and unexpected happening which takes place in its entirety at a specific time and place during
the Policy period.
2. The cost of removing, nullifying or cleaning-up seeping, polluting or contaminating substances unless
the seepage, pollution or contamination is caused by a sudden, unintended and unexpected happening
which takes place in its entirety at a specific time and place during the Policy period.
3. Fines, penalties, punitive or exemplary damage.
This clause shall not extend this insurance to cover any liability which would not have been covered
under this Insurance had this clause not been attached, except in so far as detailed herein.
Any One Accident – Rs.
Aggregate during the policy period - Rs.
This endorsement is granted in consideration of additional premium of Rs. ___________ subject
otherwise
to the terms, exceptions, conditions and limitations of the within mentioned policy.
11. PRODUCT LIABILITY INSURANCE

Scope of cover:
This insurance covers legal liability arising out of defective product manufactured and have left premises
as against public liability insurance which covers risk within the premises
Export to U.S.A./ Canada and other countries can be covered together with domestic turnover.
This cover is available subject to signed declaration by the insured as regards fulfillment of all statutory
requirements.
The risks are classified in seven groups.
Rating is based on (i) annual turnover (ii) indemnity limits per year.
Revision in limits may be allowed during currency of the policy for which the RO should refer to HO with
valid reasons.
Selected ratio of indemnity any one accident to any one year should be only 1:1, 1:2,1:3,1:4 and that no
fraction hereof is allowed to be opted.
This liability is restricted to:
(i) Any bodily injury/death on account of accidental injury from the use of such product to a third party
(ii) Any accidental loss or damage to property of a third party.
a. Compulsory excess :
1.2% per AOA limit Subject to Minimum & Maximum limit stated in Schedue.
b. Voluntary excess :
This is in addition to compulsory excess. The discount of premium varies from 2.5% to 25%
based on percentage of limits selected under the policy from 5% to 50% of any one accident.
c. Extensions of Exports Vendor’s Liability together with Domestic cover :
Named : 5% Premium on limit of Indemnity + loading of premium on exports turnover.
Unnamed : 10% Premium on limit of indemnity + premium on exports turnover.
The loading is based on three categories for exports as follows :
i) U.S.A. / Canada.
ii) Organisations for Economic Co-operation and Development.
iii) Other than above.
d. Retroactive date :
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This is considered as the first incepted date under claims made policy as well as renewed policy
without break in cover. This policy is issued with pre-condition that sum insured and payment of claims
will be in Indian rupees. In case\ insured desires settlement in foreign currency Reserve Bank permission
will have to be taken in view of exchange control regulations.
CLAUSES :
Notification Extension clause :
Any notification of acceptance and/or claim under the policy will be made as if the same is made against
insured.Extension of time will be as per limits laid under Indian Limitation Act.
Claim reporting clause :
As per this clause the limit laid down there under is 90 days from expiry/ cancellation of the policy for an
event occurred during the currency of the policy. This extension clause however applies to policy that is
not renewed consecutively.
Indemnity to others :
Officials of the insured, temporary employees, or for that matter any official of the insured who is
responsible for liability arising out of the business operation or any other incidental operation connected
with the business operation of the insured would be entitled for indemnity under this policy in case of any
liability claim under this policy, as if he is the insured.
Cross Liabilities :
Each person/party will be separately entitled for indemnity in respect of any claim made against them.
This would however be restricted to limits of indemnity specified under the policy.
Indemnity Limits :
Maximum would be per accident limit. This also includes defence cost incurred with the permission of this
company.
Claims series clause :
This applies to each accident. In case of series of claims arising out of the same event (faulty design, use,
labeling, supply, service, Product showing some defect) first reporting date is taken as claim made and
subsequent reportings shall be indemnified upto indemnity limits under A.O.A. limits. This is however
subject to limitation period of three years. There would, therefore, be no liability for same occurrence
reported after three years.
The policy is subject to compulsory excess / voluntary excess as earlier specified.
In case of continuous inhalation/ingestion of obnoxious material injury date is considered as first
consultation date of the doctor or first evidence of the same to the claimant and duly reported thereof.
Exclusions :
Company will not be liable for any claims arising out of following:
(a) Cost of repairs, reinstatement, modification of defective product, including cost to recall whole or part
of the product.
(b) Cost arising out of any product intended for incorporation into structure, machinery, control or any
aircraft.
(c) Non compliance of statutory orders.
(d) Loss of goodwill/market or due to any fine/penalty.
(e) War and allied perils, radioactive contamination, nuclear fuel and other such perils.
(f) Damage to any property belonging to or held in trust by the insured.
(g) A ny loss or damage prior to retroactive date except in case of continuous inhalation of material where
injury cannot be established in which case first consultation of medical practitioner or first notice date will
be taken as occurrence date i.e. damage first evident cause unknown as date of occurrence
(h) Deliberate discharge or technical / administrative management.
(i) Any contractual liability and under contract of employment
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(j) Failure of the product for the purpose it was intended.
(k) Product Guarantee
(l) Product Recall ( This may be covered separately on payment of Advance Premium )
CONDITIONS
(a) Written notice immediately on occurrence of the event. This would be followed by relevant information
of the event together with submission of any writ summons received by the insured.
(b) Insured shall not make any admission or offer without prior consent of this company.
(c) Defence proceedings : This company has the right and is not obligated to conduct the defence,
The expenses for which will be borne by the Co. subject to limits of indemnity under the policy after taking
into account the amounts thereunder.
(d) Insured shall provide all the assistance in conducting the proceedings of the claim.
(e) Any charges / alteration material to the risk shall be intimated to the company.
(f) The company shall relinquish all conduct of the claim on payment of any claim or series of claims out
of the same event and that no further liability will be admissible thereof.
(g) Policy and schedule will be read together. All terms and conditions shall be interpreted in accordance
with provisions of Indian law.
(h) Proper maintenance of record of turnover by the insured and company has the right to inspect the
same.(i) Contribution condition.
(j) Cancellation clause 30 days notice with minimum retention being 25% of the annual premium. There
will not be any refund of premium, if claim is notified under the policy.
(k) In the event of the claim there will not be any reinstatement of limit, and that existing limits shall stand
reduced to the extent of liability so admitted.
(l) In case of disclaimer of liability limitation period is 12 months to file a suit in court of law from the date
of disclaimer.
(m) All benefits under this policy shall be fortified if claim is fraudulent.
(n) Cause of action would be within India.
(o) Policy disputes clause : All interpretations are subject to Indian law subject to jurisdiction within India.
Risk Assessment:
(a) Analysis of production schedule/activities’ , use thereof; sale of the product, manufacture of the
product.
(b) Safety control programme/implementation thereof.
(c) Hazard analysis.
(d) Design/material used.
(e) Manufacturing process.
(f) Quality control.
(g) Packing/Labelling.
(h) Sales/distribution network.
(i) Details of customer complaints.
(j) Previous history.
(k) Other consideration e.g. labour relations.
PRODUCT RECALL
Coverage
First Party Recall Insurance can protect businesses from the devastating effect of such recalls; covering
the key expense areas as mentioned above the also providing the expertise from independent recall
consultants to guide the company through the critical first few weeks of a product recall. The insurance
covers loss arising out of the recall of a product as a result of:
(i) Accidental omission, introduction or substitution of a component or substance during
manufacturing.
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(ii) Error by the insured in the design, manufacture, packaging, blending, mixing, compounding,
labelling or storage.
The policy covers expenses incurred for Recall where the use on consupmtion of the product may result
or cause any legal liability due to death of bodily injury.
Features
The policy covers costs to inspect, withdraw or destroy, the insured product, including;
i) Communication (Radio,TV,Internet, ads...)
ii) Shipping from purchaser, distributor or user
iii) Overtime and additional personnel costs
iv) Storage costs and cost of disposal
v) Redistribution
vi) Independent Security, PR or Recall Consultants
vii) Crisis Management Consultants & Public Relations Expenses
Optional Cover
i) Product Extortion Expenses.
ii) Restoration, Replacement and Refund expenses.
iii) Third Party Recall expenses.
Geographical Scope :
World-wide
Limits / Premium :
Varies with risk
Deductible :
Varies with Risk
Submission Requirements :
A variety of factors will be considered when evaluating insurability and determining premium, including:
(i) Revenue of the insured (iv) Packaging
(ii) Product type (v) Past incidents
(iii) Internal Procedure (vi) Quality
NORTH AMERICAN JURISDICTION EXTENSION CLAUSE
Where the Insured has requested an extension to the Operative Clause for indemnity to be granted in
respect of any judgment, award or settlement made within countries which operate under the laws of the
United States of America or Canada (or to any order made anywhere in the world to enforce such
judgment, award or settlement either in whole or in part) such extension is only granted where so stated
in the Schedule to the Policy and where a specific amount has been entered against ‘Applicable Excess’,
and where a specific date has been entered against “Retroactive Date” in the Schedule under the
heading “North American Jurisdiction”. Acceptance by the Insured of this policy is deemed to be
acceptance of the above conditions as precedent to the granting of indemnity against such North
American Jurisdiction. In consideration of the granting of such indemnity,
The Insured agrees to accept the following terms and exclusions in respect of any such judgment, award
or settlement:
1. The indemnity does not apply to awards or damages of a punitive or exemplary nature whether in the
form of fines, penalties, multiplication of compensatory awards or damages, or in any other form
whatsoever.
2. The Company shall not be liable for the amount shown as the Applicable Excess in the Schedule,
being the first amount of each and every claim. For the purpose of this sub-clause
(2) “Claim” shall be deemed to include compensatory awards, claimants’ costs, fees and expenses and
associated defence costs.
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3. The indemnity does not apply to claims arising out of injury and/or Damage occurring prior to the
Retroactive Date stated in the Schedule under the heading “North American Jurisdiction”. Provided
always that in the event of any injury or Damage arising from continuous or continual inhalation, ingestion
or application of any substance and where the Insured and the Company cannot agree when the injury or
Damage occurred, then:
(a) Injury shall be deemed to have occurred when the claimant first consulted a qualified medical
practitioner in respect of such injury;
(b) Damage shall be deemed to have occurred when it first became evident to the claimant, even if the
cause was unknown.
Subject in all other respects to the terms and exclusions of the Policy which shall not be deemed in any
way whatsoever to over-ride, modify or alter any of the specific terms and exclusions applicable to this
Extension Clause.
Dated at __________________ this ________________________ day of __________________
PRODUCTS RECALL INSURANCE EXTENSION

The Insurers will indemnify the Insured in respect of Recall Expenditure incurred by the Insured for the
recall of Products (or any part thereof) as a result of a decision taken by the Insured during the Period of
Insurance and notified to Insurers during the Period of Insurance that it is necessary to recall such
Products because their use or consumption (or continued use or consumption) may cause the Insured to
incur a legal liability arising from;
1. Accidental Bodily Injury (including death, illness or disease to any person) and/or accidental loss of or
damage to material property, and/or
2. Failure of the products to perform the function for which they were manufactured, designed, sold,
supplied, installed, repaired, altered, treated, dispatched or delivered by or on behalf of the Insured;
All in the normal course of the Insured’s business as described in the Schedule.
Definitions
“Recall Expenses” shall mean
a) The reasonable and necessary financial outlay incurred by the Insured in arranging for the return of the
Product or any part thereof
i) to the premises of the Insured
ii) to the premises of the manufacturer (or manufacturer’s nominated agent)
such financial outlay to include cost of correspondence, newspaper and magazine advertising, radio
or television announcements and transportation costs packing and/or temporary storage charges.
b) The cost of examination and, where necessary, destruction, replacement or re-working of the Product
or any part whether incurred by the Insured and/or his nominated agent arising out of a recall as
described above.
Exclusions
The Insurers shall not be liable for any Recall Expenditure arising from the Insured’s decision to recall any
Products:-
(i) when such decision is forced upon the Insured by any Government or Public Authority and which the
Insured would not have made but for the intervention of the said Government or Public Authority.
(ii) which have not been delivered to customers by the Insured and which remain in the care custody and
control of the Insured or its parent or subsidiary or associated companies.
(iii) solely as a result of their having been mis-delivered or mis-directed by or on behalf of the Insured.
(iv) where recall is brought about solely due to exposure to weather or due to external loss or damage or
gradual deterioration. This exclusion shall not apply where a defect in the Product supplied is merely
exacerbated by exposure to weather or the passage of time.
(v) as a result of deliberate Product contamination or alleged deliberate Product contamination.
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(vi) as a result of the Insured’s liability to pay any import duties or Customs or Excise charges or Value
Added
Tax incurred before the delivery of the Products to the Insured.
(vii) For loss or destruction of or damage to any property whatsoever or any loss or expense whatsoever
resulting or arising there from or any consequential loss.
(viii) For any legal liability of whatsoever nature directly or indirectly caused by or contributed to by or
arising from
a) ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste
from the combustion of nuclear fuel.
b) The radio-active, toxic, explosive or any other hazardous properties of any explosive nuclear assembly
or nuclear component thereof.
(vii) For loss or damage directly or indirectly occasioned by happening through or in consequence of war,
invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion,
revolution,
insurrection, military or usurped power or confiscation or nationalization or requisition or destruction of or
damage to property by or under the order of any government or public or local authority.
(viii) For the self-insured Excess specified in the Schedule hereto.
(ix) For any claim in respect of Recall Expenses of products manufactured or distributed by the Insured or
the Insured’s Agents prior to the Retroactive Date stated in the Schedule hereto.
(x) For claims arising in connection with Products prior to their unqualified acceptance by the Insured
customer, acceptance being deemed to mean in the case of contracts for the supply only of products the
acceptance of delivery by or on behalf of the Insured’s customer (where delivery to the Insured’s
customer is in stages and is recognised as such by the issue of delivery notes or the like acceptance of
each stage so recognized shall be deemed to have taken place).
12. PROFESSIONAL INDEMNITY INSURANCE
Any professional acting in professional capacity is bound to exercise due care & skill required by a
competent practitioner in that profession. His failure to exercise due care may give cause of action
against him by his client since such duty to the client applies to any profession be that of a doctor,
solicitor or an accountant. Taking into view the above aspects there could be two counts upon which an
action may be based for damages due to negligence
i) The defendant did not have the necessary degree of skill
ii) The defendant having the necessary skill did not exercise the same in particular case.
The consequences of such an action could be very grievous as far as the professional is concerned since
it may invite unwanted publicity. Moreover, any such action not only affects the reputation of the
professional but may also invite bankruptcy.
This insurance applies to all the professionals of medical profession/establishments, Engineers,
Architects,Interior Decorators, Chartered Accountants, Financial/Management consultants,
lawyers/Advocates/Solicitors and Counsels.
Aggregate limits within geographical limits of India including Nepal/Bhutan are covered on annual basis.
Any other professional other than that stated above shall also be considered on similar basis and if no
similar form is available reference should be made to H.O.
Proposal Form :
Each category Insurance has separate proposal form, Questionnaire form which would enable the
Company to decide acceptance as well as underwriting of the business. Each category proposal forms
are standardized and have to be submitted duly filled in not only at inception of cover but also on
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renewals. No proposal shall be accepted unless proposal form is submitted with duly signed declaration
that all statutory requirements pertaining to the profession are complied with.
Liabilities Covered :
This agreement covers all sums which insured becomes legally liable to pay as damages to third party
for any errors and omissions committed by Insured whilst rendering professional services during the
policy period. This also includes legal costs/ expenses incurred duly approved by the Company,
maximum within limits of indemnity so covered.
This policy cannot be issued with unlimited indemnity limits.
Premium :
To be paid at inception annually and not acceptable in instalments.
Wherever required as far as possible, accurate Turnover figures shall be submitted. In case any increase/
decrease in turnover is anticipated, the same should be notified immediately for necessary adjustment
since no adjustments are allowed after expiry of the Policy.
Retroactive Date :
This is the first incepted date under claims made Policy renewed without break in period of cover.
Excess, Compulsory :
All Policies are subject to compulsory excess of fixed percentage with minimum Excess limits as stated in
the Schedule. This is applicable to both deaths/bodily injury or property damage including Defence costs
due to any one accident. Doctor’s/Medical Practitioner’s Policy is not subject to this excess. Each Policy
has specific percentage with minimum and maximum limit as stated in the Schedule.
Excess, Voluntary :
In case Insured opts for this, voluntary discount in premium is allowed from 2.5% to 15% depending on
opted percentage of limit of indemnity per any one accident ranging from 1% to 10%. This excess shall be
in addition to compulsory excess.
In no case the Policy can be issued for more than 12 months and has prescribed Short Period Scales for
Policyless than 12 months.
Cancellation of Policy can be allowed subject to there being no claim. No Refund is permissible if policy is
cancelled subsequent to claim.
Each category of Professional Indemnity prescribes minimum premium.
Jurisdiction available for all policies will be Indian Courts. If cover is desired for coverage outside India
then reference should be made to H.O.
Policy Conditions applicable to all categories of Professional Indemnity Insurance :
i) The Policy defines ‘policy period (midnight to midnight) and period of Insurance commencing from
retroactive date.
ii) Notification Extension Clause :
In event of any claim made against Insured in view of circumstances giving rise to a claim and the same
is subsequently reported by insured to the Company, the claim will be dealt with by the Company as if it
has been first made against Insured. Maximum limit for notification will be stipulated time limit as per
Indian Limitation Act.
iii) Extended Claim Reporting Clause :
In case of non-renewal or cancellation of policy extended, claim reporting time limit is 90 days from date
of expiry/cancellation of the Policy and the claims reported thereunder shall be handled as if made on last
day of expiring Policy for any accident/occurrence taken place during Policy Period.
If any Insurance is in force during this extended reporting period, there will not be any extended period
available under expired/cancelled policy.
iv) Claim Series Clause :
Where series of losses occur due to the same event, error, omission related to professional services,
claims shall be added together and shall be treated as on claim. Any claim made should not be later than
3 years after the first claim of the series.
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EXCLUSIONS :
a) Criminal act or any act committed in violence of law or ordinance
b) Any services rendered under influence of intoxicants
c) Third Party liability
d) Any contractual liability which would not exist but for the contract
e) Non compliance of statutory provisions
f) Loss of goodwill/ market
g) Any libel, slander, false arrest, detention
h) Fine, penalty punitive or exemplary damages
i) War and allied perils, radioactive contamination, nuclear components
j) Deliberate disregard of technical/administrative management &/or reasonable steps to prevent
the claim
k) Any death/injury/damage under contract of employment with insured.
CONDITIONS :
a) Written notice to the Company in event of any claim or any circumstances thereof. All writ/summons
forwarded to the Company immediately on receipt.
b) No admission of liability or any offer thereat without prior consent of the Company.
c) The Company has right, not obligation to take over and conduct defence proceedings and settlement of
claim. Any expenditure incurred thereof shall reduce the limit of indemnity. This action will not in any way
modify Company’s liability under the Policy.
d) Insured shall co-operate to provide all necessary information.
e) Material change/circumstances will have bearing on claim provided such information or policy condition
shall be provided expeditiously.
f) Upon any settlement of any claim or series of claims or any lesser amount for which claim has been
settled, the Company shall relinquish the conduct and control of any further liability in context thereof.
g) The interpretation of Policy and the schedule shall be read together as contract and shall bear such
specific meaning wherever it may appear. All the terms/exclusions shall be interpreted in accordance with
Indian Law.
h) Contribution condition stating Company shall not be called upon to pay more than their rateable
proportion
of loss in event of there being another liability Insurance or any other person covering similar liability.
i) 30 days’ cancellation notice by Company – pro-rata return of premium subject to minimum retention of
percentage of premium for unexpired period.
Policy may be cancelled by Insured by giving 30 days’ notice – retention at short period subject to no
claim. In case of claim no refund would be allowed.
j) In event of claim under Policy the limit of indemnity under A.O.A. stands reduced to the extent of
quantum
of liability. No reinstatement allowed on that count.
k) Any disclaimer of liability by the Company, claim becomes time bar unless suit filed within 12 months of
such disclaimer.
l) Any fraud/mis-statement/non-disclosure, there will be no liability under the policy.
m) Jurisdiction within India & Indian Court.
n) Policy dispute clause – regarding interpretation, subject to Indian Law. There are certain policy
conditions
which are related to specific Professional Indemnity Insurance cover.
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DOCTORS AND MEDICAL PRACTITIONERS
1. OPERATIVE CLAUSE:
WHEREAS the insured named in the Schedule hereto and carrying on the business/profession described
in the said Schedule has applied to THE .................... COMPANY LIMITED (hereinafter called ‘the
COMPANY’) for the indemnity hereinafter contained and has made a written proposal and declaration
which shall be the basis of this contract and is deemed to be incorporated herein and has paid the
premium as consideration for or on account of such indemnity.
NOW THIS POLICY WITNESSETH that subject to the terms exceptions and conditions contained herein
or endorsed hereon the Company will indemnify the Insured against their legal liability to pay
compensation including defence costs, fees and expenses anywhere in India in accordance with Indian
Law.
2. INDEMNITY
The Indemnity applies only to claims arising out of bodily injury and/or death of any patient caused by or
alleged to have been caused by error, omission or negligence in professional service rendered or which
should have been rendered by the Insured or qualified assistants named in the Schedule or any nurse or
technician employed by the Insured (hereinafter referred to as the ‘Act’).
PROVIDED ALWAYS THAT
(a) such Act during the Period of Insurance results in a claim being first made in writing against the
Insured during the policy period as stated in the Schedule.
(b) there shall be no liability hereunder for any claim made against the insured for act committed or
alleged to have been committed prior to the Retroactive Date specified in the Schedule.
For the purpose of determining the Indemnity granted
(a) ‘Policy Period’ means the period commencing from the effective date and hour as shown in the Policy
Schedule and terminating at midnight on the expiry date as shown in the Policy Schedule.
(b) ‘Period of Insurance’ means the period commencing from the retroactive date and terminating on the
expiry date as shown in the Policy Schedule.
(c) ‘Bodily Injury’ means death, injury, illness or disease of or to any person.
3. LIMIT OF INDEMNITY
Irrespective of the number of persons or entities named as insured in the Schedule or added by
endorsement, the total liability of the Company hereunder for damages inclusive of defence costs (as
hereinafter defined) shall not exceed the limit of indemnity set out in the Schedule for Any One Act (AOA)
in respect of any or all claims made against the insured arising out of Any One Act.
The indemnity limit for Any One Year as set out in the Schedule, shall represent the aggregate amount of
company’s liability during the policy period, arising out of all Acts.
4. DEFENCE COSTS
The Company will pay all costs, fees and expenses incurred with their prior consent in the investigation,
defence or settlement of any claim made against the Insured and the costs of representation at any
inquest, inquiry or other proceedings in respect of matters which have a direct relevance to any claim
made or which might be made against the Insured, provided such claim or claims are the subject of
indemnity by the Policy. Such costs, fees and expenses are called ‘Defence Costs’.
5. (a) NOTIFICATION EXTENSION CLAUSE
Should the Insured notify the Company during the Policy Period in accordance with General Condition
No.8.1 of any specific event or circumstance which the company accepts may give rise to a claim or
claims which form the subject of indemnity by this policy, then the acceptance of such notification means
that the Company will deal with such claim or claims as if they had first been made against the Insured
during thePolicy period. The extension under the Clause will be subject to the maximum time limit laid
down under the Indian Limitation Act in force from time to time.
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(b) EXTENDED CLAIM REPORTING CLAUSE
In the event of non-renewal or cancellation of this Policy either by the Company or by the Insured, the
Company will allow a time limit not exceeding 90 days from the date of expiry or cancellation of the policy,
provided no insurance is in force during this extended reporting period for the same interest, for
notification of claims for accidents which had taken place during the period of insurance but could not be
made during the Policy Period, provided however, all claims made during the extended reporting period
shall be handled as if they were made on the last day of the expiring policy period and are subject to the
limits of indemnity and the terms, conditions and exceptions of the policy.
6. CLAIMS SERIES CLAUSE
For the purpose of this policy where a series of losses and/or bodily injuries and/or deaths are attributable
directly or indirectly to the same cause or error or omission relating to discharge of professional services
all such losses and/or bodily injuries and/or death claims shall be added together and all such losses
and/or bodily injuries and/or death shall be treated as one claim and such claim shall be deemed to have
been made at the point in time when the first of the claims was made in writing. There shall, however, be
no coverage for claims made arising from one specific cause which are made later than 3 years after the
first claim of the series.
7. EXCLUSIONS
1. No liability shall attach to the Company in respect of
(i) any criminal act or any act committed in violation of any law or ordinance
(ii) services rendered while under the influence of intoxicants or narcotics
(iii) the performance by dentists and dental surgeons of 1) general anaesthesia or 2) any
procedure carried out under general anaesthesia unless performed in a Hospital,
(iv) the use of drugs for weight reduction
(v) Claims made against the Insured arising from the performance of cosmetic plastic surgery,
hair transplants, punch grafts, flap rotations and the like (hereinafter referred to as cosmesis) it
being understood that the following shall not be deemed to be cosmesis :
a) Anaesthetic x-ray or other medical nursing or laboratory services provided in connection with the
performance of cosmesis.
b) Plastic surgical repair of scar tissue being the result of previous surgery unrelated to cosmesis
performed by the Insured.
c) Plastic surgery in connection with burns or other traumatic injury.
(vi) Third Party Public Liability
(vii) claims arising from any condition directly or indirectly caused by or associated with Human T-
Cell Lymphotropic Virus type III (HTLV 111) or LYMPHADENOPATHY ASSOCIATED VIRUS
(LAV) or the mutants derivatives or variations thereof or in any way related to Acquired Immune
Deficiency Syndrome or any Syndrome or condition of a similar kind howsoever it may be named.
2. This Policy does not cover liability

i) assumed by the Insured by agreement and which would not have attached in the absence of
such agreement.
ii) arising out of deliberate, wilful or intentional non-compliance of any Statutory provision.
iii) arising out of loss of pure financial nature such as loss of goodwill, loss of market etc.
(iv) arising out of all personal injuries such as libel, slander, false arrest, wrongful eviction,
wrongful detention, defamation, etc. and mental injury, anguish or shock.
(v) arising out of fines, penalties, punitive or exemplary damages.
(vi) directly or indirectly occasioned by happening through or in consequence of war, invasion, act
of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution,
insurrection or military or usurped power.
(vii) directly or indirectly caused by or contributed by
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iii) ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear
waste from the combustion of nuclear fuel
ii) the radioactive, toxic, explosive or other hazardous properties of any explosive nuclear
assembly or nuclear component thereof
i) arising out of genetic injuries caused by x-ray treatment/diagnosis or treatment/diagnosis with
radioactive substances.
(ix) In respect of professional services rendered by the Insured prior to the Retroactive Date in the
Schedule.
(x) The deliberate conscious or intentional disregard of the insured’s technical or administrative
management of the need to take all reasonable steps to prevent claims.
(xi) injury to any person under the contract of employment or apprenticeship with the Insured their
contractor(s) and/or Sub- Contractor(s) when such injury arises out of the execution of such
contract.
8. CONDITIONS
8.1 The Insured shall give written notice to the Company as soon as reasonably practicable of any
claims made against the Insured (or any specific event or circumstances that may give rise to a claim
being made against the Insured) and which forms the subject of indemnity under this policy and shall give
all such additional information as the Company may require. Every claim, writ, summons or process and
all ocuments relating to the event shall be forwarded to the Company immediately they are received by
the Insured.
8.2 No admission offer promise or payment shall be made or given by or on behalf of the Insured
without the written consent of the Company.
8.3 The Company will have the right but in no case the obligation, to take over and conduct in the name
of theinsured the defence of any Claims and will have full discretion in the conduct of any proceedings
and in the settlement of any claim and having taken over the defence of any claim may relinquish the
same. All amounts expended by the Company in the defence, settlement or payment of any claim will
reduce the limits of indemnity specified in the Schedule of the Policy.
In the event that the Company, in its sole discretion chooses to exercise its right pursuant to this
condition, no action taken by the company in the exercise of such right will serve to modify or expand in
any manner, the company’s liability or obligations under this policy beyond what the company’s liability or
obligations would have been had it not exercised its rights under this condition.
8.4 The Insured shall give all such information and assistance as the Company may reasonably required.
8.5 The Insured shall give notice as soon as reasonably practicable of any fact, event or circumstance
which materially changes the information supplied to the Company at the time when this policy was
effected and he Company may amend the terms of this policy.
8.6 The Company may at any time pay to the Insured in connection with any claim or series of claims
under this policy to which an indemnity limit applies the amount of such limit after deduction of any sums
already paid) or any lesser amount for which such claims can be settled and upon such payment being
made the Company shall relinquish the conduct and control of and be under no further liability in
connection with such claims.
8.7 The Policy and the Schedule shall be read together as one contract and any word or expression to
which a specific meaning had been attached in any part of this policy or the Schedule shall bear such
specific meaning wherever it may appear. The terms and exclusions of this policy (and any phrase or
word contained therein) shall be interpreted in accordance with the Indian Law.
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8.8 If at the time of happening of any event resulting into a liability under this policy, there be any other
liability insurance or insurances effected by the Insured or by any other person covering the same liability,
then the Company shall not be liable to pay or contribute more than its rateable proportion of such
liability.
8.9 This Policy does not cover liability which at the time of happening of any event resulting into such
liability, be insured by or would but for the existence of this policy, be insured by, any other policy (but not
a liability policy) or policies, except in respect of any excess beyond the amount which could have been
payable under such policy/policies had this insurance not been effected.
8.10 The Company may cancel this Policy by giving thirty days’ notice in writing of such cancellation
to the Insured’s last known address and in such an event the company will return a pro-rata portion of the
premium (subject to a minimum retention of 25 per cent of the annual premium) for the unexpired part of
the Insurance.
This Policy may also be canceled by the Insured by giving thirty days’ notice in writing to the Company in
which event the Company will retain premium at short period scale provided there is no claim under the
Policy during the period of Insurance. In case of any claim under the policy, no refund of premium shall be
allowed.
8.11 In the event of Liability arising under the Policy or the payment of a claim under this Policy, the limit
of indemnity per any one year under the policy shall get reduced to the extent of quantum of liability to be
paid or actual payment of such claim. Under no circumstance it shall be permissible to reinstate the
aggregate limit of indemnity to the original level even on payment of extra premium.
8.12 It is also hereby further expressly agreed and declared that if the Company shall disclaim liability to
the Insured for any claim hereunder and such claim shall not within 12 calendar months from the date of
such disclaimer have been made the subject matter of suit in a court of Law then the claim shall for all
purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.
8.13 The Company shall not be liable to make any payment under this Policy in respect of any claim if
such claim shall be in any manner fraudulent or supported by any statement or device whether by
Insured or by any person on behalf of the Insured and/or if the insurance has been continued in
consequence of any material mis-statement or the non-disclosure of any material information by or on
behalf of the Insured.
8.14 Policy disputes Clause

Any dispute concerning the interpretation of the terms conditions limitations and/or exclusions contained
herein is understood and agreed to by both the Insured and Company to be subject to India Law. Each
party agree to submit to the jurisdiction of any Court of competent jurisdiction within India and to comply
with all requirements necessary to give such Court of jurisdiction. All matters arising hereunder shall be
determined in accordance with the law and practice of such C
13. PROSPECTUS LIABILITY INSURANCE

This cover is available as extension to the Directors and Officers Insurance , however the indemnity limit
may get exhausted in event of a loss related to issuance of Prospectus and thereby the Directors would
have no protection for other issue, hence, normally a separate policy is issued and also it provides a more
comprehensive cover
Why take prospectus insurance?
● Those persons who are responsible for the preparation of the Issue Document, owe a duty of
care to those investors, typical such responsibilities are enshrined in the laws and regulations of
the countries in which the shares are sold.
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● Directors and Officers are personally exposed, whilst they may be entitled to indemnity for any
claim against them by the Company, the Directors, Officers and Senior Employees want to
ensure they have sufficient protection for such potential claims.
● The Company may assume exposure not only by direct claims against it but also by the
Directors indemnification provisions, and protection is therefore sought.
● Selling/Controlling Shareholders can assume exposure for the documents.
● Directors’ and Officers Insurance policies often contain a prospectus exclusion, if this is
removed, then some cover for Directors may be provided. However, this policy is designed to
cover the on-going acts of Directors and cannot offer the breadth of protection offered by a
separate prospectus policy.
● Criminal and civil exposures related to content of the prospectus are detailed in the Public
Offers of Securities Regulation.
● If it is a single policy then the amount of prospectus liability coverage is “shared” with the
coverage for all
other D&O policy exposures. A company may buy a three-year policy, pay a substantial additional
premium for doing so, and then find its coverage diluted or even exhausted in the first year by an
employment practices or other D&O claim.
APPLICABILITY
Listing particulars and the prospectus need to include detailed information on various aspects of the
issuing company’s business. Whilst there are strict regulations in place to guide the directors regarding
the information to be provided, the personal responsibility for the contents and accuracy of the information
falls largely with the directors who will be jointly and severally liable for mis-statements or omissions.
The liabilities for the directors, the vending shareholders and the company itself are widespread. The
following are examples of areas where the parties to the offering could be exposed to risk :
● Investors may begin an action against the directors, the vending shareholders and/or the
company for an alleged misrepresentation, error or omission in the prospectus on which they had
relied to make their investment.
● Underwriters can pursue the directors, the vending shareholders, and/or the company by
virtue of the warranties and the hold harmless indemnity given under the underwriting/ placing
agreement.
● Regulatory bodies have authority to initiate proceeding against the parties to an offering in the
event of allegations of wrongdoing or a breach of the listing rules.
● Professional advisers to the offering may claim against the directors, the vending
shareholders and the company for financial loss pursuant to an indemnity.
The examples outlined above provide a glimpse of the legal liability exposures facing the directors, the
vending shareholders and the company when offering securities. Prospectus Liability Insurance can
provide comfort to those assuming liability and can also enable the future use of the proceeds raised from
the offering.
Who should consider this Insurance?
Both the issuing organisation and the directors and officers may be covered by the policy. In addition it
can offer protection to claims lodged against other employees of the company. It can also be extended to
include the professional advisors to the transaction - if required.
Liability can attach to a number of parties, such as:
● Individuals who sign the prospectus.
● All directors of the entity.
● The issuer.
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● Anyone who is named in the prospectus.
● Anyone who has authorized the contents of any part of the prospectus.
SCOPE OF COVER
What Does It Cover?
Prospectus Liability insurance (also known as Initial Public Offering (IPO)) covers potential liabilities
arising out of:
● alleged misrepresentations, errors or omissions contained in the issue documents
● wrongful acts of the Directors and the Company in regard to issue of Prospectus
● prior activities in connection with the offering, e.g. negotiations, discussions and decisions
● Non-US listings and certain US listings
● warranties and indemnities of the directors to the underwriters or sponsor of the flotation
● the preliminary prospectus, the roadshow presentation and any press release related to the
issue
● the professional advisers to the issue
Cover may also include legal and other defence costs incurred in connection with a claim against the
insured and may even extend to public relations and crisis management expenses.
EXTENSIONS
● cover for Estates, Heirs & Legal Representatives
● protection for Spousal Property
● access to limited free legal advice
● optional extension for Civil Penalties
● optional extension for Additional Insureds
● joint property liability
CONDITIONS
1. Representaion and Severability
2. Change in Risk during Policy Period
3. Retention
4. Limit of liability
5. Notice and Report of Securities claim
6. Advancement of Costs
7. Defence of claim
8. Allocation
9. Subrogation
10. Other Insurance
11. Notice and Authority
12. Assignment
13. Jurisdiction and Governing Law
14. Plurals and Titles
EXCLUSIONS
The insurer shall not be liable to make any payment for loss in connection with any securities claim made
against the insured for :
1. Gaining any profit which insured was not legally entitled
2. Dishonest or fraudulent act
3. Illegal or unlawful payment to an insured of any remuneration
4. Any claim reported or notice of which is given under any policy of which this policy is a renewal or
replacement
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5. Pending or prior litigation as of the continuity date specified
6. Any actual or alleged act or omission of a director, officer or employee
7. Any Loss which is brought by or on behalf of any insured or the company or which is brought by any
securities holder or member of the company
8. Bodily injury, sickness, disease, death or emotional distress of any person or damage to or destruction
of any tangible property including loss of use thereof
9. The actual, alleged or threatened discharge, dispersal, release or escape of pollutants or any direction
or request to test for , monitor, clean up, remove, contain, treat, detoxify or neutralize pollutants,
nuclear material or nuclear waste
10. In a capacity as trustee or fiduciary under law or administrator of any person, profit sharing or
employee benefits programme including but not limited to an actual or alleged violation of the
responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act.
EXCESS
For Directors, it is NIL and for Company Reimbursement, it is as agreed.
LIMIT OF LIABILITY
The insurer’s total liability for all loss under Covers A, B and C combined, arising out of all securities claim
first made against the insureds during the policy period or any extension thereto shall be stated in the
Schedule of the policy. The sub-limit of indemnity stated in the Schedule shall be maximum limit of the
Insurer’s liability for all defence costs in the aggregate and shall be part of and not in addition to the limit
of liability as stated in the Schedule.
Defence costs are not payable by the insurer in addition to the limit of liability. They are part of loss and
are subject to the limit of liability for loss.
NOTICE AND REPORT OF CLAIM

Notice of a securities claim or of circumstances which may result in a securities claim shall be given in
writing by the insured , as a condition precedent to the obligations of the insurer under the policy, as soon
as practicable and either : any time during the policy period or
within 30 days after the end of the policy period, as long as such securities claim is reported no later than
30 days after the date such securities claim was first made against an insured.
SUBMISSION REQUIREMENTS
● a completed Prospectus Liability Proposal Form
● a copy of the final Disclosure Document
● a copy of any Supplementary Disclosure Documents
● a copy of the Due Diligence Committee’s Report(s)
● the past two Annual Reports and Financial Statements for the Company
● size of the issue
● a copy of draft documents such as the Prospectus, Registration statement and agreements
● description of the proposed transaction
● the target of net funds to raise
● description of the parties involved in the transaction, including the financial adviser(s)
solicitor(s)
and auditor(s)
● tentative date of issue
● indemnity limit opted
● jurisdiction
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This write up, proposal form and clause is as per the one used in the international markets.
PROPOSAL FORM FOR PROSPECTUS LIABILITY INSURANCE

Completing the Proposal Form
● Please answer all questions in full leaving no blank spaces
● If you have insufficient space to complete any of your answers, please attach a separate
signed and dated sheet and identify the question number concerned
● It is agreed that whenever used in this proposal form, the term Applicant shall mean the
Principal
Organisation and all its Subsidiaries, as defined in the New India Assurance Co. Prospectus
Liability
Coverage Section (“the policy”).
● The headings in this proposal are solely for convenience
● It is agreed that whenever used in this proposal form, the definition of the terms ‘Claims’,
‘Policy
Period’, ‘Offering Prospectus’ or ‘Defence Costs’ are in accordance with the policy.
● The Prospectus Liability policy is written on a claims made basis. The policy covers only
Claims
first made during the Policy Period or any Extended Reporting Period. The limit of liability to pay
damages or settlements will be reduced and may be exhausted by the payment of Defence Costs.
Please furnish claims history (countrywise) for the last three years in the following format:
(a) Year 20.. 20.. 20..
(b) No. of claims:
(c) Total amount paid:
15. WORKMEN’S COMPENSATION INSURANCE

1. This class of insurance is governed by Internal Guide Rates as well as rules and regulations must be
observed as per Internal Guide.
The Policy seeks to indemnify the Insured employer against his liability under :
● W.C. Act, Fatal Accident Act 1855 and
● At Common Law.
If any employee in his immediate service shall sustain personal injury by accident or disease arising out
of and in course of his employment except those stated under Schedule III of W.C. Act – Part ‘C’.
In addition the Company will also pay for all legal costs and expenses incurred with its consent in
defending any claim for such compensation.
2. The laws applicable are as under :
(a) The Workmen’s Compensation Act, 1923 and subsequent amendments provide for wages not
exceeding Rs8,000/-.
However, it is provided that ‘where the monthly wages of a workman exceed Rs.8,000/-, his monthly
wages for the purposes of computation of compensation for death and permanent disablement shall
be deemed to be Rs8,000/- only’. This would mean that calculations for maximum liability under
the Act would be based on a monthly wage of Rs.8000/- only.
“Factor-multiplier” is provided for the purpose of working out lump-sum compensation amount in
case of “death” and “Permanent Disablement”. The provisions are as follows :
(i) Where death results from injury : An amount equal to 50 percent of monthly wages multiplied
by the relevant factor or Rs.80,000/- whichever is more.
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(ii) Where permanent total disablement results from injury :An amount equal to 60 per cent of the
monthly wages multiplied by the relevant factor or Rs.90,000/- whichever is more.
(iii) In case of permanent partial disablement or amputation of a full limb or a part, the Act lays
down different percentages for loss of earning capacity according to the nature and extent of
injury.
(iv) Liability for Temporary Total Disablement is payable half monthly being 25% of monthly wages,
as provided in the Tariff.
(b) The Indian Fatal Accidents Act, 1855 : This Act enables claims for damages upto an unlimited
amount to be maintained against a person who by his wrongful act, neglect or default causes the
death of another.
(c) The Common Law : Gives a person the right to claim from another, damages upto an unlimited
amount for injury or loss sustained on account of the negligence of such other person or of his
servants acting within the scope of their employment.
3. Following 2 forms of cover are available.
Table ‘A’ : Indemnity against liability under Workmen’s Compensation Act, 1923 and amendments thereto
and Indian Fatal Accidents Act, 1855 and at Common Law.
Table ‘B’ : Indemnity against liability under India Fatal Accidents Act, 1855 and at Common Law.
4. The insurance under Table ‘A’ can be extended by charging an additional premium of 50% of
applicable
rate to cover liability out of diseases mentioned in part ‘C’ of Schedule III of Workmen’s Compensation
Act as amended. Otherwise liability for such occupational diseases is excluded from basic covers.
5. The insurance does not cover any interest and/or penalty which may be imposed on an Insured on
account of failure to comply with the requirements of the W.C. Act as amended.
6. The Internal Guide classifies the risks according to the trade or business and gives alphabetically the
classified risks. Against each trade or business so classified the Internal Guide gives the premium rates
per mille which is applied to the total earnings of the employees so insured during the period of insurance.
It is important therefore that the trade and occupation of the worker are correctly described in the
proposal form.
7. The term “earnings” include regular salary/wages, overtime, value of board/lodging, housing
accommodation, bonus and all perquisites, privileges or benefits in cash or kind. Initially a provisional
premium calculated on estimated total earnings is charges. This is subject to adjustment at the end of the
policy period when the insured will be required to furnish details of the actual earnings on the “Wages
Adjustment Statement”form.These details of actual earnings should be submitted to the Company within
one month of the expiry of the policy.
8. Before every renewal the wages Adjustment statement should be obtained form the insured and
premium is adjusted accordingly, since the policy is issued for estimated wages for all workmen on pay
roll.
9. All workmen should be covered and no selection of risk to be allowed.
10. The Policy may be extended to cover medical expenses by charging additional premium as per
Internal Guide.
11. Wherever the estimated wages exceed Rs. 5 lacs and the claims experience satisfies the criteria, the
benefit of Special Rating as provided in the Internal Guide Tariff to be given to the Insured.
12. Declined Risk :
Following risk must be referred to the Regional Office before acceptance :- Aviation, Ammunition filing,
breaking down of Explosive, Collieries, Demolition as a separate contract, explosive factory, fireworks
factory, Gunpowder factory, Mines, Quarries, Railways, Shipping, Tunnelling.
11. Exclusions under the Policy :

(a) War and allied perils
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(b) Liability to employees of contractor (unless specifically covered)
(c) Any employee who is not a “workman” within the meaning of the Law
(d) Any contractual liability
(e) Nuclear exclusion
12. Claims :
The officials handling claims should be thoroughly conversant with W.C. Act and should familiarise with its
provisions, rules, regulation, procedures.
The claim becomes payable if the accident in respect of which it is made arises “out of and in the course
if the workman’s employment’.
Over a period of years numerous legal decisions have been passed over the interpretation of the
expression arising “out of and in the course if the workman’s employment’.
Under the workmen’s compensation Act following are the few exceptions under which no compensation
would be payable :-
(a) Any injury which does not result in total or partial disablement for a period exceeding 3 days.
(b) In respect of any injury for the first 3 days of disablement unless such disablement lasts for a
period of 28 days or more.
(c) For any injury not resulting in death caused by accident directly attributable to :
(i) Workman having been at the relevant time under the influence of drinks or drugs.
(ii) Wilful disobedience of the workmen to an order expressly given or to a rule expressly framed for the
purpose of securing the safety of the workmen.
(iii) Wilful removal or disregard by the workman of any safety guard or other devise which he knew to
have been provided for the purpose of securing his safety.
Employees of sub-contractors have right to claim compensation direct from the principal. The principal,
however, may obtain reimbursement from the main contractor.
Cover in respect of claim on the principal to pay compensation to contractor’s workmen is normally
excluded from the scope of the policy. Provision is however available to cover the workmen of the
contractor by endorsement when wages paid to the contractor’s workmen are included in the amount of
wages declared and extra premium thereof is charged.
It is important to note that if a workman institutes a claim before the Workmen’s Compensation
Commissioner for damages in respect of his injury, he cannot subsequently file a civil suit against his
employer. On the other hand, if he institutes a claim under Common Law, he cannot subsequently claim
compensation under the Workmen’s Compensation Act. He has to choose his form of redressal.
In this context it is interesting to note that :-
(a) Both the fatal Accidents Act and Workmen’s Compensation Act abolished the defence of “rule
of fellow-servant or common employment”.
(b) Also the doctrine of assumption of risk called “violent non fit injuria” is not permitted as
defence under the W.C. Act.
(c) When contributory negligence is established, it helps to reduce the liability of the employer
under Common Law, the W.C. Act, however, does not permit contributory negligence to be raised
as a defence, but, as observed earlier, the Act absolves the employer of liability in respect of
claims against injury, not resulting in death, arising out of the workman’s willful disobedience or
willfully disregarding the safety measures laid down to be observed or being under the influence
of alcohol or drug.
The amount of compensation depends on the injuries and the percentage of loss of earning capacity
consistent with he injuries sustained. The physician or surgeon who treated the injured employee should
give a certificate as to the nature of injuries sustained and the percentage of loss of earning capacity
resulting therefrom based on the provisions laid down in the W.C. Act.
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When we are not satisfied with such a certificate, we may direct the employee to a registered medical
practitioner of our choice and insist on a certificate from him.
In claims involving death of the workman, the inquest report of the Police or other authorities, the death
certificate from the local authorities and the post-mortem report, if any, should provide the required
evidence as a proof of loss.
The employer should take steps to ensure that every accident is brought to the notice of the Company.
Every fatal or serious accident should definitely be reported to the Workmens’ Compensation
Commissioner within the time limit specified in the Act.
The compensation payable in respect of fatal injuries must be deposited with the commissioner. In the
case of permanent disablement benefits, it is necessary to draw up a Memorandum of Agreement setting
forth the terms of the settlement which must be registered with the Commissioner. Only the half-monthly
payments for temporary disablement may be made directly to the insured. Hence, in all lump sum
payments a discharge from the Commissioner is a sufficient discharge to us and for half-monthly
payments the insured’s discharge would be sufficient.
MEDICLAIM POLICY:
APPLICABILITY OF INSURANCE:
The policy covers reimbursement of hospitalization/domiciliary hospitalization
expenses for illness / diseases or injury sustained.
INDEMNIFICATION UNDER THE POLICY:

In the event of any claim becoming admissible under this scheme, the amount of
such expenses reasonably and necessarily incurred under the heads given here
below are payable. However, this should not exceed the sum insured in any one
period of insurance.
Room, Boarding, Nursing expenses not exceeding 1% of the Sum Insured in the
hospital / nursing home.
ICCU/ICU Expenses not exceeding 2% of the S.I.
Surgeon, anesthetist, medical practitioner, consultants, specialists’ fee appliances,
medicines and drugs, diagnostic materials and x-rays, dialysis, chemotherapy, radio
therapy, cost of pace-maker, artificial limbs and cost of organs and similar expenses.
Pre-hospitalisation for 30 days and Post-hospitalisation for 60 days.
N.B.: All claims admitted during the period of insurance shall not exceed the sum-
insured person mentioned in the policy schedule.
ADDITIONAL BENEFITS:
This scheme also provides the following benefits:
Family package discount in premium.

Cumulative bonus.
Cost of health check-up.
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Hospital Cash
ESSENTIAL REQUIREMEMTS FOR HOSPITAL/NURSING HOME:
It should have atleast 15 in-patient beds.

Fully qualified nursing staff under its employment round the clock.
Fully qualified doctors should be in charge round the clock.
Availability of fully equipped operation theater.
DOMICILIARY HOSPITALIZATION BENEFIT:
This means medical treatment for a period exceeding 3 days for such illness /
disease / injury which in the normal course will require care and treatment at a
hospital / nursing home but actually taken whilst confined at home in India under
any of the following situations:
The condition of the patient is such that he/she cannot be removed to the hospital/
nursing home or
The patient cannot be removed to hospital / nursing home for lack of accommodation
therein.
EXCLUSIONS UNDER DOMICILIARY HOSPITALIZATION BENEFITS:
Any treatment not exceeding 3 days.

Expenses incurred for pre & post hospitalization treatment.
Expenses incurred for treatment of any of the following diseases.
o Asthma
o Bronchitis
o Chronic Nephritis
o Diarrhea and all type of Dysenteries including Gastro enteritis.
o Diabetes Mellitus and Insipidus.
o Epilepsy
o Hypertension
o Influenza, Cough and cold
o All psychiatric or Psychosomatic Disorders
o Pyrexia of unknown origin for less than 10 days
o Tonsillitis and upper respiratory Tract Infection including Laryngitis.
o Arthritis, Gout and Rheumatism.
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EXCLUSIONS UNDER THE POLICY:
PRE-EXISTING ILLNESS:
All diseases / injuries which are preexisting when the cover incept for the first time are
excluded.
FIRST 30 DAYS EXCLUSIONS:

Any disease other then “diseases coming under First year exclusions” contracted by the
insured person during the first 30 days from the commencement of the insurance are
excluded.
FIRST YEAR EXCLUSIONS:

During the first year of operation of the cover, the expenses incurred on treatment such as
Cataract, Benign Prostatic Hypertrophy, Hysterectomy Menorrhagia or Fibromyoma, Hernia,
Hydrocele. Congenital Internal Diseases. Fistula in anus, piles. Sinusitis and related
disorders are not payable.
GENERAL EXCLUSIONS APPLICABLE IN ALL SITUATIONS:
War or warlike operations

Circumcision unless it is necessary for a treatment of a disease not excluded under
the scheme or necessitated due to an accident.
Cost of spectacles and contact lenses, hearing aids.
Dental treatment or surgery of any kind unless warranting hospitalization.
Convalescence, general debility, “Run-down” condition or rest cure, congenital
external disease or defects or anomalies, sterility, venereal disease, intentional self-
injury and use of intoxicating drugs / alcohol.
Charges incurred at the hospital primarily for diagnostic, x-ray or laboratory
examinations not connected with the positive existence of any ailment is excluded.
Expenses on vitamins and tonics unless forms part of treatment.
Nuclear weapons, materials.
Treatment pertaining to pregnancy (including voluntary termination of pregnancy),
child birth including ceasarian operation.
Naturopathy treatment.
AGE-LIMIT:
18 to 65 Years.
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Children between the age group of 3 months and 5 years of age can also be covered
so long as one or both parents and covered
FAMILY DISCOUNT:
A discount of 10% in the total premium will be allowed comprising the insured and
any one or more of the following:
Spouse.
Dependent Children i.e., Legitimate or legally adopted children.
Dependent parents/ parents-in.law.
GROUP MEDICLAIM SCHEME:
GROUP MEDICLAIM SCHEME is available for named persons only.

GROUP MEDICLAIM SCHEME applicable as per the following table
No. of persons Discounts %
101-500 2.5
501-1000 5.0
1001-2000 7.5
2001-10000 10.0
10001-15000 12.5
15001-25000 15.0
25001-50000 20.0
Above 50000 persons 30.0
MATERNITY BENEFIT EXTENSION is available with 10% loading on Total Basic

premium. Maximum benefit allowable is Rs. 50,000/- or sum insured which ever is
lower.
COST OF HEALTH CHECK-UP is not payable under Group Mediclaim policy.
CUMULATIVE BONUS is not available under Group Mediclaim policy
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Group Mediclaim policy is subject to BONUS CLAUSE i.e., Low Claims Ratio discount
or High Claims Ratio loading will be applicable on the premium at renewal depending
on the incurred claims ratio for the entire group insured.
NAGRIK SURAKSHA POLICY:

COVERAGE:
Personal accident cover (Death, Loss of Limbs, PTD and PPD more than 40%) upto
a maximum of 80% of the Total Sum Insured opted and reimbursement of
accidental hospitalization expenses upto 20% of the opted Sum insured.
TYPES:
Individual / Family Package and Group Policy.
SUM INSURED:
Minimum Rs. 1 Lac.

Increase in multiples of Rs. 25,000/-
Six times the annual salary of the proposer
Maximum Rs. 5 Lacs.
POLICY PERIOD:
Individual - 1 to 4 years
Group - 1 year.
ELIGIBILITY:
Indian citizens 5 to 70 years in case of family cover. 18 to 70 years for group/
individual cover.
GEOGRAPHICAL SCOPE: Worldwide.
Payment of claims: Indian Currency only.
Hospital/ Nursing Home means:

Medical establishments with:
Inpatient bed facilities

Fully equipped operation theatre
Fully qualified nursing staff on duty round the clock
Full-fledged modern X-ray facilities
Fully qualified Registered Medical Practitioners in-charge round the clock.
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SUM INSURED LIMITATION:
Individual: Maximum 6 times annual income.

Family Cover: Maximum 6 times annual income of proposer for non-earning members also.
ALTERATION OF SUM INSURED:
It is not permissible to alter the sum insured during the currency of policy.
FAMILY PACKAGE DISCOUNT:
10% for one or more additional members.
OTHER BENEFITS (Only for Individual Nagrik Suraksha Policy)
Cumulative Bonus:
5% for each completed claim free year for PA section. Maximum 20% if renewed within 30
days of expiry.
Carriage of Dead Body and Funeral Charges (Available for Group Policy also)
@2% of the Sum Insured under P.A. section or Rs. 2,500/- whichever is less.
Education Fund:
In the event of death or PTD by accident to the Insured, 10% Sum Insured under PA
subject to maximum of Rs. 5,000/- in cases of one dependent child below the age of 23
years or Rs. 10,000 in case of more than one dependent child below the age of 23 years.
Loss of Employment:
In case of loss of employment of the insured due to PTD, 1% of Sum Insured under PA
Section is payable in addition to the Sum Insured The following points are to be applied
strictly whilst issuing a Nagrik Suraksha Policy.
The policy is available only to Indian Citizens.

No short period policy will be issued.
No alteration in sum insured during the currency of the policy is allowed.
No income tax benefit is available under this policy.
No reimbursement of expenses towards pre and post hospitalization under section II
of the policy is available.
No third party cheque should be accepted against premium under the policy.
GROUP POLICY:
Group of persons comprising of more than 100 persons.

It is not permissible to issue unnamed group policy.
Add-on benefits viz., Education Fund, cumulative bonus, family discount, loss of
employment are not available under group policy.
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OVERSEAS MEDICLAIM POLICY:
This policy provides indemnity for expenses incurred for medical treatment for illness,
diseases contracted or injury sustained during overseas travel which is primarily in the
nature of an emergency and without which insured would not be able to leave the overseas
country. It also provides travelers with in flight Personal Accident, Loss of passport, Loss of
checked baggage, Delay of checked baggage, Personal liability benefits.
This policy is not designed to provide any indemnity in respect of medical services, the need
for which arises out of pre-existing conditions.
PERIOD OF COVER:
Under plans A-1, A-2, B-1 and B-2 policy can be issued for upto 180 days any one
trip. However, cover can be considered for extension beyond 180 days subject to
prior approval form Regional Office by issuing fresh policy and exclusion of treatment
for any illness/ accident declared or not occurring during the previous policy period
or before inception of this policy.
Under plans E-1 and E-2 annual policies can be issued to corporate Frequent
Travelers with a maximum limit of 60 days per trip but unlimited number of trips per
year. It subject to the total days outside India during the policy period is limited to
180 days.
For CFT policies, medical reports are required to be submitted for persons above 60
years of age to have full cover for illness.
AGE LIMIT:
FOR PLANS ‘B’ AND ‘H’:
Proposers between 5 years to 70 years of age.

Accompanying child between 6 months and 5 years of age can also be covered under
B and H cover subject to exclusion of childhood diseases
Children under 6 months of age are not insurable at all.
Proposals received from persons over 70 years (completed years 71 and above) have
to be referred to for approval.
For proposals received from persons over 84 years of age reference should be made
to Head Office at least 15 days prior to date of departure along with all medical
reports, completed proposal forms including the doctor’s report and a general health
certificate from the usual physician which is a must.
CFT cover would be available for persons in the age group of 18 to 70 years only.
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AGE BAND:
To determine the applicable age band only consider the proposer’s age in “Completed
years”. For example for a proposer who has completed 40 years, the age band ‘5 to 40’
would apply. When the proposer’s declared age is 41 and above the age band of ’41 to 60’
should be applied.
ISSUANCE OF OVERSEAS MEDICLAIN POLICY BEYOND 70 YEARS:

Loading:
AGE IN COMPLETED YEARS LOADING
71 and 72 years 25%
73 and 74 years 50%
75 to 79 years 100%
80 to 84 years 150%
Note:
Proposals for 80 Years of age and above should be accommodated under Plan A-1/ B-1 only.
It is reiterated that Plan A-2/ B-2 should not be granted such persons.
IMPORTANT REQUIREMENTS ALONG WITH PROPOSAL FORMS:
Passport details such as citizenship and its validity.

Visa details and its validity.
Country of visits.
Name and address of the Indian Sponsor along with certificate showing details of
employment/ study and its duration.
Period of Insurance required.
Medical examination as per medical procedure prescribed in the guidelines(ECG,
Blood Test, Sugar Test, BP reading)
Income Certificate of sponsor(in case of student)
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SENIOR CITIZEN MEDICLAIM POLICY
New Policy introduced, WEF 01 10 2007, for the benefit of Senior Citizens.
COVERAGE : As per Mediclaim Policy 2007
AGE : Available for person s between the Age of 60 to 80 years.
Insureds may renew their policies beyond the age of 80 years
provided there is no break in insurance.
Persons opting for a policy for the first time have to undergo
prescribed Pre Health check up from an empanelled doctor.
Cost of check up has to be borned by the proposer.
FAMILY : Comprises of the Insured and the Spouse only.
SUM INSURED : Rs. 1 lac or Rs.1.5 lac per person
PREMIUM :
Sum Insured Rates 60 - Rates 66 - Rates 71 - Rates 76 - 80yrs

65yrs 70yrs 75yrs
100000 3470 3830 4230 4640
150000 5150 5680 6280 6890
Loading for renewal between 81 to 85 years: 10% of the age band of 76 – 80 years.
86 to 90 years: 20% of the age band of 76-80 years.
Additional premium for covering Hypertension, Diabetes Mellitus from the

Inception of Policy:-- 10% of the relevant basic premium for each
condition.
DISCOUNTS : Discount for opting Voluntary Excess of Rs.10000/- 10%
Discount in case of Spouse is covered 10%
CUMULATIVE BONUS : Every Claim free Year 5% subject to Maximum of 30%
Renewals from other companies will not be eligible
for CB and will be treated as FRESH.
In the event of claim entire CB will be withdrawn
irrespective of the claim amount.
COST OF HEALTH : Once in 4 claim free years…1% of average sum insured
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CHECKUP excluding CB for preceeding 4 years of New India Policy.
RENEWAL : Loading will be applicable on renewal in the event of a claim as under:
Expiring Policy status Loading
Policy with CB NIL Only CB is withdrawan
Policy without CB 25%
Policy with 25% loading 50%
CLAIM PROCEEDURES: Each claim under the policy is subject to an excess of 10%
In the event of a claim, the policy contains the following sub limits:
ROOM/BOARDING 1% SUM INSURED PER DAY
ICU 2% SUM INSURED PER DAY
OVER ALL LIMIT FOR THE ABOVE SHOULD BE 25%
SURGEON/ANASTHETIST/MEDICAL
PRACTITIONER,CONSULTANTS
SPECIALIST FEES,NURSING EXPENSES OVER ALL LIMIT 25% OF
SUM INSURED.
ANAESTHESIA BLOOD OXYGEN
O T CHARGES SURGICAL APPLIANCES
MEDICINES DRUGS DIAGNOSTIC OVER ALL LIMIT 50% OF
MATERIALS AND X RAY,DIALYSIS, SUM INSURED.
CHEMOTHERAPY,RADIOTHERAPY,
COST OF PACEMAKER,ARTIFICIAL LIMB
COST OF STENTS AND IMPLANTS
Policy stipulates specific Maximum charges inclusive of Room Rent ICU charges,Surgeon Fees,
Cost of Medicines etc.,for various types of illness/operations.In case of the specified
illness/operation,Maximum amount of Claim payable will be as per the specified charges given in
the policy itself subject to the Sum Insured.
The waiting period for specified diseases/ailments/conditions stipulated in the policy is for a
period of 18 months only instead of 24 months as stipulaed in the Mediclaim Policy 2007. But the
waiting period for a) age related OSTEOARTHRITIS and OSTEOPOROSIS and b) JOINT
REPLACEMENT due to degenerative condition, is 48 months as stipulated in the Mediclaim
Policy 2007.
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Agency Commission: As per Mediclaim Policy 2007.
Special Discount in lieu of Agency Commn : Not allowed
Rebate under Sec 80 D of I T Act : As per prevalent provisions.
PRE EXISTING CONDITIONS: All diseases/injuries/conditions, which are pre existing when the cover
incepts for the first time will be excluded. This exclusion will be deleted after 18 months of continuous
claim free insurance with our company.
COMPULSORY COVERAGE FOR PRE EXISTING CONDITIONS
The exisitng condition of Diabetes Mallitus and Hypertension, at the time of inception of the policy, have
to be covered compulsorily by payment of additional premium at the rate of 10% of basic premium per
each pre existing condition. This additional premium will be payable at every subsequent renewals.
ALL RISKS INSURANCE

SUITABILITY- non tariff
This policy is suitable for people owning jewellery or valuables, which are prone to accidental loss or
damage.
INSURED PERILS:
Fire, Riot Strike, Terrorist activity

Burglary, House breaking, larceny of Theft
Accidental loss or damage
PROPERTY NOT COVERED
Fountain pens, spectacles,musicals instruments, cufflinks, clothing, cigarette cases, silver utensils, money
securities, manuscripts, deeds, Bonds, traveler’s cheques , Books of Accounts etc
SPECIAL FEATURES
The cover is strictly restricted to personal Jewellery, Ornaments and other such Valuables which
should be specified and separate values declared against each.
Declarations of full value should be insisted upon but valued Policies should not be agreed to.
All articles should be sufficiently described in details to permit identifications
In case of Jewellery studded with pears, diamond or other precious stones , valuations certificate of
Jewellery with number and detailed descriptions of the stone/s should be obtained.
Furs and similar costly items personal belongs can also be included but articles like fountains Pens,
Spectacles, Musicals instruments, Cufflinks, Clothing, cigarette cases, Silver utensils etc. should not
be covered under this policy. However, if an All Risks policy holder insists on coverage for clothing,
silver articles and the like this may be agreed to but the policy should be endorsed restricting the
cover on such items to Fire & Theft risks only.
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Special Conditions
SINGLE ARTICLE LIMIT :-
Unless specially anmd separately stated, the Co,’s labiality in respect of each articles or
pair of articles shall not exvceed 5% of the total SI under this policy.
ARTICLES IN PAIR OR SET:-
Where any item insured hereunder consists in pair of set, the particular part or parts the
Company’s liability in respect there of shall not exceed the value of any particular part or parts
which may be lost of damaged without reference to any special value which such article or may
have as part of such pair, or set more than a proportionate part of the insured value of the pair
or set.
SALIENT FEATURES
The policy covers valuables like jewellery, ornaments, paintings, work of art, and similar artifacts of
sentimental value, etc.
The scope of cover is limited to loss or damage due to fire, riot & strike, terrorist act, burglary, house -
breaking, larceny or theft and accidental loss or damage.
BENEFIT
The policy pays for any loss or damage to the property insured caused by insured perils.
The amount of claim payable would be limited to the sum insured or market value at the time of loss,
whichever is lower.
PREMIUMS
Premiums are based on underwriting considerations, which are dependant on the completed proposal forms.
EXCLUSIONS
In case of paintings or work of art, other than damage by fire, partial losses are not covered.
REQUIREMENTS
Completed proposal form giving full and accurate information. All items to be covered should be fully
described for easy identification in future. Unless value of each item is declared separately, the claim for
each item will be limited to 5% of the total sum insured.
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FIDELITY GUARANTEE INSURANCE
This insurance policy protects the employer from risks presented by any of his employees such as fraud,
dishonesty, embezzlement during the course of employment. In industries where secrecy and confidentiality
of operations is vital for a company's success, this policy will ensure the concealment of business procedures
from other competitors who may be successful in poaching their rivals' employees.
WHAT CAN BE INSURED
This insurance policy seeks to indemnify the employer from direct financial losses sustained due to acts of
fraud or dishonesty of an employee in the course of employment.
Individual policy
Provides cover against one specific named employee.
Collective policy
Provides cover against a specific group of named employees up to an agreed amount against each person.
Floater policy
Provides cover against a number of employees without specifying any names and amounts against each
person. Only the total guarantee is stated.
RISKS COVERED
This insurance policy insures the employer from risks faced owing to his employees such as:
Fraud or obtaining advantage through unfair means.

Dishonesty or breach of trust.
Forgery or illegal alteration.
Embezzlement or misappropriation of money or goods.
Larceny or dishonest means of possession.
Default or failure to perform specific duties.
COMPENSATION OFFERED
This insurance policy pays compensation according to the type of policy taken and subject to a preset
maximum limit.
Individual / Collective policy
Up to Rs.100 lacs per person.
Floater policy
Up to Rs.100 lakhs for named persons and up to Rs.75 lakhs for unnamed persons.
EXCLUSIONS
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This insurance policy will not pay compensation based on any claims arising from:
Losses not discovered within the period of insurance.

Losses discovered after 6 months of expiry / cancellation of the policy.
Losses sustained beyond the retroactive period of 2 years from the date of discovery.
JEWELLER’S BLOCK INSURANCE

This policy is essential for all jewelers and jeweler establishments, keeping in mind the specific requirements
of their trade.
WHAT CAN BE INSURED
This policy provides cover against any loss or damage.
To property by fire, explosion, riot or strike, malicious damage, burglary, house - breaking, theft, robbery or
hold-up or being carried, conveyed, distributed outside specified premises for the purpose of business.
To furniture, fixtures and fittings as well as other business appliances inside the premises.
RISKS COVERED
This policy has 4 separate sections:
Section I
Covers loss or damage to property contained within the premises where the insured's property is deposited
against the risks of fire, explosion, riot or strike, malicious damage, burglary, housebreaking, theft, robbery
and hold -up risks only.
Section II
Covers loss or damage to property insured while in the custody of the insured's partners and / or
employees.
Section III
Property insured, excluding cash and currency notes in transit within India by air - freight or local couriers.
Section IV
Loss or damage to furniture, fixtures and fittings from fire, explosion, lightning, riot or strike, malicious
damage, robbery and hold - up risks only.
This policy provides compensation based on the classification of the jeweller, either less than Rs.25
lakhs or above Rs.25 lakhs.
For a Capital Sum Insured above Rs.25 lakhs, it is a prerequisite that after business hours, the
stock must be stored in a burglar - proof safe.
Safes to minimize the chances of loss as far as possible.
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It is also essential to take fidelity guarantee cover for all the employees of the jeweler.
EXCLUSIONS
This policy will not pay any compensation if the claim has arisen from:
Any loss or damage to the property while it is being worked on or from any process of cleaning,
repairing or restoring.
Any loss or damage to the property while it is being worn or used by the insured, his
representatives or his relatives.
Any loss or damage to the property while it is displayed in a public exhibition.
Any loss due to theft or missing from property stored in an unattended road vehicle.
Any loss or damage to the property arising from depreciation, gradual deterioration, wear and tear,
etc.
Any loss or damage to fragile items.
Any loss or damage to the property owing to a dishonest act of the insured's employee or family
member or person entrusted with the property.
MONEY INSURANCE
SUITABILITY
This policy is intended to protect banks, industrial business establishments etc against loss of money.
SALIENT FEATURES
This policy can be taken to indemnify loss of money either while in transit or while in custody.
Money here includes cash, bank drafts, currency notes, treasury notes, postal orders and postage
stamps.
The basic policy covers money handled by employees named in the schedule. Money insurance can
also be extended to cover unnamed employees at an extra premium.
Many corporations tend to contract out the task of cash carriage, in which case the policy can be
extended to include carriage of cash by contractors' employees provided all the cash carriage is
contracted out.
BENEFITS
The money insurance policy covers:
Loss of money in transit caused by robbery, theft, or any fortuitous event.

Loss of money from the insured's safe or strong room caused by theft or robbery.
Loss of money from the insured's premises during business hours caused by theft or robbery.
The loss of money in transit should occur when being carried by the insured or his authorized employee,
which means employees named in the schedule.
EXCLUSIONS
The Policy does not cover loss or damage on account of:
Any consequential losses of any kind.

Loss arising out of the infidelity of the insured or employees.
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Loss of money from the insured premises where the money is not kept in a safe or strong room
after business hours.
Money carried under a contract of affreightment.
Loss of money from an unattended vehicle.
Loss in any way contributed to by the insured.
Loss caused by AOG perils.
OFFICE PACKAGE INSURANCE

SUITABILITY
This is a package policy designed to cater for the complete insurance requirement of an office. It is single
policy covering various contingencies faced by offices, which are normally covered as separate policies.
SALIENT FEATURES
The policy offers the following 11 covers:
Cover 1 - Fire & allied perils
Fire.
Lightning.
Explosion / implosion.
Aircraft damage.
Riot, strike, malicious and terrorism damage.
Storm, cyclone, typhoon, tempest, hurricane, tornado, flood.
Cover 2 - Burglary & Robbery
This cover provides indemnity against the loss of or damage to the contents in the insured premises
including money, but excluding valuables, against the risk of burglary / robbery including theft.
Cover Is Also Extended To Indemnify For
Damage caused to insured premises as well as costs for changing locks at the insured premises resulting
from burglary and / or robbery including theft or any attempt there at any time during the policy period but
limited to 10 % of the total sum insured.
This section also covers loss of money, by actual or attempted burglary, if it is kept in a safe or strong room
when the insured premises are unoccupied. This section also covers loss of money from the cashiers till and
/ or counter, caused by robbery in the insured premises.
Cover 3 - Money Insurance
This Cover indemnifies in respect of money in transit, by the employer or the employers, occasioned by
theft, or any other fortuitous cause.
The transit for the purpose of this policy shall commence with the taking over of the money for the purpose
of transit and shall end as soon as the money reaches the place of delivery.
Cover 4 - Plate Glass
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This cover pays for the loss or damage to plate glass located at the insured premises due to accidental
breakage during the policy period. Also the company pays for the cost of any temporary boarding up
necessitated by such breakage.
Furthermore the Company will indemnify costs for damaged frames and frameworks but only as a
consequence of an insured damage according to the terms and conditions up to a maximum limit of Rs.
5,000.
Cover 5 - Breakdown of Office Equipment
This section covers Office equipment such as photocopying machine, deep freezers etc against unforeseen
and sudden physical loss caused by or solely due to mechanical or electrical breakdown.
The section carries an excess of 1% of the sum insured subject to a minimum of Rs. 250/- for each and
every loss.
Cover 6 - Baggage
The Company will indemnify in respect of loss to accompanied baggage of while on official tour. The
coverage is anywhere in India. This can be extended worldwide.
Cover 7 - Electronic Equipment
The Company will indemnify in respect of any unforeseen and sudden physical loss or damage to electronic
equipment such as fax machine. Computers etc. from any cause, other than those specifically excluded.
The coverage is subject to excess as follows:
5 % of the claim amount subject to minimum of Rs 5000/- for claim involving computers.
1 % of the claim amount subject to a minimum of Rs 500/- for other equipment.
Accidental damage to external data media, software and cost for reproduction of lost data and
information is also covered.
Accidental loss or Damage to Portable Computers, and replacement or repair costs in this respect
are provided for under this particular cover.
Cover 8 - Personal Accident
This Section covers you in the case of accidents suffered by self as well as named partner / directors,
members of managerial staff or employees, aged between 16 and 65 years and permanently working with
you.
In case of such an accident an additional amount of 2 % of the sum insured for death, but not more
than Rs. 5,000 will be paid for the transport of the mortal remains.
Should the accident result in the total and irrecoverable:
- Loss of sight on both eyes,
- Physical separation of or loss of ability to use both hands or both feet,
- Physical separation of or loss of ability to use one hand and one foot,
- Loss of sight of one eye and physical separation of or loss of ability to use either one hand or one
foot,
The insured is entitled to payment of 125 % of the sum insured.

Option is available to take additional covers like Permanent Partial Disability.Temporary Disability Benefits:
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Cover 9 - Fidelity Guarantee
This Section covers against any direct pecuniary loss caused by act of fraud or dishonesty committed by any
salaried person employed by you in the insured premises.
Cover 10 - Public Liability & WC
This Section will indemnify if, in connection with claims arising out of bodily injury or property
damage in connection with the activity or business specified in the schedule, the proposed is held
legally liable to pay compensation to third persons in accordance with the Indian law and other than
in respect of the Public Liability Insurance Act, 1991, or any other no fault liability base.
The Company will pay compensation to your employee named in the Schedule engaged in the
Insured premises under the Workman's Compensation Act, 1923 or any amendment thereto or
Common Law in respect of death of or bodily injury to such employee arising out of and in the
course of employment.
Cover 11 - Hospital Cash Daily Allowance
The hospital cash policy is a comprehensive insurance policy with cash benefits which are payable according
to the selected scheme if the insured is hospitalized due to sickness or accident. It provides cash benefits for
each and every completed day of hospitalization.
BENEFITS
The policy indemnifies the insured against loss or damage to the insured property arising out of insured
perils under the respective sections.
PLATE GLASS INSURANCE
SUITABILITY
Any person who installs plate glass of substantial value can avail of this policy. This policy covers all kinds of
accidental breakages of fixed plate glass like window glasses, show room glasses, etc.
BENEFITS
Replacement cost of damaged glass or sum insured whichever is lower, is paid Cost of fixing the
replacement is also covered.
PREMIUMS
Premium rate would be 4 % to 6% of the total cost of the plate glass depending upon the location and
vulnerability.
REQUIREMENTS
A completed proposal form.

The measurements of the glasses as well as their replacement values are to be furnished.
RECOMMENDATION
As accidental breakage of plate glass is excluded in all other policies, it is recommended to avail this policy.
Sometimes the labor cost of replacement may be much more than the cost of the glass itself.
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PERSONAL ACCIDENT
This policy covers an individual against the risk of loss of life, loss of limbs, loss of use of limbs consequent
to the happening of an accident. It is an annual policy which can be taken by anybody within the age group
of 5 - 70 years. Sum insured is based on earnings and capacity to pay premiums.
There are three types of benefits available under the policy categorized as:
DEATH ONLY
The total sum Insured is paid as compensation.
ON DEATH ONLY
The total sum Insured is paid as compensation.
Permanent total disablement resulting in loss of two limbs or two eyes or at combination of one limb & one
eye - the injury merits in payment of the Total sum Insured as compensation.
Loss of limb or loss of sight of one Eye
The 50% of the sum Insured will be paid.
Permanent Partial Disablement
In case of minor injury the percentage of compensation is assessed by the attending surgeon.
ADDITIONAL COVER
Weekly compensation is paid for a total period of temporary disablement subject to a maximum of 104 /
1 00 weeks at the rate of 1% of the sum Insured or Rs.5000/3000 which ever is lower.
These benefits are available only for those who have income from gainful employment.
OTHER BENEFITS * This is varies company to company
*A sum equal to 1% of Insured sum, subject to a maximum of Rs.15000, is paid in case Permanent
Total Disability results in loss of employment.
*A sum equal to 1% of Insured sum or Rs.1000 which ever is lower is paid for transporting the dead
body of the insured to his native place.
*Cumulative bonus of 5% - 50% on Insured sum is given depending upon the successive renewals.
*Two children of age less than 23 years are provided Educational Fund at 10% of Insured sum or
Rs.5000 per child whichever is lower.
The accident cover is for 24 hours. But if cover is taken for 'on duty only' then, 75% of the normal
premium is charged.
*Cover can be granted beyond the age limit of 70 at an extra premium of 10%.
To cover the medical expenses an extra premium of 20% is charged, policy can extended to include
Medical expenses arising out of each accidesnt to the extendt of 40% of valid claim or actual claim,
which ever is less is paid.
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TERRITORIAL LIMIT :- WOLDWIDE(Travel as a bonafide passenger is aircraft is
automatically covered )
EXCLUSION
INTENSIONAL INJURY, SUICIDE, VENERAL DISEASE OF INSANITY

UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS.
DEATH/ DIABLEMENT FORM PREGNANCY
AVIATION ACTIVITIES
MAX BENEFIT CSI
WAR & NUCLEAR ARMY SERVICES
The purpose of this insurance is to pay fixed compensation for death or disablement
resulting from accidental bodily injury.
CLASSIFICATION OF RISKS: NORMAL/HEAVY

NORMAL RISKS:Accountants/Doctors/Lawyers/Architects/Teachers/Bankers, person
engaged in administrative functions, Builders, Drivers and persons engaged in occupations
of similar hazards and not engaged in manual labor.
HEAVY RISKS: Persons working in mines, explosives, magazines, electrical installations

with high tension supply, jockeys, circus personnel, persons engaged in activities like
racing, hunting, mountaineering winter sports, skiing, ice-hockey, ballooning and similar
hazards.
BENEFITS OFFERED UNDER THE POLICY:

Benefit is paid if during the period of insurance the insured shall sustain and bodily injury
solely and directly form accident caused by external violent and visible means as follows:
INDEMNITY
TABLE BENEFITS
% age if sum insured
I 1. Death cover 100% of S.I.
2. Death Cover.Loss of 2 limbs or 2 100% of S.I.

eyes or 1 eye and 1 limb.
II 3. Loss of 1 limb or 1 eye. 50% of S.I.
4. Permanent total Disablement. 100% of S.I.
5. Permanent Partial Disablement. 10% of S.I.
1% of S.I. per week.

6. In addition to % benefits offered
III under table II+Temporary Total
Disablement.
Subject to 3000/ per weeks max 100 weeks
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GROUP PERSONAL ACCIDENT POLICY:
Group policies can be issued where there is some common relationship among the persons
to be insured and a central point for the administration of insurance scheme.
TYPE A:
Covering employees of a firm/ company/ association/ club (employer-employee
relationship)- on named and unnamed basis.
TYPE B:
Covering members of an institution/ society association/ club(no employer-employee
relationship)- on named and unnamed basis.
No cumulative bonus and educational fund

On duty cover 75% of premium
Off duty cover 50% of premium
GROUP DISCOUNT:
NO. OF PERSONS DISCOUNT (%) 500001-1000000 25.0
101-1000 5.0 Above 1000001 30.0
1001-10000 7.5
10001-50000 10.0
50001-100000 12.5
100001-200000 15.0
200001-500000 20.0
HOUSEHOLDERS POLICY
SCOPE
The policy comprises of 10/11 * sections as given here under:
Section I - Fire & Allied Perils
Coverage for building.
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Covers contents of the dwelling belonging to the proposer and his / her family members
permanently residing with him / her.
Allied Perils
Fire, lightening, explosion of gas in domestic appliances.

Bursting and overflowing of water tanks, apparatus or pipes.
Damage caused by aircraft.
Riot, strike, malicious or terrorist act.
Earthquake, fire and / or shock, subsidence and landslide (including rockslide) damage.
Flood, inundation, storm, tempest, typhoon, hurricane, tomado or cyclone.
Impact damage.
Section II - Burglary & House Breaking Including Larceny And Theft
Covers contents of the dwelling against loss due to burglary, house breaking, larceny or theft.
Section III - All Risks (Jewellery & Valuables)
Covers loss or damage to your jewellery and valuables by accident or misfortune whilst kept, worn or carried
anywhere in India subject to the value declared in the schedule.
Section IV - Plate Glass
Loss or damage to fixed plate glass in the insured premises by accidental breakage subject to limit of sum
insured.
Section V - Breakdown of Domestic appliances
Covers domestic appliances against unforeseen and sudden physical damage due to mechanical or electrical
breakdown.
Section VI - T.V. (ALL RISKS)
Covers loss or damage to T.V.Set by fire and allied perils, burglary, house breaking or theft, breakage due
to accidental external means, mechanical or electrical breakdown. Any legal liability arising out of bodily
injury or accidental death of any person other than insured's family members or employee as also damage
to property not belonging to or in the custody of insured , caused by use of the T.V. Set is also covered up
to a limit of Rs.25,000/-.
Section VII - Pedal Cycles (All Risks)
Covers loss or damage to pedal cycles by:
Fire & allied perils.

Burglary, housebreaking, theft.
Accidental external means.
Third party personal injury or Third party property damage for Rs.10,000/-.
Section VII - Baggage Insurance
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Covers loss or damage to insured's accompanied baggage by accident or misfortune whilst the insured is
traveling on tour or holiday anywhere in India.
Section IX - Personal Accident
Covers death or bodily injury by accidental, violent, external and visible means to the insured
person named in the schedule and subject to limits specified therein.
Section X - Public Liability
Covers insured's legal liability for bodily injury or loss of or damage to property of third party limited
to amount specified in the schedule and workmen's compensation liability to domestic servants
engaged in insured's premises.
It is compulsory to opt for Section IB of the policy. A minimum of three sections including Section IB
have to be taken for issuance of this policy.
Section XI – Personal Computers- this section varies to company to company
HOW TO SELECT THE SUM INSURED
For the insurance of household items, it would be necessary to group the items in a broad category
like furniture, clothing , linen, utensils , crockery etc. and give a value equivalent to the market
value i.e. the value for which this used item could be bought or sold in the market.
Sections I A & B, II, III, IV, VI ,VII & VIII should be insured on market value basis as described
above.
It is a condition of Section V i.e. breakdown of domestic appliances , that the sum insured should
represent the current replacement value of a similar item. For e.g. to insure 165 ltr. Godrej fridge
which is 3 years old, the sum insured should be equivalent to the cost price of a new 165 ltr. Godrej
fridge.
However, the claim amount payable would be the amount required to bring the damaged item to
the same condition as it was prior to the damage subject to the adequacy of the sum insured.
The sum insured under Section IX i.e. Personal accident should not exceed 72 months salary from
gainful employment.
PORTABLE EQUIPMENT INSURANCE
This policy is essential for all professionals who use portable equipment, electronic and otherwise
since it insures their property from risks of theft and damage. Under the portable equipment
insurance policy, laptop computers and medical equipment can be insured. The individual value of
each item covered cannot be less than Rs.10,000/-.
RISKS COVERED
This policy covers the portable electronic equipment from the risks of:
Fire, explosion, lightning.

Riots, strike and terrorist activity.
Burglary / theft.
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Accident.
Electrical and mechanical breakdown.
This policy will provide compensation in event of a loss or damage to the electronic equipment
based on cost of repairs or replacement based on market value of the product.
EXCLUSION
Portable equipment insurance is subject to exclusions arising from:
Manufacturing faults or defects.

Loss due to climatic conditions.
Cost of maintenance.
Loss or damage for which insured is contractually liable.
SHOPKEEPER INSURANCE
This is a package policy specially designed for small shopkeepers. It is a single policy combining the
various insurance requirements of shopkeepers.
Discount in premium is available if a minimum number of four sections is selected including Section
I (b).
Only one policy can be taken by one shopkeeper for each shop in a specific location having separate
books of accounts.
SCOPE
The policy comprises of following 11 sections:
Section I - Building & Contents
Covers shop building and / or contents therein against loss or damage caused by Fire & Allied perils
i.e.
Fire, lightning, explosion of gas in domestic appliances.

Bursting and overflowing of water tanks, apparatus or pipes.
Aircraft or articles dropped there from.
Riot, strike, malicious damage, terrorist act.
Earthquake - fire and / or shock, subsidence and landslide (including rockslide).
Flood, inundation, storm, tempest, typhoon, hurricane, tornado or cyclone.
Impact damage by rail / road vehicle not belonging to the insured.
Section II - Burglary & Housebreaking
Covers contents of insured shop premises(excluding money and valuables) against loss or damage
by burglary and / or housebreaking.
Section III - Money Insurance
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Covers loss of money in transit, loss of money / valuables whilst contained in a locked safe, loss of
money contained in cashier's till and / or counter by burglary / housebreaking.
Section IV - Pedal - Cycles
Covers loss / damage to pedal cycles belonging to insured by:
Fire, lightning or external explosion.

Burglary and / or housebreaking or theft.
Flood, cyclone, storm, tempest, and other similar convulsions of nature and atmospheric
disturbance.
Earthquake, fire and shock.
This section also covers legal liability of insured for death / injury to third parties or damage to their
property arising out of use of the insured pedal cycles.
Section V - Plate Glass
Covers loss of or damage to fixed plate glass in insured's shop by accidental means.
Section VI - Neon Sign / Glow Sign
Covers loss of or damage to neon sign / glow sign by:

Fire, lightning or external explosion or theft.
Flood, inundation, storm, tempest, typhoon, hurricane, tornado, cyclone.
Section VII - Baggage
Covers loss or damage to accompanied personal baggage of insured or baggage in connection with
his trade, whilst anywhere in India, by accident or misfortune.
Section VIII - Personal Accident
Covers insured and spouse and / or his children, named in the schedule and aged between 5&70
years, against bodily injury caused solely and directly by accident and resulting in death or
permanent total or partial disablement or temporary total disablement within 12 calendar months of
such injury.
Section IX - Fidelity Guarantee
Covers direct pecuniary loss suffered by the insured due to fraud or dishonesty committed by any of
insured's salaried employees.
Section X - Public Liability
Legal liability in respect of accidental death or bodily injury to a third party or accidental damage to
their property during performance of any act in connection with insured's business.
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Compensation to insured's employees under Workmen's Compensation Act or Common Law.
Section XI - Loss of Profit
Covers loss of profit due to interruption of business consequent upon loss or damage sustained by
property insured under Section I of the policy due to insured perils.
It is necessary to opt for a minimum of 4 sections for this policy to be issued of which Sections I &
II are compulsory.
HOW TO SELECT SUM INSURED
The shop building should be insured on market value basis i.e. depreciated value basis. The
contents should be insured on cost price basis. The sum insured for contents under Section I&II
should be identical. The sum insured under Sections III, V, VI, VII, IX, X & XI is limited to specified
percentage of the sum insured for contents.
Hut Insurance
Covers dwelling huts in rural areas constructed with financial aid from Banks/co-op/Govt. Institutions.
Scope
It covers loss or damage to huts due to
1. Fire (including fire resulting from explosion and short-circuiting)
2. Lighting
3. Earthquake
4. Flood, Inundation
5. Storm, Tempest, cyclone or other atmospheric disturbance
6. Impact damage,
7. Riot, Malicious Damage
8. Aircraft
9. Explosion of boiler or gas used for domestic purpose only

10. Exclusion
Loss or damage occasioned by
1. War, invasion, act of foreign enemy, civil war, rebellion, mutiny
2. Nuclear risks
3. Theft during or after the occurrence of fire
Policy does not cover
1. Goods in trust
2. Coin, paper money, cheques, gold or silver articles
3. Securities, documents of any kind, curios, works of art
4. Explosive
Conditions
All insurance under this policy shall cease immediately upon any fall or displacement of the hut
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On happening of any loss or damage, the Insured shall give notice within 15 days of the occurrence
In case of transfer of ownership of the hut, intimation shall be given to company within a period of 15
days.
The Policy can be terminated at any time during the currency of the policy by either party by giving 7
days notice in writing
Any dispute on quantum under this policy will be referred to arbitration as per provision of
the Indian Arbitration Ac
Bankers Indemnity Policy
Highlights
A package policy designed specially to cover the risks related to banking sector. A single policy covering all
branches in India of the particular bank.
Retroactive period facility available whereby losses discovered during policy period due to an incident
occurring in earlier period but after inception of first policy, also become payable, provided the policy has
been continuously renewed with us without break.
Discount in premium available for banks having less than 500 branches.
Scope
The policy comprises of following 7 sections :
1. On Premises : Covers money and/or securities belonging to, or in the custody of bank, whilst on their
own premises or on the premises of their bankers, against loss or destruction by Fire, Riot & Strike,
Malicious damage, terrorist act, burglary ,theft ,robbery or hold-up.
2. In Transit : Covers money and/or securities if they are lost ,stolen, mislaid, misappropriated or made
away with, whilst in transit in the hands of its employees whether by negligence or fraud of the
employees.
3. Forgery or Alteration : Covers losses suffered as a result of payment of bogus, fictious, forged
cheques or drafts as also forged endorsements on genuine cheques or drafts or FDRs.
4. Dishonesty : Covers loss of money and/or securities suffered due to dishonest or criminal act of its
employees.
5. Hypothecated Goods : Covers losses suffered due to fraudulent or dishonest act of employees in
respect of goods or commodities pledged or hypothecated to the insured bank and under its control.
6. Registered Postal Service : Covers loss of registered postal sending by robbery,theft or any other
cause not specifically excluded, provided that each post parcel shall be insured with the post office.
7. Appraisers : Covers loss due to infidelity or criminal act on the part of appraisers, provided that such
appraisers are on the bank's approved list.
8. Janata Agents : Covers loss due to infidelity of criminal acts on the part of Janata Agents, Chhoti
Bachat Yojana Agents/Pygmie Collectors.
Add on covers
The following additional perils can be covered on payment of an additional premium :
1. Losses due to flood, inundation, hurricane, typhoon, storm, tempest, tornado and cyclone.
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2. Losses due to earthquake - Fire & Shock
3. Additional sum insured can be opted for under Section A & B.
How to select the sum insured?

The proposer has to select a basic sum insured which will apply to Sections A to E of the policies. This sum
insured should represent the maximum amount of loss which could be suffered by the bank due to any
single incident covered under Sections 1 to 5. The sum insured under Section 6,7&8 is fixed at a percentage
of the basic sum insured. In addition to the basic sum insured , an additional sum insured can be opted
under Section A and/or B on payment of additional premium.
Deductible Excess
25% of each loss or 2 % of basic sum insured whichever is more but not exceeding Rs. 50,000/-
under section 1 to 5 and 25 % of each loss under sections 6,7 &8.
Important Exclusion :-
Flood storm, Tempest ( not applicable to Mobile Offices )
EQ Volcanic Eruption of nature
Default/ dishonesty of non –salaried directors or partners.
Unascertained values of any securities.
Loss resulting from Trading actual ficitious, not withstanding with any act or omission on
the part any employee
Faulty Computer Programme ( can be covered by charging 3% extra premium )
Right of Recoveries :- All recoveries from defaulting employees or any other party are to
be adjusted in the claim amount in priority to any claim of the insured. Any money
recovered by bank is the property of Ins co. up to amount paid.
Insured bank to give legal authority to proceed for recovery from defaulting parties
OTHER MISCELLANEOUS INSURANCE
BURGLARY INSURANCE
Policy available to commercial establishments, factories, godowns, shops etc. Property in any form including
cash in the premises.
Risks a) Theft of property after actual forcible and violent entry into the premises.
b) Damage to insured property / premises by burglars.
c) Cash cover operates only when the cash is secured in a safe and is granted only when the cash
is secured in a burglar proof of an approved make and design.
Cash cover granted under two clauses:
i) Key clause: Key / duplicate obtained by threats of violence
ii) A complete list of amount in safe should be kept secure in some place other than
the safe.
Exclusions
i) Larceny (by insiders) / ordinary theft.
ii) Loss insurable under fire / plate glass insurance.
Extension - Riot, Strike, terrorism at extra premium.

Under insurance – prorate average applicable.
“Partial Loss”
“First Loss” policy
Where probability of total loss by burglary is remote.
Upto 25 % / 40% of bulk commodity / machinery iare involved.
Prorata average can be waived.
` 100 lakhs total sum insured can be insured for 25 lakhs but premium charged on 100 lakhs.
Burglary policy on declaration basis / floating basis can be issued.
` 100lakhs is called the declared value on which the premium is charged.
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BAGGAGE INSURANCE
Accompanied baggage
Not for dealer’s stock / travelers’ sample.
During specified journey by air, sea, rail / road.
Risks covered – burglary, theft, accidental damage.
Sparingly given by insurers.
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TELEVISION INSURANCE
TV apparatus and antenna. Covers – i) Accidental external means
ii) Fire, lightning.
iii) Flood, Storm
iv) Theft
v) Riot, Strike
vi) Earthquake, fire & shock
Coverage to loss / damage to TV and third party liability.
PEDAL CYCLE INSURANCE
Loss of or damage to cycle by fire, explosion, lightning, burglary, housebreaking, theft and accidental
external means. Insured’s legal liability to third parties / damage to third party property.
Extension: PA cover to rider on payment of additional premium.
NEON SIGN INSURANCE

Hoardings are also covered under this.
Coverage – loss / damage by accidental external means.
Fire, lightning, external explosion / theft.
BLOOD STOCK INSURANCE

Insurance of horses used for racing or stud farms etc. Indemnity against loss sustained as a result of death
of animal during period of insurance, from accident, loss / disease.
RURAL INSURANCE
As per IRDA Regulations, 2000 (Obligations of Insurers to Rural or Social Sectors), every insurer shall
underwrite atleast 2% of total gross premium in the first financial year.
3% of gross premium on the second financial year.
5% of gross premium on the third and further financial years.
The obligation includes insurance of crops.
Rural Insurance Policies

Livestock – Cattle, Sheep, Goat
Sub-animals Silkworm, honey bee
Plantation and horticultural crops, eg; rubber, grapes, etc.
Property Agricultural pumpset
Person Gramin
I R D P - Integrated Rural Development Programmes funded by Central and State Govt. on 50 : 50 basis
Target Group - Rural families
Special insurance schemes are framed to protect beneficiaries of IRDP projects. Under these projects,
policies are issued with lower rates and claims procedures are simplified. “Scheme” word refers to special
policies issued to IRDP beneficiaries.
CATTLE
Animals indigenous, exotic or cross breed within.
Milch cows 2 to 10 years
Milch Buffalos 3 to 12 years
Stud Bulls
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(Cow / Buffalo species) – 3 years to 8 years
Bullocks (castrated bulls and castrated male buffalos – 3 years to 12 years).
Indemnity for death due to

a) Accident (fire, lightning, flood, inundation, storm, hurricane, earthquake, cyclone, tornado, tempest and
famine)
b) Diseases contracted / occurring during policy period.
c) Surgical operations.
d) Riot & Strike.
PTD covered on payment of extra premium.

i) milch cattle not able to conceive / yield milk.
ii) PTD whilst in the case of stud bulls results in permanent incapacity for breeding purpose.
Exclusions
i) Neglect, overloading, unskillful treatment of animal for purpose other than stated in the policy without
consent of co. in writing.
ii) Accident / disease prior to commencement of risk.
iii) Theft / clandenation sale of insured animal.
iv) Transport by air / sea.
Waiting period for 15 days for death due to disease.

Ear tags must be surrendered / must have been retagged.
Non-Scheme Animals: Claims Procedure:

Claim form
Death certificate by qualified vetenerian.
PMC
Ear Tag No tag – no claim, but where identity is established, then we may consider.
Value of animal with respect to age.
Scheme Animals: Intimation within 7 days to company or bank. Within 30 days to furnish
a) Claim form with ear tag.
b) Veterinary certificate by surgeon / certificate jointly by i) President / Officer of co-op credit society.
ii) Sarpansh of village, iii) Officer of bank / credit institution other than financing bank certifying that they
have seen and identify ear tag.
c) PMC, if conducted.
Sum Insured – Market value, varies from breed to breed from area to area, from time to time. Market value
as agreed by vetnerian. Indemnity – sum insured / market value whichever is less.
Premium – Lower rates for indigenous / cross-breed animals. Higher rate for exotic. Group discounts / long
term discounts allowed.
SHEEP AND GOAT INSURANCE

No salvage value is deducted from claims.
Group discount 101 to 10000 animals
Other Animals: Drought horses, ponies, yaks used for cart work / farm work (age 2 to 8 years).
Long term policy: 3 , 4 or 5 years with 25% discount.
Camels male & female (age 3 to 12 years)

Identification (claim procedure as in cattle & sheep).
POULTRY INSURANCE
Poultry market agreement – a) Layers, b) Broilers, c) Parent stock (hatchery), exotic and cross breed.
Agreement prescribes age limit and minimum no. of birds to be insured.
Death due to disease / accident.
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Exclusions: eg:
Transit by any mode of transport.
Improper management (incl. Overcrowding)
Loss / death due to natural mortality, non-specified or unknown diseases or reasons.
Theft / clandenation sale of birds.
Sum insured as per valuation chart for layers and broilers.
Parent stock valuation prepared in consultation with hatchery owners.
Good feature discount.
i) Farms having resident vetenarians.
ii) Farms with incinerators (death bird disposal is hygienic and good)
iii) Layout of farms – distance between sheds.
Underwriting considerations:
All birds to be insured.
Minimum no. of birds to be maintained – all birds covered on block basis and hence no identification
required.
Should have veterinary facility of their own or on consultancy basis.
Claims:
Only on excess of birds prescribed, for.eg. in excess of 5%.
Cumbaro disease only 80% (in addition to 5% excess) payable.
ELEPHANTS
Commercial / religious purpose – 5 to 60 years.
PIGS
Indigenous / exotic / cross breed – 6 months to 3 years.
RABBITS
All breeds 1 day to 4 years.
ZOO AND CIRCUS ANIMALS

Coverage as per cattle / poultry.
Coverage – Accident / disease.
Sum insured as per veterinarian certificate.
Identification marks to be written in policy.
DOG INSURANCE
8 weeks to 8 years – indigenous, cross, exotic.
Death due to accident / disease.
Extension – additional premium.
a) Accident by travel by air, rail, road or water.
b) Accidental prisoning.
c) Loss by burglary / housebreaking.
d) Loss of show entry fee, because of accident / disease.
e) TP liability.
SILKWORM INSURANCE
Death of silkworm due to accident / disease.
Cover in respect of total loss. Valuation by sericulture officer – not the below the rank of Sr. Inspector (Tech)
of State Sericulture Dept.
Claims – Claim form supported by mortality certificate issued by sericulture department, giving details of
cause and extent of loss.
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HONEY BEE INSURANCE
Hives / bee colony belonging to society / individuals.

Accidental loss / damage to hive / colony.
Theft risk added on additional premium.
Exclusions:
Neglect, rough handling and improper management.
Natural mortality.
Destruction by order of Govt.
An agreed valuation based on figures provided by state Khadhi & Village Board or Khadhi Village Industries.
Commission accepted.
HORTICULTURE / PLANTATION (INPUTS) INSURANCE SCHEME
Following are covered:

Grape, Citrus (Orange, Lime, Sweet Lime), Chikoo, Pomegranate, Banana.
Plantation Crops:
Rubber, Eucalyptus, Poplin, Teakwood, Oil Palm, Plantation, All types of trees, Sugarcane, Tea.
Individual farmer either owner / tenant engaged in cultivation.
Name of association / organized / registered body of farmers functioning for purpose of input processing /
marketing of produce etc.
Particulars of each member recorded in schedule – in the event of loss / claim to be settled on individual
basis.
Indemnity: Loss of input due to loss / damage of crop insured due to operation of::
a) Fire (forest / bush)
b) Lightning,
c) Storm, Hailstorm, Cyclone types, Tempest, Hurricane, overland area insured,
d) Rood & inundation (inspection report is necessary to cover these risks),
e) Riot, strike and malicious damage.
f) Acts of terrorism.
Period – Crop duration / one year, whichever is less.
COMPREHENSIVE FLORICULTURE INSURANCE
a) Damage to poly house and its structure.

b) Damage to irrigation system.
c) Cover for death of plants.
d) Cover for loss of inputs due to damage to the flowers.
Perils covered in addition to horticulture – Earthquake, volcanic eruption or other convulsions of nature other
than those specifically covered by this insurance.
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INSURANCE ACCOUNTING
(PREPARATION OF FINANCIAL STATEMENTS AND AUDITOR’S REPORT OF

INSURANCE COMPANIES) REGULATIONS, 2000.
3. Preparation of financial statements, management report and auditor’s report.----(1) An insurer

carrying on life insurance business, after the commencement of these Regulations, shall comply with the
requirements of Schedule A.
(2) An insurer carrying on general insurance business, after the commencement of these
Regulations, shall comply with the requirements of Schedule B:
Provided that this sub-regulation shall apply, mutatis mutandis, to reinsurers, untill separate
regulations are made.
(3) The report of the auditors on the financial statements of every insurer and reinsurer shall be in
conformity with the requirements of Schedule C, or as near as thereto as the circumstances
permit.
(4) The Authority may, from time to time, issue separate guidelines in the matter of appointment,
continuance or removal of auditors of an insurer or reinsurer, as the case may be, and such
guidelines may include prescriptions regarding qualifications and experience of auditors, their
rotation, period of appointment, etc.
SCHEDULE B
(See Regulation 3
PART I
Accounting principles for preparation of financial statements
1. Applicability of Accounting Standards---Every Balance Sheet, Receipts and Payments Account

[Cash Flow statement] and Profit and Loss Account [Shareholders’ Account] of the insurer shall be
in conformity with the Accounting Standards (AS) issued by the ICAI, to the extent applicable to the
insurers carrying on general insurance business, except that:
(i) Accounting Standard 3 (AS 3) – Cash Flow Statements – Cash Flow Statement shall be
prepared only under the Direct Method.
(ii) Accounting Standard 13 (AS 13) – Accounting for Investments, shall not be applicable.
(iii) Accounting Standard 17 (AS 17) - Segment Reporting – shall apply irrespective of
whether the securities of the insurer are traded publicly or not.
2. Premium--Premium shall be recognised as income over the contract period or the period of risk,
whichever is appropriate. Unearned premium as well as premium received in advance, both of which
represent premium income not relating to the current accounting period, shall be disclosed
separately in the financial statements.
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A reserve for Unearned Premium, may be created as the amount representing that part of
the premium written which is attributable and to be allocated to the succeeding accounting
periods.
Premium Received in Advance, which represents premium received prior to the

commencement of the risk, shall be shown separately under the head ‘Current Liabilities’ in
the financial statements.
Unearned premium shall be shown separately under the head ‘Current Liabilities’ and
appropriate disclosures regarding management’s basis of assessment shall be made in the
financial statements.
Premium received in advance shall not be included in the unearned premium and shall be
shown separately.
Premium revenue recognition is based on the pattern of risk to which the insurer is exposed. An
insurer, based on past experience can reliably estimate the pattern of risk for a particular type of
insurance business. Most insurers bring premium revenue to account on the basis of the passage
of time. This is generally appropriate where the risk of events occurring that give rise to claims is
more or less uniform throughout the policy period subject to any regulatory prescription in this
regard.
For some classes of insurance, it is usual for the premium to be adjusted as a result of events and
information that becomes known during or after the policy period, e.g. marine cargo. Further, in
some cases, risk pattern may not be evenly spread over the period of insurance because of the
very nature of the risk covered e.g. some infrastructure projects involving varying degrees of risk
factors. A deposit premium is paid in such cases at the beginning of the policy period and
subsequently adjusted. The basis of determination of premium earned shall be adequately
justified, preferably supported by external evidence such as by certification from an actuary
and/or other technical experts. Adequate disclosure of such basis shall be made.
3. Premium Deficiency--Premium deficiency shall be recognised if the sum of expected claim costs,
related expenses and maintenance costs exceeds related unearned premiums.
For contracts exceeding four years, once a premium deficiency has occurred, future changes to
the liability shall be based on actuarial/technical evaluation.
4. Acquisition Costs---Acquisition costs, if any, shall be expensed in the period in which

they are incurred.
Acquisition costs are those costs that vary with, and are primarily related to, the acquisition of
new and renewal insurance contracts. The most essential test is the obligatory relationship
between costs and the execution of insurance contracts (i.e. commencement of risk).
5. Claims--The components of the ultimate cost of claims to an insurer comprise the claims
under policies and claims settlement costs. Claims under policies comprise the claims made
for losses incurred, and those estimated or anticipated under the policies.
A liability for outstanding claims shall be brought to account in respect of both direct business
and inward reinsurance business. The liability shall include: -
(a) Future payments in relation to unpaid reported claims;

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(b) Claims Incurred But Not Reported (IBNR) including inadequate reserves
(sometimes referred to as Claims Incurred But Not Enough Reported (IBNER)).
which will result in future cash/asset outgo for settling liabilities against those claims. Change in
estimated liability represents the difference between the estimated liability for outstanding claims
in respect of claims under policies whether due or intimated at the beginning and at the end of the
financial period. The accounting estimate shall also include claims cost adjusted for
estimated salvage value if there is sufficient degree of certainty of its realisation.
Actuarial Valuation of claim liability – in some cases
Estimate of claims made in respect of contracts exceeding four years shall be recognised on
an actuarial basis, subject to regulations that may be prescribed by the Authority. In such
cases, certificate from a recognised actuary as to the fairness of liability assessment must be
obtained. Actuarial assumptions shall be suitably disclosed by way of notes to the account.
Necessary provision for unexpired risk shall be made subject to any minimum, statutorily
required.
6. Procedure to determine the value of investments.---An insurer shall determine the

values of investments in the following manner:-
a) Real Estate – Investment Property-- Investment Property shall be measured at

historical cost less accumulated depreciation and impairment loss, residual value being
considered zero and no revaluation being permissible.
The Insurer shall assess at each balance sheet date whether any impairment of the
investment property has occurred.
An impairment loss shall be recognised as an expense in the Revenue/Profit and Loss

Account immediately.
Fair value as at the balance sheet date and the basis of its determination shall be disclosed
in the financial statements as additional information.
b) Debt Securities--Debt securities including government securities and redeemable

preference shares shall be considered as “held to maturity” securities and shall be measured
at historical cost subject to amortisation.
c) Equity Securities and Derivative Instruments that are traded in active markets-
--Listed equity securities and derivative instruments that are traded in active markets shall
be measured at fair value as at the balance sheet date. For the purpose of calculation of fair
value, the lowest of the last quoted closing price of the stock exchanges where the securities
are listed shall be taken.
The insurer shall assess on each balance sheet date whether any impairment of listed equity
security(ies)/ derivative(s) instruments has occurred.
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An active market shall mean a market, where the securities traded are homogenous, availability of
willing buyers and willing sellers is normal and the prices are publicly available.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and
derivative instruments shall be taken to equity under the head ‘Fair Value Change
Account’ and on realisation reported in Profit and Loss Account. The ‘Profit on sale of
investments’ or ‘Loss on sale of investments’, as the case may be, shall include accumulated
changes in the fair value previously recognised in equity under the heading Fair Value
Change Account in respect of a particular security and being recycled to Profit and Loss
Account on actual sale of that listed security.
For the removal of doubt, it is clarified that balance or any part thereof shall not be available for
distribution as dividends. Also, any debit balance in the said Fair Value Change Account shall be
reduced from the profits/free reserves while declaring dividends.
The insurer shall assess, at each balance sheet date, whether any impairment has occurred.
An impairment loss shall be recognised as an expense in Revenue/Profit and Loss Account
to the extent of the difference between the remeasured fair value of the security/ investment
and its acquisition cost as reduced by any previous impairment loss recognised as expense
in Revenue/Profit and Loss Account. Any reversal of impairment loss, earlier recognised in
Revenue/Profit and Loss Account shall be recognised in Revenue/Profit and Loss Account.
d) Unlisted and other than actively traded Equity Securities and Derivative
Instruments--Unlisted equity securities and derivative instruments and listed equity
securities and derivative instruments that are not regularly traded in active market will be
measured at historical costs. Provision shall be made for diminution in value of such
investments. The provision so made shall be reversed in subsequent periods if estimates
based on external evidence show an increase in the value of the investment over its carrying
amount. The increased carrying amount of the investment due to the reversal of the
provision shall not exceed the historical cost.
For the purposes of this regulation, a security shall be considered as being not actively
traded, if its trading volume does not exceed ten thousand units in any trading session
during the last twelve months.
7. Loans--Loans shall be measured at historical cost subject to impairment provisions.

The insurer shall assess the quality of its loan assets and shall provide for impairment. The
impairment provision shall not be less than the aggregate amount of loans which are subject
to defaults of the nature mentioned below:-
(i) interest remaining unpaid for over a period of six months; and
(ii) instalment(s) of loan falling due and remaining unpaid during the last six months.
8. Catastrophe Reserve---Catastrophe reserve shall be created in accordance with norms,

if any, prescribed by the Authority. Investment of funds out of catastrophe reserve shall be
made in accordance with prescription of the Authority.
It is clarified that this reserve is towards meeting losses which might arise due to an entirely
unexpected set of events and not for any specific known purpose. This reserve is in the nature of
an amount set aside for the potential future liability against the insurance policies in force.
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PART II
Disclosures forming part of Financial Statements
A. The following shall be disclosed by way of notes to the Balance Sheet:
1. Contingent Liabilities:
(a) Partly-paid up investments
(b) Underwriting commitments outstanding
(c) Claims, other than those under policies, not acknowledged as debts
(d) Guarantees given by or on behalf of the company
(e) Statutory demands/liabilities in dispute, not provided for
(f) Reinsurance obligations
(g) Others (to be specified)
2. Encumbrances to assets of the company in and outside India.

3. Commitments made and outstanding for Loans, Investments and Fixed Assets.
4. Claims, less reinsurance, paid to claimants in/outside India.
5. Actuarial assumptions for claim liabilities in the case of policies exceeding four years.
6. Ageing of claims – distinguishing between claims outstanding for more than six months and other
claims.
7. Premiums, less reinsurance, written from business in/outside India.
8. Extent of premium income recognised, based on varying risk pattern, category wise, with basis
and justification therefor, including whether reliance has been placed on external evidence.
9. Value of contracts in relation to investments, for:

(a) Purchases where deliveries are pending;
(b) Sales where payments are overdue.
10. Operating expenses relating to insurance business: basis of allocation of expenditure to
various classes of business.
11. Historical costs of those investments valued on fair value basis.
12. Computation of managerial remuneration.
13. Basis of amortisation of debt securities.
14. (a) Unrealised gain/losses arising due to changes in the fair value of listed equity shares and derivative
instruments are to be taken to equity under the head ‘Fair Value Change Account’ and on realisation reported
in profit and loss Account.
(b) Pending realisation, the credit balance in the ‘Fair Value Change Account’ is not available for
distribution.
15. Fair value of investment property and the basis therefor.
16. Claims settled and remaining outstanding for a period of more than six months on the balance
sheet date.
B. The following accounting policies shall form an integral part of the financial statements:
1. All significant accounting policies in terms of the accounting standards issued by the
ICAI, and significant principles and policies given in Part I of Accounting Principles.
Any other accounting policies followed by the insurer shall be stated in the manner
required under Accounting Standard AS 1 issued by ICAI.
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2. Any departure from the accounting policies as aforesaid shall be separately disclosed
with reasons for such departure.
C. The following information shall also be disclosed:

1. Investments made in accordance with any statutory requirement should be disclosed
separately together with its amount, nature, security and any special rights in and outside
India.
2. Segregation into performing/ non performing investments for purpose of income
recognition as per the directions, if any, issued by the Authority.
3. Percentage of business sector-wise.
4. A summary of financial statements for the last five years, in the manner as may be prescribed by
the Authority.
5. Accounting Ratios as may be prescribed by the Authority.
6. Basis of allocation of Interest, Dividends and Rent between Revenue Account and Profit and Loss
Account.
PART III
GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS
1) The corresponding amounts for the immediately preceding financial year for all items shown in
the Balance Sheet, Revenue Account and Profit and Loss Account should be given.
2) The figures in the financial statements may be rounded off to the nearest thousands.
3) Interest, dividends and rentals receivable in connection with an investment should be stated as
gross value, the amount of income tax deducted at source being included under 'advance taxes
paid'.
4) Income from rent shall not include any notional rent.
5) (I) For the purposes of financial statements, unless the context otherwise requires -
(a) the expression ‘provision’ shall, subject to note II below mean any amount
written off or retained by way of providing for depreciation, renewals or
diminution in value of assets, or retained by way of providing for any known
liability or loss of which the amount cannot be determined with substantial
accuracy;
(b) the expression "reserve" shall not, subject to as aforesaid, include any amount
written off or retained by way of providing for depreciation, renewals or
diminution in value of assets or retained by way of providing for any known
liability;
(c) the expression capital reserve shall not include any amount regarded as free for
distribution through the profit and loss account; and the expression "revenue
reserve" shall mean any reserve other than a capital reserve;
(d) The expression "liability" shall include all liabilities in respect of expenditure
contracted for and all disputed or contingent liabilities.
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(II) Where:
(a) any amount written off or retained by way of providing for depreciation, renewals
or diminution in value of assets, or
(b) any amount retained by way of providing for any known liability is in excess of
the amount which in the opinion of the directors is reasonably necessary for the
purpose, the excess shall be treated for the purposes of these accounts as a reserve
and not as a provision.
6) The company should make provisions for damages under lawsuits where the management is of the
opinion that the award may go against the insurer.
7) Risks assumed in excess of the statutory provisions, if any, shall be separately disclosed indicating
the amount of premiums involved and the amount of risks covered. The auditor shall, however,
make an appropriate qualification in this regard in his report.
8) Any debit balance of Profit and Loss Account shall be shown as deduction from uncommitted
reserves and the balance if any, shall be shown separately.
PART IV
CONTENTS OF MANAGEMENT REPORT
There shall be attached to the financial statements, a management report containing, inter alia, the
following duly authenticated by the management:
1. Confirmation regarding the continued validity of the registration granted by the Authority;
2. Certifification that all the dues payable to the statutory authorities have been duly paid;
3. Confirmation to the effect that the shareholding pattern and any transfer of shares during the year
are in accordance with the statutory or regulatory requirements;
4. Declaration that the management has not directly or indirectly invested outside India the funds of
the holders of policies issued in India;
5. Confirmation that the required solvency margins have been maintained;
6. Certification to the effect that the values of all the assets have been reviewed on the date of the
Balance Sheet and that in his (insurer’s) belief the assets set forth in the Balance-sheets are shown
in the aggregate at amounts not exceeding their realisable or market value under the several
headings – “ Loans”, “ Investments”, “Agents balances”, “Outstanding Premiums”, “Interest,
Dividends and Rents outstanding”, “Interest, Dividends and Rents accruing but not due”,
“Amounts due from other persons or Bodies carrying on insurance business”, “ Sundry Debtors”, “
Bills Receivable”, “ Cash” and the several items specified under “Other Accounts”;
7. Certification to the effect that the that no part of the life insurance fund has been directly or
indirectly applied in contravention of the provisions of the Insurance Act, 1938 (4 of 1938)
relating to the application and investment of the life insurance funds;
8. Disclosure with regard to the overall risk exposure and strategy adopted to mitigate the same;
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9. Operations in other countries, if any, with a separate statement giving the management’s estimate
of country risk and exposure risk and the hedging strategy adopted;
10. Ageing of claims indicating the trends in average claim settlement time during the preceding five
years;
11. Certification to the effect as to how the values, as shown in the balance sheet, of the investments
and stocks and shares have been arrived at, and how the market value thereof has been ascertained
for the purpose of comparison with the values so shown;
12. Review of asset quality and performance of investment in terms of portfolios, i.e., separately in
terms of real estate, loans, investments, etc.
13. A responsibility statement indicating therein that:
(i) in the preparation of financial statements, the applicable accounting standards, principles and policies have
been followed along with proper explanations relating to material departures, if any;
(ii) the management has adopted accounting policies and applied them consistently and made judgements
and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the operating profit or loss and of the profit or loss of the
company for the year;
(iii) the management has taken proper and sufficient care for the maintenance of adequate accounting records
in accordance with the applicable provisions of the Insurance Act 1938 (4 of 1938) / Companies Act, 1956 (1
of 1956), for safeguarding the assets of the company and for preventing and detecting fraud and other
irregularities;
(iv) the management has prepared the financial statements on a going concern basis;
(iv) the management has ensured that an internal audit system commensurate with the size and nature of
the business exists and is operating effectively.
PART V
Preparation of Financial Statements
(1) An insurer shall prepare the Revenue Account, Profit and Loss Account [Shareholders’ Account]
and the Balance Sheet in Form B-RA, Form B-PL, and Form B-BS, or as near thereto as the
circumstances permit.
Provided that an insurer shall prepare Revenue Account separately for fire, marine, and
miscellaneous insurance business.
(2) An insurer shall prepare separate Receipts and Payments Account in accordance with the Direct
Method prescribed in AS 3 – “Cash Flow Statement” issued by the ICAI.
Notes:
(a) Investments in subsidiary/holding companies, joint ventures and associates shall be separately disclosed, at
cost.
(i) Holding company and subsidiary shall be construed as. Significant influence may be exercised in
several ways, for example, by representation on the board of directors, participation in the policy
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making process, material inter-company transactions, interchange of managerial defined in the
Companies Act, 1956:
(ii) Joint Venture is a contractual arrangement whereby two or more parties undertake an economic activity,
which is subject to joint control.
(ii) Joint control - is the contractually agreed sharing of power to govern the financial and operating
policies of an economic activity to obtain benefits from it.
(iii) Associate - is an enterprise in which the company has significant influence and which is neither a
subsidiary nor a joint venture of the company.
(iv) Significant influence (for the purpose of this schedule) -means participation in the financial and
operating policy decisions of a company, but not necessarily control of those policiespersonnel or
dependence on technical information. Significant influence may be gained by share ownership, statute
or agreement. As regards share ownership, if an investor holds, directly or indirectly through
subsidiaries, 20 percent or more of the voting power of the investee, it is presumed that the investor
does have significant influence, unless it can be clearly demonstrated that this is not the case.
Conversely, if the investor holds, directly or indirectly through subsidiaries, less than 20 percent of the
voting power of the investee, it is presumed that the investor does not have significant influence, unless
such influence is clearly demonstrated. A substantial or majority ownership by another investor does
not necessarily preclude an investor from having significant influence.
(b) Aggregate amount of company's investments other than listed equity securities and derivative instruments and
also the market value thereof shall be disclosed.
(c) Investments made out of Catastrophe reserve should be shown separately.
(d) Debt securities will be considered as “held to maturity” securities and will be measured at historical cost subject
to amortisation.
(e) Investment Property means a property [land or building or part of a building or both] held to earn rental income
or for capital appreciation or for both, rather than for use in services or for administrative purposes.
Notes:
(a) Short-term loans shall include those, which are repayable within 12 months of the
balance sheet date. Long term loans shall be the loans other than short-term loans.
(b) Provisions against non-performing loans shall be shown separately.
(a) The nature of the security in case of all long term secured loans shall be specified in each
case. Secured loans for the purposes of this schedule, means loans secured wholly or
partly against an asset of the company.
(d) Loans considered doubtful and the amount of provision created against such loans shall
be disclosed
SCHEDULE - 10
Notes:
(a) No item shall be included under the head “Miscellaneous Expenditure” and carried forward unless:
1. some benefit from the expenditure can reasonably be expected to be received in future, and
2. the amount of such benefit is reasonably determinable.
(b) The amount to be carried forward in respect of any item included under the head “Miscellaneous
Expenditure” shall not exceed the expected future revenue/other benefits related to the expenditure.
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SCHEDULE C
(See Regulation 3)
AUDITOR’S REPORT
The report of the auditors on the financial statements of every insurer shall deal with the
matters specified herein:
1. (a) That they have obtained all the information and explanations which, to the best of their
knowledge and belief were necessary for the purposes of their audit and whether they have found
them satisfactory;
(b) Whether proper books of account have been maintained by the insurer so far as appears from
an examination of those books;
(c) Whether proper returns, audited or unaudited, from branches and other offices have been
received and whether they were adequate for the purpose of audit;
(d) Whether the Balance sheet, Revenue account and Profit and Loss account dealt with by the
report and the Receipts and Payments Account are in agreement with the books of account and
returns;
(e) Whether the actuarial valuation of liabilities is duly certified by the appointed actuary
including to the effect that the assumptions for such valuation are in accordance with the
guidelines and norms, if any, issued by the Authority, and/or the Actuarial Society of India in
concurrence with the Authority.
2. The auditors shall express their opinion on:
(a) (i) Whether the balance sheet gives a true and fair view of the insurer’s affairs as at the end
of the financial year/period;
(ii) Whether the revenue account gives a true and fair view of the surplus or the deficit for the financial
year/period;
(iii) Whether the profit and loss account gives a true and fair view of the profit or loss for the
financial year/period;
(iv) Whether the receipts and payments account gives a true and fair view of the receipts and
payments for the financial year/period;
(b) The financial statements stated at (a) above are prepared in accordance with the requirements
of the Insurance Act, 1938 (4 of 1938), the Insurance Regulatory and Development Act, 1999 (41
of 1999) and the Companies Act, 1956 (1 of 1956), to the extent applicable and in the manner so
required.
(c) Investments have been valued in accordance with the provisions of the Act and these Regulations.
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(d) The accounting policies selected by the insurer are appropriate and are in compliance with the
applicable accounting standards and with the accounting principles, as prescribed in these
Regulations or any order or direction issued by the Authority in this behalf.
3. The auditors shall further certify that:
(a) they have reviewed the management report and there is no apparent mistake or material
inconsistencies with the financial statements;
(b) the insurer has complied with the terms and conditions of the registration stipulated by the
Authority.
4. A certificate signed by the auditors [which shall be in addition to any other certificate or report
which is required by law to be given with respect to the balance sheet] certifying that:–
(a) they have verified the cash balances and the securities relating to the insurer’s loans, reversions and life
interests (in the case of life insurers) and investments;
(b) to what extent, if any, they have verified the investments and transactions relating to any trusts
undertaken by the insurer as trustee; and
(c) no part of the assets of the policyholders’ funds has been directly or indirectly applied in
contravention of the provisions of the Insurance Act, 1938 (4 of 1938) relating to the application
and investments of the policyholders’ funds.
Though the basic accounting principles are same for accounting

of general insurance business, due to very peculiar nature of
general insurance business, there are certain intricacies in
accounting of various general insurance transactions
With the opening of insurance sector,the number of general insurance companies
operatingin the country is increasing gradually. At present there are 13general insurance
companies out of which 8 are private sector companiesviz. Royal Sunderam, Tata
AIG, Reliance General, IFFCOTokio, ICICI Lombard, Bajaj Allianz,

HDFCChubb,Cholamandalam, and remaining 5companies are public sector companies
viz The New IndiaA s s u r a n c e Company Ltd.,
N a t i o n a lI n s u r a n c e Company Ltd,
United India Insurance Company Ltd,Oriental General Insurance company Ltd.
And ECGC. At present there is one national reinsurer viz. General Insurance
Corporation of India. For the year 2003-04, the total premium completion of the general
insurance
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businessis 16118 crore with the accretion rate of 13%. Still there is lot of untapped
general insurance market and there is a huge potential for development of general
insurance business. Normally most of the general insurance policies are annual policies
with few exception as Erection policies, Contractor’s All Risk policies etc. Nowadays
there is an increasing trend to issue long term policies in personal lines of business
such as Personal Accident Policies, Housing Loan Policies etc.
LEGAL FRAMEWORK:
The primary legislations which deals with the insurance business in India are the
Insurance Act, 1938 and the IRDA Act, 1999. Various aspects relating to accounts and
audit are dealt with by the following statutes and rules/ regulations made there under;
The Insurance Act, 1938 (including Insurance Rules, 1939 )

The Insurance Regulatory and Development Authority Act,1999;
The Insurance Regulatory and Development Authority Regulations;
The Companies Act, 1956; and
The General Insurance Business ( Nationalisation )Act, 1972 (including Rules
framed there under).
S 11 of the Insurance Act, 1938 prescribes the manner in which the accounts of
an insurance company has to be maintained. With the opening of the insurance
sector for private players, IRDA Act, 1999 was passed to provide for the
establishment of an Authority to protect the interests of the holders of insurance
policies, to regulate, promote and ensure orderly growth of the
i n s u r a n c e industry and for matters c o n n e c t e d therewith or i n c i d e n t a l
thereto and further to amend the
Insurance Act, 1938,

the Life Insurance Corporation Act,1956 and
theGeneral Insurance Business (Nationalisation) Act, 1972.
Section 114A of The IRDA Act, 1999 empowers IRDA to make regulations
consistant with the Act, to carry out the purposes of this Act for various matters specified
in said Section 114A. In exercise of the powers conferred by section 114A of the
Insurance Act,1938 ( 4 of 1938 ),and in supersession of The Insurance Regulatory and
Development Authority (Preparation of financial Statements and Auditors Report of

InsuranceCompanies) Regulations, 2000, Authority, in consultation with the
Insurance Advisory Committee,has made the Insurance Regulatory and Development

Authority(Preparation of Financial Statements and Auditors Report ofInsurance
Companies) Regulations, 2002. Thus the Regulationsmade in the year 2000 were
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modifiedand superceded by the Regulations made in the year 2002.As per these
Regulations, aninsurer carrying on general insurance business has to comply with
the requirements of Schedule B. Schedule B is divided into 5 partsas under:
PART I—Accounting principles for preparation
of financial statements
1. Applicability of Accounting
Standards:-
Every Balance Sheet, Receipts and Payments Account [Cash Flow Statement ] and
Profit and Loss Account[ Shareholders Account ]of the insurer shall be in
conformity with the Accounting Standards (AS) issued by the ICAI to the extent
applicable to the insurers carrying on general insurance business.
However, there are 3 exceptions viz.
AS-3 Cash Flow Statement shall be prepared only under Direct Method
(ii) AS-13 Accounting for Investments, shall not be applicable and
(iii)AS-17 Segment Reporting shall apply to all insurers irrespective
of the requirements regarding listing and turnover mentioned therein.
2. Premium –
Premium shall be recognized as income over the contract period or the period of risk,
whichever is appropriate. Premium received in advance, which represents premium

income not relating to the current accounting period,shall be disclosed separately under
the head “Current Liabilities” in thefinancial statements.A reserve for unexpired risks
shall be created as the amount representing that part of premium written which is
attributable to, and to be allocated to the succeeding accounting periods and shall not be
less than as required under 64V(1)(ii)(b) of the Act.
As per the provisions of section 64V(1)(ii)(b), reserve for unexpired risks shall be
created in respect of—fire and miscellaneous business, 50 per cent
(ii) marine cargo business, 50 per cent, and
(iii) marine hull business, 100 per cent of the premium, net of re-insurances, during
the preceding twelvemonths.
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3. Premium Deficiency-
Premium deficiency shall be recognised if the sum of expected claim costs, related
expenses and maintenance costs exceed related reserve for unexpired risks.
4. Acquisition Costs-
Acquisition costs, if any shall be expensed in the period in which they are incurred.
5. Claims-
The ultimate cost of claims to an insurer comprise the claims under the policies and
specific claims settlement costs. Claims under policies comprise the claims made for
losses incurred, and those estimated or anticipated under the policies following a loss
occurence.A liability for outstanding claims shall be brought to accounts in respect of

both direct business and inward reinsurance business.
The liability shall include:-
Future payments in relation to unpaid reported claims;
(b) Claims Incurred But Not Reported (IBNR) including inadequate
reserves [sometimes referred to as Claims Incurred But Not Enough Reported

(IBNER)], which will result in future cash/asset outgo for settling liabilities against those
claims. Change in estimated liability represents the difference between the estimated
liability for outstanding claims at the beginning and at the end of the financial period.
The accounting estimates shall also include claims cost adjusted for estimated for
estimated salvage value if there is sufficient degree of certainty of its realization.Claims
made in respect of contracts where the claims payment period exceeds four years shall
be recognised on actuarial basis.
6. Procedure to determine the value of investments:-
According to this sub clause of the Regulations, a detailed procedure has been
prescribed for determining value of various investments viz.
Real Estate- Investment Property:-To be measured at historical cost less

accumulated depreciation and impairment loss. Revaluation is not permissible.
Fair value as at the balance sheet date and the basis of its determination shall be
disclosed in the financial statements as additional information.
(b) Debt Securities shall be considered as “ held to maturity “securities and shall
be measured at historical cost subject to amortization.
(c) Equity Securities and Derivative Instruments that are traded in active markets
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shall be measured at fair value as at balance sheet date. For the purpose of
calculation of fair value, the lowest of the last quoted closing price of the stock
exchanges where securities are listed shall be taken.Unrealised gains/losses
arising due to change in the fair value of listed equity shares and derivative instruments
shall be taken to equity under the head “Fair Value Change Account”. Profit / Loss on
sale of such investments shall include accumulated changes in the fair value previously
recognised under the heading Fair Value Change Account in respect of a particular
security and being recycled to Profit and Loss Account on actual sale of that listed
security. The balance in Fair Value Change Account or any part thereof shall not be
available for distribution as dividends. Also, any debit balance in the said FairValue
Change Account shall be reduced from the profits/free reserves while declaring
dividends.
(d) Unlisted and other than actively traded Equity Securities and Derivative
Instruments will be measured at historical costs. Provision shall be made for
demunition in value of such investments.
7. Loans:-
Loans shall be measured at historical cost subject to impairment provisions.
8. Catastrophe Reserve:-
Catastrophe reserve shall be created in accordance with the norms, if any, prescribed by
the Authority. Investment of funds out of catastrophe reserve shall be made in
accordance with prescription of the Authority.Till date the Authority has not prescribed
any norms for creation of such reserve.
PART II- Disclosures formingpart of Financial Statements:- This contains various

disclosures to be made by an insurer as per subclause A, B and C.
PART III- General Instructions for Preparation of Financial Statements:- This part
contains 8 instructions for the preparation of finanacial statements.
PART IV- Contents of Management Report:- The management report is required
to be attached to the financial statements. This report contains various
confirmations, certifications and declarations duly authenticated by
The management.
PART V:- Preparation of Financial Statements:- An insurer shall prepare the

Revenue Account, Profit and Loss Account[Shareholders’ Account] and
the Balance Sheet in Form B-RA,Form B-PL, and Form B-BS, or as
near thereto as the circumstances permit. An insurer shall prepare
Revenue Accounts separately for fire, marine and miscellaneous

insurance business and separate schedules shall be prepared for Marine Cargo, Marine-
Other than Marine Cargo and the following classes of miscellaneous insurance
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business under miscellaneous insurance and accordingly application of AS-17 –
Segment Reporting- shall stand modified.
1.Motor
2. Workmen’s Compensation/ Employers’ Liability
3. Public/Product Liability
4. Engineering
5. Aviation
6. Personal Accident
7. Health Insurance
8. Others
An insurer shall prepare separate Receipts and Payments Account in accordance with
the Direct Method prescribed in AS-3– “Cash Flow Statement” issued by the ICAI.
ORGANIZATIONAL STRUCTURE
A large general insurance company having operations through out India and abroad
usually has three tier organization structure. At level one, there are operating offices
transacting general insurance business. These are called branch/divisional offices. Basic
general insurance functions like acceptance of general insurance business,
issuance of policies, development and training of agency force, payment of commission /

brokerage to various insurance intermediaries, settlement of insurance claims under
policies and payment of management expenses and other statutory payments. At level
two, there are Regional Offices which are controlling 20-25 operating offices depending
on the geographical area and the requirements and policies of each company. The main
function of the regional office would be to supervise the operating offices under their
jurisdiction and to give them support and guidance for expanding the business and
settlement of large claims. At the top there is a Head Office or a Corporate Office whose
main function is to guide, supervise and control the various activities carried on
by the operating offices and regional offices. Head office also supervises the operations
of overseas offices.Further two specialized functions viz. re-insurance and investments
are traditionally handled only by head office.
ACCOUNTING MODULE:-
As seen earlier, the basic insurance functions including accounts are carried on at the
operating office of the general insurance company. In an IT accounting environment, the
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support of documentation, maintenance of books of accounts and reporting are based
on the structure using which transactions are fed and retrieved in and out of the system.
In the current IT era, where most of the data may be available across locations, except
for preparation of journal vouchers and few other emerging transactions, all other
transactions input to the system could be system generated.
As seen earlier, the most important accounting functions in a general insurance

company are:-
◆ Premium accounting
◆ Commission/brokerage accounting
◆ Claims accounting
◆ Accounting of expenses of management
◆ Co-insurance accounting
◆ Re-insurance accounting
◆ Investment accounting, and
◆ Accounting of foreign operations Premium Accounting:-
In case of Tariff business such as fire insurance, motor insurance etc., the premium is
charged as per tariff.In case of non-tariff business the premium is charged as per the
guideline rates fixed by the respective technical departments of Head Office of the
insurer with certain discretion to the operating offices while underwriting such business.
According to section 64VB of the Insurance Act,1938; no risk can be assumed by an

insurer unless premium is received in advance Recently, in addition to collection
of premium by cash/ cheque/DD/BG/CD, IRDA has permitted to collect the premium by
other manner of receipt of premium such as credit card/Debit card/E transfer etc.
However, the same has to be collected before assumption of the risk.Applicable service
tax(at present 8% ) has to be collected on taxable premium and deposited
with the respective excise authorities within prescribed time limit.Sometimes, same
business is shared by more than one insurer as desired by the insured. The lead
insurer has to collect the full premium along with service tax on the
full premium. However, only own share of premium is accounted as premium and the
balance is shown as amount due to other co-insurers. A policy stamp is required to be
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affixed as per the provisions of the Stamp Act and has to be accounted properly by
debiting policy stamp expenses.
A premium register is generated in the system on daily basis. As seen earlier , as per
IRDA Regulation, the premium has to be recognised as income over the contract
period or the period of risk, whichever is appropriate. Most of the general insurance
policies are annual contracts and hence the earned premium is worked out by
1/365 method.Where the same is not practicable, the same is worked out either 1/24 or
1/12 method. At the end of the financial year, the unearned premium is compared
with the reserve for unexpired risks as required under section 64V(1)(ii)(b) of the
Insurance Act, 1938 and the shortfall if any is accounted as unearned premium.
ACCOUNTING OF COMMISSION/
BROKERAGE:-
commission/brokerage is paid at different rates on different classes of insurance

business.No commission/ brokerage is paid on certain classes of business. Commission/
brokerage becomes payable as soon as business is underwritten. However, the same is

paid on monthly basis.The applicable service tax on commission is bourne by the insurer
and paid to the excise authorities. TDS is deducted as per provisions of IT Act and
deposited in Govt. account within prescribed time limit.In case of cancellation of
a policy due to cheque dishonour or any other reason, commission/brokerage
payable is reversed or recovered if already paid to the agent/broker.
CLAIMS ACCOUNTING:-
Claims outgo is the major outgo of an insurance company. A claim processing is done
by the respective technical department and aprroved by the competent authority.
The payment and accounting of the claims is done by the accounts department.In case
of claims on policies involving co-insurance arrangements, the full amount of claim is
paid by the lead insurer, but only own share of claim is accounted as claims cost and the
balance is shown as amount recoverable from the co-insurers. where a claim is reported
but not settled by the end of the financial year, an adequate provision is made for such
outstanding claims.At the end of each financial year, as required by IRDA the actuarial
valuation of the claims liability of an insurer is made by the appointed actuary, and
the shortfall, if any is provided asIBNR/IBNER.
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EXPENSES OF MANAGEMENT:-
For managing insurance business certain administrative expenses are incurred such
1. as Employees’ remuneration and

2. welfare benefit,
3. managerial remuneration,
4. travel,conveyance etc.,
5. rent,
6. rate and taxes,
7. repairs,
8. printing and stationery,
9. communication,
10. legal and professional charges,
11. medical fees,
12. auditors fess &expenses,
13. advertisement and publicity,
14. interest and bank charges,
15. depreciation, and others.
These expenses are first aggregated and then apportioned to each class of business viz.
Fire, Marine and Miscellaneous revenue account on a reasonale and equitable basis.
Any major expenses
(Rs. 5 lacs or in excess of 1% of net premium, whichever is higher ) are
required to be shown separately. Section 40C of the Insurance Act, 1938 prohibits an
insurer to spend as expenses of management in excess of the limits prescribed in the
Act. An adequate provision for outstanding expenses is made in the accounts at the end
of the financial year
A provision for leave encashment, gratuity etc. at the end of each financial year is made
on actuarial basis.
CO-INSURANCE:-
As seen earlier, the lead insurer has to collect the full premium alongwith service tax and
pay the same to the respective excise authorities.The lead insurer accounts it’s own
share as premium and balance is shown as payable to other co-insurers.Similarly in
case of claim, the entire claim amount is paid by the lead insurer to the policy holder, but
only his own share is accounted as claims expense and the balance is shown as amount
due from the coinsurer. Lead insurer also recovers certain percentage of the co-insurer’s
share for managing co-insurance arrangement as a leader. Coinsurance accounts are
settled asper the agreement between the coinsurers. Usually, there is a provision
for charging of interest for delayed settlement of accounts. At the end of each financial
year, provision for outstanding claims, if any is communicated by the lead insurer and
balance confirmation certificates are exchanged by all co-insurers.OUNTIN
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INVESTMENT ACCOUNTING:-
Investments are assets held by an insurer for earning income by way of dividends, rent
and interest or for capital appreciation or for otherbenefits to the insurer.An insurance
company makes investment, apart from earning income, to comply with the statutory
requirements and also for meeting any unforeseen contingences and claims.There are
two main sourcesof investible funds viz., surplus funds arising out of the business
and income from interest and dividends on existing investments.
Section 27B, 27C and 27D of the Insurance Act, 1938 lays down certain norms for
investment of the funds by an insurance company.Earlier we have seen the procedure
to determine the value of investments as laid down in the IRDA’s Regulations for
preparation of financial statements.Further IRDA has also issued detailed guidelines
under IRDA (investment) (amendment) Regulations, 2001 for making investments by the
insurer. IRDA prohibits any investment abroad out of policyholders’ funds. Accounting
entries for investments are involved for buying/selling investments,receipts / accrued and
outstanding of interest, dividends, rent,and recording impairments, write off and write
down of certain investments.
FOREIGN OPERATIONS:-
Foreign branch accounts are merged with the Indian operations of an insurer to present
global financial position. In addition to the Indian requirements, these offices have to
comply with the local laws for preparation of financial statements and get the accounts
audited by the local qualified auditors or the Indian firms of auditors, as the case my be.
These accounts which are prepared in local currencies are converted in Indian currency
as per AS11 and merged with Indian accounts.
CONSOLIDATION:-
The accounts of a large insurance company having number of offices in India and
abroad, are consolidated at the head office of the company.The accounts prepared by
the operating offices in India are audited by the branch auditors. These are consolidated
at various regional/ zonal offices and the consolidated accounts for the whole region are
submitted to head office.At head office, separate accounts are prepared for the re-
insurance and investment operations.If the company has foreign branches, their acounts
audited by the local statutory auditors or the central statutory auditors are converted in
Indian currency and merged with the Indian accounts. Further, following special
provisions/reserves are made only at head office while preparing final accounts-
Unexpired Risk Reserve:- Most of the general insurance policies are annual
policies,which are issued through out the year.Thus at the financial year end,
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there is unexpired liability under various policies which may occur during the
remaining term of the policy beyond the year end and for which the entire
premium is accounted as income. Section 64V(1)(ii)(b) of the Insurance Act,
1938 has provided certain percentage of net premium as Reserve for unexpired
risks, as seen earlier, which is a compulsory minimum requirement. In addition to
this, if unearned premium exceeds such reserve for unexpired risks, calculated
as per the provisions of the Act, the difference is to be accounted as unearned
premium.
(b) Provision for terminal benefits of the employees:- Every year provision for
leave encashment,gratuity etc. payable to the employees on superanuuationis
made on actuarial basis at the head office.
(c) Reserve for Bad and DoubtfulDebts:- After doing age-wise analysis of the
debtors, a suitable provision is made at head office of an insurer.
(d) Provision for taxation:- Tax liability of an insurance company is governed by
the special provisions contained in section 44 of the Income tax Act.Adequate
provision for tax liability( including wealth tax) is made at head office.
(e) Provision for proposed dividend:-An adequate provision is made for proposed
dividend as per the board resolution at head office.
(f) IBNR/IBNER provision is made as suggested by the appointed actuary by
increasing the outstanding claims reserve.Thus the central accounts department
at head office is responsible for the consolidation of all regional office accounts (
where the accounts of various operating offices are consolidated), reinsurance
accounts, investment accounts and foreign operation accounts. The
consolidation is done with the help of a suitable consolidation software.Fire
revenue account, Marine revenue account, Miscellaneous revenue account,
Profit and Loss account and Balance Sheet along with 15 schedules is prepared
as per formats given in the PartV of the IRDA Regulations for the financial
statements.The final accounts are audited by the statutory auditors appointed by
the shareholders’ (by C&AG in case of a Govt. company ) and presented in the
Annual General Meeting for approval. ■
AOUNTING
RATIOS
1.NET CURRENT ASSET=CURRENT ASSET - CURRENT LIABILITIES
2.DEBT EQUITY RATIO = DEBT DEBENTURE +SECURED LOANS

-------------- ------------------------------------------------
EQUITY EQUITY CAP+PREF. SHARE CAP+ FREE
MINUS MISC EXPENDITURE
CONTINGENT ASSETS ARE NEITHER RECOGNISED NOR DISCLOSED
3.ASSET COVER RATIO = ASSETS

----------------
SECURED LOANS
4.NET WORTH = EQUITY= SHAREHOLDER'S FUNDS = (EQUITY CAPITAL+PREF. CAPITAL +

FREE RESERVES- MISC. EXPEN
OR, TOTAL ASSET MINUS TOTAL LIABILITY
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5.PREMIUM GROWTH RATE = PREM(CY) -PREM (PY)
------------------------------- X100
PREM (PY)
6. NET RETENTION RATIO = PREM . GROSS- PREMIUM (NET)

-------------------------------x100
PREM NET
7.COMMISSION RATIO = COMMISSION

--------------- X100
PREMIUM
8. MGT EXPENSE RATIO = MGT EXP
---------------- X100
PREMIUM
9.COMBINED RATIO = CLAIMS +EXPENSES

----------------------- X100
GROSS PREMIUM
10.TECHNICAL RESERVE TO NET PREMIUM RATIO= TECHNICAL RESERVES

------------------------------
NET PREMIUM
WHERE TECHNICAL RESERVE IS UNEXPIRED RISK RESERVE + O/S CLAIMS
11.UNDERWRITING BALANCE RATIO = OPERATING PROFIT

------------------------
NET PREMIUM
12.RESERVE FOR UNEXPIRED RISKS = PREMIUM (C Y) - PREMIUM (PY)
PREM (CY) > PREM (PY), THEN ADDITION TO RESERVE

PREM (CY) < PREM (PY), THEN RELEASE FROM RESERVE
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Insurance Regulatory and Development
Authority (Investment) Regulations, 2000
F.No. IRDA/ Reg./ 8/ 2000.-In exercise of the powers
conferred by Sections 27A, 27B, 27D and 114A of the Insurance Act, 1938 (4 of 1938), the
Authority in consultation with the Insurance Advisory Committee, hereby makes the following
regulations, namely:
1. Short title and commencement

(1) These regulations may be called the Insurance Regulatory and Development Authority
(Investment) Regulations, 2000.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions – In these regulations, unless the context otherwise requires, -
a) ‘Act’ means the Insurance Act, 1938 (4 of 1938).

b) ‘Accretion of funds’ means investment income, gains on sale/ redemption of existing
investment and operating surplus.
c) ‘Authority’ means the Insurance Regulatory and Development Authority established under
sub-section (1) of Section 3 of the Insurance Regulatory and Development Authority Act,
1999 (41 of 1999).
d) ‘Principal Officer’ means any person connected with the management of an insurer or any
other person upon whom the Authority has served notice of its intention of treating him as
the principal officer thereof.
e) All words and expressions used herein and not defined but defined in the Insurance Act,
1938 (4 of 1938), or in the Insurance Regulatory and Development Act, 1999 (41 of 1999),
or in any Rules or Regulations made thereunder, shall have the meanings respectively
assigned to them in those Acts or Rules or Regulations.
Regulation of Investments
(1) General Business: Without prejudice to Section 27 or Section 27B of the Act, - Every
insurer carrying on the business of general insurance shall invest and at all times keep
invested his total assets in the manner set out below:
S.No Type of Investment Percentage
i) Central Government Securities being not less than 20%
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ii) State Government securities and other Guaranteed securities including (i) above 30%
being not less than
iii) Housing and Loans to State Government for Housing and Fire Fighting equipment, 5%
being not less than
iv) Investments in Approved Investments as specified in Schedule II
a) Not less than

Infrastructure and Social Sector
10%
Explanation: For the purpose of this requirement, Infrastructure and Social Sector
shall have the meaning as given in regulation 2(h) of Insurance Regulatory and
Development Authority (Registration of Indian Insurance Companies) Regulations,
2000 and as defined in the Insurance Regulatory and Development Authority
(Obligations of Insurers to Rural and Social Sector) Regulations, 2000 respectively
b) Others to be governed by Exposure/ Prudential Norms specified in Regulation 5 Not exceeding

30%
v) Other than in Approved Investments to be governed by Exposure/ Prudential Not exceeding

Norms specified in Regulation 5 25%
Note:
All investments shall be made in graded securities and the grading shall not be less than of ‘very
strong’ rating by a reputed and independent rating agency (e.g. AA of Standard and Poor).
(3) Reinsurance Business: Every reinsurer carrying on reinsurance business in India

shall invest and at all times keep invested his total assets in the same manner as set out
in sub-regulation (1), until such time separate regulations in this behalf are made by the
Authority.
4. EXPOSURE/ PRUDENTIAL NORMS
Without prejudice to anything contained in Sections 27A and 27B of the Act, every insurer shall
limit his investments based on the following exposure norms:
198
A) Exposure Norms
Type of Investment Limit for Investee Limit for the entire Limit for the industry
Company group to which the sector to which the
investee company investee company
belongs belongs
(a) Equity/ Preference (i) As on any date (i) As on any date
Shares/ Convertible Not exceeding 15% of
portion of Debentures at Not exceeding 20% Not exceeding 15% the total capital
face value. of the total capital of the total capital employed* in all such
(b) Debentures - (face value) employed*. employed* of the companies.
including private placed group companies.
NCD and Non convertible
portion of Convertible
Debentures.
(c) Short/ Medium/ Long (ii) During the year (ii) During the year
Term Loans and any
other direct financial Not exceeding 5% of Not exceeding 10% of
assistance. estimated annual estimated annual
accretion of funds. accretion of funds.
* Total capital employed means total of equity shares, preference shares, debentures,
long/ medium/ short term loans (excluding public deposits), free reserves but
excluding revaluation reserves, of the investee company as shown in its last audited
balance sheet.
B) Exposure Norms for Investment in Public Financial Institutions
Equity Share and Preference Shares (at their face Not exceeding 15% in general of the paid up equity/
value). preference capital of the institution or the existing
holding % level, if higher.
Investment in Equity Capital, Bonds, Debentures, Not exceeding 10% of the capital employed by an
Term Loans. institution as per the last audited Balance Sheet.
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Total Investment vis-à-vis Net Worth of the Company. Not exceeding 60% of Net Worth of the institution.
Total Investment in a Financial Year. 7.5% of annual accretions.
Total Investments in all the Financial Institutions. Annual aggregate financial assistance to all
Development Financial Institutions put together in a
single year shall not exceed 20% of the estimated
annual accretions for the year.
C) Prudential Norms
The prudential norms for various instruments shall be as under:
i) Debentures:
Norms for Fully Convertible Debentures and Partly Convertible Debentures:
Investment decisions are related to attractiveness of equity shares to be received as a

result of conversion. Due consideration is also given to the factors, viz
a) rate of interest at the time of subscription to said debentures,

b) appreciation and
c) dividend income likely to be received from the equity shares.
Similar considerations also apply for Non-Convertible (NC) Debentures with detachable
warrants attached to it.
Norms for Non-Convertible Debentures and Non-Convertible Debentures with warrants

attached:
1. Eligibility Amount
a) Working Capital Debentures 20% of the current assets, loans and advance minus outstanding
amount of existing working capital NC Debentures.
b) Project Finance As appraised by the Investment Committee
c) Normal Capital Expenditure As assessed by the Investment Committee
Asset Cover (as specified in Schedule III):
First pari passu charge on fixed assets of the company offered as security with a
minimum of 1.25 times including proposed borrowings (excluding revaluation of assets).
200
Debt Equity Ratio (as specified in Schedule III):
Not to exceed 2:1 including the proposed NC Debenture issue. However, in case of
capital intensive project debentures, higher ratio upto 4:1 may be considered.
Interest Cover (as specified in Schedule III):
Not less than 2 times for the latest year or on the basis of the average of the
immediately preceding three years after including the interest on the proposed debentures at
the applicable rate.
Dividend Pay-out:
Minimum dividend of 10% in each of the two years out of the immediately preceding
three years including the latest year.
ii) Term Deposits and Loans with Non Banking Companies:

The insurer need to place the deposits with a view to cater to working capital needs of
the corporate sector. The placement of the deposit are to be decided after evaluating financial
and non-financial aspects of the performance parameters of the companies. The analysis need
to include study of financial position, track record and other features such as quality of
management, future prospects and market potential for the company's products. Credit rating
of borrower should be uniformly maintained at a position which is indicative of a very strong
financial position being not less than AA of Standard and Poor or equivalent rating of any other
reputed and independent rating agency.
The maximum amount of Short Term Deposit that may be placed with any company is
restricted to Rs 2 crores or 10% of net worth whichever is less.
The various norms/ parameters for the placement of term loans are as under:
Particulars Limits
Unsecured borrowing as a % of net Not to exceed 25% of net worth including the proposed loan, subject to
worth. networth of the borrowing company being not less than Rs. 15 crores.
Interest Cover. Atleast 2.5 times including interest on proposed loans.
Debt/ Equity Ratio. Not to exceed 2:1.
Current Ratio. Not less than 1.33:1.
Dividend Record. Atleast 10% for the last 5 years or 15% and above for 3 out of 5 years.
Listing Equity shares of the Company shall be listed on any recognised stock
exchange and the price should continuously been quoting above par
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atleast for 12 months prior to the date of sanction of loan.
Collateral Security Cheques shall be obtained for principal and interest amount. Personal
guarantee of promoters and pledge of shares may be taken.
ii) Infrastructure and Social Sector:

In the case of projects/ works in the infrastructure and social sector undertaken by a
person other than a company, the norms indicated in the table above shall have to be
met to the extent applicable.
iii) Guidelines on subscription to Preference Shares:

a) Companies whose preference shares are selected for investment should have sound
financial position and steady income earning capacity.
b) The dividend payable on the preference shares should be cumulative.
c) The preference shares shall be redeemable.
d) Preference capital after proposed issue shall not exceed 100% of equity capital.
e) Dividend should have been paid on equity shares for two years out of immediately
preceding three years.
f) Preference dividend should have been paid for 3 years or 3 out of 4 or 5 years including
latest 2 years if the preference shares are issued earlier.
g) Non-dividend paying preference shares should not be considered for investment.
h) Dividend cover on the basis of average profit of last 3 to5 years should be 3 times.
4. Returns to be submitted by the Insurer:
Every insurer shall submit to the Authority the following returns within such time, at
such intervals and verified / certified in such manner as indicated there against. These returns
shall be in addition to those prescribed in Insurance Rules, 1939.
.No Form No as Short description Periodici Time limit for submission Verified/
annexed to ty of Certified by
these returns
regulations
1 Form 1 Statement of investment Yearly Within 30 days from the date Principal
and income on of Board approval of audited Officer/ Chief
investment accounts. (Investment)
2 Form 2 Statement of down Quarterly Within 21 days of the end of Principal

graded investments. each quarter. Officer/ Chief
(Investment)
3 Form 3 A Statement of Investment Quarterly Within 21 days of the end of Principal

of Controlled Fund (Life) each quarter. Officer/ Chief
– Compliance Report (Investment)
4 Form 3 B Statement of Investment Quarterly Within 21 days of the end of Principal

of Total Assets (General) Officer/ Chief
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– Compliance Report each quarter. (Investment)
5 Form 4 Prudential Investment Yearly Within 30 days from the date Principal
Norms – Compliance of Board approval of audited Officer/ Chief
Report accounts. (Investment)
The Authority may, by any general or special order, modify or relax any requirement
relating to the above.
4. Power to Call for additional information

The Authority may, by general or special order, require from the insurers such other
information in such manner, intervals and time limit as may be specified therein.
5. Duty to Report extraordinary events affecting the investment portfolio

Every insurer shall report to the Authority forthwith, the effect or the probable effect of
any event coming to his knowledge, which could have an adverse impact on the investment
portfolio held by him
6. Constitution of Investment Committee
Every insurer shall constitute an Investment Committee which shall consist of a

minimum of two non-executive directors of the Insurer, the Principal Officer, Chiefs of
Finance and Investment divisions, and wherever appointed actuary is present, the Appointed
Actuary. The decisions taken by the Investment Committee shall be properly recorded and be
open to inspection by the officers of the Authority.
7. Miscellaneous
(1) Valuation of Assets and Accounting of Investments shall be as per the
Insurance Regulatory and Development Authority (Preparation of Financial
Statements and Auditor’s Report of Insurance Companies) Regulations, 2000.
(2) The Authority may, by any general or special order, modify or relax
requirement relating to regulation 5.
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MOTOR INSURANCE
GENERAL REGULATION-42 RATING

CLASSIFICATION ENDORSME-56 CC- PASSANGER& TONNEAGE
PVT-CAR & TAXI NCB.50 BASIS
MIN- PRMIUM-100 AGE WISE
2 WHEELER GEOGRAPHICAL AREA- ZONE
SHORT PERIOD RATE
COMMERCIAL-GOODS
PASANGER VEICHILE
TP- COVER MV ACT-1988
MISC TYPE TPPI- UN LIMITED ACT SECTIOS-
TPPD- 6000 NO FAULT LIABLITY
SCOPE OF COVER
PA-OWNER- 50/100 MACT- LOKADALAT
POLICY CONDITION
PA -PASANGER- RS-5/- 10,000- MAX- 2 LAC LOK NAYK
GENERAL EXCLUSION
2WHE- RS 7/- MAX- 1 LAC HIT AND RUN ACCIDENT
EXCLUSION
DR- CLR- RS.25/- NFPP- RS 75/-
DEPRICIATION
DUTY OF THE INSURED

INTIMATION - FIR, SAFTY CLAIMS HUB
MEASURE- DONT DO'S
DOCUMENTS REQ
ASSITANCE TO THE INSURER
REPAIR- CASH LOSS BASIS
IMPORTANTANT PROVISON
SEC 149- 149A, 163, 163A
DEFENCE OF INSURER
TIME LIMIT TO FILE SUIT-
STAMP DUTY- APPEAL – TIME, CLAIM AND Interest settlement RATE- accessories rate, u/w limit,
IBNE IBNR- STAISTICS, INC- CLAIM STATEMENT-
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1. Identification of the risk relating to the type of vehicle for which Insurance is sought.
2. Recording of all relevant data of past experience with regard to type of vehicles and gathering
information from the market.
3. Analysis the data and designing the suitable product
4. Educating the customer with regard to the design of the product and seeking suggestions
from the customer to offer the product that would aptly suit them.
5. Assisting the customer to choose the correct value for Insurances and revise the market value
of Insurance appropriately at the time of renewal6. Keeping track of claim records
7. Identifying the perils causing accidents very often and also extent of losses produced by each
peril.
8. Advising the customer the risk prevention measures.
9. Conducting frequent customer seminars and educational programs with regard to changed
traffic rules and regulations, change of legislation and other code of conduct.
10. Periodical interactions with other insurers so that aggregate exposure in the market, their
claim experience in respect of each category of vehicle, cause of accident, etc. can be discussed
and known.
11. The insurers should pre-inspect the vehicle before accepting the risk where there is no
continuity of Insurance in case of used vehicles.
12. Enforcing underwriting controls like fair and reasonable excess provisions, pre risk
acceptance and other safeguards
13. Maximizing the resources and minimising the cost to remain solvent
14. Faster claims settlement to achieve maximum customer service. Besides, underwriter's
personnel are given periodical training and keep them abreast of the updated environment
changes. The focus should be on IT development to cope up with the demanding
expectations of the customers.
Motor Vehicle Insurance
Type of cover required –
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Comprehensive, Third party, Fire only, Theft only,
Fire/Theft and Third party only.
Type of use of vehicle
Details of the vehicle
Age, experience, past claims experience, previous insurance, if any
Value of the vehicle including accessories fitted thereon.
Sum Insured – Insurable value
The value of the property being insured is determined based on various factors
such as
Manufacturing cost
·Profit margin of the manufacturer
·Transportation charges
·Tax and Duties
·Cost of Insurance
·Intermediary Commission
·Suitable loading with regard to increase in value due to market
fluctuations
·Cost of accessories and other value addition
·Any other extra cost, which may be material for valuation of property,
offered for Insurance.
The selection of value is usually the option of the insured and such value so fixed
will be the maximum limit of liability in the event of loss. It is also on the basis on
which premium is collected. This value is called sum insured which can increase
or reduced during the currency of the policy.
Sum insured is name of Insured Estimated Value (I.E.V) in Motor Insurance,
which is now being proposed to be called as “Insured's Declared Value”
Cover Note:
A cover note is an unstamped document issued based on the details given in the proposal form
confirming the acceptance of the risk from the date and time of receiving the consideration
(premium).
This document is issued immediately only under circumstances where the
issuance of the policy is not feasible. This cover note is a replica of the policy to be issued.
The validity of the cover note is 60 days, which can be further extended at the option of the
insurer, if necessary.
Policy Form:
After a contract has been concluded between the proposer and the insurer, it is recorded in a
document called a policy. The policy is not the contract but only the evidence of it. In the event
of a dispute, it is the policy to which the attention of the court will be drawn unless the insured
brings the evidence to prove that there is a discrepancy between the policy and the fact.
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Endorsement:
From time to time, it is necessary to make alterations in the wordings of a policy to
take note of changes in the material facts submitted earlier in substitution for one
item to another. It would be costly and time consuming to issue a new policy for
every alteration. Therefore, any changes to the original policy are noted by way of
issuing an Endorsement.
Period of Insurance
Usually, the insurance is offered only for 12 months, as most of the insurance contracts
including accident and liability insurance are annual policies.
When the liability of the insurer commences under the contract of the policy, the policy is said
to attach or in other words the risk is said to attach or it begins to run from that time.
DUTIES OFTHE INSRUED AT THE TIME OF TAKING INSURANCE
The Insured should declare all the materials facts relevant to the risk for which
insurance is sought such a type of vehicle, purpose of usage, model of the
vehicle, age of the vehicle etc.,
History of past claims
Name of the previous insurers if any who have declined accepting the risk
offered for Insurance or cancelled the policy.
Maintenance of the vehicle in the most efficient manner as though he is
uninsured
The Insured should bring to the notice of the Insurer about any alterations
subsequent to the issuance of the policy, e.g.; accessories insured should
remain in the vehicle during the entire period of insurance.
It is obligation on the part of the insured to declare any accidents that have
taken place whether material or not to this Insurance.
TYPES OF VEHICLE
There are different categories of vehicles plying on the road in accordance with the
provisions of the Motor Vehicle Act.
Motor vehicles : Any mechanically propelled vehicle used upon roads and includes a chassis to
which body is not attached and trailer but does not include vehicle run or fixed rails or specially
adopted for use within the factory premises.
Private car : Private car is a type of a vehicle used for social, domestic, pleasure and
professional purpose and not for carriage of goods (other than samples) excluding
use of vehicle for hire or reward, pace making reliability trial and speed testing and
used for any purpose in connection with motor trade.
Two Wheeler : Motorcycle is a mechanically self-propelled two-wheeler with gear
or without gear but a kick starter vehicle is treated as Geared vehicle for Insurance
Rating.
Scooter: It is a mechanically propelled two-wheeler with variable gears.
Auto cycles: Pedal cycle mechanically assisted by a motor engine upto 75 cc. Capacity.
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COMMERCIAL VEHICLES
Good carrying vehicle (private carriers) :
The owner of the transport vehicle who uses the vehicles only for carriage of goods, which are
his properties, or carriage of goods, which are necessary for the purpose of his business.
Good carrying vehicle (public carriers) : The owner of the transport vehicle who uses the
vehicles only for carriage of goods, which are not his properties, or carriage of goods, which are
necessary for the purpose of his business.
Public service vehicle :
A motor vehicle used for carrying passenger and includes motor cab, contract carriage and stage
carriage.
Motor cab: Motor vehicle used to carry not more than 6 persons excluding
driver for hire or reward.
2. Contract carriage: Motor vehicle which carry passengers for hire or reward
under a contract and the vehicle used as whole for an agreed sum either on
time basis or point to point basis.
3. Stage carriage: A motor vehicle which can carry more than 6 passengers
excluding driver for hire or reward with fares paid by individual passenger for
the whole journey or for stages of the journey.
MISCELLANEOUS TYPE OF VEHICLE –
All other vehicles, which do not fall under any of the categories enlisted above, are classified
under this category.
Examples are: Ambulance, Tractor and Trailer, Road Rollers, Excavators etc.
TYPES OFINSURANCE
Act Only Policy (Third party liability towards death and/or bodily injury
and/or property damage)
Comprehensive Policy (Accidental damages to the vehicle insured or loss of
the vehicle and liabilities to third party towards death and/or bodily injury
and/or property damage)
Act only with Fire and/or Theft

Fire and/or theft only
Motor Trade Policies
Internal Road Risk Policy
TYPES OFINSURANCE POLICIES

ACT ONLYPOLICY:
It is the minimum cover required under the motor vehicles act and provides compensation for
death and/or bodily injury and/or property damage to third parties out of use of motor vehicle
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in the public place for which the Insured is liable to pay. The extent of liability is as per the
Motor vehicle Act.
COMPREHENSIVE POLICY:
An Insurance policy which covers Accidental Damage to the vehicle involved in an accident along
with or in addition to the third party liability.
ACT ONLY AND FIRE AND/OR THEFT:
A restricted cover under comprehensive policy by which the insurer accepts to insure the risk of
Fire and/or theft only of the vehicle to be insured in addition to third party liability. This
decision is taken by the underwriter after considering the various factors such as make, model
of the vehicle, declinature of Insurance by previous insurers, past claims experience etc.
FIRE AND/OR THEFT RISK:
This cover is given if the vehicle to be insured is laid up in the garage of if it remains unused.
Laid up Vehicles:
Laid up vehicle is one, which is laid up in the garage and not in use for a period of 2 consecutive
months or more and not left for repairs due to an accident. Concession is provided for such
vehicles provided the period of suspension should not extend beyond 12 months from the
original expiry date of the policy. The lay up period will be counted from the date of surrender of
Certificate of Insurance.
MOTOR TRADE POLICIES:
Motor Trade policies are designed to extend the facility of Insurance to Motor vehicle
Manufacturer, dealer and repairer who deal with Motor vehicles that remain in their custody as
part of their trade. Trade policies are given to those who are authorized to have own trade
plates by Registered Transport Authority. This policy takes care of damage to the vehicle,
bodily injury to Third Party and third party death. This insurance is unlike to the normal motor
insurance policy given to the registered owner of the vehicle.
TRANSIT RISK INSURANCE:
This policy is issued to manufacturer or dealers. This policy takes care of transport risk during
the period of transit from one place to another. Usually the vehicles involved are un-registered
and uninsured under Normal Motor policy.
SCOPE OFMOTOR INSURANCE
Underwriters and insured mutually agree to the scope of the contract and other terms and
conditions such as
Insured perils
Conditions to the contract to be observed by the insured and the insurer during
the currency of the policy.
The value for which insurance is done.
Period of the contract of Insurance.
Period of the contract of insurance
Procedure to be followed in case of material alterations.
Rate of premium compatible with the risk covered.
Right of the insurers
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Duties of the insured
General exclusions (These exclusions cannot be deleted the breach of which
will render the contract void ab-initio)
Specific exceptions, which are outside the scope of the contract
Procedures to be followed in the event of claim
Termination of Contract.
INSURED PERILS
a) Fire/Explosion/Self Ignition or Lightning
b) Burglary, housebreaking or theft
c) Riot and Strike
d) Malicious Act and terrorism
e) Earthquake (Fire and shock damage)
f) Flood
g) Accidental external means
h) Whilst in transit by rail/road/inland water way/Lift or elevator or air
i) and slide/Rock slide
The expression whilst thereon means like the accessories insured must have been
on the vehicle at the time of Insurance as well as at the time of claim.
Accidental external means the happening of something unexpected or unforeseen
and it excludes loss arising from natural causes within. The word external refers to
outwardly visible. It means that what is not internal
Example: Loss or damage to the car due to overheating is not covered.
Self-Ignition: It appears to include the damage or loss caused by the internal
defect of the care, which is the direct cause for fire.
The term malicious damage is intended to include loss arising to the malicious act
of a third party and not the act of he insured. If it results from the insured, the act
becomes willful.
Accessories
Accessories are those items, which are not necessary for running of the vehicle,
but which the vehicle is required to carry with it under motor vehicles Act. This
will depend upon the class of vehicle and its use.
Example: Rear view mirror, crash guard
Electrical/Electronic Items
Electrical/Electronic Items refers for insurance purpose items that are fitted to the
vehicle in addition to those that is provided by the manufacturer of the vehicle
including accessories.
With regard to the details of perils for different type of vehicles, the student may
refer to the annexure and comparative charts.
Cancellation of policy
At the option of the insurer 7 days notice by registered letter to the insured at his
last mentioned address. The insured is entitled to refund of premium for
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unexpired period and the insurer retains the premium for expired period
proportionately.
B. At the option of the insured 7 days notice and the insured is entitled or refund of
premium on the number of days unexpired and the insurer will retain the premium
for the period in which the risk was in force more than proportionately on short period basis
provided no claim has been preferred by the insured.
No cancellation is allowed if the ownership of the vehicle is transferred to the new
owner unless the evidence of from policy for the vehicle is produced. Transfer of policy in the
event of the death of the Insured .The policy will lapse after 3 months from the date of death of
the insured or until the expiry of the policy whichever is earlier.
a. Otherwise, the legal heirs can get the policy transferred subject to their
application with
Death certificate of the insured and legal heir ship certificate
Proof of title to the motor vehicle
Copy of the policy
b. Insurance company reserves its rights to abide by any order of the court, with
regard to declaration about the legal heirs and ownership of the vehicle and the nominee will
not have any right to the order of the court.
Transfer of Policy in case of change of Ownership

The policy benefits stand to accrue to the buyer of the vehicle once sale consideration is paid
and suitable endorsements made in the certificate or registration provided the transfer of
insurance from the original owner to the new owner ought to be done within 15 days of sale, as
per Motor Vehicle Act, if not done the accidental benefit to the damage or loss of the vehicle is
forfeited on the 16th day itself but the Act is generous towards third party liability.
Premium : The contract of insurance comes into force only when the consideration is paid by
the insured to insurer who promises to indemnify the insured in the event
of claim. It is a precondition that premium ought to be collected prior to the commencement
of risk upon which the promise of the insurer rests. The insurers can turn down the
liability if consideration is not paid prior to the occurrence of loss. The consideration so paid by
the insured is known as premium. The insurance act is very specific and emphatic the collection
of premium in advance to the commencement of insurance contract is an absolute necessity
and any breach in this regard will be termed as violation of act provision under section 64 VB, in
turn, the insurers can reject the claim if loss arises.
FACTORS THATDETERMINE THE QUANTUM OF PREMIUM

The amount of premium to be paid by the insured is depending upon various
factors.
a. Value of the vehicle
b. Additional accessories
c. Extra fittings like electronic and non electronic item
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d. Type of vehicle
e. Age of vehicle/model of vehicle
f. Zone where the vehicle is plying
g. Cubic capacity/seating capacity/gross vehicle weight
h. Perils covered
i. Combination of risks like comprehensive cover, third party and fire or theft or
c. fire and theft.
j. Past claims experience
The premium must be calculated in accordance with the premium computation tables appearing
in the tariff separately for different types of vehicles.
Rate of premium is different for accidental damages to the insured's own vehicle
and liability risk to third party.
The insured cannot choose to pay premium only for accidental damages and he has
to necessarily take third party liability with accidental damage to vehicle; whereas,
the risk of third party liability can be separately taken and premium paid.
Premium payable on a policy is based on the value for which insurance is sought
and must be calculated in accordance with premium computation tables appearing
in the tariff.
ANNUAL PREMIUM :
As motor policies are annual policies, the premium consideration is collected for 365 days. It is
not permissible to insure for more than one year under motor insurance.
PRO RATA PREMIUM :
Under some circumstances, depending on provisions
made available in the tariff, premium is charged in proportion to the number of
days for which the risk has been in fore. Such premium is known as Pro rata Premium.
Situations where pro rata premium is charged
Due to the change of ownership of the vehicle, the insurance gets transferred
to the new owner. This may happen during the currency of the policy period
and the new owner may like to have the extension of policy period so that he
gets an insurance policy for note more than complete 12 months. The insured
can get such extension of policy with a suitable premium for additional period
of insurance without letting the insured to have a revised policy for a period
more than 12 months.
ii. Some insured desire to revise their policy period to coincide with the financial
year or assessment year
iii. When the insured desires to enhance the value of vehicle during the currency
of the policy in order to cope with the market value.
iv. Any additional extra items like electronic or non electronic items
subsequently fitted in the vehicle can be added to the value of the vehicle
insured during the currency of the policy with suitable additional premium
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v. Sometimes insured may desire to reopt the extraneous perils like earthquake,
flood, riot & strike during the currency of the policy which he had originally
opted out by enjoying reduced premium.
SHORT PERIOD PREMIUM :

There are occasions where the insured needs
insurance for a period less than 365 days. Such facility is allowed but the insured
has to pay the premium on short period basis. The premium for short period is
slightly higher than the regular premium-rating factor. It means policy for short
period is more expensive than normal annual policies.
Situations under which short period premium is collected
When the policy is issued for a period less than 12 months
When the policy is cancelled at the request of the insured.
REMIUM REBATES :
The insurer recognizes the merit of claim free clients and the premium for renewal period is
reduced by way of bonus. The bonus is rewarded on premium for the value of the vehicle and
not on premium for third party liability.
Tables of no claim bonus are provided in the tariff for different category of vehicles.
This discount goes with the insured and not with the vehicle i.e., if the vehicle is
sold, the new owner is not eligible for the no-claim bonus. However, the previous
owner can substitute the discount for any new vehicle, which he may purchase
during three years from the date of transfer. In case if the vehicle is sold to spouse
or children or parents, the discount passes on to such persons. Similarly, if a vehicle is used or
operated by an employee for an institution and the same is transferred to him at a later date, he
can avail and no claim discount. For persons coming abroad, discount can be allowed provided
he produces a letter to that effect that he is eligible for the discount, within three years from the
expiry of the overseas policy.
In case of renewals, the no-claim discount can be granted to the insured only if he
renews his policy within 90 days.
VEHICLES USED IN OWN PREMISES AND CONFINED SITES :A reduction

in premium is allowed if the vehicle is not licensed for road use and used in own
premises where public have no access to. Similar discount is allowed for goods
carrying vehicle, which need not be registered, and which are used in confined
sites where public has no access.
VEHICLES SPECIALLY DESIGNED FOR HANDICAPPED PERSONS :

A Discount in premium for vehicles, which are specially designed for and used, by
handicapped persons and institutions engaged exclusively in the service for
handicapped and mentally retarded, of course, as per the provision of the MVact.
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AUTOMOBILE ASSOCIATON MEMBERSHIP :
If the insured is member of a recognized automobile association, a discount of 5% shall be
granted subject to a maximum of Rs.50/- for Two-wheelers and Rs.100/- for Private cars.
VOLUNTARY EXCESS DISCOUNT :

Some insured desire to avoid preferring insurance claims to the extent, which can be borne by
them within their financial limits. This is called Insured bearing first portion of each and every
claim arising out of accident. The premium is reduced based on the quantum chosen by the
insured as per tariff.
Personal Accident Insurance :

Insured choose to take personal accident policies for the occupants of the vehicle including
owner and driver. The additional premium is being charged based on PA table selection. It can
be given for unnamed occupants too. Premium for Increased liability against third party
property or unlimited insurance for legal liability.
COMMENCEMENT OF RISK :
The risk commences immediately on the issuance of insurance policy. The details of policy and
what it contains are given as under.
Policy:
Policy is a stamped document, which forms the evidence of contract of Insurance. In the event
of dispute, the terms and conditions embodied in the policy are referred to in the court of law.
Policy issued by Insurance companies has the following sections:
The Preamble clause:
This clause introduces the parties to the contract namely the Insurer and the Insured.
The Recital clause: Recital clause expresses what is agreed between both parties
and narrates the period of Insurance and about the consideration.
The Operative clause: The operative clause speaks about the perils covered,
exclusions and General exceptions.
The Schedule: This clause talks about the subject matter of Insurance covered
along with terms and conditions applicable to the policy.
The Attestation clause: This specifies the duly constituted authority to issue
policies, namely the authorized signatory.
The above are the various sections that are common to Insurance Policies.
In line with the above, Motor Insurance policy deals with the following sections:
·The parties to the contract namely the Insurer and the Insured.
·The perils covered under the policy
·Specific exclusions
·General Exceptions
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·Conditions
The perils covered, exclusions, exceptions and conditions for different type of
vehicles of a Motor Insurance policy is shown below in the form of comparative
chart and the policy forms are available in the form of Annexure for ready
reference.
Termination of contract
A contract of insurance can be terminated on the following circumstances
At the option of the insurer
At the option of the insured
Double insurance
If it comes to the knowledge of the insurer or the insured finds that there are two co
existing policies for the same vehicle for the same period, the one which was taken
first remains and the next policy gets cancelled and the premium is refunded by
retaining a nominal amount towards administrative and document expenses.
Retention of minimum premium is necessary in the event of cancellation to take
care of administrative expenses.
CONCESSION FOR VEHICLES LAID UP

If a vehicle is laid up in garage and is not put to use for a continuous period of more
than 2 months, the liability of the insurers under the liability risk section of the
policy is suspended for such period and a concession is given to the insured. The
concession is given in two forms and the insured can chose whichever he wants.
a. Prorate refund of premium for such period. This refund is granted in the form
of credit and not as cash i.e., such refund can be adjusted against the premium
for subsequent renewal.
b. The policy period can be extended after the expiry of the policy for a period
equal to the period of such lay up.
Under Accidental Damage section – The cover is suspended for the period during
which the vehicle is laid up in garage and not in use and
a. Restricted cover for fire and/or theft is granted for the period of lay up and a
refund of premium on pro rata basis is made after charging a premium for the
restricted cover. Again the refund is on credit basis and not cash.
b. As an alternative, the insured can extend the policy period after the expiry of
the policy for a period equal to the period of lay up.
c. A notice in writing must be given to the insurers regarding the lay up and the
certificate of insurance must be surrendered.
d. Such lay up of vehicle must not be meant for repairing the vehicle.
The period of suspension of cover shall not extend beyond 12 months from the
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expiry date of the policy.
FORMS OF LOSSES
·Direct loss and/or damage to the Insured vehicle resulting from accidental
means caused by insured peril proximately.
·Indirect loss and/or damage (Third party Liability) Indirect loss and/or
damage to the insured by legal liability.
1. Direct Losses and or Damage: It refers to physical loss of the property i.e.
vehicle by way of theft or visible physical damage to the vehicle due to
accident.
2. Indirect Loss and or Damage: As a result of accident, the owner of the vehicle
may be made legally liable to compensate the third parties for their death
and/or bodily injury and/or property damage. Such compensation is called
“Liability” arising out of use of vehicle in public place. It means the insurers
meet the legal liability payable by the insured to a third party due to accident.
Third party means any person other than the Insured and the Insurer:
Liability means “The amount of financial compensation legally payable by the
insured to the third party”.
Public place means “According to Section 2(24) of MVAct, it is a road, street, way
or other place, whether thoroughfare or not, to which the public have a right of
access and includes any place or stand at which passengers are picked up or set
down by a stage carriage”
Example:
A. Motor car sustains damages by hitting against a compound wall of another
person and in the process resulted in the death of a pedestrian. Before arrival
of police on the scene, the stereo was also stolen.
In the above case:
Direct loss and/or damage : (i) Damage to vehicle (ii) Loss of stereo
Indirect loss and/or damage of Third Party liability : (i) Death of the pedestrian (ii)
Damage to compound wall
From the past experience, a few instances of proximate causes are given as under
A. Damages to vehicle whilst attempting to save a cyclist or pedestrian
B. Damages resulting from bursting of tyres
C. Damages resulting from mechanical breakdown
D. Damages to vehicle due to skidding in the heavy rain
E. Small vehicles hit by over speeding heavy vehicles
F. Vehicles damaged whilst in the parking place
G. Accidents due to animals
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H. Damages due to poor visibility due to fog and bad roads.
I. Overturning by hitting trees or parapet or road dividers and other stationery objects
J. Accident to vehicles due to pits on sides of the road by public Authorities.
DUTIES OF THE INSURED

Duty of the assured to do his best to avert/avoid or minimize loss.
This duty arises from the duty of good faith he owes to the insurers and more
usually from the express conditions of the policy.
ii. If accident caused by fire or collision or any external means, he must take such
measures as are reasonable to extinguish fire or to prevent further loss by
removing the vehicle to nearby safer place.
iii. He is not to interfere with the efforts of other persons engaging in helping to
reduce or minimize loss.
iv. For that purpose he should take steps to remove the vehicle insured to a place
of safety unless he finds that all hope to save it useless.
If his failure to perform these duties is willful, it may be an evidence of fraud

disentitling him to recover anything on the policy.
It has become an absolute necessity that the insured complies with the
conditions imposed by the insurer, which are embodied in the policy form.
The Duties of the Insured prior to the occurrence of loss

He should take reasonable steps to safeguard the vehicle from any loss or
damage and act as if uninsured
The Insured should maintain the vehicle in the most efficient and roadworthy
condition.
The company as at all times, shall be at liberty to inspect and examine the
vehicle or any part of the vehicle and also any driver or employee of the insured.
After the occurrence of accident

It is the duty of the Insured to exercise care and concern in the event of
accident and also at the time of break down of the motor vehicle.
The Insured should exercise due diligence and precautions to ensure that the
damaged vehicle is immediately attended to so that the aggravation of further
loss and deterioration to the damaged vehicle is prevented and avoided.
Any aggravation of damages due to non-attendance, non repairing the
damaged vehicle or driving the vehicle without repairing the damages
amounts to failing from the duties of the insured. The insured is solely
responsible for such lapses and will be made to bear the loss or damage.
Notice of loss to be given immediately to the insurance company.
The insured should extend all the assistance and necessary information with
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regard to the claim
All legal documents such as letters, writs or claims, summons received should
be immediately forwarded to the insurance company
Notice shall be given with regard to any prosecution, inquest or fatal inquiry
to the insurance company
Insured should lodge FIR with police authorities with regard to theft or
criminal acts, which may lead to claim.
Insured should also co-operate with the insurance company in securing the
conviction of the offender.
Legal Proceedings
a. In case there is any contributory negligence with regard to third party claims,
insured should not make any admission, offer or promise for payment of
indemnify to any third party without the consent of the insurance company.
b. If necessary, the insurance company will conduct the defense in settlement of
claim/legal proceedings/prosecution on behalf of the insured. The insured
should extend all assistance and co operation to the insurance company.
Settlement of the claim at the option of the insurer

Insurance has the option to either allow the insured to repair the damaged
vehicle or reinstate the damaged parts or replace the motor vehicle or its
accessories. The payment may be made by cash.
The insurance company will pay for the loss or damages and also the
reasonable cost of fitting such damaged parts (labour charges)
Such payments shall not exceed the sum insured (which is estimated value of
the vehicle chosen by the insured at the time of taking policy or renewal
provided the market value of the vehicle including accessories is not less than
the estimated value of the Insured.
Application of principle of contribution due to Double Insurance in the event of

claim
In case of double insurance, the insurance company will only pay its ratable
proportion of the loss or damage or any compensation or cost or expenses.
In case the insured is having more than one policy for the same vehicle with
two different insurers each insurer will pay only in proportion to their Sum Insured.
Reference to Arbitration in respect of Dispute admissible claims with regard to

quantum difference
In case of dispute regarding quantum of loss or damage where the insurers
admit liability, such disputes shall be referred to Arbitration. Arbitration
proceedings are discussed in details in the next chapter.
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Time Limit for filing Suit in the Court of Law
If the Insured fails to prefer any claim within twelve calendar months from
rejection of liability in the Court of Law, the insured loses the rights of
remedy.
Observance and fulfillment of terms and conditions of the terms and conditions of
the policy
Since the policy terms and conditions are given in the policy based on the true
information and details given by the insured to the best of their knowledge the
insured is bound to comply with the same; and such compliance shall be the
condition precedent to any admissible liability under the policy. The contract
of insurance of insurance is subject to implied and express conditions, which
expects the insured to observe the conditions precedent and conditions subsequent.
Common Exclusions that are applicable to all types of vehicle in the event of claim
A.Geographical Area: If the vehicle sustains damages or the vehicle is lost and
if any liability is incurred, that should have been only due to an accident that
takes place within India.
B.Contractual liability is excluded
D.No insurance claim is payable if

i.The insured violates the condition of limitations as to use
ii. If the vehicle is driven by any person other than the driver whose name if
any is specified in the policy
The insurers will pay only for the resultant damages or less in consequent to
the accident and not for consequential loss that may arise due to the non usage
of the vehicle, like
i. Rent for alternate care
ii. Loss of earning whilst the vehicle is in the garage for accidental repairs.
e. No liability arising directly and indirectly or contributed by ionizing
radiations, or contamination by radioactivity from any nuclear fuel or nuclear
waste from the combustion of nuclear fuel.
f. Damage caused by nuclear weapons material is not admissible
g. No claim due to war, warlike operations
h. The act of terrorism is excluded.
Role of a Surveyor
Surveyors are being authorized and placed in different categories depending on
their professional qualifications and their special competence gained by
experience. Once they are empanelled, their services are being utilized by
insurance companies operating in India in different fields of working. They play a
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very vital role in the insurance field not only prior to the acceptance of risk but also
after the occurrence of loss. Insurance companies are utilizing the services of
surveyors for pre inspection of major risks and on the assessment of insurance
liabilities. The remuneration depends on the quantum of assessed admissible liabilities of
insurers.
Any Association or group or a firm or an individual can become surveyors
provided they have competence in the field like Chemical Engineering,
Automobile Engineering and Chartered Accountancy etc.
What is expected of surveyors?

1. They should develop their product knowledge or insurance based on their
specialization and keep on updating the changes.
2. They should be highly competent in handling the assignments given by
insurers and be helpful both to their insurer and the insured.
3. They should be neutral, unbiased and free from prejudice in their approach
towards the customers while handling the claims
4. Their attitude should be polite and the decision should be firm in respect of the
assessments and should avoid the style of rudeness towards the customers.
5. He should exercise due diligence, care while assessing the Quantum of
liability and in the process the concern towards the interest of the policy
holders should not be lost.
6. THE DUTIES OF THE SURVEYOR SHOULD BE DISCHARGED
SCRUPLOUSLY and the honesty and integrity should be maintained at the
highest degree.
7. THE SURVEYOR SHOULD REMEMBER THAT HE IS INDEPENDENT
and his role is indispensable to ensure that the promises of both parties are fulfilled.
FUNCTIONS OF SURVEYORS IN MOTOR INSURANCE

1. The job of the surveyor begins as soon as the allotment of survey is done by
Insurance companies. He should collect the necessary work allotment for
each job along with claim papers such as claim intimation letter of the insured,
Estimate of the repairers submitted by the insured and relevant policy copy.
2. The surveyors should immediately reach the spot of accident and advise the
insured to remove the damaged vehicle to the safe place or reputed repairers
workshop.
3. He should assist the insured, if necessary to lodge the FIR and produce the
vehicle to the RTO authorities.
4. He should take necessary photographs of the damaged vehicle
5. He should ascertain the actual cause of accident and the extent to which parts
are damaged.
6. His primary duty is to estimate on his own the likely expenditure towards the
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cost of Labour (Removing the dent, painting etc.) and cost of parts to be
replaced, if required.
7. The surveyor should negotiate with the repairers and accurately decide the
quantum of liability without letting the repairers to manipulate the cost of
repairs by inflating the bills and also estimating the parts for replacement,
which are repairable at a minimum cost.
8. The surveyors should justify that the cause of the loss is due to insured peril
and the extent of damage is in conformity with the nature of accident that took
place.
9. The Surveyor should conduct the survey at the repairers' workshop
immediately and permit the repairers to dismantle the vehicle in the presence
very carefully to find out the external and internal damages, if any.
10. There should not be any communication gap between the surveyor and the
repairer as well as surveyor and the insurer.
11. The surveyor should keep the insurers informed about the developments of
the claim periodically and keep the insured posted about what he has
discussed with the repairers with regard the accidental repair works to be
carried out.
12. He may have to verify the bills of the parts to ensure the avoidance of inflated
bills by the repairers.
13. The surveyor should finalize his report with regard to the admissible liability
in respect of cost of repairs, Labour charges, replacement of parts and the
value of salvage. He should ensure that the report is concluded after re
inspecting the repaired vehicle so as to confirm that the repairers have actually
carried out replacement of new parts and other repair works as agreed by
repairers.
14. The report should be submitted with his due recommendations confirming the
genuineness of the claim, the authenticity of proximate cause (cause of loss),
and verification of vehicular records.
15. His report should be submitted at the earliest so that the insured does not suffer
under any circumstances for want of financial assistance.
DUTIES OF THE INSURER
Verification and Recording of claim: It is the foremost duty of the insurer immediately when a
claim is reported to verify
a. Whether the vehicle is insured or not
b. Whether the premium is paid in advance before date and time of accident
Whether the policy is in force or not
c. This is to ensure that the loss falls within the policy period.
d. Whether the loss and/or damage is caused by an Internal Peril as described in
the policy.
Once he is satisfied on the above aspects, the insurer will proceed to register the
claim and issue a claim form to be insured.
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Appointment of Surveyor
On obtaining the completed claim form from the insured along with the “Estimate
of repairs” the insurer appoints the surveyor to assess the nature, cause and extent
of loss and/or damage. The surveyor is appointed based on competence, expertise
and experience in the field in which he is to undertake the survey preferably an
Automobile Engineer.
Collection of Documents
The insurer then collects vehicular records depending upon the type of vehicle lost
and/or damaged due to an accident. It is mandatory on the part of the insurers to
fill the “Supplementary to the claim form” statement the particulars extracted after
verifying the original vehicular records such as Registration Certificate, Driving
License, Permit, Trip sheet etc. depending upon the type of vehicle for which claim
is lodged. He collects reports from external agencies such First Information
Report and Fire Brigade Report depending upon the circumstances of the accident
and/or loss
Liaison
The insurer should liaison with the insured informing him to cooperate with the
surveyor to submit the documents required by the surveyor in order to release his
survey report and at the same time keep in touch with the surveyor to submit his
report after satisfying himself with all aspects of the claim. The position of the
claim their requirements and developments are clearly communicated to both the
insured and the surveyor.
Compliance
The insurer will ensure that the insured has complied with all the conditions under
the policy and fulfilled his duties prudently as if he is uninsured.
Valuation
The insurer obtains the survey report and evaluates his liability taking into account
the survey report and bills submitted by the insured. He will see all aspects of the
claim with regard to depreciation applied by the surveyor, excess and more
importantly the Salvage value of the damaged parts/vehicle. After fully satisfying
himself about the genuiness reasonableness and compliance with terms and
conditions of the policy the claim is processed and recommended for settlement.
Updating of Records
Once the claim is approved for payment by the competent authority, the claim is
settled and proper entries are made in appropriate registers.
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Methods of claim settlement
Types of losses
Partial loss
Total loss
Partial loss
Accidental damage to the vehicle
ii. Theft/loss of accessories or parts of the vehicle
iii. Additional expenses like towing and spot repairs.
When vehicle sustains damages in an accident and the insured incurs the
expenditure in order to repair the damaged parts of the vehicle in addition to the
towing charges to the repairer shop which is less than the insured value of the
vehicle under the policy, the loss or damages fall under the partial loss.
Example: Cost of repairs
cost of parts replaced
Labour charges towards painting and replacing the damaged parts
Cost of removal from the Accident spot to the repairers workshop
Total Loss
There is a total loss when the insured vehicle is stolen by somebody or the vehicle
is so damaged that it cannot be repaired without incurring expenditure more than
the sum insured or the vehicle is so damaged that the damaged value of the vehicle
be as of no value, such losses fall under Total loss.
The insurance company practices different modes of claims settlement depending

upon the nature of claim, extent of repairs and the market value of the vehicle on
the date of accident.
MODES OF SETTLEMENT
Repair basis
Total loss basis
Cash loss/salvage less loss basis
A. Repair basis
The surveyor ascertains the total internal and external physical damages to the
vehicle and identifies the nature of damages, cause of accident and then
determines the extent of damages.
Once the surveyor is satisfied with the geniuness of the claim taking into
account the cause of accident, the perils insured, he arrives at the cost of
repairs, cost of replacement of parts and the salvage value. He then discusses
and negotiates with the repairer to arrive at a consensus and authorizes the
repairers to carry out the repair work relevant to the accident.
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Under this repair basis, the insured should bear a portion of the repair cost for
depreciation which is based on the age of the vehicle finding place in the
policy. The surveyor suggests the settlement of claim on repair basis only
when he is satisfied that the quantum involved in economical in comparison
with that of market value and sum insured whichever is less.
The insured is required to submit the relevant bills for cost of labour, the cost
of parts and the cost of removal from the spot of accident to the repairer's
workshop. On submission of bills and surrendering of salvages to the insurer
the claim will be processed and settled.
The settlement of claim under repair basis fall under partial loss as the repair
liability of the insurer less than the value insured.
Total loss basis
Under many circumstances, the insurance company may opt to make over the
damaged vehicle if the claim on repair liability found to be on the higher side,
uneconomical as compared to the market value under this basis.
The insurer may have to incur additional expenditure like garage charges; cost
of disposal in the form of advertisement, auction charges and/or sales charges
and total insured value may be paid, if it is less than the market value just prior
to the loss.
In case the vehicle is lost by theft, the market value of similar vehicle, same
type and model or sum insured, whichever is less.
Cash loss or salvage less loss basis
This is a kind of settlement when the insured chooses to retain the damaged
vehicle and insists for immediate payment based on the cost of repairs. The
insurance company ascertains the resale value of the damaged vehicle (on as
in where in condition) and pays the difference between the market value of
similar undamaged vehicle as on date of accident and the market value of the
damaged vehicle. Such repair cost is restricted to 75% of the admissible
claim on repair basis in respect of cash loss basis.
The insurance company chooses one of the above three modes of settlement
which ever is more economical
Example
Maruti Esteem model 2002 met with an accident
Sum insured of the vehicle is Rs. 5, 00,000/-
The market value on the date of accident is Rs. 4, 50,000/-
The cost of repairs …………. Rs. 4, 00,000/-
a. Cost of labour is - Rs. 50,000/-
b. Replacement of parts Rs. 375,000/-
Less salvage: Rs. 25,000/-
The resale value of the damage vehicle is Rs. 2, 00,000/-
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SETTLEMENTOF CLAIM ON REPAIR BASIS
1. Repair basis: Rs. 3, 75,000/-

2. Total loss basis: Market value Rs. 4, 50,000/-
Less Resale value of the
Damaged vehicle Rs. 2, 00,000/-
AddAdvertisement expenses Rs. 5, 000/-
Add Garage expenses Rs. 10,000/-
Net Liability Rs. 2, 65,000/-
3. Cash Loss basis

Market value Rs. 4, 50,000/-
Less: Resale value of
The damaged vehicle Rs. 2, 00,000/-
Net Liability Rs. 2, 50,000/-
Cash loss settlement is more essential than the other two modes of settlement
which is Rs.3, 75,000/- and Rs. 2, 65,000/-. Whereas under cash loss settlement
the amount is Rs. 2,50,000/- which is almost less than 75% of the repair liability
(i.e. 75% of 3,75,000/- = Rs. 2,81,250/-)
In case if the insurance company settles the claim on total loss basis and takes over
the damaged vehicle for disposal, the resale value of the damaged vehicle may not
be the same as on date of damage to that of resale value on the date of settlement,
because the damaged vehicle may further deteriorate in kind and value.
It is noteworthy to mention that there is a special clause known as “Excess” clause,
it means that the amount that will be specified in the policy and any claim in excess
of that amount will be the liability of the insurers, which may be voluntarily chosen
by the insured or imposed by the insurers compulsorily. In respected of the above
referred claim, if the excess is Rs. 10,000/- net liability will be reduced to the
extent as though Rs. 10,000/- is the insured's first bearing portion.
VEHICULAR RECORDS
Requirements of documents in the event of claim
Two Wheeler (motor cycle/scooter/mopeds)/private cars
Registration certificate:
It is a certificate issued by the computer authority confirming ownership of the vehicle in whose
name the vehicle stands registered.
The ownership of the vehicle lies with the person whose name has been mentioned in the RC
book. The vehicle should bear the registration number in both front and back and the Regional
Transport Authority is the competent body to issue the Registration certificate. The Registration
certificate will carry in it the name of the Registered owner and vehicle particulars such as
Registration Number, Engine Number, Chassis Number, Make, Model, Color of the vehicle, Cubic
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Capacity, carrying capacity etc. Any financial interest in the form of Hire purchase or
Hypothecation will be included in the R C book.
Driving license: Driving License means License issued by the Competent

Authority namely Regional Transport Authority authorizing the person specified
therein otherwise than as a learner to drive a specified class of motor vehicle. The
Drivers License contain particulars such as Name of the Driver and his address,
age, validity period of license and the class of vehicle he is entitled to drive.
A Driver should hold a valid Driving License at the time of accident. A valid
license means “Any person holding a permanent Driving License Other than
Learners License) in force and is not disqualified from holding such license.
Driving License is required in all claims involved in accident except for the
following circumstances,
o For parked vehicles
o Theft or Burglary of the vehicle
Taxation book:
It is mandatory for all vehicles plying on the public place to pay the prescribed Road tax to State
Government. The Road tax can be paid on quarterly, half years or Annual of life time which is
entered in the RC book of the respective motor vehicle. Aclaim is admissible only if Road tax is
paid in full as on the date of accident. Certificate of Insurance in force is a must for RTO
authorities to accept tax. In case of stolen vehicle the payment of road tax may be waived.
Documents required in the event of claim for Commercial vehicles
1. Registration Certificate
2. Driving license
3. Taxation book
4. Fitness certificate
5. Permit
6. Trip sheet
7. Weigh slip/load challan
8. First information report (FIR)
Fitness certificate:
Fitness certificate is a certificate issued by Regional Transport
Authority confirming that the Vehicle is in Road worthy condition to ply on the
public place.
CFX form – cancellation of fitness:
When a commercial vehicle meets with an accident, the Motor Vehicle Inspector
inspects the vehicle on the spot and issues a CFX (Cancellation of Fitness) report
which means the fitness of the vehicle is suspended temporarily till the repairs to
the vehicle is carried out by the owner of the vehicle. Once the vehicle is repaired
the vehicle is to be shown to the RTO Authorities and Fitness Certificate will be
revalidated.
Permit:
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Permit is a document issued by a Competent Authority specifying the
boundaries or limits upto which the vehicle is authorized to ply in a public place
and also the nature of goods it can carry. The permit contains details such as Name
and address of the holder of the permit, Area of operation, goods permitted to be
carried, and validity period of permit.
Example :
The area of operation can be limited by the type of permit whether
National permit or State permit, public carrier permit or private carrier permit, or
stage carrier permit or contact carriage etc.
Separate permit is issued for vehicle carrying inflammable materials.
Trip sheet:
It is a document to be prepared for every trip undertaken by the vehicle
whether it is Goods Carrying or Passenger Carrying Vehicle.
It is a Log book stating the particulars of goods carried or passengers travelled
according to the type of vehicle. Trip sheet has to be closed on daily basis and also
on trip to trip basis.
Claim form:
Claim form is issued by the insurer to the Insured immediately when
a claim is reported. Issuance of claim form does not mean acceptance of Liability.
The claim form should be duly filled in by the insured in all respects. The claim
form contains details such as Insured particulars, vehicle particulars, Details of the
driver', Place, time, cause, nature and extent of damages, Details of third parties
involved in the accident, witness and also whether the accident was reported to
Police.
The details required in the claim form are vital in deciding whether there is liability
for the insurers and hence it has to be filled in, clear legible and descriptive manner
to the extent possible
Estimate:
The insured should provide a detailed quotation as to the number of
parts to be replaced or repaired, along with the cost and Labour charges from the
repairer to whom the vehicle is to be entrusted for repair. This forms the basis for
arranging survey.
Documents required for theft claim
1. First Information Report: First Information Report is report given by the

Police Authorities based on the statement given by the Insured or his
representative immediately after the occurrence of the theft. The case is
registered in CR Diary under Indian Penal code and the report given is the FIR
which is one of the proofs of the occurrence of the theft.
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2. Non-Traceable Certificate:When the vehicle is not traced after a reasonable
period of reporting the theft, the Police Authorities issue Non-Traceable
certificate in their prescribed format stating that the vehicle is undetectable.
3. Final Investigation Report : The police authorities will finally prepare a

Final Investigation Report stating that the vehicle is un-detectable obtaining a
certified copy of the order passed by the Court accepting the report. The
Insured should produce a copy of the Final Investigation Report to the insurer
during the settlement of the claim.
4. Letter of Subrogation: The insurer established his right by getting the rights
of the insured transferred to him by executing a bond in non-judicial stamp
paper called Letter of Subrogation. The letter has to be executed by the
insured immediately on acceptance of liability by the insurer. This Letter of
Subrogation is normally executed for theft claims after payment of the claim
to the Insured where the Insurer has right over the vehicle stolen when
recovered at a later date.
Though for accidental damage claims the insurer has a Subrogation Right to sue
and get reimbursement from the negligent party it is not enforced due to the
presence of Knock for Knock Agreement.
Original Vehicular documents along with all the keys pertaining to the vehicle
have to be surrendered.
ARBITRATION :
Arbitration shall be conducted under and in accordance with
the provision of the Amended Arbitration Conciliation Act, 1996.
Only when a claim is admitted : In case any dispute or difference of opinion
between the insured and the insurers as to the quantum of claim to be paid under
the policy, the matter can be referred to Arbitration. Such facility is available only
in case of admissible liability.
Rejected claim cannot be referred to Arbitration :
In case insurance company has disputed or not admitted the liability in respect of any policy
issued due to technical reasons, the matter of dispute shall not be referable to arbitration.
Arbitration Proceedings :The difference as to the quantum of admissible claim
shall be referred to the sole arbitrator who will be appointed in writing by both the parties.
I
f they cannot agree upon a single arbitrator within 30 days, any party invoking
arbitration, the matter will be referred to a panel of three arbitrators comprising of
two arbitrators, one appointed by each party to the dispute or difference.
The third arbitrator has to be appointed by such two arbitrators and arbitration
shall be conducted under the Act.
Award by Arbitrators :
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The right of action or suit upon the Insurance policy can be taken only when the award by such
arbitrators with regard to the quantum of loss or damage is obtained, it means it is a condition
precedent that the award should be,obtained first and then only right of action or suit upon the
Insurance policy shall lie.
IN CASE OF REPUDIATED CLAIM :

When a suit in the court of law is not filed within twelve calendar months from date of
insurance company disclaiming the liability to the insured, It is considered for all purposes that
the claim is deemed to have been abandoned or given up by the Insured, In which case no
amount isrecoverable by the insured from the Insurance company there after.
RELEVANCE OF MATERIAL FACTS IN THE EVENT OF CLAIMS :It has

become an absolute necessity that the insured declare all information that is
needed by the insurer in the proposal form and that only influence the admissibility
of claim.
We have already seen the relevance of material facts. It is open to the Insurance
Company to allege and prove that the policy give rise to a claim which was
obtained by non-disclosure of relevant material facts or by representation of a fact
which was false in some material and contract of Insurance becomes consequently
void ab-initio.
The policy was obtained by fraud; the policy becomes void from the inception. A
plea under this clause cannot be disallowed on the ground that in spite of the
alleged misrepresentation, the policy was not cancelled by the insurers.
The following are considered to be material facts which warrant special attention:
·
·Warranty that the vehicle would be driven by a person who has been
convicted of motoring offences.
·Previous refusals of other insurers to insure the vehicle
·Allegation that the policy was obtained after the accident in collusion
with other persons.
KNOCK FOR KNOCK AGREEMENT:
The Knock-for Knock agreement is in agreement entered into among the Insurers writing motor
insurance. The agreement provides that in the event of damages caused by collision or attempt
to avoid collision between two vehicles, the Insurer of each vehicle will bear his own
loss within the limits of his policy, irrespective of legal liability and will not
enforce his subrogation rights, if any against the other insurer. Points for Mental revision
Accident – Legal liability to third parties
Third party claims

KNOCK FOR KNOCK AGREEMENT
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We have seen how “Tort” gives rise to Liability towards Third parties.
Tort modified in India in the form of ·Workmen's Compensation Act: According to the Act, if any
Employee dies or is injured during the Course of Employment, the Employer is liable to pay
compensation.
·Employees liability Act
·Fatal Accidents Act
·Motor Vehicles Act
What is Third party liability?
The insured becomes legally liable to any third party for bodily injured or death
that has arisen due to the use of his motor vehicle in the public place. What is that,
that can be claimed from the Insurance Company is the financial liability payable
to a third person other than the insured and the Insurer.
MACT:
Third Party claims are usually adjudicated by the Motor Accident Claims
Tribunal (MACT). The MACT is a statutory body set up under SECTION 110 of
the Motor vehicles Act, The claimant has to move the Tribunal within a period of 6
months from the accident. Summons received from the Tribunal should be
accepted and defense has to be entered on time.
It is not necessary that the Third Party claim should be settled only after the MACT
gives its award. A compromise may be a solution for settlement. As a matter of
fact, many claims of litigation expenses of the Insured.
Avoid the misstatement of age of the vehicle
To defend a claim in MACT or to negotiate a claim for a compromise settlement

we have to collect a large number of facts. In getting information in the actual
negotiation the Investigator can play a very useful role as a part of his duties.
MACT Tribunals are not conferred any extraordinary power than what is vested
with the courts under law of torts. The job of the MACTis only to expedite speedy
settlement of third party claims. Of course, the settlement of claim under MACT
is subject to the terms and conditions of the Insurance contract and M.V. Act
Provisions.
LOK ADALAT: Lok means “People” and Adalat means “Court”. So Lok Adalat
is formed for quick justice and speedy disposal of claims for Road accident victims
whose cases are pending in MACTand other property and civil suit.
With relevance to Motor Insurance Lok adalat plays a significant role in dealing
with cases pertaining victims of road accidents before Motor Accidents Claims
tribunal.
Cases are taken up at Lok Adalat only if at least one hearings is over in MACTare
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Court. The Insurance Company before taking up the cases before LOK ADALAT
will ensure negligence of the Motorist is evident and all documents in support of
the claim are in order because the claim placed before the Lok Adalat cannot be
withdrawn.
The decision of the Lok Adalat does no have a legal binding on both the parties and
need not be accepted by either of the parties. But in principle it is accepted as
effective system to negotiate and arrive at a Amicable settlement acceptable to
both the parties.
Once the settlement is effected it is binding on both the parties and is generally
acceptable by the Tribunal. Thus Lok Adalat has helped in clearing a lot of cases
pending before MACT thereby helping the petitioner in getting a reasonable
compensation and also helps Insurance Company to uphold their image as a
provider of social security.
LIABILITY TO THIRD PARTIES
1. The Liability should arise, due to an accident caused by the use of Insured
vehicle anywhere in India.
2. The Insurance company will indemnify the Insured for all sums including
claimants cost and expenses for which the Insured should become legally
liable to pay
In respect of death of a person or bodily injury to any person and
Damage to any property of only third party
3. When the Insured incurs any cost and expenses with the consent of the
Insurers the same will be paid by them.
a. The Insurance Company will indemnify any liability that may arise due to the
driver, provided the driver observes and fulfils the terms and condition of the
policy and also the exception as though he is uninsured.
The company may at its option.
a. Arrange for representation any inquest or take inquiry in respect of any
death for which the insurance company will indemnify the insured.
b. Insurance company will take any proceeding to any court of law for any
lleged offence relating to any event that falls under the subject of
indemnity under the policy.
Types of Compensation
1. General Damages
2. Special Damages
General Damages:
General Damages are damages awarded by the court of Tribunal for pain, suffering
reduced earning capacity, inconvenience and loss of life.
The General damages will depend upon the state of injury, the Medical
examination, the X-ray test Medical evidence, pain in leg, leg gets swollen when
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the injured walks, unable to do heavy work, slight deformity in the legs for the
whole life.
SPECIAL DAMAGES : Special Damages is awarded to the Insured who is
hospitalized and medical expenses that are incurred and for financial loss of
income because of absence of someone to replace the injured to carry on business
or loss of income due to absence from duty this kind of damages will not prevent
much difficulty in assessing damages. Remaining without salary amount to
special damages, Loss of maintenance expenses if injured, earning at the time of
accident will also fall under the head special damages.
In the case of death:
In order to ascertain the quantum of damages in case of death the following criteria
should be considered by the Tribunal
Age and the health of the deceased when the accident was caused
The status of the deceased, his earning capacity and his contribution to the
family
The loss caused to the family by his death
The damage he suffers from pain and suffering and duration of the same of the
same,
Whether he died immediately or after the expiry of some days Loss of expectancy of life
COMPONENTS OF AN AWARD
1. The award contains the just compensation made by the tribunal
2. Specifies the person to whom the compensation to be paid
3. It specifies the amount, which shall be paid by the driver of the vehicle or
owner, insurer, involved in the accident or by all or any of them as the case
may be.
OMBUDSMAN
The hardships and expensive legal recourse available to individuals in the event of
delay in or dispute of quantum of settlement of a claim prompted IRDAto establish
an Independent Arbitrator – known as OMBUDSMAN
Ombudsman was established in November 1999 by IRDA to arbitrate insurance

related disputes for quick, low cost and prompt settlement of claims at the cost of
Insurance companies. Earlier to this the only options available to people were to
go to the Consumer Forum or Civil Court to settle their differences. The Ombudsman now has
representation in 12 different notified jurisdictions throughout the country.
Here the process is very simple. Any Insurance related complaint can be filed in
the notified jurisdiction. Ombudsman entertain complaints only on individual life
or non life policies, as long it is non commercial in nature up to an extent of Rs. 20
lacs. As an arbitrator, the Ombudsman has to take unbiased and independent
decision to ensure that the common man receives fair and just compensation from
the insurance company.
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How to file a compliant with Ombudsman:
1. Aletter in writing stating the facts of the case along with documentary proof.
2. Complaint to Ombudsman should be filed within 1 year from the date of
repudiation of claim by the insurer
3. Ombudsman will not interfere if the insured has already approached the
consumer forum or filed suit in Court of Law
4. Complaint should be filed with in the jurisdiction of the insured.
Role of Ombudsman:
1. On receiving the complaint, if Ombudsman finds a prima facie case, response
is sought from the insurer within 14 days.
2. If on receiving the petitioner's claim, the circumstances of the case,
documentary evidence and cross examination reveal that the claim of the
petitioner is fraudulent in nature, the claim is immediately dismissed.
3. Settlement is done in 3 ways.
Settlement on reference
Settlement following mediation
Settlement through mediation and award
Settlement through mediation, when the insurer contests the complainant's claim
Ombudsman investigate the complaint and gives suitable guidelines for settlement within a
month
After acceptance a copy is sent to both the parties. The parties must confirm
acceptance within 15 days. The Ombudsman directs the insurer to settle the claim
within 15 days. If the directive is not accepted by the insurer, Ombudsmen can
declare an award.
If company has credible alternative arbitration mechanism the IRDA can exempt
the insurance companies from the authority of Ombudsman, so far no insurance
has sought for such exemption.
Motor Third Party Insurance Pools
Public sector general insurance companies arbitrarily loading premium for
commercial vehicle act Insurance due to heavy incurred loss ratio
·Even most of the companies denied the act insurance for commercial
vehicle.
·Private insurance companies showed total avoidance towards
underwriting commercial vehicles act only policies.
·The federation of transport operators represented the matter to IRDA to
intervene and regulate the pricing structure. Also, to issue direction to
companies not to deny act only policies.
·Therefore IRDA has come out with an idea of Third Party Insurance
Premium pool.
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·Whereby all TPPremium of Commercial Vehicle (Both Act and Package
policies) pooled together and the management of pool vested with
General Insurance Corporation

a. ·GIC after retaining its statuary cession of 20% cedes the balance to all the
companies in the ratio of their gross direct premium.
b. ·Claims also shared on the same pattern.
c. ·The underwriting offices also get 10% procurement cost.
d. ·This pool arrangement encouraged all the companies including public
and private sector to accept commercial vehicles act only policies.
Indian Motor Third Party Insurance Pool [IMTPIP] which came into effect from
01.04.2007
a. ·GIC (Re) is the Pool Administrator
b. ·All registered General Insurance Companies in India dealing in Motor
will be members of the pool.
a. ·They shall collectively, mandatory and automatically participate in
pooling arrangement.
b. ·All operating offices of the pool members will underwrite pool business
and they receive 10% reinsurance commission on premium booked.
·The pool U/w liability policy only & liability portion of package policy
of all commercial vehicle segment. Business u/w by members w.e.f.
01.04.2007.
·Pooling mechanism is multi lateral reinsurance mechanism between u/w
insurer and all registered General Insurance Companies.
·20% ceded to GIC-Re as statutory session
·Balance 80% shall be shared by all members in the same proportion of
TGDP bears to Total Market GDPin respect of all classes of business for
that financial year.
·Underwriting business and claims settlement will be as per General
Insurance Council directives.
·All Insurers as leaders meet claims and other expenses, make
provisioning for claims, share the same with Co-insurers in pre agreed
ratio.
Conciliation process in Motor TPClaims
·Identify cases suitable
·Admissions of liability sec 64 VB/DL/Permit/FIR/Investigation
confirming accident/ Income/ Dependency / Factor PM Report
·Medical Certificate for disability
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·Age Proof
·Advocate's recommendation
·Moving court for conciliation
·Offer to the claimant
·Jaldh Rawat only in injury cases
Underwriting considerations for u/w passenger carrying commercial
vehicles
·Model
·Carrying capacity
·Permit route
·Fleet
·Past claim experience
·Terrain(Geographical area) where plying
·Age/ experience of drivers/ conductors
·Private/ Public
·Road worthiness of vehicle/ Inspection
·PAfor passengers
·Other Insurance from the same insured
·Voluntary excess
·Own workshops/ access to quality workshops
·Member of association/ safety equipments.
·Owner & driver same
I – RELEVANT SECTIONS OF M.V. ACT:
Sec 3 Necessity of DL
Sec 4 Age Limit pertaining to DL
Sec 6 Restriction on Holding DL
Sec 7 Restriction on Granting Learner’s Licence for certain vehicle
Sec 10 Form & Contents of DL
Sec 14 Currency of Licences to drive Motor Vehicle
Sec 28 D State Govt’s power to make rules regarding batch and uniform
Sec 39 Necessity of Registration
Sec 50 Transfer of ownership in RC Book, if vehicle registered within the state-14 days; if
registered outside the state-45 days
Sec 66 Necessity of Permit
Sec 75 Scheme for renting of Motor Cab
Sec 81 Duration and Renewal of Permit
Sec 82 Transfer of permit (if owner dies, within 3 months to succeeding person)
Sec 83 Replacement of Vehicles
Sec 91 Restriction of hours of work of drivers – notification in Official Gazette by State Govt.
Sec 134 C Duty of Driver to give information of accident to Insurer in writing
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Sec 140 Liability under No Fault (`50,000/- for death&`25,000/- for permanent disablement)
Sec 146 Necessity for Insurance against TP Risk
Sec 147 Requirement of Policy and Limit of Liability
Sec 149 (1) Duty of Insurer to satisfy the Award, passed against the Insured
Sec 149 (2) Insurer can avoid liabilities under certain specified grounds (can also be
remembered as exclusions under the policy)
Sec 152 No settlement between Insurer and Insured pertaining to Third Party is valid, unless
the third party is a party to the settlement.
Sec 157 Transfer of Certificate of Insurance and Policy – deemed transfer of rights and
Liabilities within 14 days
Sec 158 (6) Duty of Policy Officer to send the information of accident to claims tribunal and
Insurer – within 30 days of recording information.
Sec 160 Duty of RTA / Police Officer to furnish particulars relating to accident, on payment of
prescribed fee, to the claimant / owner of the vehicle / concerned Insurer
Sec 161 Special provisions as to compensation in case of hit and run motor accident
(Solatium fund scheme by Central Govt. for DEATH `25000 & for GRIEVOUS HURT
`12500)
Sec 163 A Payment of compensation on structured formula basis – neglect or default of the Owner
/ any other person need not be established.
Sec 165 State Govt. to constitute claims Tribunals – where railway and motor vehicle are both
joint tort feasors , claim would lie to the Motor Accident Claims Tribunal under the Act.
Sec 166 Application for compensation – On fault liability, long drawn trial – special
damages and future prospects also awarded
Sec 167 Option for filing case under WC Act / MV Act, but not under both
Sec 168 (3) Deposit of Award within 30 days of pronouncement or as the claims tribunal may
Direct.
i)A claim before claims tribunal is neither a criminal case nor a civil case. It is a
summary enquiry and is a legislation for welfare of the society.
ii) There is no embargo imposed by the legislature on the tribunals to grant
compensation over and above the amount claimed by the parties in a given case.
Sec 170 If the Insured colluded with Claimant or failed to contest the Case, Without
Prejudice to the provision U/S 149 (2), Insurer has right to contest on any of the
ground available to the Insured. (mainly for Insurer’s appeal on Quantum Basis)
Sec 171 Award of Interest where any claim is allowed
Sec 172 (2) No MACT shall pass an Order for special cost exceeding `1000/-
Sec 173 Appeals to be filed within 90 days from the date of award. Appeal deposit of
`25,000/- or 50% of award amount whichever is less.
No appeal shall lie, if the amount in dispute in appeal is less than `10,000/-
Sec 181 Driving Vehicle in contravention of Sections 3 & 4
Sec 182 Offence relating to Licence
Sec 183 Driving at excessive speed
Sec 184 Driving dangerously – in a manner dangerous to the public
Sec 185 Driving by a drunken person or by a person under the influence of drugs
Sec 186 Driving when mentally or physically unfit to drive
Sec 192 Using vehicle without Registration
Sec 192 A Using vehicle without Permit
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Sec 196 Driving un-insured vehicle
Sec 201 Penalty for causing obstruction to free flow of traffic
Sec 202 Power to arrest without warrant
II – RELEVANT SECTIONS OF INDIAN PENAL CODE IN RELATION TO THIRD

PARTY CLAIMS
Sec 279 Driving or riding on a public way so rashly or negligently as to endanger human life
etc.
Sec 304 A Causing Death by rash or negligence act
Sec 337 Causing hurt by an act which endangers human life etc.
Sec 338 Causing grievous hurt by an act which endangers human life etc.
III – RELEVANT SECTIONS OF CRIMINAL PROCEDURE CODE IN RELATION

TO THIRD PARTY CLAIMS
Sec 154 First Information Report (FIR)

Sec 173 Charge Sheet (where Driver found guilty)
Sec 174 Final Report (where Nobody found guilty)
Sec 161 Statement of Witnesses before Police
Sec 164 Statement of Witnesses before Magistrate
IV – RELEVANT SECTIONS OF CIVIL PROCEDURE CODE IN RELATION TO

THIRD PARTY CLAIMS
Sec 33 Judgment and Decree

Sec 34 Interest
Sec 35 Cost
Sec 35 A Compensatory Cost
Sec 35 B Cost for causing Delay
Sec 60 Property liable to attachment and sale in execution of decree for money
Sec 75 Power of Court to issue Commission
Order 6, Rule 17 Amendment of Pleading

Order 8, Rule 6 Particulars of set-off to be given in written statement (Effect of set-off)
Order 9, Rule 13 Setting aside Ex-Parte against Defendant
Order 11, Rule 12 Application for discovery of documents
Order 17, Rule 1 Court may grant time and adjourn Hearing
Order 18, Rule 17 Court may recall and examine Witness
Order 21, Rule 10 Application of execution
Order 21, Rule 26 When Court may stay execution
Order 21, Rule 38 Warrant for arrest to direct judgment debtor to be brought up
Order 21, Rule 53 Attachment of decrees
Order 21, Rule 106 Setting aside orders passed ex-parte, etc.
Order 23, Rule 1 Withdrawal of suit or abandonment of part of claim
Order 23, Rule 3 Compromise of suit
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RELATED ACT AND RULES TO DEAL WITH THIRD PARTY CLAIMS
1) Motor Vehicle Act, 1988

2) Motor Vehicle Rules, 1989
3) Rent a Cab Schedule, 1989
4) Rules of the Road Regulations, 1989
5) Solatium Scheme, 1989
6) Motor Vehicles (Driving Licence Fee Rules, 1978)
7) Motor Vehicle (National Permits) Rules, 1975
8) Tourist Vehicles (Additional Conditions of Permit) Rules, 1986
9) Motor Vehicles (Third Party Insurance) Rules, 1946
10) The Inter-State Transport Commission Rules, 1960
11) Motor Vehicles (Diplomatic and Consular Officers Vehicles) Rules, 1960
12) Motor Vehicles (Operation of Commercial Traffic between India and Contiguous Countries)
Rules, 1963
13) Motor Vehicles Worker’s Rules, 1963
14) Public Liability Insurance Act, 1991
15) Public Liability Insurance Rules, 1991
16) Workmen’s Compensation Act, 1923
17) Civil procedure Code
18) Criminal Procedure Code, 1973
19) Evidence Act, 1872
20) Indian Penal Code
238
HUMAN RESOURCES MANAGEMENT
GENERAL INSURER‟S (PUBLIC SECTOR) ASSOCIATION OF INDIA
In accordance with the recommendations made by the Poddar Committee and as accepted by the
Government of India an association known as General Insurer‟s (Public Sector) Association of India has
been registered under the Societies Registration Act 1860.
The four General Insurance Companies namely,
1. National Insurance Co. Ltd.
2. The New India Assurance Co. Ltd.
3. Oriental Insurance Co. Ltd.
4. United India Insurance Co. Ltd.
shall be the member of the Association.
The member companies will be represented on the Association by their respective Chairman-cum-
Managing Director and each member company shall nominate another executive not below the rank of a
General Manager as a nominee member.
To start with, the senior most Chairman-cum-Managing Director shall be the Chairman of the Association.
The term of office of the Chairman shall be a maximum period of one year or until superannuation
whichever is earlier.
On expiry of the term of the Chairman, the next Chairman shall be elected by the Governing Board.
The Governing board of the Association shall comprise The Chairman-cum-Managing Directors of the four
companies.
Secretariat:
The secretariat shall comprise one General Manager, who shall be designated as The Secretary General
and shall be assisted by Executive and other staff as may be required.
The secretary-General shall be the functional head of the association and shall be responsible for
conducting the affairs of the Association.
Functional Committees:
The Association may form functional Committees for the sake of effective performance and coordination
in various matters relating to technical, reinsurance, investment, personnel and information technology.
Role of the Association:
I. The Association shall coordinate and assist the member companies in the following areas of
operation 1. Product Development
2. Customer service
239
3. Personnel matters
4. Government Policy directives
5. Rural and non-traditional business
6. Inter-subsidiary competition.
7. Reinsurance programmes
8. Uniform approach on technical aspects
9. Investment and finance
10. Promotion and management of Loss Prevention Association of India.
11. Mutual funds and Housing Finance
12. International operations through wholly owned subsidiaries of GIC
II. Coordination with TAC and IRDA
III. Discussion on Policy issues with Government of India and other authorities.
IV. Acting as link between the Government and four companies on all operation an policy issues.
V. Pooling of training facilities through National Insurance Academy, Insurance Institute of

India and College of Insurance
VI. The following areas of personnel shall be under the purview of the Association
a) Rationalisation of pay scales
b) Incentive Schemes
c) Pension
d) Promotion Policyholder e) Deputation of Officers to various affiliated bodies/Institutions and

inter-company transfers f) Conveyance Schemes, Housing Loan Schemes and Medical Benefit
Schemes.
240
LICENSING OF INSURANCE AGENTS (ii) in Form IRDA – Agents – VC, if the applicant
REGULATIONS, 2000 is a firm or a company;
Provided that the applicant, who desires to be a

In exercise of the powers conferred by sub-
composite insurance agent, shall make two
section 96) of section 42 and clauses (k), (l)
(m), (n), (o) and (p) of sub-section (2) of separate applications.
section 114A of the Insurance Act, 1938 (4 of b) The fees payable by the applicant to the
1938), the Authority, in consultation with the
Authority shall be as specified in regulation 7.
Insurance Advisory Committee, hereby makes
the following regulations, namely:- (2) The designated person may., on receipt of
the application along with the evidence of
1. Short title and commencement payment of fees to the authority, and on being
(1) These regulations may be called Insurance satisfied that the applicant, -
Regulatory and Development authority
i. possesses the qualifications as specified under
(Licensing of Insurance Agents) Regulations,
regulation 4;
2000.
ii. possesses the practical training as specified
(2) They shall come into force on the date of
under regulations 5;
their publication of the Official Gazette
iii. has passed the examination as specified
3. Issue or renewal of licence under regulation 6;
(1) A person desiring to obtain or renew a iv. has furnished the application complete in all
licence (hereinafter referred to as “the
respects;
applicant”) to act as insurance agent or a
composite insurance agent shall proceed as v. has the requisite knowledge to solicit and
follows: - procure insurance business; and
a) the applicant shall make an application to a vi. is capable of providing the necessary service
designated person – to the policyholders; grant or renew, as the case
may be, a licence in form IRDA - Agent – VB,
(i) in Form IRDA – Agents – VA, if the applicant along with identity card in Form IRDA – Agents
is an individual; – VZ:
(3) If the designated person refuses to grant or renew a licence under this regulation, he shall give the
reasons therefore to the applicant.
4. Qualifications of the applicant
(1) The applicant shall possess the minimum qualification of a pass in 12th Standard or equivalent
examination conducted by any recognized Board / Institution, where the applicant resides in a place with
a population of five thousand or more as per the last census, and a pass in 10th standard or equivalent
examination from a recognized Board/Institution if the applicant resides in any other place.
5. Practical Training
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(1) The applicant shall have completed from an approved institution, at least, one hundred hours‟
practical training in life or general insurance business, as the case may be, which may be spread over
three to four weeks, where such applicant, as the case may be, which may be spread over three to four
weeks, where such applicant is seeking licence for the first time act as insurance agent:
f) a Master of Business Administration of any Institution / University recognized by any State Government
or the Central Government; or
g) possessing any professional qualification in marketing from any Institution / University recognized by
any State Government or the Central Government -
he shall have completed, at least, fifty hours‟ practical training from an approved institution :
Provided that such applicant shall have completed from an approved institution, at least, seventy hours‟
practical training in life an general insurance business,, where such applicant is seeking licence for the
first time to act as a composite insurance agent.
(3) An applicant, who has been granted a licence after the commencement of these regulations, before
seeking renewal of licence to act as an insurance agent, shall have completed, at least twenty-give hours‟
practical training in life or general insurance business, as the case may
from an approved institution.
Provided that such applicant before seeking renewal of licence to act as a composite insurance agent
shall have completed from an approved institution, at least, fifty hours‟ practical training in life and
general insurance business.
6. Examination
(1) The applicant shall have passed the pre-recruitment examination in life or general insurance business,
or both, as the case may be, conducted by the Insurance Institute of India, Mumbai, or any other
examination body.
7. Fees payable
(1) The fees payable to the Authority for issue or renewal of licence to act as insurance agent or a
composite insurance agent shall be rupees two hundred and fifty.
(2) The additional fees payable to the Authority, under the circumstances mentioned in sub-section (3) of
section 42 of the Act, shall be rupees one hundred.
8. Code of Conduct
9. Cancellation of licence
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(1) The designated person may cancel a licence of an insurance agent, if the insurance agent suffers, at
any time during the currency of the licence, from any of the disqualifications mentioned in sub-section (4)
of section 42 of the Act, and recover from him the licence and the identity card issued earlier.
10. Issue of duplicate licence
(1) The authority may issue a duplicate licence to replace a licence lost, destroyed or mutilated
on payment of a fee of rupees fifty,
11. Non-application to existing insurance agents
(1) Nothing contained in regulations 4 to 6 of these Regulations shall apply to the existing agents before
the commencement of these Regulations
CDA RULES, 2003 (CONDUCT, DISCIPLINE & APPEAL)
1) Applicable to every person appointed to any post under The New India Assurance Co. Ltd.
2) FAMILY in relation to an employee includes:

Husband / Wife, Sons / Daughters, Step-sons, Step-daughters, wholly dependent on the
employee (unless deprived by Law).
Any person related whether by blood / marriage to husband / wife and wholly dependent on
such employee.
3) GENERAL
Integrity (absolute);
devotion to duty;
do nothing unbecoming of a public servant;
confirm and abide by rules and obey all orders & directions in the course of his official duties.
Supervisory post officers should ensure compliance of the above – if possible a written direction
given / obtained.
It shall not be construed that an employee is empowered to evade his responsibility by seeking
Instructions from / or approval of superior officer when such instructions are not necessary
under the schemes of distribution of powers and responsibilities.
4) MISCONDUCT
Theft, fraud / dishonesty in connection with business or property.
Taking or giving bribes, any illegal gratification.
Possession of resources / property disproportionate to known source of income.
Furnishing false information regarding name, age, father’s name, qualifications etc., or any
other matter germane to the employment at the time / course of employment.
Acting in prejudice to interest of corporation.
Absence without / over-staying sanctioned leave for more than four consecutive days.
Habitual late or irregular attendance.
Negligence in performance of duty including malingering or slowing of work.
Damage to property of corporation or subsidiary.
Interference or tampering with safety devices installed in premises.
Drunkenness / riotous indecent behaviour in premises and also outside, when connected with
243
employment.
Gambling in premises.
Collection of money within the premises not sanctioned by Law.
Sleeping while on duty.
Criminal offence involving moral turpitude.
Absence from employee’s appointed place of work.
Smoking.
Purchasing properties, machineries to or from the Corporation / Subsidiaries, without
permission.
Commission of any act subversive of discipline or of good behaviour.
The latest addition is sexual harassment of any women at her work place.
5) Whole time service at the disposal of corporation.
6) Not to seek outside employment without sanction of Competent Authority for stipend or
honorarium.
7) Part time work – with sanction of corporation or subsidiaries without detriment to official duties.
Fees received is payable in part or wholly to the corporation.
8) Obligation to maintain Secrecy – shall not communicate directly or indirectly any official document or
information to any employee or person.
9) Evidence before Committee or any other authority – with permission of Corporation without
criticizing the policies of Corporation / Subsidiaries. Exceptions: Authority of Govt by Parliament; Judicial
Inquiry or
Departmental Inquiry.
10) Prohibition against participation in Politics and standing for Election –

i) shall prevent any member of his family from participating, when unable to report to
Corporation or subsidiary or such act become subservient to corporation (revolutionary).
ii) Decision of corporation is final when an activity falls within Rule (i)
iii) No employee shall take part in politics, but he can exercise his right to vote.
iv) He is allowed to assist in conducting election as per Law.
11) Participation in demonstration – shall not resort or abet any form of strike.
12) Press and Radio –

i) Shall not participate in editing or managing of newspaper / periodicals.
ii) Shall not broadcast, write articles in his name; without prior sanction of Corporation.
iii) Purely literary, artistic or scientific in character are allowed.
13) Not to receive gifts himself or on behalf of himself –

i) from person having any official dealing. Transport, boarding, lodging, pecuniary advantage
are Gifts.
ii) On wedding, anniversary, funeral or social conformity shall report to competent authority
when giving gift exceeds `500/-
iii) When receiving gifts more than `250/-
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iv) IN any other case to inform corporation, when more than `250/-
14) Private Trading - No employee shall act as insurance agent or his family members. Registration,
promotion or management of any land or company to be registered under Company’s Act 1956,
promotion / management of co-operative society allowed under Cooperative Societies Act 1912, for the
benefit of employees.
15) No speculation in stocks or shares.
16) Restrictions on borrowing or investments -

Lending or borrowing with interest is prohibited. Small amount can be borrowed from friend or relatives
on temporary basis without interest.
A) Submission of property returns by all employees:

* Declaration regarding immovable property.
* Shares, debentures, debts and liabilities – Annual return.
* Submit by 30th April every year for period ending March 31st ofpreceding year.
Not to acquire, dispose, lease, mortgage purchase, sale of giftor any immovable property without the
knowledge of Competent Authority, by the employee / family.
17) Employee to avoid habitual indebtedness or insolvency

An employee in debt shall declare correct statement on 30th June and 30th December and steps taken to
rectify his position.
An employee is in debt, if total liabilities other than those fully accrued or those taken from employees’
co-op. credit society exceed his salary for six months.
An employee is deemed to be unable to liquidate his debts, if it appears that he will not cease to be in
debt within a period of three years.
18) Employees not to be absent from duty without permission or be late in attendance – where no CL
remains, EL or Loss of Pay leave can be determined by Competent Authority beyond 3 occasions.
19) Absence from Station – absence from station must be informed to competent authority.
20) Suspension – An employee placed under suspension

* where disciplinary proceeding against him is contemplated or is pending.
* where a case against him in respect of any criminal offence is under investigation or trial.
* when detained in custody for more than 48 hours, deemed suspended from the date of
detention.
* when penalty of dismissal or removal or compulsory retirement from service is declared
void by Court of Law, the competent authority can hold further enquiry. Period is
treated as being under suspension.
* the same authority or higher authority can revoke suspension.
21) Subsistence Allowance – An employee under suspension is entitled to

i) 50% subsistence allowance (Basic +DA + CCA + HRA + Qual. Pay + Personal Paty + Spl Pay + Deputation
all.) from date prior to suspension.
ii) where period of suspension is more than six months, 75% of subsistence allowance will be given.
245
iii)reduced to 25%, the period of suspension is prolonged due to reasons recoded in writing, directly
attributable to employee under suspension.
iv)When arrested by police and no bail is granted, then no subsistence allowance is given. If bail is
granted & suspension continues, then subsistence allowance given from the date of bail.
Appropriate authority – Authority to impose major penalty.
22) Treatment of period of suspension – When suspension is unjustified or partly justified or dismissed;
a) acquitted – full pay less subsistence allowance.
b) proportion of pay & allowance as competent authority prescribes.
a) Period of absence – period of duty

b) Period of absence at discretion of comp. authority – period of admissible leave. However, these
shall not constitute continuity in service, i.e. deemed as break in service.
No order passed will compel an employee to refund the subsistence allowance payable under Rule 21.
23) Penalties – Imposed by the Competent Authority on an employee, who commits a breach of
discipline / acts in prejudice to good conduct.
MINOR a) Censure
b)Withold one or more increments for a specified period
c) Recovery from pay any amount due to the Corporation.
d) Reduction in time scale to a lower stage for a period not exceeding three
years without cumulative effect.
MAJOR a) Witholding one or more increments permanently.

b)Reduction to a lower service or post or to a lower time scale or to a lower
stage in a time scale.
c)Compulsory retirement.
d)Removal from service which shall not be disqualification for future
employment.
e) Dismissal.
24) Disciplinary Authority

An authority who may impose penalties on any employee by virtue of his office.
25) Procedure for imposing major penalties

If there are grounds for inquiring into truth of any imputation of misconduct or
misbehaviour against an employee, an enquiry must be held.
The competent authority may appoint a officer of PSU / retired officer to enquire
against misconduct.
Where proposed to hold an inquiry, charges are framed; list of sustainable documents
and witnesses produced – communicated to concerned employee to admit / deny
articles of charges.
Inquiry held on charges not admitted by employee.
Disciplinary Authority may himself be an Inquiry authority.
A retired officer / public servant, “Presenting Officer” appointed to present the case in
support of articles of charges.
246
Any other employee “Defence Assistant” can render assistance; but not a legal
practitioner.
Inquiry is conducted.
Charge sheeted employee given adequate opportunity to defend himself with
documents and witnesses relevant to charges under inquiry. After completion of
evidence, employee and Presenting Officer file brief within 15 days on their respective
cases.
Where employee does not co-operate, enquiry authority may hold the inquiry ex-parte.
Inquiry concludes with findings on articles of charges with reasons therefor.
26) Action on Inquiry Report

When competent authority when itself not the inquiry authority may remit the case to I.O for
further enquiry.
When competent authority opines no penalty is called for, orders passed exonerating employee
concerned.
27) Procedure for imposing minor penalties

Employee informed in writing imputations of misconduct.
Employee to submit written statement of defence with specified period not exceeding 15 days.
Orders passed by competent authority with reasons therefor.
28) Communication of Order

All communications of order served to an employee personally / registered post.
Where personal / postal communication fails, orders affixed in notice board.
29) Common Proceedings

When two or more employees are concerned in a case, common proceedings will be conducted.
30) Special Procedure in certain cases

When employee convicted on criminal charge (judicial trial).
When not reasonably practicable to hold on enquiry
When security of company is threatened
Where employee abundance post over stayal of leave 90 continuous days
Competent authority passes order as it deems fit
31) Right to Appeal
Every employee has right to appeal against penalties imposed on him (competent authority:
1stepabove)
However no appeal lies if order passed by the Company. Rule 20 (Suspension ) and Rule 23
(Minor and Major Penalties)
32) Period of Limitation for appeal:

Appeal to be filed within 3 months from the date of receipt of order
33) Form and Contents of Appeal

Every appeal to be made in individual name
Appeal addressed to competent authority: language used shall not be disrespectful / improper.
34) Submission of Appeal

247
Appeal to be submitted through the authority who made the order
35) Withholding of Appeals

Appeal withheld by authority who made the order when
Rule 33 is violated (individual name and appropriate language)
Not submitted within 3 months
It is a repetition of appeal already decided (no new facts / circumstances can be adused)
Appeal withheld under Rule 33 when returned to appellant can be resubmitted within
one month
36) Transmission of appeals

Authority shall transmit to the appellate authority without any avoidable delay together with his
commence and records thereon.
When withheld the authority shall translate to appellate authority the reasons with record, for
withholding appeal.
37) Consideration of Appeals

Appellate authority can confirm / revoke an order for suspension weighing the circumstances of
the case.
Appellate authority in case of major / minor penalties shall consider.
If procedure of rules has been complied with and there is no failure of justice.
If findings are justified.
If penalty imposed is excessive /adequate /inadequate and pass orders setting aside
/reducing / confirming /enhancing the penalty OR remit the case to any authority /
authority who has made the order
ENHANCED PENALTY:
Only competent Appellate Authority can impose.
Fair chance extended to appellant to represent before enhancement.
If appellate Authority proposes to impose penalty under Rule 23 (b) to (i) then an inquiry
is held and thereafter decision taken.
Appeals shall be disposed off expeditiously and not later than 6 months from receipt of
appeal.
38) Appeal against other orders

An employee may appeal when
An order denies or varies to his disadvantage salary / other conditions of service.
The interpretation of the order is to his disadvantage.
39) Review
i) Company on its own motion
Can confirm, modify, set aside, reduce or impose any penalty.
Remit the case.
ii) An appellate authority on its own motion can call for records of the case and review and
pass orders as if employee has preferred an appeal. This shall be done within 6 months
from the date of order.
iii) The CMD on his own motion can call and review an order and pass orders as he deems
fit.
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40) Memorial
When an appellate authority rejects an appeal / enhances penalty, the employee addresses a
memorial to the CMD; if file within 6 months from the date of receipt of appeal order.
41) Canvassing non-official or outside influence

Employee cannot bring any outside influence to bear upon any superior authority.
Employee cannot address by name any member of the Company or outside authority in his
appeal, petition or memorial.
42) Interpretation
If there is a question on interpretation, it shall be referred to Board of the Company, whose
decision shall be final.
43) Amendments
Amendments / modifications / additions to these rules shall be effective from the dates stated
therein.
44) Administrative Instructions

CMD of the Company can instruct / direct to give effect to / carryout the provisions of these
rules in order to secure effective control over the employees.
MATTERS RELATING TO CDA RULES

1. Undertaking of part-time employment for Insurance Education:
2. Contribution of articles and reports
i. An Employee may be permitted to contribute articles and reports to periodicals and for writing and
publishing a book provided that:
(a) Such work shall not affect the normal official functions of the employee.
(b) Previous sanction shall be obtained from the competent authority.
(c) „Script‟ shall be approved by the Company before it is sent to the publishers for publication. No
amendment/alterations/additions shall be made in the approved script without prior permission of the
Company
ii. Retention of Honorarium
The employee may be allowed to retain recurring or non-recurring fee/!honorarium or more than one such
fee put together upto an amount of Rs.500/- in one calendar year and where the recurring or non-
recurring fee or fees received in one calendar year are in excess of Rs.500/-, l/3rd of the total of such fee
or fees shall be paid to the Company provided that the total amount of such fee or fees retained by the
employee is not reduced below Rs.500/-.
3. Permission to participate in Radio and/or Doordarshan (TV) programme and retention of
honorarium thereof
The permission to participate in Radio and/or Doordarshan (TV) programme may be granted to the
employees subject to the following conditions:
(a) Grant of permission
No employee shall, except with the previous sanction of any other authority empowered in this behalf, or
in the bonafide discharge of his duties, participate in Radio Broadcasting and/or Doordarshan telecast in
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any manner, whatsoever. The Competent Authority for this purpose is Chairman-cum-Managing Director
of the Company. Provided that no such sanction shall be required if such broadcasting and / or telecast is
occasional or is of a purely literary, artistic or scientific character.
Permission may be granted subject to the condition that the employee shall undertake such
participation without detriment to his normal duties and outside the office hours and does not
violate the provisions of Rule 8 of General Insurance (Conduct, Discipline and Appeals) Rules,
(b) Retention of honorarium
No employee shall be allowed to retain honorarium if such participation is during office hours and in
bonafide discharge of his duties. However, the employee may be allowed to retain recurring or non-
recurring fees/honorarium or more than one such fee put together upto an amount of Rs.500/- in one
calendar year and where the recurring or non-recurring fee or fees received in one calendar year are in
excess of Rs.500/-, 1/3rd of the total of such fee or fees shall be paid to the Company provided that the
total amount of such fee or fees retained by the employee is not reduced below Rs.500/-.
4. Suspension
Appropriate authority for suspending an employee shall be the Authority who is competent to impose a
major penalty on the concerned employee as specified in the schedule to CDA Rules.
The meaning of suspension is temporary suspension of contract of employment. Suspension only

connects that the relationship of master and servant remains in abeyance during the period of suspension
and in such period, the employee cannot seek any outside employment. If the suspension order is
disobeyed and employee forces himself to work, this will be serious misconduct.
Rule 21 of CDA Rules provides that an employee shall be entitled to draw subsistence allowance equal to
50% to his basic pay and other allowances. Functional Allowance such as Conveyance Allowance,
Entertainment Allowance, etc. shall be excluded. It must be ascertained that the employee is not gainfully
engaged in any other profession during the period of suspension. If necessary an undertaking to this
effect should be taken from him before making payment of subsistence allowance.
Rule 21 (2) provides variation in quantum of subsistence allowance if the period of suspension exceeds
six months. If the enquiry cannot be completed within six months, for reasons which cannot be directly
attributed to concerned employee, the subsistence allowance would stand enhanced to 75% of basic pay
and allowance. On the contrary if delay in completion of enquiry is due to dilatory tactics adopted by
concerned employee, the rate of subsistence allowance would stand reduced to 25% of basic pay and
allowances. In either case, Competent Authority must record reasons before effecting any variation in
rate of subsistence allowance. If an employee, who was suspended under rule 20 (2) of CDA rules for
having been detained in custody for more than 48 hours, is not granted bail, no subsistence allowance
will be payable to him. If he is granted bail, the Competent Authority may decide, having regard to
nature of charges leveled against him, whether to continue his suspension. If suspension is continued, he
would be entitled for subsistence allowance from the date he is granted bail.
The deductions, which may be effected from subsistence allowance, are given below:
A) Compulsory Deduction:
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Following deductions have to be compulsorily effected out of subsistence allowance:
i. Income Tax: (If the gross salary is subject to Income Tax).
ii. Compensation for the use of Accommodation allotted
iii. Repayment of loans and advance taken from the Company.
iv. Medical Benefit Insurance Scheme premium.
B) Voluntary Deductions:
These deductions are optional and if an employee so desires, these can be continued after obtaining
request from him to this effect.
LIC premium: Post Office CTD and Loan taken from Bank
Amount due to co-operative credit society.
Refund of loan taken from Provident Fund.
C) No deductions in respect of following items should be made from subsistence allowance.
i. Subscription towards provident fund.
ii. Amount due under court attachment
iii. Recovery of any loss which employee may have caused to the Company.
It will be clear from above that voluntary deductions can be effected only if the net subsistence allowance
after compulsory deductions is sufficient for voluntary deductions. If the subsistence allowance is
insufficient for effecting voluntary deductions, concerned employee should be advised to make these
payments directly.
An employee under suspension is not supposed to attend office and is not required to sign the muster
roll. However, he is not supposed to leave headquarters without prior permission of the Competent
Authority. This is required to ensure that communications to him regarding disciplinary action to be taken
against him can be effected.
Suspension of an employee can be revoked after disciplinary action against him is completed and
Competent Authority has decided to award him penalty, provided such penalty is not one of the penalties
listed under Rule 23 (f), (g) and (h). In case of these major penalties viz. compulsory retirement, removal
from service or dismissal is awarded; the period of suspension should be confirmed while meting out the
punishment. An employee under suspension can be reinstated before completion of disciplinary action if
Competent Authority is of the opinion that such reinstatement will not hinder enquiry proceedings.
While revoking suspension of an employee, the Competent Authority should also mention as to how the
period of suspension is to be treated. Rule 22 of CDA rules gives guidelines in this regard. If an employee
is honourably acquitted, he will be entitled to full pay and allowance, as if he had not been suspended,
less the subsistence allowance already paid to him.
If an employee is held partly or fully guilty of the charges leveled against him, the Competent Authority
may decide to confirm either a part or full of the suspension period. In either case the period of
suspension, which is confirmed, shall not be treated as period spent on duty or on leave and therefore
such period shall not count as service for any purpose under the Rules. Thus, where period of
suspension is confirmed, an employee shall not earn any increment for the period of suspension and his
normal grade increment will stand postponed by equal period. Similarly, no leave shall accrue to an
employee during the period of suspension. However, such period shall not constitute a break in service.
Where only a part of suspension period is confirmed, the remaining part can be treated, as on leave
provided employee has sufficient leave to his credit. For such period, to be treated as leave, employee
will be entitled for full pay and allowances, less the subsistence allowance already paid to him. In case no
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pay but the employee will not be required to refund the subsistence allowance already paid to him for
such period which is to be treated as on loss of pay.
During the period of suspension an employee will not be entitled for any benefits which are
otherwise available to regular employees save and except benefit under Medical Benefit Insurance
Scheme. An employee under suspension shall not be eligible for any benefit in relation
to conveyance facilities. However, recovery of monthly loan repayment instalment shall be continued.
This may be followed if employee under suspension is covered under any of the Vehcile Loan Schemes.
As regards telephone, if the connection belongs to Company, Telephone Authorities should be advised to
disconnect the same immediately. If it belongs to Officer / Development Officer, neither the rental nor
the call charges shall be paid/reimbursed from the immediate next bi-monthly period commencing after a
date of suspension. Charges for S.T.D./Trunk Calls found to be made after the date of suspension during
the current bi-monthly period, shall also not be payable/reimbursable.
5. Facilities available to Charge sheeted Employee, Defence Assistant and Witnesses
A. Charge sheeted Employee
i. Shall be treated as on duty for the period he spends in participating in the enquiry and also for the
period spent in the journey to and from the place of enquiry.
ii. Shall be paid Travelling Allowance and Halting Allowance as applicable to him as if he is on tour.
Provided no Travelling Allowance or Halting Allowance will be payable to the charge-sheeted employee if
the enquiry is held at a place other than his headquarter expressly at his own request.
B. Defence Assistant
(i) The employee who assists the charge sheeted employees in the conduct of enquiry (Defence
Assistant.) shall be extended the same facilities as given under Item No. 'A' above.
However, when the enquiry is held at the headquarters of the charge sheeted employee, the benefits as
above would not be allowed to the Defence Assistant called from a station other than the headquarters of
the charge sheeted employee but the CMD may, in exceptional and deserving cases, allow TA/HA at his
discretion to the Defence Assistant of the charge sheeted employee called from a place other than the
headquarters of the charge sheeted employee. No such permission is necessary if the charge sheeted
employee/Defence Assistant. Undertakes in writing that he/she would not claim the facility of leave and
TA/HA etc.
(ii) If the Defence Assistant is from another subsidiary, the Head Offices of the two Companies involved
may coordinate for the grant of leave facility and TA/DA etc
C. Witnesses:
Payment of TA/DA to witness other than employee of General Insurance Industry shall be regulated as
under:
i. If such witness is working in any Central/State Govt. the amount of TA/DA payable to him shall be
equal to the amount of TA/DA which would have been payable to him if the said witness was on tour in
his official capacity.
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ii. If the such witness is working in a Private Limited Company or a Limited Company or a Pvt.
Organisation, the amount of TA/DA shall be restricted to the amount of TA/DA which would have been
payable to him if the said employee was on official tour.
iii. If the such witness is carrying on his private business/vocation for example Private Traders, Shop
Keepers, Surveyors, Engineers, Consultant etc. such case shall be dealt on merits keeping in view their
status, position and services rendered etc. Extension of these facilities shall, however, be subject to the
following:
(a) Such an outsider witness shall attach with his bills a certificate of attendance and a copy of
summon/letter received from the Enquiry Officer.
(b) Relevancy of such an outsider witness has already been examined by the enquiry officer under Rule
25(8) of CDA Rules after the submission of the names and particulars of such witnesses by the
Presenting Officer who wants to examine such witnesses and an order in writing is made to this effect by
the Enquiry Officer.
iv. When the ex-employees are required at centres outside their headquarters, they may be granted the
following facilities/allowances:-
(a) When they are required at Metro Centres where we have our Guest Houses, they may be provided
with Guest House facilities at the expenses of the Company.
(b) When, they are required at other centres we have no Guest House facility, they may be provided at
the expense of the Company, Hotel accommodation, the type of which may be decided by the Competent
Authority in keeping with the status of the ex-employee and the exigencies of the case.
(c) The ex-employee may be paid an out of pocket expense allowance of Rs.100/- per' day to take care of
all other expenses. This amount may be admissible in respect of cases covered by both (a) and (b)
above.
(d) The ex-employee may be reimbursed the travelling expenses which would have been admissible to
them had they continued in our employment in the position in which they were immediately prior to their
going out of employment. The Competent Authority may, however, depending on the exigencies of the
case, allow an ex-employee, reimbursement of expenses for a better mode of transport and/or
transportation by a higher class.
v. When the ex-employees are required at their headquarters, they may be paid an out-of- pocket
expense allowance of Rs.50/-per day to take care of all expenses. The Competent Authority to sanction
these facilities is the CMD and all such cases with complete details be referred to HO by the respective
Regions alongwith their comments and statement of expenses submitted by such witness.
Note:
1. These provisions are applicable to both management and defence witnesses.
2. Local conveyance cannot be allowed to the charge sheeted employee and his Defence Assistant when
the enquiry is being held where both are stationed at the same place.
6. Copy of the Enquiry Report to be furnished to the Chargesheeted employee:

As per Supreme Court Ruling, the charge sheeted employee is entitled to a copy of the enquiry report
submitted by the Enquiry Officer to the Disciplinary Authority as also to make representations if any,
against it. Failure to furnish the report to the charge-sheeted employee would be violative of the principles
of natural justice which in turn will render the order of penalty invalid.
The competent authority will, therefore, have to furnish the enquiry report to the charge-sheeted
employee, inter-alia, calling for his representation if any, against the findings of the Enquiry Officer.
If the Disciplinary Authority himself is the Enquiry Officer, such furnishing of the Enquiry Report is not
necessary.
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The General Insurance (Employees') Pension
(Amendment) Scheme, 2010.
(1) Save as otherwise expressly provided in this scheme, this scheme shall be deemed to have
come into force on the 1st day of January 2004.
(2)
APPLICATION AND ELIGIBILITY
3. Application:-
This scheme shall apply to employees who,-
were in the service of the Corporation or a Company, as the case may be, on or after the first
day of January, 1986 but had retired before the first day of November, 1993 ;
(a) have retired on or after the 1st day of November, 1993 but before the notified date
(a) are in the service of the Corporation or a Company before the notified date and continue to
be in the service of the Corporation or a Company on or after the notified date
join the service of the Corporation or a Company as the case may be, on or after the notified
date but before the 1st day of January, 2004;
were in the service of the Corporation or a Company, as the case may be during any time on or
after the 1st day of November, 1993 and had died after retirement but before the notified date,
their family shall be entitled for the amount of pension payable to them from the date on which
they would have been entitled to pension under this scheme had they been alive till the date on
which they died, if the family of the deceased,-
joined the service of the Corporation or a Company on or after the 1st day of November, 1993
but who have died while in the service of the Corporation or the Company, as the case may be,
before the notified date, their family shall be entitled to the family pension under this scheme.
were in the service of the Corporation or a Company, as the case may be, during any time on or
after the 1st day of January, 1986 and had died while in service on or before the 31st day of
October, 1993 or had retired on or before the 31st day of October, 1993 but died before the
notified date in which case their family shall be entitled to the family pension under this scheme,
if the family of the deceased, -
254
joined the service of the Corporation or a Company on or before the 31st day of October, 1993
and who died while in service on or after the 1st day of November, 1993, but before the notified
date in which case their families shall be entitled to family pension under this scheme if the
family of the deceased employee,
(a) joined the services of the Corporation or the Company, as the case may be, before the 28th day of
June, 1995, and are in its service on the notified date
the words "after the notified date; or" the words, figures and letters "after the notified date but
before the 1st day of January, 2004; or" substituted vide Notification S.O.2473 (E), dt.08.10.2010
[6] Sub-paragraph (9) inserted vide S.O.342(E) dated 22nd April, 1997.
[6.1] Note (2) inserted vide Notification S.O.2473 (E), dated 08.10.2010
----------------------------------------------------------------------------------------------------------------------------
4. Option to subscribe to the Provident Fund._
QUALIFYING SERVICE
14. Qualifying Service:-
Subject to the other condition contained in this scheme, an employee who has rendered a minimum ten
years of service in the Corporation or a Company, on the date of retirement shall qualify for pension.
15. Commencement of:-
Subject to the provisions contained in this Scheme, qualifying service of an employee shall commence
from the date he takes charge of the post to which he is first appointed on regular basis.
16. Counting of service on probation:-
Service on probation against a post in the Corporation or concerned Company if followed by confirmation
in the same or another post shall qualify.
17. Counting of period spent on leave:-
All leave during service in the Corporation or concerned Company, for which leave salary is payable shall
count as qualifying service :
Provided that extra-ordinary leave on loss of pay granted on medical certificate or on account of
employee's inability to join duty due to civil commotion, not exceeding twelve months during the entire
service, shall also count as qualifying service.
18. Broken period of service of less than one year:-
If the period of service of an employee includes broken period of service of less than one year, then, if
such broken period is more than six months it shall be treated as one year and if such broken period is
six months or less it shall be ignored.
19. Counting of period spent on training:-
255
Period spent by an employee on training in the Corporation or a Company, as the case may be
immediately before his appointment shall count as qualifying service.
20. Counting of past service in the erstwhile insurer:-
Period of continuous service of a "transferred employee" with an insurer, shall qualify for pension
Provided that such 'transferred employee' was not eligible for any pension, annuity, gratuity in lieu of
pension or such other superannuation benefit in lieu of pension from the insurer in respect of the service
with such insurer;
21. Period of suspension:-
Period of suspension of an employee pending enquiry shall count for qualifying service where, on
conclusion of such enquiry, he has been fully exonerated or the suspension is held to be wholly
unjustified and in other cases, the period of suspension shall not count as qualifying service unless the
competent authority passing the orders under General Insurance (Conduct, Discipline and Appeal) Rules
framed by the Board of the Corporation or a Company in this behalf, expressly declares at that time that
it shall count, to such extent as such authority may declare.
22. Forfeiture of service:-
Resignation or dismissal or removal or termination or compulsory retirement of an employee from the

service of the Corporation or a Company shall entail forfeiture of his entire past service and consequently
shall not qualify for pensionary benefits.
23. Period of deputation to foreign service.:-
An employee deputed on foreign service to the United Nations or any other foreign body or organisation
may, at his option,_
(a) pay pension contribution in respect of his foreign service and count such service as qualifying service
under this scheme; or
(b) avail of the retirement benefits admissible under the rules of the foreign employer and not count such
service as qualifying service under this scheme:
Provided that where an employee opts for sub-paragraph (b), retirement benefit shall be payable to him
in India in rupees from such date and in such manner as the Corporation or the concerned Company, as
the case may be may, by order, specify.
24. Military Service:-
An employee who has rendered military service before appointment in the Corporation or the concerned
Company shall continue to draw the military pension, if any, and the military service rendered by the
employee shall not count as qualifying service for pension.
25. Period of deputation to an organisation in India:-
Period of deputation of an employee to another organisation within India shall count as qualifying
service: Provided the organisation to which he is deputed or the employee pays the pensionary
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contributions at the rates specified in sub-paragraph (1) of paragraph 7 of this scheme to the Corporation
or the concerned Company.
26. Addition to qualifying service in special circumstances:-
An employee shall be eligible to add to his service qualifying for superannuation pension (but not for any
other class of pension) the actual period not exceeding one-fourth of the length of his service or the
actual period by which his age at the time of recruitment exceeded twenty-eight years, or a period of five
years, whichever is less, if the service or post to which the employee is appointed is one -
(a) for which post-graduate research, or specialist qualification or experience in scientific, technological or
professional fields, is essential; and
(b) to which candidates of more than twenty-eight years of age are normally recruited, and
(c) for which the candidate was given age relaxation over and above the maximum age limit fixed by the
Corporation or the Company on account of his possessing higher qualification or experience:
Provided that this concession shall not be admissible to an employee unless his actual qualifying service
at the time he quits the service in Corporation or a Company, as the case may be is not less than ten
years:
Provided further that this concession shall be admissible only if the recruitment procedure in respect of
the said service or post contains a specific provision that the service or post is one which carries the
benefit of this paragraph.
27. Condonation of interruption in service._
(1) In the absence of a specific indication to the contrary in the service records, an interruption between
two spells of service in the Corporation or a Company, as the case may be rendered by an employee
including service, counted in terms of the various provisions contained in this scheme shall be treated as
automatically condoned and the pre-interruption service treated as qualifying service.
(2) Nothing in sub-paragraph (1) shall apply to an interruption caused by the resignation or dismissal or
removal or compulsory retirement or termination from service.
(3) The period of interruption referred to in sub-paragraph (2) shall not count as qualifying service.
28. Counting of service rendered on permanent part time basis in certain cases._
(1) In the case of an employee, who immediately prior to his appointment on a whole-time basis was
employed on a permanent part-time basis in the service of the Corporation or a Company and was
contributing to the Provident Fund, such service rendered by him on permanent part-time basis shall be
counted as qualifying service;
(2) The length of qualifying service of the employee referred to in sub-paragraph (1)for the purpose of
calculating the amount of pension shall be determined in accordance with Appendix II.
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CLASSES OF PENSION
29. Superannuation Pension: Scales and Other Conditions of Service of

Supervisory, Clerical and Subordinate Staff)
Superannuation pension shall be granted to an Scheme, 1974 and in paragraph 4 of General
employee who has retired on his attaining the Insurance (Termination, Superannuation and
age specified in paragraph 12 of General Retirement of Officers and Development Staff)
Insurance (Rationalisation and Revision of Pay Scheme, 1976
30. Pension on voluntary retirement:
(1) At any time after an employee has completed twenty years of qualifying service, he may, by giving
notice of not less than ninety days, in writing to the appointing authority, retire from service :
Provided that this sub-paragraph shall not apply to an employee who is on deputation unless after having
been transferred or having returned to India he has resumed charge of the post in India and has served
for a period of not less than one year:
Provided further that this sub-paragraph shall not apply to an employee who seeks retirement from
service for being absorbed permanently in an autonomous body or a public sector undertaking to which
he is on deputation at the time of seeking voluntary retirement.
(2) The notice of voluntary retirement given under sub-paragraph (1) shall require acceptance by the
appointing authority:
Provided that where the appointing authority does not refuse to grant the permission for retirement
before the expiry of the period specified in the said notice, the retirement shall become effective from the
date of expiry of the said period.
(3) (a) An employee referred to in sub-paragraph (1) may make a request in writing to the appointing
authority to accept notice of voluntary retirement of less than ninety days giving reasons therefor ;
(b) on receipt of request under clause (a), the appointing authority may , subject to the provisions of
sub-paragraph (2), consider such request for the curtailment of the period of notice of ninety days on
merits and if it is satisfied that the curtailment of the period of notice will not cause any administrative
inconvenience, the appointing authority may relax the requirement of notice of ninety days on the
condition that the employee shall not apply for commutation of a part of his pension before the expiry of
the notice of ninety days.
(4) An employee who has elected to retire under this paragraph and has given necessary notice to that
effect to the appointing authority shall be precluded from withdrawing his notice except with the specific
approval of such authority :
Provided that the request for such withdrawal shall be made before the intended date of his retirement.
(5) The qualifying service of an employee retiring voluntarily under this paragraph shall be increased by a
period not exceeding five years, subject to the condition that the total qualifying service rendered by such
258
employee shall not in any case exceed thirty three years and it does not take him beyond the date of
retirement
(6) The pension of an employee retiring under this paragraph shall be based on the average emoluments
as defined under clause (d) of paragraph 2 of this scheme and the increase, not exceeding five years in
his qualifying service, shall not entitle him to any notional fixation of pay for the purpose of calculating
his pension;
Explanation.- For the purpose of this paragraph, the appointing authority shall be the appointing
authority specified in Appendix-I to this scheme
(b) Notwithstanding anything contained in this scheme, the amount of invalid pension shall not be less
than the ordinary rate of family pension which would have been payable to his family in the event of his
death while in service.
(7) The amount of pension finally determined under this paragraph shall be expressed in whole rupee
and where the pension contains a fraction of a rupee, it shall be rounded off to the next higher rupee.
(8) [8] Notwithstanding anything contained in this Scheme, in relation to an employee covered by the
proviso to clause (k) of Paragraph 2, pension shall be calculated in accordance with the provisions of sub-
paragraph (2), so however, that such pension shall not be less than what he would have been entitled to
had he continued in the scale of pay of General Manager, when the pension becomes due and payable to
him.
31. Invalid Pension:-
Invalid pension may be granted to an employee who,

has rendered minimum ten years of service ; and
retires from the service on account of any bodily or mental infirmity which permanently
incapacitates him for the service;
An employee applying for an invalid pension shall submit a medical certificate of incapacity from
a medical officer approved by the Corporation or a Company as the case may be;
32. Compassionate Allowance:-
An employee who is dismissed or removed or compulsorily retired or terminated from service shall forfeit
his pension :
Provided that the authority competent to dismiss or remove or compulsorily retire or terminate
him from service may, if -
o such dismissal, removal, compulsory retirement or termination is on or after the 1st day
of November, 1993 and
the case is deserving a special consideration, sanction a compassionate allowance not exceeding
two-thirds of pension which would have been admissible to him on the basis of qualifying service
rendered upto the date of his dismissal, removal, compulsory retirement or termination.
The compassionate allowance sanctioned under the proviso to sub-paragraph (1) shall not be less than
the amount of minimum pension payable under paragraph 35 of this scheme.
33. Payment of pension or family pension in respect of employees who retired or died
between 1.1.1986 and 31.10.1993.-
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(1) Employees who have retired from the service of the Corporation or a Company, as the case may be
between the 1st day of January, 1986 and the 31st day of October, 1993 shall be eligible for pension with
effect from the 1st day of November, 1993.
The family of a deceased employee governed by the provisions contained in sub-paragraph (7) of
paragraph 3 shall be eligible for family pension with effect from 1st day of November, 199RATE OF
PENSION
34. Amount of Pension:-
In respect of employees who retired between the 1st day of January, 1986 but before the 31st
day of July, 1987, basic pension and additional pension will be updated as per the formula given
in Appendix-III.
In the case of an employee retiring in accordance with the provisions of the relevant
rationalisation scheme after completing the qualifying service of not less than thirty three years,
the amount of basic pension shall be calculated at fifty per cent of the average emoluments.
(a) Additional pension shall be fifty per cent of the allowances drawn by an employee during the
last ten months of his service.
No dearness relief shall be paid on the amount of additional pension;
Explanation :-For the purposes of this sub-paragraph "allowances" means allowances which are
admissible to the extent counted for the following purpose only, namely :-
making contributions to the Provident Fund ;
grant of house rent allowances ;
payment of gratuity ; and
re-fixation of salary on promotion.
Pension as computed being the aggregate of sub-paragraphs (2) and (3) above shall be subject
to the minimum pension as specified in this scheme
An employee who has commuted the admissible portion of his pension as per the provisions of
paragraph 40 of this scheme shall receive only the balance of pension, monthly.
(a) In the case of an employee retiring before completing a qualifying service of thirty- three
years, but after completing a qualifying service of ten years, the amount of pension shall be
proportionate to the amount of pension admissible under sub-paragraphs(2) and (3) and in no
case the amount of pension shall be less than the amount of minimum pension specified in this
scheme.
35. Minimum Pension:- [9]
The amount of minimum pension shall be,_
rupees three hundred and seventy five per month in respect of an employee belonging to
supervisory, clerical and subordinate cadre, who had retired or died before the 1st day of August,
1992 and in respect of Officer and Development Officer who had retired or died before 1st day of
April, 1993;
rupees seven hundred and twenty per month in respect of an employee belonging to supervisory,
clerical and subordinate cadre, who had retired or died on or after 1st day of August, 1992 and in
respect of an Officer and Development Officer who had retired or died on or after 1st day of
April, 1993;
[10] rupees 1,100/- per month in respect of an employee who has retired or died on or after the
first day of August,1997;
(d) [10.1] in case of any wage revision in future the amount of minimum pension payable to an
employee shall be determined by the Corporation corresponding to the index to which the scales will be
linked."
260
36. Dearness Relief:-
Dearness Relief shall be granted on basic pension or family pension or invalid pension or on
compassionate allowance in accordance with the rates specified in Appendix-IV.
The dearness relief shall also be allowed on the full basic pension even after commutation.
37. Determination of the period of ten months for average emoluments._
The period of the preceding ten months for the purpose of average emoluments shall be
reckoned from the date of retirement .
In the case of voluntary retirement the period of preceding ten months for the purposes of
average emoluments shall be reckoned from the date on which the employee voluntarily retires.
In the case of dismissal or removal or compulsory retirement or termination of service the period
of preceding ten months for the purpose of average emoluments shall be reckoned from the date
on which the employee is dismissed or removed or compulsorily retired or terminated by the
Corporation or the Company.
If during the last ten months of the service, an employee had been absent from duty on
extraordinary leave on loss of pay or had been under suspension and the period whereof does
not count as service, the aforesaid period of the extraordinary leave or suspension shall not be
taken into account in the calculation of the average emoluments and an equal period before the
ten months shall be included.
FAMILY PENSION
38. Family Pension._
Without prejudice to the provisions contained in this scheme where an employee dies -
after completion of one year of continuous service; or
before completion of one year of continuous service , provided the deceased employee
concerned immediately prior to his appointment to the service or post was examined by the
medical officer approved by the Corporation or the Company and declared fit for employment in
the Corporation or such Company, as the case may be ; or
after retirement from service and was on the date of death in receipt of a pension, or
compassionate allowance, the family of the deceased shall be entitled to family pension, the
amount of which shall be determined in accordance with the Appendix-V.
The amount of family pension shall be fixed at monthly rates and be expressed in whole rupees
and where the family pension contains a fraction of a rupee, it shall be rounded off to the next
higher rupee:
Provided that in no case a family pension in excess of the maximum prescribed under this scheme shall
be allowed.
(3) (a) (i) where an employee, who is not governed by the Workmen's Compensation Act, 1923(8 of
1923), dies while in service after having rendered not less than seven years continuous service, the rate
of family pension payable to the family shall be equal to fifty per cent of the pay last drawn or twice the
family pension admissible under sub- paragraph (1), whichever is less, and the amount so admissible
shall be payable from the date following the date of death of the employee for a period of seven years,
or for a period upto the date on which the deceased employee would have attained the age of sixty five
years had he survived, whichever is less;
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(ii) In the event of death of an employee after retirement, the family pension as determined under clause
(a) or clause (b) of this sub-paragraph shall be payable for a period of seven years, or for a period upto
the date on which the retired deceased employee would have attained the age of sixty five years had he
survived, whichever is less;
(b) (i) Where an employee, who is governed by the Workmen's Compensation Act, 1923 (8 of 1923), dies
while in service after having rendered not less than seven years continuous service, the rate of family
pension payable to the family shall be equal to fifty per cent of the pay last drawn or one and half times
the family pension admissible under sub- paragraph(1), whichever is less;
(ii) the family pension so determined under sub-clause (i) shall be payable for the period mentioned in
clause (a);
(c) after the expiry of the period referred to in clause (a), the family, in receipt of family pension under
that clause or clause (b) shall be entitled to family pension at the rate admissible under sub- paragraph
(1).
(4) Notwithstanding anything contained in this scheme, where the family of a deceased employee opts
for pension in accordance with sub-paragraph (5) of paragraph 3 or is governed by the provisions
contained in sub-paragraph (6) or (7) or (8) of paragraph 3 , such family of the deceased shall be eligible
for family pension under this scheme.
39. Period of payment of family pension._
The period for which family pension is payable shall be,_

in the case of a widow or a widower, upto the date of death or remarriage, whichever is earlier;
in the case of a son, until he attains the age of twenty five years; and
(c) in the case of an unmarried daughter, drawing family pension after acquiring eligibility for the same
under sub-clause (iii) of clause (l) of Paragraph 2 until she attains the age of twenty five years or until
she gets married, whichever is earlier: [10.2]
(ca) in the case of widowed or divorced or unmarried daughter, drawing family pension after acquiring
eligibility for the same under sub-clause (iv) of clause (l) of paragraph 2, till the date of her marriage or
re-marriage, as the case may be, or the date on which her income exceeds the dependency criteria as
may be specified by the Corporation or a Company from time to time in this regard, whichever is earlier.
[10.3]
Provided that if the son or daughter of an employee is suffering from any disorder or disability of mind or
is physically crippled or disabled so as to render him or he unable to earn a living even after attaining the
age of twenty five years, the family pension shall be payable to such son or daughter for life subject to
the following conditions, namely:-
if such son or daughter is one among two or more children of the employee, the family pension shall be
initially payable to the minor children in the order set out in Clause (e) of sub-paragraph (1) until the last
minor child attains the age of twenty-five years and thereafter the family pension shall be resumed in
favour of the son or daughter suffering from disorder or disability of mind or who is physically crippled or
disabled and shall be payable to him or her for life;
262
if there are more than one such children suffering from disorder or disability of mind or who are
physically crippled or disabled, the family pension shall be paid in the order of their birth and the younger
of them will get the family pension only after the elder next above him or her ceases to be eligible:
Provided that where the family pension is payable to such twin children it shall be paid in the manner set
out in clause (f) of sub-paragraph (1);
the family pension shall be paid to such son or daughter through the guardian as if he or
o
she were a minor except in the case of a physically crippled son or daughter who has
attained the age of majority;
o before allowing the family pension for life to any such son or daughter, the Competent
Authority shall satisfy that the handicap is of such a nature as to prevent him or her from
earning his or her livelihood and the same shall be evidenced by a certificate obtained
from a medical officer approved by the Corporation or the Company, setting out, as far
as possible, the exact mental or physical condition of the child;
o the person receiving the family pension as guardian of such son or daughter or such a
son or daughter not receiving the family pension through a guardian shall produce every
three years a certificate from a medical officer approved by the Corporation or the
concerned Company to the effect that he or she continues to suffer from disorder or
disability of mind or continues to be physically crippled or disabled.
COMMUTATION
40. Commutation._
An employee shall be entitled to commute for a lump sum payment a

fraction not exceeding one-third of his pension.
Provided that in respect of an employee who is governed by sub-paragraph (5) of paragraph 3 of this
scheme, the family of such employee shall also be entitled to commute for a lump sum payment, a
fraction not exceeding one-third of the pension admissible to the employee.
An employee shall indicate the fraction of pension which he desires to commute and may either indicate
the maximum limit of one-third pension or such lower limit as he may desire to commute.
If fraction of pension to be commuted results in fraction of rupee, such
fraction of a rupee shall be ignored for the purpose of commutation.
The lump sum payable to an applicant shall be calculated in accordance with the Table given below:-
Commutation Values for a pension of Re. one per annum
Age next birthday Commutation value Age next birthday Commutation value
expressed as expressed as
number of year‟s number of year‟s
purchase purchase
17 19.28 51 12.95
18 19.20 52 12.66
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19 19.11 53 12.35
20 19.01 54 12.05
21 18.91 55 11.73
22 18.81 56 11.42
23 18.70 57 11.10
24 18.59 58 10.78
25 18.47 59 10.46
26 18.34 60 10.13
27 18.21 61 9.81
28 18.07 62 9.48
29 17.93 63 9.15
30 17.78 64 8.82
31 17.62 65 8.50
32 17.46 66 8.17
33 17.29 67 7.85
34 17.11 68 7.53
Age next birthday Commutation value Age next birthday Commutation value
expressed as expressed as
number of year‟s number of year‟s
purchase purchase
35 16.92 69 7.22
36 16.72 70 6.91
37 16.52 71 6.60
38 16.31 72 6.30
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39 16.09 73 6.01
40 15.87 74 5.72
41 15.64 75 5.44
42 15.40 76 5.17
43 15.15 77 4.90
44 14.90 78 4.65
45 14.64 79 4.40
46 14.37 80 4.17
47 14.10 81 3.94
48 13.82 82 3.72
49 13.54 83 3.52
50 13.25 84 3.32
85 3.13
Notes:
(1) The Table above indicates the commuted value of pension expressed as number of year's purchase
with reference to the age of the pensioner as on his next birthday. The commuted value in the case of an
employee retiring at the age of fifty-eight years is 10.46 year's purchase and, therefore, if he commutes
rupees one hundred from his pension within one year of retirement, the lump sum amount payable to
him works out to Rs.100 X 10.46 X 12 = Rs.12,552.
(2) An employee who had commuted the admissible portion of pension is entitled, to have the commuted
portion of pension restored after the expiry of a period of fifteen years from the date of commutation;
(3) An applicant who is authorised a superannuation pension, voluntary retirement pension, invalid
pension or Compassionate Allowance shall be eligible to commute a fraction of his pension under this
scheme
(4) In the case of a pensioner eligible for superannuation pension or pension on voluntary retirement, no
medical examination shall be necessary, if the application for commutation is made within one year from
the date of retirement. However, if such a pensioner applies for commutation of pension after one year
from the date of his retirement, the same will be permitted subject to medical examination.
265
Provisions of General Insurance ( Rationalisation of
Pay Scales and Other conditions of service)
Amendment Scheme, 2010.
1. AMENDMENT SCHEME, 2010 :
Scales of pay and allowances of Class I Officers have been revised as per General Insurance
(Rationalisation of Pay Scales and Other conditions of service of Officers) Amendment Scheme, 2010, (in
short, the Amendment Scheme, 2010) vide Gazette Notification S.O.No. 2470(E) dated 8 th October, 2010.
The following Administrative Instructions are issued for implementation of the provisions of the
Amendment Scheme,2010:
2. ELIGIBILITY :
3. EFFECTIVE DATE :
The pay scales and allowances would be deemed to have come into force from the dates mentioned
against each of the item as under :
Item Effective Date
Scales of Pay, Dearness Allowance, 01.08.2007

House Rent Allowance, City
Compensatory Allowance, Transport
Allowance, Provident Fund, Gratuity as
per revised pay, Fixed Personal
Allowance.
Hill Station Allowance, Kit Allowance and 01.11.2010

Paradeep Port Allowance
4. OPTION FOR FIXATION :
4.1 PERIOD FOR EXERCISING OPTION :
(a) Option for fitment in the revised pay scales is to be exercised on or before 22.10.2010 .
(c) Option once exercised shall be final.
(d) Officers shall not be eligible for the arrears on account of revision upto the date so opted for fitment.
Arrears as may be payable under the provisions of the Amendment Scheme, 2010 shall be released as
early as possible, subject to the receipt of option in the prescribed form within the stipulated time limit.
4.2 FITMENT ON PROMOTION :
266
6. ADDITIONAL (STAGNATION) INCREMENTS:
officers in the scale of pay of Scale I, Scale II, Scale III and Scale IV:
In the scale of pay of No. of Stagnation No. of Stagnation

Increment/s at present Increment/s as per
Amendment Scheme, 2010
Scale I Two Three
Scale II Four Five
Scale III Two Two
Scale IV NIL One
7. COMPONENTS FOR ARREARS:
7.1 BASIC PAY :
7.2 DEARNESS ALLOWANCE:
7.2.1 Item III of the Thirteenth Schedule
7.3. HOUSE RENT ALLOWANCE (HRA) :
Place of Posting Rate per month
(1) Cities of Mumbai, Navi Mumbai, Kolkata, New Delhi, 10% of Pay, subject to a maximum of
Chennai, Ahmedabad, Bengaluru, Hyderabad, Pune, Rs.3,200/- per month
Faridabad, Ghaziabad, Noida and Gurgaon
(2) Cities with population exceeding 12 lacs except the 8% of Pay, subject to a maximum of
cities mentioned at (1), Gandhinagar, and all cities in Rs.2,700/- per month
the State of Goa;
(3) All other places 7% of Pay, subject to a maximum of

Rs.2,600/- per month
Transport Allowance @ Rs.800/- per month, as above, shall be payable with effect from 1st August 2007,
or the date of actual fixation in the revised scales of pay, whichever is later.
7.CONVEYANCE ALLOWANCE TO PHYSICALLY HANDICAPPED EMPLOYEES:- 1.85% of the

Basic Pay subject to maximum of Rs.200/- p.m.
267
8. HILL STATION ALLOWANCE:
Sl.No Height of Place of posting Rate
(Above Mean Sea Level)
(i) 1500 metres and over 2.5% of the Basic Salary subject to
maximum of Rs.460/- per month
(ii) 1000 metres and over but not less than 1500 2% of the Basic Salary subject to
metres, Mercara and places which are specifically maximum of Rs.370/- per month
declared as "Hill Stations" by Central/State
Governments for their employees.
(iii) Not less than 750 metres and surrounded by and 2% of Basic Salary subject to a maximum
accessible only through hills with a height of of Rs.370/- per month
1000 metres and over
15. LUMP-SUM MEDICAL BENEFITS TO OFFICERS:
At present, officers are allowed reimbursement of domiciliary medical expenses on annual basis, as a
lump-sum amount up to the following limits:-
Basic Pay Maximum amount reimbursable per annum (Rs.)
Above Rs.31725/- 12000
Upto Rs.31725/- 8000
19. GROUP SAVINGS LINKED INSURANCE SCHEME (GSLI) AND GROUP TERM INSURANCE
SCHEME (GTIS):
Consequent upon revision in basic pay for officers, the revised categorisation for the purposes of GSLI
and GTIS with reference to the revised basic will be as under:-
Category Existing basic pay/salary range Revised basic pay / salary range (Rs.)
I 30,176 and above 49,411 and above
II 22,681 to 30,175 35,661 to 49,410
III 16,386 to 22,680 25,451 to 35,660
IV 11,110 to 16,385 17,240 to 25,450
(Rationalisation and Revision of Pay Scales and Other Conditions of Service of Supervisory,
Clerical and Subordinate Staff) Amendment Scheme, 2010.
268
18th October, 2010
1. Amendment Scheme, 2010 :
Scales of pay and allowances of Supervisory, Clerical and Subordinate Staff have been revised as per General
Insurance (Rationalisation and Revision of Pay scales and other Conditions of Service of Supervisory, Clerical
and Subordinate Staff) Amendment Scheme,2010, (in short, the Amendment Scheme, 2010), vide Gazette
Notification, S.O. No.2472(E) issued on 08th October, 2010. A copy of the
10.3. House Rent Allowance (HRA):
Sl. No. Place of posting Rate per month
1. Cities of Mumbai, Navi Mumbai, Kolkata, 10% of pay, Max—Rs.3200/- p.m

Delhi, Chennai, Ahmedabad, Bengaluru,
Hyderabad, Pune, Faridabad, Ghaziabad,
Noida and Gurgaon
2. Cities with population exceeding 12 lacs, 8% of pay, Max—Rs.2700/- p.m.

except cities mentioned at serial number
1, Gandhinagar and all cities in the State
of Goa;
3. All other places 7% of pay, subject to minimum of Rs.570 and

maximum of Rs.2600/- per month
10.4 City Compensatory Allowance (CCA):
Place of posting Rate per month
(a) Cities of Mumbai, Navi Mumbai, Calcutta, New 3% of pay subject to minimum of Rs.175/-
Delhi, Faridabad, Gaziabad, NOIDA, Gurgaon, per month and maximum of Rs.635 per
and Chennai month
b Cities with population exceeding 12 lacs, except 2.5% of pay subject to minimum of Rs.145/-
cities mentioned at (a) Gandhinagar and all per month and maximum of Rs.595/- per
cities in the State of Goa; month.
(c) Cities with the population of 5 lacs and above 2% of pay subject to minimum of Rs.115/-
but not exceeding 12 lacs,State capitals with per month and maximum of Rs.510/- per
population not exceeding 12 lacs, Chandigarh, month
Mohali, Pondicherry, Port Blair, Panchkula.
10.5 Functional Allowance:
269
1. With effect from the 1st day of August, 2007, the employees performing the following functions shall be
paid Functional Allowances as under:-
Subordinate Staff engaged in either as key Rs.375/- p.m

(i Holder or for carrying cash to or from Bank, as
) his regular and main function, where the
amount of cash carried during a calender
month is ordinarily Rs.25,000/- or more
(ii Other Subordinate Staff working as Liftmen, Rs.165/- p.m

) Machine Operators, Head Peons, Jamadars,
Daftaries, AC Plant Operators and Heavy
Vehicle Drivers, who were assigned these
functions before 1st day of January, 2006.
(ii Assistant (or Senior Assistant, in the event of Rs.800/- p.m

i) non-availability of Assistant) engaged in
handling cash in an office, as his regular and
main function, where the amount of cash
transactions during a calendar month is
ordinarily Rs.25,000/- or more
(i Telex Operators, Punch Card Operators, Unit Rs.60/- p.m

v Record Machine Operators and Comptists, who
were assigned these functions before the 1st
day of January, 2006
( Stenographer to Chairman-cum-Managing Rs.75/- p.m

v Director, Scale VII, Scale VI and equivalent
) positions
10.6 Allowance for Technical Qualification: Class II, III and IV
Sl. Examination Allowance for Technical Qualification (p.m.)

No.
1. Insurance Institute of India Or Chartered

Insurance Institute :
On completion of :
i. Licentiate Rs.180
ii. Associateship RS. 490
iii. Fellowship RS.820
2. Institute of Actuaries :
270
On passing each subject RS.180
3. Institute of Chartered Accountants or
Institute of Cost and Works Accounts:
On completion of : -
i. Intermediate Examination RS. 350
ii. Final Group A or Group B RS.600
iii. Final Group A and Group B Rs. 820
4. On completion of Master of Business Rs.820/- (except for Class II)

Administration of a Recognised University or
Institution (AICTE approved course)
(1) GRADUATION INCREMENTS OR ALLOWANCE TO ASSISTANTS:
Stage Revised Graduation Allowance per month with effect from

01.08.2007
One year after reaching the maximum Rs.300/-

of the scale
Two years after reaching the Rs.530/-

maximum of the scale
10.8 Transport Allowance:
Rate of Rs.275/- (Rupees Two Hundred and Seventy-five only) per month.
10.10 Fixed Personal Allowance:
Sl. Employees in the Revised Fixed Increment Dearness Allowance on

No. scale of Pay (as on Personal portion of Fixed Increment portion of Fixed
01.11.1993) of Allowance Personal Personal Allowance as per
(FPA) Allowance as the Altered Terms as on
per the Altered 01.11.1993
Terms (Sixth
Schedule)
1. Senior Assistant 840 230 18.68
2. Stenographer 840 230 18.68
3. Assistant, etc. 840 230 18.68
271
4. Record Clerk. 530 130 12.74
5. Driver 390 100 9.80
6. Other Subordinate 390 100 9.80

Staff
10.11 Washing Allowance for Class IV:
Rs.150/- per month with effect from 01.08.2007.
11. Hill Station Allowance:
Sl. No Place of posting Rate per month
1. Posted at places situated at a height of 1500 2.5% of the Basic Salary subject to maximum
metres and over above mean sea level. of Rs.370/- per month.
2. Posted at places situated at a height of 1000 2% of the Basic Salary subject to maximum
metres and over, but less than 1500 metres of Rs.290/- per month.
above mean sea level, at Mercara and at places
which are specifically declared as "Hill Stations"
by Central/State Governments for their
employees.
3. Posted at places situated at a height of not less 2% of Basic Salary subject to a maximum of
than 750 meters above mean sea level which Rs.290/- per month.
are surrounded by and accessible only through
hills with a height of 1000 metres and over
above mean sea level.
12. Kit Allowance:
Hill Station Allowance is payable has been revised to Rs.1,000/-. The Kit Allowance shall not be payable
on transfer from one hill station to another if the same was drawn at any time during the preceding three
years.
13. Paradeep Port Allowance:
confiremed employee posted in the office of the Company in Paradeep Port shall be paid an allowance of
Rs.110/- (Rupees One Hundred and Ten only) per month so long as he is posted in that office. This
allowance shall not be treated as Basic Salary for any purpose.
TRANSFER AND MOBILITY POLICY - OFFICERS

This policy aims :
1. To provide for an opportunity in improving competency, self development and career path of Officers;
272
2. To ensure grooming up of an officer for taking position in higher rank by following job rotation;
3. To achieve organizational goals;
4. To maintain sectoral balance in all Regions with a view to provide adequate service to insuring public.
B. APPLICABILITY:
i. These guidelines will come into effect from 1st June 2002.
ii. These guidelines are applicable to all officers upto the rank of Deputy Managers. Transfers / posting of
officers in the rank of Manager and above shall be at the discretion of the Management keeping in view
office exigencies and distinct nature of duties of officers of these cadres.
iii. These guidelines are not applicable to officers (a) posted / deputed to foreign operations
C. DEFINITIONS:
1. Transfer shall mean relocation of an officer from one town / city / urban agglomeration to another
town / city / urban agglomeration.
2. Metro centres shall mean and include :
Mumbai (including New Mumbai, Sub Urban areas upto Virar on Western Railway and upto Kalyan on
Central Railway)
Kolkata (entire Urban agglomeration)
Chennai (including Tambaram, Avadi, Red hills & Manali)
Delhi (including Gurgaon, Bahadurgarh, Noida & Faridabad)
Regional Centres shall mean – Centres other than Metro Centres where our Regional Offices are located
3. Geographical Zones shall mean as under :
Northern Zone – National Capital Territory of Delhi, States of Haryana, Punjab, Rajasthan, UP.,
Uttaranchal, Jammu and Kashmir, H.P. and Union Territory of Chandigarh.
Western Zone – States of Maharashtra, Gujarat, M.P., Chattisgarh, Goa, Union Territory of Daman & Diu,
Dadra & Nagar Haveli.
Eastern Zone – States of West Bengal, Bihar, Jharkan, Orissa, Sikkim, Assam, Meghalaya, Nagaland,
Tripura, Mizoram, Manipur, Arunachal Pradesh and Andaman & Nicobar.
Southern Zone – States of Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, Union Territories of
Pondicherry and Lakshadeep & Minicoy.
4. Normal period posting (NPP) shall mean continous posting in all cadres of Class I taken together for a
period of 5 years in respect of all centres.
5. Local transfer shall mean a transfer of an officer from one department to another in the same office or
from one office to another within the same town / city / urban agglomeration.
273
E. JOB ROTATION:
1. No officer shall ordinarily continue in a sensitive assignment for a period exceeding 3 years at a
stretch.
“Sensitive Assignment” for this purpose shall mean and include handling claims.
2. No officer may generally hold any post as in-charge of operating offices continuously for more than
10 years. However, in exceptional circumstances where for exigencies ofoffice if any relaxation is
required, C.M.D. shall relax this provision for reasons to be recorded in writing. On rotation from
development functions to administrative assignment, an officer shall have to serve on the administration
side for a minimum period of 3 years before being considered for development assignment again.
F. REQUEST TRANSFERS:
1. No transfer request shall ordinarily be considered until an officer has completed a minimum of 3 years
at his present place of posting. However, in case of extreme hardship involving serious health of the
individual concerned, the Board of the Company may relax this provision recording the reasons therefore.
2. Not more than 3 request transfers shall be considred from an officer in the entire service career, the
first such request transfer being counted since March 1, 1990.
3. Where the number of transfer requests for a particular station is more than the number of vacancies
available at that station, the selection out of the available transfer requests for the vacancies shall be
made on the basis of the length of stay of the officers at their present place of posting. The longer the
stay, the first to be considered.
4. If and under any circumstances, a transfer request is considered after 5 years posting, at the present
place, the transfer shall not be considered as a request transfer.
5. Spouse Cases :
Cases of transfer / postings where the officer wishes to join his / her spouse in different locations may be
given preferential treatment as far as possible.
6. Physically Handicapped Officers :
Cases of transfer / posting of officers suffering from physical disability of a nature and extent that causes
hardship in the mobility of the officer shall be considered sympathetically.
6A. Cases of Hardship due to major diseases: **
An Officer, who himself or whose spouse/any of the dependent children is suffering from any of the nine
specified diseases (for whcih Special Sick Leave is admissible as per Rules relating thereto), subject to the
satisfaction of the CMD on the basis of documentary evidence to that effect, may not be transferred from
one station to another, for the period specified by the CMD, but he will continue to be liable to job
rotation in terms of Para 5.
7. Difficult Areas :
Officers who have been transferred and posted to difficult areas from other parts of the Country shall be
considered, after the expiry of three years, for posting to one of the three places of their choice, subject
to availability of vacancies at the place of their choice. Such choice posting if made, shall be considered
as a Company transfer. This provision will not apply to officers whose home town falls within the difficult
274
area. For the purpose of this rule, „difficult area‟ would mean the area declared as such by the Chairman-
cum-Managing Director.
G. OFFICERS DUE TO RETIREMENT WITHIN 2 YEARS:
Officers who are due for retirement on Supperannuation within 2 years reckoned from 1st April of the
year in which transfer / posting is effected shall not be transferred unless necessitated by extenuating
circumstances, provided he will not be holding a sensitive post.
“Request for transfer from an Officer to his declared hom town or place of choice during the last 2 years
of this service would be considered subject to vacancy provided no further transfer benefits shall be
allowed at the time of retirement”.
H. TRANSFER BENEFITS:
1. An officer transferred from one station to another is entitled to transfer benefits as may be allowed
from time to time as per guidelines issued by the Company. For local transfers within the City, no transfer
benefit is allowed. In the case of request transfers, if considered before completion of 3 years, no
transfer benefits shall be allowed.
2. In cases of officers under orders of transfer, who have represented to the transferring authority on
grounds of extreme hardships, if any, for extension of time to join at the new place, the authority
concerned may, at his discretion, grant a maximum of additional 30 days beyond the date specified in the
Transfer Order or the 30 days ordinarily available when no such date is specified.
PROMOTION POLICY FOR OFFICERS - 2006

This Policy aims to provide requisite manpower competent to hold positions at various levels in the
Company to meet the challenges of the contemporary scenario, while providing reasonable opportunities
of career growth to its deserving and capable officers in various Scales by allowing them to move up in
the hierarchy and should higher responsibilities commensurate with their caliber and competence relevant
to the organizational needs from time to time.
4. Applicability:
The provisions of this Policy are applicable to promotions of Officers upto the cadre of Scale-VII
5. Seniority and Span of Promotion:
5.2 Promotions of officrs in the Company upto the Scale-V shall be within the company on all India Basis.
For this purpose, all Officers in each Scale upto Scalve IV shall be ranked in a single seniority list on all
India basis for the Company.
6. Determination of Vacancies:
6.1 Promotional vacancies for every financial year shall be determine don the basis fo the
norms/guidelines adopted by the Company for determining the cadre strength in each Scale from time to
time having regard to the organizational needs.
8. Eligibility and Zone of Consideration:
8.1 For empanelment for consideration of promotion to the cadres of Scale-VI & Scale VII, an officer
should have completed a minimum two full years of continusous service in the existing cadre and should
275
have minimum two full years of balance service remaining before attaining the age of superannuation*,
subject to the provisions of Para 17;
* the words "and should have minimum two full years of balance service remaining before
attaing the age of superannuation" inserted vide Circular HO:PER:CIR-34 dated 05.10.2009
8.2 To be eligible for being included in the process of consideration of promotion to the cadres of Scale-
V, Scale-IV, Scale-III and Scale-II, an officer should have completed minimum three years of continuous
service from the date of selection to the existing cadre, as on 31st March of the year prescribed for this
purpose from time to time:
Provided that out of such eligible officers, a number equal to
(a) five times the number of vacancies, in case of promotion ot the cadre of Scale-V,
(b) four times the number of vacancies in case of promotion to the cadre of Scale-IV, and
(c) three times the number of vacancies in case of promotions to the cadres of Scale-III and Scale II
from the top of the respective seniority list shall constitute the zone of consideration, subject to the
provisions of Para 17:
Provided further that, subject to the provisions of Explanation (3) to para 17, all eligible officers either
belonging to same batch or selected on same date shall be considered even if the total number exceeds
the above proportion:
Provided also that if the total number of eligible officers is less than the above proportion, all the eligible
candidates shall be considered.
Explanation: For the purposes of this paragraph, 'continuous service' means a period of duty excluding
period(s) of Extrordinary Leave.
9. Qualifying Benchmarks for consideration of promotions to various cadres
9.1 Screening Interview for promotions to the cadres of Scale VI and Scale VII
9.1.1. All officers in the eligibility cadre in GIPSA Member Companies and GIC empanelled as per Para 8.1
for consideration of promotion shall be interviewed by a Screening Committee comprising of 4 or 5
outside experts in the field of, say Management, HR and Organisational Behaviour, Public Administration,
Economics, Psychology etc.
9.1.2. The Screening Committee shall assess the officers under the parameters of conceptual level/vision,
depth & range of overview of the Industry/economy, planning ability, decision making ability,
management traits, positive attitude, problem solving ability including conflict resolution/management,
overall leadership ability etc and submit their assessment/recommendations to the Promotion Committee.
9.2 Written Test for promotions upto the cadre of Scale-V:
9.2.1. All officers included in the zone of consideration in terms of Para 8 above for promotion from
Scale-I to Scale-II, Scale-II to Scale-III and Scale-IV to Scale-V shall be required to qualify in a Written
Test to be conducted by an independent, professional Examining Body of repute (for example, National
Insurance Academy, Pune), before being included in further process for consideration of promotion for
the year concerned
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9.2.2. The nature of the Written Test shall be objective or descriptive or both, and it sahll carry a
maximum of 100 marks.
9.2.3. An officer shall be declared as having qualified the Written Test provided he secures 50 (45 for
SC/ST Officers with effect from Promotion Exercise 2008-09)* or more marks, as per the evaluation done
by the Examining Body. Officers securing marks below the minimum qualifying marks shall not be
considered in the futher process of promotion for the year concerned.
* the words in bracket, i.e. '45 for SC/ST Officers with effect from Promotion Exercise 2008-09'
inserted vide Notice dated 28.01.2008
9.2.4. The Examining Body shall have absolute discretion with regard to adopting an appropriate
techique/methodology for evaluation and the decision of the Examining Body in this regard as also on
the results of evaluation shall be final and binding.
10. Criteria for promotions upto Scale V:
10.1 Selection for promotion up to Scale-IV shall be based on the overall ranking obtained under the
parameters of Merit as judged by the score in the Written Test (subject to the provisions of Para 14.2),
Insurance Qualification (for promotions upto Scale-III) and Work Record (as per the annual performance
appraisal system in force) as well as Seniority.
10.2 In addition to the above, promotion from the cadre of Scale-IV to Scale-V shall be subejct to
Interview.
10.2.1. The system of Interview may be introduced for promotion to other cadres also, subejct to suitable
adjustment of Weightage in numerical marking,s from a date as may be deemed necessary and approved
by the Board of the Company.
Note: For the purpose of this paragraph, 'interview' shall include an interview conducted through video
conferencing, wherever the Promotion Committee so allows.
11. Scheme of weightage to various parameters in the criteria for promotions upto Scale V
11.1 In assessment, maximum Weightage in terms of numerical marks for various criteria shall be
worked out as under
Parameter Scale I to Scale II to Scale III to Scale IV to

Scale II Scale III Scale IV Scale V
(a) Written Test 30 30 30 25
(b) Insurance Qualification 5 5 - -
(c) Work Record 30 35 45 45
(d) Seniority 35 30 25 15
(e) I nterview
11.2 Written Test
For the purpose of assigning weightage of scores in the Written Test under Para 11.1, for every mark
scored in the Written Test, the following weightage shall be granted:-
(a) For Promotions upto Scale-IV : 0.3
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(b) For promotions to Scale-V : 0.25
Example:
An Officer in Scale-III scoring 60 marks in the Written Test shall be assigned 18 marks (out of 30) in the
scheme of weightage.
An Officer in Scale-IV scoring 60 marks in the Written Test shall be assigned 15 marks (out of 25) in the
scheme of weightage.
11.3 Insurance Qualifications
11.3.1. The Insurance Qualification marks are to be alloted only for Scale I and Scale II officers. For
promotion to the cadre of Scale IV and above, no weightage will be given for Insurance Qualification.
11.3.2. For promotion from Scale I to Scale II & from Scale-II to Scale-III, marks for Insurance
Qualification shall be allotted as under:-
(a) For Licentiate of I.I.I. NIL
(b) For completion of A.I.I.I. or A.C.I.I. 2 Marks
(c) For completion of F.I.I.I. or F.C.I.I. 5 Marks
11.3.3. For first two promotional exercises to be conducted under the provisions of this Policy, the
weightage of Insurance Qualification marks shall be available only once (in conjunction and
continuation with similar provisions under 1990 Policy). Thereafter, this rstriction shall not be
applicable.
Part of C.R Scale-l Scale-II Scale-III Scale-IV
Traits 10 10 10 10
Performance 12.5 12.5 17.5 17.5
Growth 7.5 12.5 17.5 17.5

Potential
Total 30 35 45 45
11.4 Work Record:
The work record shall be assessed through the annual confidential reports, the three parts of which shall
carry maximum marks in various Scales as under:-
278
11.5 Seniority:
Evaluation for the parameter of seniority shall be done as under:-
11.5.1. The marks for completed years of service will be alloted as under:-
(a) For the first three completed years of service (i.e. The minimum eligibility period in the existing Scale:
NIL
(b) For each completed year of service (beyond the first three years) in the existing Scale, as per the
following table:-
Scale Marks of each completed year of service (beyond the Maximum Marks
first three years) in the existing Scale as on 31st March of
the year referred to in Para 8.2
Scale I 5 35
Scale II 3 30
Scale III 3 25
Scale IV 2 15
11.5.2. To give weightage to inter-se seniority amongst the officers belonging to the same batch, 0.01
mark will be added in the ascending order, starting with 0.00 for the last officer in the list. If there is
more than one batch in the same year, all such batches of officers shall be arranged according to the
date of selection and marks will be alloted as above.
11.6 Interview:
Promotion Committee shall interview candidates and allot appropriate marks, the maximum being 15.
12. Promotion Committees:
.15. Special provisions for SC/ST officers:
The guidelines / directives / administrative instructions issued by the Department of Personnel and
Training, Government of India on the subject, as received by the Company from its administrative
Ministry, from time to time shall be deemed to be a part of this policy and given effect accordingly,
mutatis-mutandis.
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16. Appointing Authority for promotion:
The Appointing Authority for various cadres of officers shall be as under:-
Sl. No. Promotion to the Appointing Authority

cadre of
(i) Scale-VII & Scale-VI Chairman-cum-Managing Director
(ii) Scale-V & Scale-IV General Manager (Scale-VII)
(iii) Scale-III & Scale-II Deputy General Manager (Scale-VI)
20.2 The officers shall have option to select a date, ranging between the date of taking charge in the
higher cadre and the date of next annual increment, from which his/her salary is to be fixed in higher
scale. Such an option shall be required to be exercised within one month from taking charge in the higher
cadre, failing which the fixation of salary shall be done from such date of taking charge.
21. Effect of non-acceptance of promotion:
Where an officr declines to accept promotion, such refusal shall be taken into account when considering
his/her case for promotion for subsequent two years.
Explanation:
Notwithstanding anything contained herein to the contrary, for the purpose of this paragraph, similar
provisions appearing under Para 16 of the 1990 Policy shall be deemed to have continusous effect, in
conjunction with the provisions of thsi Paragraph
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LEAVE RULES
 Leave cannot be claimed as a matter of right.

 Competent Authority can refuse, revoke /
reduce leave of any description.
CASUAL LEAVE
Casual leave in a calendar year, i.e. Jan to Dec
12 days + 2 RH (Restricted Holidays)
(inclusive of 6 occasions ½ CL can be availed)
Maximum 5 days CL at a time.
EARNED LEAVE
This leave is earned by duty.
One day credit for every 11 working days.
Accumulation upto 240 days.
Can be availed minimum 6 days and a maximum of 120 days
at a time. 240 days preparatory to retirement.
15 days notice required.
Short term EL granted on extenuating circumstances.
½ day EL or SL in continuation and / continuation of ½ CL is
granted. Eg. ½CL followed by 2 days SL treated as 2 ½ days SL.
When no CL on credit then even 1/2day CL is treated as 1
day EL.
SICK LEAVE
30 days (half pay basis) earned on completed calendar year
Can be accumulated upto 240 days (half pay basis)
Only leave without pay affects earning of SL
Ex: 2 months leave during calendar year
(2 ½ days SL per month)
So, 2 x 2 ½ = 5 days SL deducted from 30 days
SL, i.e. 25 days SL alone accrue.
Medical certificate from registered practitioners

Fitness certificate when returning to duty
If 2nd opinion is sought by Competent Authority, cost of 2nd
medical examination to borne by the Company.
For retiring employees, 1st Jan to date of retirement divided

by 12.
For every one day SL 1/2 day pay is given.
SPECIAL SICK LEAVE

Special sick leave is granted by CMD for 6 months (180 days)
on ½ pay for 9 major illnesses:
1)Paralysis, 2) TB, 3) Cancer, 4) Leprosy, 5) AIDS, 6) Mental
Disease, 7) Brain Tumor, 8) Kidney
Diseases and 9) Cardiac Ailment.
When all SL has been exhausted, special SL will be granted
by HOD on recommendation of Regional In Charge.
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ADVANCE SICK LEAVE
Maximum 180 days.
Generally 50% only is granted on ½ pay.
Rest to be treated as loss of pay,
Mostly once in a career only.
Second time in a career in case of an accident / illness etc.
and must be serious but not chronic in nature (Not Covered by the
major disease provision) Only to persons not habituated to taking
frequent leave. Recommendation of medical authority Granted by
HO. The employee should have enough service to have the advance
SL adjusted against future accrual of EL / SL.
MATERNITY LEAVE
Granted to female employees with less than three living
children. 180 days on any one occasion – the spread of leave pre-
natal / post-natal will be left to the Convenience of the employee.
In case of miscarriage, 6 weeks leave with pay is granted.
In entire service period, maternity leave granted (incl. miscarriage)
shall not exceed 12 months. It is allowable even during probation,
subject to less than three living children.
ADOPTION LEAVE
To Childless female employee for adopting child below 1
year of age. Grant of leave is 2 months or the child reaches one year
of age, which ever is earlier.For only one child Adoption deed has to
be produced to the Company.
EXAMINATION LEAVE
Intervening days may be granted with EL / CL.
Examination leave including journey time to be granted (from and to
nearest centres).
For exams like, Institute of Actuaries (London), Chartered
Accountants, ICWA, MBA, etc.
Exam in the forenoon and no exam in the following day, then
employee has to attend the office
In the afternoon.
QUARANTINE LEAVE
When members of family suffer from infectious disease.
The medical officer shall quarantine the member.
Medical officer in charge – Govt. Civil / Military or Municipal
Hospital / Dispensary.
Employee is eligible only if he reports the presence of
infectious disease and produces the
Medical report to that effect.
He is not eligible if he declares after rejoining duty.
If employee himself suffers, he is eligible only for sick leave.
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Cholera, Small pox, Plague, Diphtheria, Typhus -Fever and
Cerebrospinal meningitis are
considered as infectious diseases – to be declared by State
Govt.
Competent Authority for Sanction – HO.
TRADE UNIION LEAVE

Special leave for bonafide trade union work for 15 days per
year excluding journey time for not more than 15 persons.
Special leave for a maximum of 10 days per year for 20
other persons of a recognized union (excluding journey time).
AUTHORISED ABSENCE FROM DUTY (treated as on duty)

Upto 6 days for vasectomy / Salpingectomy Upto 14 days to
a female employee for sterilization, can be granted in conjunction
with Maternity leave. 1 day for IUCD for family planning purpose.
HOME GUARDS ORGANISATION

Upto 15 days for camp duties.
Certificate of attendance should be produced.
TERRITORIAL ARMY
Maximum of 14 days.
Training at Urban Units only.
No ceiling for any one year.
Regional In Charge grants the participation at training camp.
Request for extension by Commandant of the particular unit
for grant of leave beyond 14 days is forwarded to HO.
For mandatory training period 1 or 2 months special leave is
granted.
INSURANCE EXAMINATION INVIGILATION

Upto 3 days maximum, single occasion.
Subject to maximum of 7 days in a year.
Eg: III, Bombay, Chartered Ins. Inst. London.
SPORTS
Upto 30 days in a year for National / International event.
Upto 10 days when sponsored by the Company in a local
event in sports.
Both put together not exceeding 30 days.
Participants are referees / time keepers and not managers
of event.
CURFEW
Prevention to attend the office due to operation of Law;
either in area of residence or area of Office.
Regional Incharge is the competent Authority to grant leave.
REPUBLIC DAY PARADE

Maximum 25 days Competent Authority - HO
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CONFERENCE OF INSURANCE INSTITUTES
Including Journey Time
Delegates and council members
SPECIAL LEAVE
Natural Calamities – Cyclone, Floods, Riots
HO grants special leave for that particular area (declared by
local administration)
Kendriya Sachivalaya Hindi Parishad

Upto 5 days including travel time – meeting, ceremonies,
prize distribution
Not exceeding 20 days in a year.
MOUNTENEERING / TREKKING
Considered similar to sports.
Expeditions approved by Indian Mounteneering Foundation.
Not exceeding 30 days in a calendar year.
Granted by HO.
BLOOD DONATION
One day on the day of donation only.
2 days in a year.
The donor volunteers and does not receive any payment.
Granted by Regional In Charge upto Scale IV, HO for Scale V
and beyond.
SPECIAL LEAVE FOR ELECTION DUTY
On election and dates for performing journeys.

On polling date, when employee resides away from place of
posting.
STUDY LEAVE
For Class I only
Management and allied studies
Shall not exceed 1 year; CMD may extend by one year
exceptionally
Can be in India or abroad
Leave without pay
PF, Gratuity, Seniority, Encashment rested for the period.
EXTRAORDINARY LEAVE / LEAVE OF LOSS OF PAY
Granted where no other leave due.

Upto 3 months on any occasion and not beyond 6 months
in entire service period.
Competent Authority is Regional In Charge upto 90 days and
HO for beyond 3 months.
Employees meeting with accident whilst on duty.
284
Upto 6 months – Regional In Charge and Beyond 6
months – Head Office.
LEAVE DETAILS OF PTS

PL 1 day for 1 month – maximum of 30 days
CL 8 days in a calendar year
SL 10 days for completed years of service – Maximum
160 days (1/2 pay)
ML 180 days each confinement. Three months –
maximum two occasions – After
completion of 2 years only – If less than three living
children.
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REINSURANCE
286
Purpose of reinsurance
The purpose of reinsurance is to spread a risk amongst a number of insurers. Every insurer aims to
write a balanced account and if he were to accept for his own account risks which were, in terms of
sum insured or limits of indemnity, very much larger than normal, there would be a possibility that
one or two losses in respect of such risks in the course of a year could result in serious losses in the
account as a whole. In any event, if the account comprised a comparatively small number of large
risks, losses would tend to fluctuate within very wide limits from year to year, and much larger
reserves would have to be set up than would otherwise be the case.
On the other hand, competition and the desire to provide the best possible service for clients mean
that an insurer cannot limit the amount for which he is prepared to grant cover to the insured to the
amount of his own normal acceptance for a particular class of risk, as this would mean that the
proposer or his broker might have to approach a number of insurers to obtain the full cover required.
The insurer therefore issues a policy covering the whole of the risk which the insured wishes to have
covered and make arrangements with other insurers or reinsurers to reinsure part of the risk. It is
important to note that the insured is not a party to the reinsurance contract, and obtain no rights and
incurs no obligations under it. In the event of a claim arising, the original insurer must pay to the
insured the whole amount of the claim, and then recover appropriate amounts from the reinsurers. If
for example, a reinsurer became insolvent and was unable to pay his share of a claim, the resulting
loss would have to be borne by the insurer and not by the insured.
Reinsurance Need:
• To protect its Capital and its Shareholders

• To Stabilise its results from year to year by leveling claims fluctuations
• To increase its Capacity to handle larger and more complex risks of various classes
• To maintain any statutory minimum Solvency requirements and provide Security
• To Spread risks throughout world markets, not just locally, to lessen financial impact on
any single economy
• Limit concentration of risk
• Take advantage of risk expertise of reinsurers who have grater experience of business
(territory class)
. REINSURANCE IN INDIA
Until GIC was notified as a National Reinsurer,it was operating as a holding / parent
company of the 4 public sector companies,controlling their reinsurance programmes.
GIC would receive 20% obligatory cession.of each policy written in India.
Since deregulation, GIC has assumed the role.of the market.s only professional re-insurer.In order
to focus on reinsurance, both in.India and through its overseas offices and trading partners, GIC has
divested itself of any direct business that it wrote prior to
November 2000, with the temporary exception of crop insurance. It currently manages Hull Pool on
behalf of the market, which receives a cession from writing companies and after a pool protection
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the business is retro-ceded back to the member companies. GIC also manages the .Terrorism
Pool..
REINSURANCE REGULATION
The placement of reinsurance business from tbe Indian market is now governed by
Reinsurance Regulations formed by the IRDA. The objective of the regulation is to
maximize the retention of premiums within the country and to ensure that IRDA has
issued the following instructions:
. Placement of 20% of each policy with National Re subject to a monetary limit for each risk for
some classes Inter-company cession between four public
sector companies. . Indian Pool for Hull managed by GIC.. The treaty and balance risk after
automatic capacity are to be first offered to other insurance companies in the market before offering
it to international re-insurers.. Each company is free to arrange its own reinsurance program, which
has to be submitted to the IRDA 45 days before commencement.. Not more than 10% of
reinsurance premium to be placed with one re-insurer. No re-insurer will have a rating of less than
.BBB. from Standard and Poor.s or an equivalent rating from AM Best.
General Insurance Corporation of India
GIC as a national re-insurer is providing useful capacity to all insurance companies
Facultative Reinsurance
The oldest type of reinsurance, and one which is still in use to some extent at the present day, is
facultative reinsurance. The distinguishing features of this type of reinsurance are that the reinsurers
considers each risk offered to him individually, and is free to accept or reject each offer as he
considers appropriate. The procedure in connection with facultative reinsurance is in fact very much
the same as that which applies to the original acceptance of the business by the direct insurer. The
reinsurer is entitled to have before him all the information available to the direct insurer to enable
him to decide whether or not to accept the risk. In fire insurance, for example, the reinsurer may
wish to consult the plan and report on the insured premises, and to have details of the rates of
premium being charged by the direct insurer.
The great disadvantage of facultative reinsurance is that a considerable amount of time and work,
with consequent expense, are involved. There is also uncertainty whether sufficient reinsurance can
be obtained in any particular case, and this may mean that the direct insurer will have to delay
granting cover until the possibility of obtaining reinsurance has been investigated.
Treaties
Because of the disadvantages mentioned above, treaty reinsurance has become very much more
popular, and facultative reinsurance is now generally confined to those classes of insurance where
reinsurance is comparatively uncommon and to cases where the capacity of treaties is insufficient to
provide the whole of the reinsurance required.
288
A treaty is an agreement between the direct insurer and a group of reinsurers, under which the
ceding company undertakes to cede, and the reinsurers undertake to accept, a share of any
business which comes within the terms of the treaty. So far as the individual risks ceded under the
treaty are concerned, the reinsurers have no option but to accept them. The result of such an
arrangement is that the direct insurer is able to grant cover in respect of all business coming within
the scope of the treaty, up to a limit of the amount which can be given to the treaty, plus his own
retention, in the knowledge that reinsurance facilities are available.
Sometimes details of individual cessions are given to the reinsurers on what are known as
bordereaux, but it is more common at the present time to have "blind treaties" under which the
reinsurers do not receive details of each individual cession.
At first sight this might seem to suggest that there are possibilities of abuse by the direct insurers,
that they might cede the poorer risks to the reinsurers and retain the good business for themselves.
In fact, this does not happen, for two main reasons. First, it is always a condition of a treaty that the
ceding company must itself retain a share of the risk, and the maximum amount which the treaty will
accept is geared to the amount retained by the ceding company. Secondly, if a company's treaty
continually produced poor results, the ceding company would find that it would have great difficulty
in obtaining continuance of the treaty when it was due for renewal.
Community of interest between the direct office and the treaty is strengthened by the fact that the
direct office receives from the treaty a commission depending on the profits of the treaty.
There are various types of treaty, the main types being the following:-
Surplus Treaty
Under this type of treaty, the direct insurer fixes a retention in respect of each individual risk, the
retention varying with the merits of each risk, and the reinsurer the surplus with the treaty, subject to
its capacity.
A surplus treaty is spoken of in terms of lines, a line being equivalent to the ceding company's
retention. There may, for example, be a 10-line treaty and, if so, the maximum amount which could
be ceded would be 10 times the ceding company's retention. If further reinsurance was required, it
would have to be obtained facultatively.
Facultative Obligatory
This type of cover is a form of surplus which provides that the company may, if it so wishes (ie it is
not obliged as with a quota share and surplus), cede share of risks to its reinsurers. The Reinsurers,
on the other hand, are obliged to accept the business ceded.
Quota Share Treaty
Under this arrangement, a fixed proportion of the whole of a given class of insurance is reinsured.
For example, the ceding company may agree to reinsure 75 per cent of the class of business
concerned, so that the treaty will received three-quarters of the premiums and will be responsible for
the same proportion of all of the losses. This type of treaty is suitable where an office
289
has only a small portfolio of a particular class of business, but it has the disadvantage that
premiums are paid away in respect of small risks which individually do not justify reinsurance.
Excess of Loss Treaty
This is an arrangement whereby an insurer decides the maximum amount which he is prepared to
bear in respect of anyone loss, and the reinsurers agree to pay a proportion or the whole of the
excess of any loss which exceeds that amount. There is usually an upper limit to such a treaty. As
soon as the amount retained is exceeded, the reinsurers are interested and are responsible for the
proportion of claims and expenses (plus additional amounts for companies expenses) in proportion
which their interest bears to that of the ceding company. Thus the ceding company only gives
shares of larger risks to itself reinsurers, thereby retaining more of its own premium and potential
profit.
For example,
the insurer may agree to bear the first £5,000,000 of any loss, and the treaty may pay, say 90 per
cent of the excess of any loss up to £100,000,000. another treaty may be arranged to pay the
excess beyond £100,000,000.
Stop Loss/Aggregate
Excess of Loss
This is a form of contract on a non-proportional basis which provides that as opposed to the
reinsurers paying when a single loss or series of losses arising from a single event exceed a certain
figure, if all the claims which occur during a given year exceed a certain percentage of the ceding
company's premium the reinsurer will pay all amounts exceeding this figure.
Bordereau (plural Bordereaux)—A form providing

premium or lossdata with respect to identified
Admitted Reinsurance—A company is “admitted” specific risks which is furnished the reinsurerby the
when it has beenlicensed and accepted by reinsured.
appropriate insurance governmental authoritiesof a
state or country. In determining its financial Burning Cost—A term most frequently used in
condition a cedinginsurer is allowed to take credit spread loss propertyreinsurance to express pure
for the unearned premiums and unpaidclaims on loss cost or more specifically the ratioof incurred
the risks reinsured if the reinsurance is placed in losses within a specified amount in excess of the
an admittedreinsurance company. cedingcompany’s retention to its gross premiums
over a stipulated numberof years.
Arbitration Clause—Language providing a means
of resolving differences * Adapted from www.captive.com.
between the reinsurer and the reinsured without

litigation.
Cancellation—(a) Run-off basis means that the
Usually, each party appoints an arbiter. The two liability of the reinsurerunder policies, which
thus appointed select athird arbiter, or umpire, and became effective under the treaty prior tot he
a majority decision of the three becomesbinding on cancellation date of such treaty, shall continue until
the parties to the arbitration proceedings. the expiration date of each policy; (b) Cut-off basis
means that the liability of the reinsurer under
290
policies, which became effective under the treaty reimburse the company for the commission paid to
prior to the cancellation date of such treaty, shall its agents, plus taxes and its overhead. The
cease with respect to losses resulting from amount of such allowance frequently determines
accidents taking place on and after said profit or loss to the reinsurer.
cancellation date. Usually the reinsurer will return
to the company the unearned premium portfolio, Commutation Clause—A clause in a reinsurance
unless the treaty is written on an earned premium agreement, which provides for estimation,
basis. payment and complete discharge of all future
obligations for reinsurance losses incurred
Capacity—The percentage of surplus or the dollar regardless of the continuing nature of certain
amount of exposure that an insurer or reinsurer is losses such as unlimited medical and lifetime
willing to place at risk. Capacity may apply to a benefits for Workers’ Compensation.
single risk, a program, a line of business, or an
entire book ofbusiness. Contingent Commissions (or Profit
Commission)—An allowancepayable to the
Catastrophe Reinsurance—A form of ceding company in addition to the normal ceding
reinsurance that indemnifies the ceding company commission allowance. It is a pre-determined
for the accumulation of losses in excess of a percentage of the reinsurer’s net profits after a
stipulated sum arising from a catastrophic event charge for the reinsurer’s overhead, derived from
such as conflagration, earthquake or windstorm. the subject treaty.
Catastrophe loss generally refers to the total loss
of an insurance company arising out of a single Contributing Excess—Where there is more than
catastrophic event. one reinsurer sharing a line of insurance on a risk
in excess of a specified retention, each such
Cede—When a company reinsures its liability with reinsurer shall contribute towards any excess loss
another, it “cedes” business. in proportion to his original participation in such
risk. Example: Retention US$100,000,
Ceding Commission—The cedant’s acquisition
costs and overhead expenses, taxes, licenses and Reinsurer A accepts one-half contributing share
fees, plus a fee representing a share of expected part of US$1,000,000n excess of said
profits—sometimes expressed as a percentage of US$100,000. Reinsurer B accepts remaining one-
the gross reinsurance premium. halfcontribution share part of US$1,000,000.
Ceding Company—The original or primary Earned Premium—(1) That part of the premium
insurer; the insurance company which purchases applicable to the
reinsurance.
expired part of the policy period, including the
Claims-Made Basis—A form of reinsurance under short-rate premium on cancellation, the entire
which the date of the claim report is deemed to be premium on the amount of loss paid under some
the date of the loss event. Claims reported during contracts, and the entire premium on the contract
the term of the reinsurance agreement are on the expiration of the policy.
therefore covered, regardless of when they
occurred. A claims made agreement is said to “cut (2) That portion of the reinsurance premium
off the tail” on liability business by not covering calculated on a monthly, quarterly or annual basis
claims reported after the term of the reinsurance which is to be retained byte reinsurer should there
agreement—unless extended by special cession be canceled.
agreement. See Occurrence Basis.
(3) When a premium Is paid in advance for a
Commission—In reinsurance, the primary certain time, the company is said to “earn” the
insurance company usually pays the reinsurer its premium as the time advances. For example, a
proportion of the gross premium it receives on a policy written for three years and paid for in
risk. The reinsurer then allows the company a advance would be one-third “earned” at the end of
ceding or direct commission allowance on such
the first year.
gross premium received, large enough to
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Errors and Omissions Clause—A provision in loss containment provisions. One of its objectives
reinsurance agreement which is intended to is the enhancement of the cedant’s financial
neutralize any change in liability or benefits as statements or operating ratios, for example, the
result of an inadvertent error by either party. combined ratio; loss portfolio transfers; and
financial quota shares are examples.
Excess of Loss—A form of reinsurance under
which recoveries are available when a given loss Flat Rate—In reinsurance, a percentage rate
exceeds the cedant’s retention defined in the applied to a ceding company’s premium writings
agreement. for the classes of business reinsured to determine
the reinsurance premiums to be paid the reinsurer.
Ex Gratia Payment—A payment made for which
the company is not liable under the terms of its Following the Fortunes—The clause stipulating
policy. Usually made in lieu of incurring greater that once a risk has been ceded by the reinsured,
legal expenses in defending a claim. Rarely the reinsurer is bound by the same fate thereon as
experienced by the ceding company.
encountered in reinsurance as the reinsurer by
custom and for practical reasons follows the Incurred Loss Ratio—The percentage of losses
fortunes of the ceding company. incurred to premiums earned. (See Experience.)
Expense Ratio—The percentage of premium Inflation Factor—A loading to provide for

used to pay all the costs of acquiring, writing and increased medical costs and loss payments in the
servicing insurance and reinsurance. future due to inflation.
Experience—(1) The loss record of an insured or Intermediary—A third party in the design,
of a class of coverage. negotiation, and administration of a reinsurance
agreement. Intermediaries recommend to cedants
(2) Classified statistics of events connected with
the type and amount of reinsurance to be
insurance, of outgo, or of income, actual or
purchased and negotiate the placement of
estimated.
coverage with reinsurers.
(3) What figures show to have happened in the
Intermediary Clause—A provision in reinsurance
past. Experience may be compiled on different
agreements which identifies the intermediary
bases to provide various means of appraisal,
negotiating the agreement. Most intermediary
namely Accident Year, Calendar Year, or Policy
clauses shift all credit risk to reinsurers by
Year, but, for underwriting purposes, should
providing that:
always compare earned premium with incurred
losses after the latter have been modified by 1. the cedant’s payments to the intermediary are
anallowance for loss development and incurred but deemed payments to the reinsurer; and
not reported losse sI.B.N.R.).
2. the reinsurer’s payments to the intermediary are
Extra Contractual Obligations (ECO)—A generic not payments to the cedant until actually received
term that, when used in reinsurance agreements, by the cedant.
refers to damages awarded by a court against an
insurer which are outside the provisions of the This clause is mandatory in some states.
insurance policy, due to the insurer’s bad faith,
fraud, or gross negligence in the handling of a Layer—A horizontal segment of the liability
claim. Examples are punitive damages and losses insured, for example, the
in excess of policy limits.
second US$100,000 of a $500,000 liability is the
Facultative—Facultative reinsurance means first layer if the cedant retains US$100,000 but a
reinsurance of individual risks by offer and higher layer if it retains a lesser amount.
acceptance wherein the reinsurer retains the
Lead Reinsurer—The reinsurer who negotiates
“faculty” to accept or reject each risk offered.
the terms, conditions, and premium rates and first
Financial Reinsurance—A form of reinsurance signs on to the slip; reinsurers who subsequently
which considers the time value of money and has
292
sign on to the slip under those terms and of view of the insured. With regard to limits on
conditions are considered following reinsurers. occurrences, property catastrophe reinsurance
agreements frequently define adverse events
Letter of Credit—A financial guaranty issued by a having a common cause and sometimes within a
bank that permits the party to which it is issued to specified time frame, for example 72 hours, as
draw funds from the bank in the event of a valid being one occurrence. This definition prevents
unpaid claim against the other party; in multiple retentions and reinsurance limits from
reinsurance, typical used to permit reserve credit being exposed in a single catastrophe loss.
to be taken with respect to non-admitted
Offset Clause—A provision in reinsurance
reinsurance; and alternative to funds withheld and agreements which permits each party to net
modified coinsurance. amounts due against those payable before making
payment; especially important in the event of
Loss Adjustment Expense—All expenditures of
insolvency of one party which ceases to remit
an insurer associated with its adjustment,
amounts due to the other.
recording, and settlement of claims, other than the
claim payment itself. The term encompasses both Participating or Pro Rata Reinsurance—
allocated loss adjustment expenses (ALAE) which Includes Quota Share, First Surplus, Second
are loss adjustment expenses identified by a claim Surplus, and all other sharing forms of reinsurance
file in the insurer’s records, such as attorney’s where under the reinsurer participates pro rata in
fees; and unallocated loss adjustment expenses all losses and in all premiums.
(ULAE), which are operating expenses not
identified by claim file, but functionally associated Peril—This term refers to the causes of possible
with settling losses, such as salaries of claims loss in the property field—for instance: Fire,
department. Windstorm, Collision, Hail, and so on. In the
casualty field the term “Hazard” is more frequently
Loss Development—The difference between the used.
original loss as originally reported to the reinsurer
and its subsequent evaluation at a later date or at Per Risk Excess Reinsurance—Retention and
the time of its final disposal. A serious problem to amount of reinsurance apply “per risk” rather than
reinsurers who, being involved in the more serious on a per accident or event or aggregate basis.
cases, must frequently wait many years for the
final disposition of a loss. Policy Year—The year commencing with the
effective date of the policy or with an anniversary
Loss Event—The total losses to the ceding of that date.
company or to the reinsurer resulting from a single
cause such as a windstorm. Pool—An organization of insurers or reinsurers
through which particular types of risks are
Loss Ratio—Proportionate relationship of incurred underwritten with premiums, losses, and expenses
losses to earned premiums expressed as a shared in agreed ratios.
percentage.
Portfolio Reinsurance—In transactions of
Non-Admitted Reinsurance—A Company is reinsurance, it refers to all the risks of the
“non-admitted” when it has not been licensed and reinsurance transaction. For example, if one
thereby recognized by appropriate insurance company reinsures all of another’s outstanding
governmental authority of a state or country. Automobile business, the reinsuring company is
Reinsurance is “non-admitted” when placed in a said to assume the “portfolio” of Automobile
non-admitted company and therefore may not be business and it is paid the total of the unearned
treated as an asset against reinsured losses or premium on all the risks soreinsured (less some
agreed commission).
unearned premium reserves for insurance
company accounting and statement purposes. Portfolio Run-off—The opposite of Return of
Portfolio—permitting premiums and losses in
Occurrence—An adverse contingent accident or
event neither expected nor intended from the point
293
respect of in-force business to run to their normal Reinstatement Clause—When the amount of
expiration upon termination of a reinsurance treaty. reinsurance coverage provided under a treaty is
reduced by the payment of a reinsurance loss as
Premium, Deposit—When the terms of a policy the result of one catastrophe, the reinsurance
provide that the final earned premium be cover is automatically reinstated usually by the
determined at some time after the policy itself payment of a reinstatement premium.
hasbeen written, companies may require tentative
or “deposit” premiums at the beginning which are Reinstatement Premium—A pro rata reinsurance
readjusted when the actual earned charge has premium is charged for the reinstatement of the
been later determined. amount of reinsurance coverage that was reduced
as the result of a reinsurance loss payment under
Premium, Pure—The portion of the premium a catastrophe cover.
calculated to enable the insurer to pay losses and,
in some cases, allocated claim expenses or the Reinsurance—The practice whereby one party
premium arrived at by dividing losses by exposure called the Reinsurer in consideration of a premium
and in which no loading has been added for paid to him agrees to indemnify another party,
commission, taxes, and expenses. called the Reinsured, for part or all of the liability
assumed by th latter party under a policy or
Premium (Written/Unearned/Earned)—Written policies of insurance which it has issued.The
premium is premium registered on the books of an reinsured may be referred to as the Original or
insurer or reinsurer at the time a policy is issued Primary Insurer, or Direct Writing Company, or the
and paid for. Premium for a future exposure period Ceding Company.
is said to be unearned premium for an individual
policy, written premium minus unearned premium Reinsurer—An insurer or reinsurer assuming the
equals earned premium. Earned premium is risk of another under contract.
income for the accounting period, while unearned
premium will be income in a future accounting Retention—The net amount of risk which the
period. ceding company or the reinsurer keeps for its own
account or that of specified others.
Professional Reinsurer—A term used to
designate a company whose business is confined Retrocession—A reinsurance of reinsurance.
solely to reinsurance and the peripheral services Example: Company B” has accepted reinsurance
offered by a reinsurer to its customers as opposed from Company “A”, and then obtains for itself, on
to primary insurers who exchange reinsurance or such business assumed, reinsurance from
operate reinsurance departments as adjuncts to Company “C”. This secondary reinsurance is
their basic business of primary insurance. The called a Retrocession. The transaction whereby a
majority of professional reinsurers provide reinsurer cedes to another reinsurer all or part of
complete reinsurance and service at one source the reinsurance it has previously assumed.
directly to the ceding company.
Retrospective Rating—A plan or method which
Profit Commission—A provision found in some permits adjustment of the final reinsurance ceding
reinsurance agreements which provides for profit commission or premium on the basis of the actual
sharing. Parties agree to a formula forcalculating loss experience under the subject reinsurance
profit, an allowance for the reinsurer’s expenses, treaty—subject to minimum and maximum limits.
and the cedant’s share of such profit after
Risks—A term used to denote the physical units of
expenses.
property at risk or the object of insurance
Quota Share—The basic form of participating protection and not Perils or Hazard. Reinsurance
treaty whereby the
by tradition permits each insurance company to
reinsurer accepts a stated percentage of each and frame its own rules for defining units of Risks. The
every risk within a defined category of business on word is also defined as chance of loss or
a pro rata basis. Participation in each risk is fixed uncertainty of loss.
and certain.
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Salvage and Subrogation—Those rights of the reinsurance agreement under consideration, ;but
insured which, under the terms of the policy, net after all other adjustments, for example,
automatically transfer to the insurer upon cancellations, refunds, or other reinsurance.
settlement of a loss. Salvage applies to any Normally, subject premium refers to premium on
proceeds from the repaired,recovered, or scrapped subject business. Also known as base premium.
property. Subrogation refers to the proceeds
ofnegotiations or legal actions against negligent Surplus—The excess of assets over liabilities.
third parties and may apply to either property or Statutory surplus is an insurer’s or reinsurer’s
casualty coverage. capital as determined under statutory accounting
rules. Surplus determines an insurer’s or
Self-Insurance—Setting aside of funds by an reinsurer’s capacity to write business.
individual or organization to meet his or its losses,
and to absorb fluctuations in the amount of loss, Surplus Share—A form of proportional
the losses being charged against the funds so set reinsurance where the reinsurer
aside or accumulated.
assumes pro rata responsibility for only that
Sliding Scale Commission—A ceding portion of any risk which exceeds the company’s
commission which varies inversely with the loss established retentions.
ratio under the reinsurance agreement. the scales
Treaty—A general reinsurance agreement which
are not always one to one: for example, as the loss
is obligatory between the ceding company and the
ratio decreases by 1%, the ceding commission
reinsurer containing the contractual terms applying
might increase only 5%.
to the reinsurance of some class or classes of
Slip—A binder often including more than one business, in contrast to a reinsurance agreement
reinsurer. At Lloyd’s of London, the slip is carried covering an individual risk.
from underwriter to underwriter for initialing and
Ultimate Net Loss—This term usually means the
subscribing to a specific share of the risk.
total sum which the assured, or any company as
Special Acceptance—The facultative extension of his insurer, or both, become obligated to pay either
a reinsurance treaty to embrace a risk not through adjudication or compromise, and usually
automatically included within its terms. includes hospital, medical and funeral charges and
all sums paid as salaries, wages, compensation,
Spread Loss—A form of reinsurance under which fees, charges and law costs, premiums on
premiums are paid during good years to build up a attachment or appeal bonds, interest, expenses for
fund from which losses are recovered in bad doctors, lawyers, nurses, and investigators and
years. This reinsurance has the effect of stabilizing other persons, and for litigation, settlement,
a cedant’s loss ratio over an extended period of adjustment and investigation of claims and suits
time. which are paid as a consequence of the insured
loss, excluding only the salaries of the assured’s or
Stop Loss—A form of reinsurance under which of any underlying insurer’s permanent employees.
the reinsurer pays some or all of a cedant’s
aggregate retained losses in excess of a Unearned Premium—That portion of the original
predetermined dollar amount or in excess of a premium that applies to the unexpired portion of
percentage of premium. risk. A fire or casualty insurer or reinsurer must
carry a reserve against all unearned premiums as
Subject Premium—A cedant’s premiums (written a liability in its financial statement, for if the policy
or earned) to which should be canceled,the company would have to
pay back the unearned part of the original
the reinsurance premium rate is applied to
premium.Working Layer—The first layer above
calculate the reinsurance premium. Often, subject
the cedant’s retention wherein moderate to heavy
premium is gross/net written premium income
loss activity is expected by the cedant and
(GNWPI) or gross/net earned premium income
reinsurer.Working layer reinsurance agreements
(GNEPI), where the term “gross/net” means gross
often include adjustable features to reflect actual
before deducting reinsurance premiums for the
underwriting results.
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Reinsurance is used by Insurance Companies via various arrangements, broadly split as follows:
Facultative Treaty
- reinsurance for individual risks reinsurance for entire portfolios
• Automatic acceptance of risks,

as long as satisfy criteria laid out
• Each individual risk on which by Reinsurer (oblig/oblig)
reinsurance is required is offe • Possible to have Fac/oblig
• red separately to Reinsurer treaties where insurer can choose
• Reinsurer has no obligation to to cede, Reinsurer automatically
cede or accept accepts.
• Time-consuming • Treaty can be inflexible
• No guarantee cover will be • Treaty is efficient
available, or at a price that is • Treaty is certain
acceptable
• Insurer cannot automatically
accept underlying policy until it is in
place
Proportional Non Proportional
the insurer decides what part of the original does not apply to specific risk, but instead to
insurance it wishes to retain for its own account losses, by limiting the amount of the original
(its retention) and reinsurers (cedes) the insurance company’s loss for any one loss or
balance with a reinsurer(s series of losses
The two main types of Proportional The two types of Non Proportional
Reinsurance are : Reinsurance are :
• Quota Share • Excess of Loss
• Surplus • Stop Loss
Quoto share Excess of Loss
Simplest type of reinsurance whereby a

Reinsurer agrees to reinsure a fixed proportion
of every risk accepted by the ceding company, This type of treaty protects a ceding company
sharing proportionately in all losses and against a loss where the ceding company’s
receiving in the same proportion of all direct net claims liability exceeds its retention limit.
premium, less the agreed reinsurance
commission
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Disadvantages This could be either protection against any
individual loss (Single XOL) or an accumulation
of individual losses arising from one event
(Catastrophe XOL) e.g. natural disasters
• Cedes same proportion of low and high
variance risks. Stop Loss
• Cedes same proportion of risk
irrespective of size.
• Passes share of profit to reinsurer
This ensures that the Reinsured’s Results for a
Surplus given portfolio are maintained within an agreed
Loss Ratio, beyond which which Reinsurers are
liable up to an agreed limit.
Unlike a Quota Share, under a Surplus Treaty

the ceding company can retain a risk up to the
level of its agreed Retention amount. The Cover could thus be defined as say:
proportion of the risk which is beyond the
40% of Aggregate Loss Ratio Excess of
Retention amount is then ceded into the
110% of Aggregate Loss Ratio
Surplus treaty and reinsurer receives a
proportionate share of the premium, less
reinsurance commission.
Stop Loss protection is common in Portfolios
Purpose of Surplus Cover that are prone to wide variation in Results, such
as an Agriculture or a Medical portfolio
• Enables insurer to write larger risks
• Enables insurer to fine-tune experience Purpose of Excess of Loss
for the class concerned
• Popular for classes where a wide
variation can occur in size of risks, e.g.
commercial property. • Permit an insurer to accept
Disadvantages risks that could lead to large claims.
• Reduce risk of insolvency from
• Administration more complicated catastrophe, single large
• Potential for human error especially loss/ aggregation of claims
facultative/obligation treaties.
• Stabilise the technical results of
the insurer by reducing
Reinsurance Commission claims fluctuations
– Lower capital required

• Commission is paid by the reinsurer to
the Cedant on premiums ceded.
Disadvantages of Excess of Loss

• In principle Reinsurance commission
should be sufficient to cover the original • Profit to reinsurer
commission, plus the cedant’s • Underwriting cycle
Management expenses, but the margin • Knowing at what level to buy
is also tied to the performance of the and how much vertical
portfolio (and the negotiation skills of coverage is required
the broker involved).
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Premium Amount
• Commission rate is agreed upon by the • Minimum and Deposit premiums are
parties at the time of negotiating terms payable, normally to be paid quarterly
of the treaty. or half yearly in advance, during the
year.
• The Minimum and Deposit Premium
• Main Types of Commission are: charged is arrived at as follows: % Rate
– Flat Commission Quoted X EGNPI X 90%.
– Profit Commission (over and • Purpose of the 90% margin is to
above the Flat Commission) provide leeway for the possibility that
– Sliding Scale Commission the EGNPI may not be achieved. After
Sliding Scale Commission the end of the year, additional premium
is payable if the Actual GNPI exceeds
90% of the EGNPI.
• Reinsurers argue that a Minimum
• This is a performance based Premium ensures that:
Commission which allows for downward – the ceding company does not
adjustment of Commission on posting a deliberately overstate its
high loss ratio; and also provides for a EGNPI (to achieve lower rates)
higher Commission for good results. and
– the reinsurer receives a
guaranteed premium to meet
• A Provisional Commission, which is its expenses and to
normally the mid point between the Gross Net Premium Income (GNPI)
Commission scale, is payable before
the year end adjustment adjustment of
the Commission
Loss Ratio – This is the amount against
Commission which Excess of Loss rates are
based, to derive the
61.00% and more 27.50%
reinsurance Premiums.
59.50% and more but less than 61.00% 28.50%
–
– Pricing is initially based on the
58.00% and more but less than 59.50% 29.50% Estimated GNPI (EGNPI) and
then adjusted after the close of
56.50% and more but less than 58.00% 30.50% the year, when the Actual GNPI
is known.
55.00% and more but less than 56.50% 31.50% –
– The EGNPI figure not only
provides the basis of
52.00% and more but less than 53.50% 33.50% calculation of premiums, but
also gives the reinsurer a
50.50% and more but less than 52.00% 34.50% feeling of exposure it is
assuming under an excess of
49.00% and more but less than 50.50% 35.50% loss treaty.
–
47.50% and more but less than 49.00% 36.50% – cover the liability it has
assumed
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but less than 32.50% 47.50%
Provisional commission: 37.50
Profit Commission
• A percentage of the earned profits

which the reinsurer agrees to pay in
addition to the Flat Commission that
would already have been awarded.
• Formula takes into account the

Reinsurers’ Management expenses
margin (normally 7,5%) and the treaty’s
possible deficits from prior years.
Limits
• This specifies the point at which the reinsurer becomes liable and the amount for which the
reinsurer is liable.
• Limits are typically expressed as follows:
“Limit: R 3,500,000 Ultimate Net Loss each and every loss each and every risk, each and every
occurrence or series of loss occurrences arising out of one event.
Deductible: R 3,500,000 Ultimate Net Loss each and every loss each and every risk, each and
every occurrence or series of loss occurrences arising out of one event.”
• The above statement means that the Reinsurers will pay up to R3,5m in excess of the first R3,5m
payable by the Reinsured for each loss occurrence.
• Normally cover is arranged in various layers, primarily for pricing purposes
Reinstatements
• Apart from the Monetary Limits given per layer, the amount of cover under an excess of loss
treaty is limited in terms of the aggregate amount that is recoverable per layer.
• For example, if a layer of 7m Excess of 3m provides for 3 Reinstatements, the total amount
recoverable under the layer is 28m ie the 3 x 7m reinstatements + the 7m cover.
• In most cases Reinstatements are provided at an additional premium Pro Rata to the amount
recoverable and based on a stated margin of the premium to the layer.
• The Reinstatements clause could read as follows:
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“First reinstatement free, Second reinstatement at 50% additional premium and Third
reinstatement at 100% additional premium; all pro-rata to amount only”.
Stability or Index Clause
• Some claims, particularly long tail, are affected by inflation and (both CPI and potentially court
award inflation) claims. The Stability or Index Clause is a method designed to ensure that the
Limits of cover are maintained at the same intrinsic value applicable when cover commenced
irrespective of the effects of inflation over a period of time
The type of treaty an insurance company arranges depends on a number of factors :
• Class of Business
• Assets, Capital and Reserves
• Actual or Perceived Exposures
• Loss Experience and/or Profitability
• Availability of Capacity
• Legislation
• Cost of Reinsurance
• Expertise / Knowledge
• Spread risk
• Write larger portfolios of risks
• Encourage reciprocal business
• Reduce net expense levels if commission is generous.
•
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AVIATION INSURANCE
New India participated in the Aviation Insurance of Air India way back in 1946. New India Assurance
Company provides professional aviation insurance advice and solutions to the needs of small aircraft
operators as well as scheduled airlines.
The aviation portfolio encompasses following type of covers.
Hull All Risk Insurance Policy: This policy is suitable for small aircraft operators belonging to
flying clubs, companies engaged in agricultural spraying operations, aircrafts especially designed
for VVIPs, business executives and for those engaged in industrial aids. The policy scope includes
all physical loss or damage sustained by the insured aircraft including total loss, disappearance. All
losses are paid subject to deductibles.
Spares All Risk Insurance Policy: Covers loss or damage to spares, tools, equipments and supplies owned
by the insured or the property for which the insured is responsible whilst on ground or in transit by land, sea, air
including in own aircraft or whilst on the premises of others for storage only.
Hull/Spares War Risk Insurance: Indemnity is provided to the aircraft as well as spares caused by war,
invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, resurrection, martial law, strikes,
riots, civil commotion, malicious acts, sabotage.
Hull Deductible Insurance: Airlines at times have to bear a proportion of loss due to application of a
deductible under All Risk Policy, which may impose considerable financial difficulty on the insured. Therefore
the operators insure part of their deductibles under this kind of insurance.
Aviation Personal Accident (crew member) Insurance: This cover is designed to cover insured person
against injury, disablement or death arising as result of an accident that is generally granted on annual basis.
The cover operates while mounting or dismounting from and whilst traveling an aircraft while the aircraft is
being used within the geographical scope as per its permitted usage. This cover can also be on 24 hours
basis. The capital sum insured varies according to the status of the insured or earning capacity and fixed by
the insurers.
Loss of License Insurance: Operating crews of the aircraft are required to have valid license. License is
liable to be suspended either temporarily or permanently on medical grounds. Consequential financial loss is
covered by the loss of license policy. Cover provided is in respect of incapacity causing permanent total
disablement or temporary total disablement due to bodily injury or illness.
Besides the aforesaid general aviation policies New India Assurance Company also provides various other tailor-
made insurance as per specific requirements of the insured.
Claims: In case of claims following are illustrative documents that are generally called for from the insured.
Documents in connection with aircraft details
Documents in connection with flight details
Documents in connection with the accident
Certificate of airworthiness/registration
Crew details
Maintenance & engineering information
Operational manual passenger documentation in case of claims
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AIRCRAFT INSURANCE POLICY
Headings and marginal captions are inserted for the purpose of

convenient reference only and are not to be deemed part of this
Policy.
Certain words and phrases used in this Policy have special
meanings which can be found in Section IV(D) Definitions.
The Insurers agree to insure against loss, damage or liability,

arising out of an Accident occurring during the Period of
Insurance to the extent and in the manner provided in this
Policy.
SECTION I LOSS OF OR DAMAGE TO AIRCRAFT

1. Coverage
(a) The Insurers will at their option pay for, replace or repair,
accidental loss of or damage to the Aircraft described in the
Schedule arising from the risks covered, including
disappearance if the Aircraft is unreported for sixty days after the
commencement of Flight, but not exceeding the Amount Insured
as specified in Part 2(5) of the Schedule and subject to the
amounts to be deducted specified in Condition 3(c).
(b) If the Aircraft is insured hereby for the risks of Flight, the
Insurers will, in addition, pay reasonable emergency expenses
necessarily incurred by the Insured for the immediate safety of
the Aircraft consequent upon damage or forced landing, up to 10
per cent of the Amount Insured as specified in Part 2(5) of the
Schedule.
2. Exclusions applicable to this Section only
The Insurers shall not be liable for
Wear and Tear, (a) wear and tear, deterioration, breakdown, defect or failure
Breakdown howsoever caused in any Unit of the Aircraft and the
consequences thereof within such Unit;
(b) damage to any Unit by anything which has a progressive or
cumulative effect but damage attributable to a single recorded
incident is covered under paragraph 1(a) above.
HOWEVER accidental loss of or damage to the Aircraft

consequent upon 2(a) or (b) above is covered under paragraph
1(a) above.
3. Conditions applicable to this Section only
Dismantling (a) If the Aircraft is damaged
Transport and
Repairs
(i) no dismantling or repairs shall be commenced without the
consent of the Insurers except whatever is necessary in the
interests of safety, or to prevent further damage, or to comply
302
with orders issued by the appropriate authority;
(ii) the Insurers will pay only for repairs and transport of labour
and materials by the most economical method unless the
Insurers agree otherwise with the Insured.
AVN 1C
21.12.98
Payment or If the Insurers exercise their option to pay for or replace the Aircraft
Replacement
(b) If the Insurers exercise their option to pay for or replace the Aircraft
(i) the Insurers may take the Aircraft (together with all documents
of record, registration and title thereto) as salvage;
(ii) the cover afforded by this Section is terminated in respect of
the Aircraft even if the Aircraft is retained by the Insured for
valuable consideration or otherwise;
(iii) the replacement aircraft shall be of the same make and type
and in reasonably like condition unless otherwise agreed with the
Insured.
Amounts to be (c) Except where the Insurers exercise their option to pay for or
Deducted from the replace the Aircraft, there shall be deducted from the claim under
Claim
paragraph 1(a) of this the Section
(i) the amount specified in Part 6(B) of the Schedule and
(ii) such proportion of the Overhaul Cost of any Unit repaired or

replaced as the used time bears to the Overhaul Life of the Unit.
No (d) Unless the Insurers elect to take the Aircraft as salvage the Aircraft
Abandonment shall at all times remain the property of the Insured who shall have
no right of abandonment to the Insurers.
Other (e) (No claim shall be payable under this Section if other insurance
Insurance which is payable in consequence of loss or damage covered under
this Section has been or shall be effected by or on behalf of the
Insured without the knowledge or consent of the Insurers.
See also Section IV
SECTION II LEGAL LIABILITY TO THIRD PARTIES

(OTHER THAN PASSENGERS)
1. Coverage
The Insurers will indemnify the Insured for all sums which the
Insured shall become legally liable to pay, and shall pay, as
compensatory damages (including costs awarded against the
Insured) in respect of accidental bodily injury (fatal or otherwise)
and accidental damage to property caused by the Aircraft or by any
person or object falling therefrom.
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2. Exclusions applicable to this Section only
The Insurers shall not be liable for

Employees and (a) injury (fatal or otherwise) or loss sustained by any director or
Others employee of the Insured or partner in the Insured's business whilst
acting in the course of his employment with or duties for the
Insured
Operational (b) injury (fatal or otherwise) or loss sustained by any member of the
Crew flight, cabin or other crew whilst engaged in the operation of the
Aircraft;
Passengers (c) injury (fatal or otherwise) or loss sustained by any passenger whilst
entering, on board, or alighting from the Aircraft;
Property (d) loss of or damage to any property belonging to or in the care,
custody or control of the Insured;
Noise and Pollution (e) claims excluded by the attached Noise and Pollution and Other
and Other Perils Perils Pollution and Exclusion Clause.
3. Limit of Indemnity applicable to this Section
The liability of the Insurers under this Section shall not exceed the
amount stated in Part 6(C) of the Schedule, less any amounts
under Part 6(B). The Insurers will defray in addition any legal
costs and expenses incurred with their written consent in
defending any action which may be brought against the Insured in
respect of any claim for compensatory damages covered by this
Section, but should the amount paid or awarded in settlement of
such claim exceed the Limit of Indemnity then the liability of the
Insurers in respect of such legal costs and expenses shall be
limited to such proportion of the said legal costs and expenses as
the Limit of Indemnity bears to the amount paid for compensatory
damages.
See also Section IV
SECTION III LEGAL LIABILITY TO PASSENGERS

1. Coverage
The Insurers will indemnify the Insured in respect of all sums which
the Insured shall become legally liable to pay, and shall pay, as
compensatory damages (including costs awarded against the
Insured) in respect of
(a) accidental bodily injury (fatal or otherwise) to passengers whilst
entering, on board, or alighting from the Aircraft and
(b) loss of or damage to baggage and personal articles of passengers
arising out of an Accident to the Aircraft.
Provided always that
Documentary (i) before a passenger boards the Aircraft the Insured shall take such
Precautions
304
measures as are necessary to exclude or limit liability for claims
under (a) and (b) above to the extent permitted by law;
(ii) if the measures referred to in proviso (i) above include the issue of
a passenger ticket/baggage check, the same shall be delivered
correctly completed to the passenger a reasonable time before the
passenger boards the Aircraft.
Effect of In the event of failure to comply with proviso (i) or (ii) the
Non- liability of the Insurers under this Section shall not exceed the
Compliance
amount of the legal liability, if any, that would have existed
had the proviso been complied with.
2. Exclusions applicable to this Section

The Insurers shall not be liable for injury (fatal or otherwise) or loss
sustained by any
Employees and (a) director or employee of the Insured or partner in the Insured's
Others business whilst acting in the course of his employment with or
duties for the Insured;
Operational Crew (b) member of the flight, cabin or other crew whilst engaged in the
operation of the Aircraft.
3. Limits of Indemnity applicable to this Section

The liability of the Insurers under this Section shall not exceed
the amounts stated in Part 6(C) of the Schedule, less any
amounts under Part 6(B). The Insurers will defray in addition any
legal costs and expenses incurred with their written consent in
defending any action which may be brought against the Insured
in respect of any claim for compensatory damages covered by
this Section, but should the amount paid or awarded in settlement
of such claim exceed the Limit of Indemnity then the liability of the
Insurers in respect of such legal costs and expenses shall be
limited to such proportion of the said legal costs and expenses as
the Limit of Indemnity bears to the amount paid for compensatory
damages. See also Section IV
SECTION IV
(A) GENERAL EXCLUSIONS APPLICABLE TO ALL SECTION
This Policy does not apply:-

Illegal Uses 1. Whilst the Aircraft is being used for any illegal purpose or for any
purpose other than those stated in Part 3 of the Schedule and as
defined in the Definitions.
Geographical 2. Whilst the Aircraft is outside the geographical limits stated in Part
Limits 5 of the Limits Schedule unless due to force majeure
305
Pilots 3. Whilst the Aircraft is being piloted by any person other than as
stated in Part 4 of the Schedule except that the Aircraft may be
operated on the ground by any person competent for that
purpose.
Transportation 4. Whilst the Aircraft is being transported by any means of
by Other conveyance except by Other as the result of an Accident giving
Conveyance rise to a claim under Section I of this Policy.
Landing and 5. Whilst the Aircraft is landing on or taking off or attempting to do
Take-off Areas so from a place which does not comply with the
recommendations laid down by the manufacturer of the Aircraft
except as a result of force majeure.
Contractual 6. To liability assumed or rights waived by the Insured under any
Liability agreement (other than a passenger ticket/baggage check issued
under Section III hereof) except to the extent that such liability
would have attached to the Insured in the absence of such
agreement.
Number of 7. Whilst the total number of passengers being carried in the Aircraft
Passengers exceeds the declared maximum number of passengers stated in
Part 2(4) of the Schedule.
Non- 8. To claims which are payable under any other policy or policies
Contribution except in respect of any excess beyond the amount which would
have been payable under such other policy or policies had this
Policy not been effected.
Nuclear Risks 9. To claims excluded by the attached Nuclear Risks Exclusion
Clause.
War, Hijacking 10. To claims caused by

And Other
Perils
(a) War, invasion, acts of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection, martial law,
military or usurped power or attempts at usurpation of power.
(b) Any hostile detonation of any weapon of war employing atomic or
nuclear fission and/or fusion or other like reaction or radioactive force or
matter.
(c) Strikes, riots, civil commotions or labour disturbances.
(d) Any act of one or more persons, whether or not agents of a sovereign
Power, for political or terrorist purposes and whether the loss or damage
resulting therefrom is accidental or intentional.
(e) Any malicious act or act of sabotage.
(f) Confiscation, nationalisation, seizure, restraint, detention, appropriation,
requisition for title or use by or under the order of any Government
(whether civil military or de facto) or public or local authority.
(g) Hi-jacking or any unlawful seizure or wrongful exercise of control of the
Aircraft or crew in Flight (including any attempt at such seizure or
control) made by any person or persons on board the Aircraft acting
306
without the consent of the Insured.
Furthermore this Policy does not cover claims arising whilst the Aircraft
is outside the control of the Insured by reason of any of the above perils.
The Aircraft shall be deemed to have been restored to the control of the
Insured on the safe return of the Aircraft to the Insured at an airfield not
excluded by the geographical limits of this Policy, and entirely suitable
for the operation of the Aircraft (such safe return shall require that the
Aircraft be parked with engines shut down and under no duress).
(B) CONDITIONS PRECEDENT APPLICABLE TO ALL SECTIONS
It is necessary that the Insured observes and fulfils the following

Conditions before the Insurers have any liability to make any
payment under this Policy.
Due Diligence 1. The Insured shall at all times use due diligence and do and concur in
doing everything reasonably practicable to avoid accidents and to avoid
or diminish any loss hereon.
Compliance 2. The Insured shall comply with all air navigation and airworthiness orders
with Air and requirements issued by any competent authority affecting the safe
Navigation
Orders, etc.
operation of the Aircraft and shall ensure that
(a) the Aircraft is airworthy at the commencement of each Flight;
(b) all Log Books and other records in connection with the Aircraft which are
required by any official regulations in force from time to time shall be
kept up to date and shall be produced to the Insurers or their agents on
request;
(c) the employees and agents of the Insured comply with such orders and
requirements.
(C) GENERAL CONDITIONS APPLICABLE TO ALL SECTIONS

Claims Control 1. The Insurers shall be entitled (if they so elect) at any time and for so long
as they desire to take absolute control of all negotiations and proceedings
and in the name of the Insured to settle, defend or pursue any claim.
Subrogation 2. Upon an indemnity being given or a payment being made by the Insurers
under this Policy, they shall be subrogated to the rights and remedies of
the Insured who shall co-operate with and do all things necessary to
assist the Insurers to exercise such rights and remedies.
Variation in Risk 3. Should there be any change in the circumstances or nature of the risks
which Risk are the basis of this contract the Insured shall give immediate
notice thereof to the Insurers and no claim arising subsequent to such
change shall be recoverable hereunder unless such change has been
accepted by the Insurers.
Cancellation 4. This Policy may be cancelled by either the Insurers or the Insured giving
10 days notice in writing of such cancellation. If cancelled by the Insurers
they will return a pro rata portion of the premium in respect of the
unexpired period of the Policy. If cancelled by the Insured a return of
premium shall be at the discretion of the Insurers. There will be no return
of premium in respect of any Aircraft on which a loss is paid or is payable
307
under this Policy.
Assignment 5. This Policy shall not be assigned in whole or in part except with the
consent of the Insurers verified by endorsement hereon.
Not Marine Insurance 6. This Policy is not and the parties hereto expressly agree that it shall not
be construed as a policy of marine insurance.
Arbitration 7. This Policy shall be construed in accordance with English Law and any
dispute or difference between the Insured and the Insurers shall be
submitted to arbitration in London in accordance with the Statutory
provision for arbitration for the time being in force.
Two or More Aircraft 8. When two or more Aircraft are insured hereunder the terms of this Policy
apply separately to each.
Limit(s) of
Indemnity
9. Notwithstanding the inclusion herein of more than one Insured, whether
by endorsement or otherwise, the total liability of the Insurers in respect
of any or all Insureds shall not exceed the Limit(s) of Indemnity stated in
this Policy.
False and Fraudulent 10. If the Insured shall make any claim knowing the same to be false or
Claims fraudulent as regards amount or otherwise this Policy shall become void
and all claims hereunder shall be forfeited.
(D) DEFINITIONS
1. "ACCIDENT" means any one accident or series of accidents arising out

of one event.
2. "UNIT" means a part or an assembly of parts (including any sub-
assemblies) of the Aircraft which has been assigned an Overhaul Life as
a part or an assembly. Nevertheless, an engine complete with all parts
normally attached when removed for the purpose of overhaul or
replacement shall together constitute a single Unit.
3. "OVERHAUL LIFE" means the amount of use, or operational and/or
calendar time which, according to the Airworthiness Authority,
determines when overhaul or replacement of a Unit is required.
4. “OVERHAUL COST" means the costs of labour and materials which are
or would be incurred in overhaul or replacement (whichever is
necessary) at the end of the Overhaul Life of the damaged or a similar
Unit.
5. "PRIVATE PLEASURE" means use for private and pleasure purposes
but NOT use for any business or profession nor for hire or reward.
6. "BUSINESS" means the uses stated in Private Pleasure and use for
business or professional purposes but NOT use for hire or reward.
7. "COMMERCIAL" means the uses stated in Private Pleasure and
Business and use for the carriage by the Insured of passengers,
308
baggage accompanying passengers and cargo for hire or reward.
8. "RENTAL" means rental, lease, charter or hire by the Insured to any
person, company or organisation for Private Pleasure and Business uses
only, where the operation of the Aircraft is not under the control of the
Insured. Rental for any other purpose is NOT insured under this Policy
unless specifically declared to Insurers and the detail of such use(s)
stated in Part 3 of the Schedule under SPECIAL RENTAL USES.
Definitions 5, 6, 7 and 8 constitute Standard Uses and do not include
instruction, aerobatics, hunting, patrol, fire-fighting, the intentional
dropping, spraying or release of anything, any form of experimental or
competitive flying, and any other use involving abnormal hazard, but
when cover is provided details of such use(s) are stated in Part 3 of the
Schedule under SPECIAL USES.
9. "FLIGHT" means from the time the Aircraft moves forward in taking off or
attempting to take off, whilst in the air, and until the Aircraft completes its
landing run. A rotary-wing aircraft shall be deemed to be in Flight when
the rotors are in motion as a result of engine power, the momentum
generated therefrom, or autorotation.
10. "TAXIING" means movement of the Aircraft under its own power other
than in Flight as defined above. Taxiing shall not be deemed to cease
merely by reason of a temporary halting of the Aircraft.
11. "MOORED" means, in the case of aircraft designed to land on water,
whilst the Aircraft is afloat and is not in Flight or Taxiing as defined
above, and includes the risks of launching and hauling up.
12. "GROUND" means whilst the Aircraft is not in Flight or Taxiing or Moored
as defined above.
CONDITIONS
1. INSURED'S DUTIES WHEN LOSS OCCURS.
When loss occurs, the Insured shall

(a) take all reasonable measures to protect the aircraft, whether or not the loss is covered by
this Policy, and any further loss due to the Insured's failure to do so shall not be
recoverable under this Policy; reasonable expense incurred in affording such protection,
provided the loss is covered by this Policy, shall be deemed incurred at the Underwriters'
request.
(b) give notice thereof as soon as practicable to the Underwriters and also in the event of theft,
larceny, robbery, pilferage or vandalism, to the Police. The Underwriters shall not be
responsible for the payment of a reward offered for the recovery of the insured property
unless authorized by the Underwriters or their representatives.
(c) file proof of loss with the Underwriters' representatives within sixty (60) days after the
occurrence of loss, unless such time is extended in writing by the Underwriters, in the form
of a sworn statement of the Insured setting forth the interest of the Insured and of all others
in the property affected, any encumbrances thereon, the actual cash value thereof at the
309
time of loss; the amount, place, time and cause of such loss, the amount of all insurance
whether valid and collectible or not, covering said property; and the Insured as often as
required shall submit to examination under oath by any person named by the Underwriters
and subscribe the same; upon the request of the Underwriters the insured shall exhibit the
damaged property to the Underwriters or their representatives, and as often as required
shall produce for examination all logbooks, and all books of accounts, bills, invoices, and
other vouchers, or certified copies thereof if the originals be lost, at such reasonable place
as may be designated by the Underwriters or their representatives and shall permit extracts
and copies thereof to be made.
2. ASSISTANCE AND CO-OPERATION OF THE INSURED.
The Insured shall co-operate with the Underwriters and, upon the Underwriters' request, shall
attend hearings and trials and shall assist in effecting settlements, securing and giving evidence,
obtaining the attendance of witnesses and in the conduct of suits. The Insured shall not, except at
his own cost, voluntarily make any payment, assume any obligation or incur any expense.
3. LIMIT OF LIABILITY; SETTLEMENT OPTIONS; NO ABANDONMENT.
The liability of the Underwriters for direct physical loss of or damage to the aircraft shall not exceed
the amount of insurance set out in the Declarations, less the applicable deductible, nor what it
would cost to repair or replace the aircraft or parts thereof with other of like kind and quality, and
without compensation for loss of use. The Underwriters may pay for the loss in money or may
repair or replace the aircraft or parts thereof, as aforesaid, or may return any stolen property with
payment for any resultant damage thereto at any time before the loss is paid or the property is so
replaced, or may take all or such part of the aircraft at the agreed or appraised value, but there
shall be no abandonment to the Underwriters.
In the case of partial physical loss of or damage to the aircraft when repairs are effected by the
Insured the liability of the Underwriters shall not exceed the actual cost of any parts or materials
necessary to effect repairs or replacement plus 150% of the actual cost of labour to the Insured
without any further allowance for overhead or overtime; when the repairs are made by other than
the Insured, the actual costs as evidenced by bills rendered to the Insured, less any discount
granted to the Insured, excluding cost of overtime and its related overhead unless previously
agreed to by the Underwriters. The amount of such loss shall include the cost of transporting new
or damaged parts or of transporting the damaged aircraft to the place of repair and subsequent
return to the airport nearest to the place of accident, or home airport, whichever be the nearer, but
shall be limited to the least expensive method of reasonable transportation.
In no event shall the liability of the Underwriters for partial physical loss of or damage to the aircraft
exceed the amount for which the Underwriters would be liable were the loss payable as a total loss.
4. SUBSTITUTIONS.
Power plant and/or propellers and/or rotors and/or appliances of like make or type may be
substituted. The value of any such installed substituted item shall not exceed the value of the item
originally installed unless endorsed hereon and any required additional premium paid hereon.
5. APPRAISAL.
If the Insured and the Underwriters fail to agree as to the amount of loss, each shall, on the written
demand of either, made within sixty days after receipt of proof of loss by the Underwriters, select a
competent and disinterested appraiser, and the appraisal shall be made at a reasonable time and
310
place. The appraisers shall first select a competent and disinterested umpire, and failing for fifteen
days to agree upon such umpire, then on request of the Insured or the Underwriters, such umpire
shall be selected by a judge of a court of record in the county and state in which such appraisal is
pending. The appraisers shall then appraise the loss, stating separately the actual cash value at
the time of the loss and the amount of loss in respect of each item, and failing to agree, shall
submit their differences to the umpire. An award in writing of any two shall determine the amount of
loss. The Insured and the Underwriters shall each pay his or their chosen appraiser and shall bear
equally the other expenses of the appraisal and umpire.
The Underwriters shall not be held to have waived any of their rights by any act relating
to appraisal.
6. OTHER INSURANCE.
If there be other insurance against loss or damage covered by this Policy, the Underwriters shall
not be liable under this Policy for a greater proportion of such loss or damage than the amount of
insurance stated in the Declarations bears to the total amount of valid and collectible insurance
against such loss or damage.
7. NO BENEFIT TO BAILEE.
The insurance afforded by this Policy shall not enure directly or indirectly to the benefit of any
carrier or bailee.
8. REINSTATEMENT.
In the event of loss whether or not covered by this Policy the amount of insurance in respect to any
aircraft shall be reduced as of the time and date of loss by the amount of such loss and such
reduced value shall continue until repairs are commenced. The insurance shall then be increased
by the value of the completed repairs until the amount of insurance is fully reinstated or the Policy
has expired.
9. SUBROGATION.
In the event of any payment under this Policy, the Underwriters shall be subrogated to all the
Insured's rights of recovery therefor against any person or organisation and the Insured shall
execute and deliver instruments and papers and do whatever else is necessary to secure such
rights. The Insured shall do nothing after loss to prejudice such rights.
10. CHANGES.
Notice to any agent or knowledge possessed by any agent or by any other person shall not effect a
waiver or a change in any part of this Policy or estop the Underwriters from asserting any right
under this Policy; nor shall any part of this Policy be waived or changed, except by endorsement
signed by the Underwriters and issued to form part of this Policy.
11. ASSIGNMENT.
This Policy shall not be assigned in whole or in part except with the consent of the Underwriters
verified by endorsement signed by the Underwriters and issued to form part of this Policy; if,
however, the Insured shall die or be adjudged bankrupt or insolvent within the Policy period, this
311
Policy, unless cancelled, shall, if written notice be given to the Underwriters within thirty days after
the date of such death or adjudication, cover the Insured's legal representative as the Insured.
12. CANCELLATION.
This Policy may be cancelled by the Insured by surrender thereof or by mailing to the Underwriters
written notice stating when thereafter such cancellation shall be effective. This Policy may be
cancelled by the Underwriters by mailing to the Insured at the address shown in this Policy written
notice stating when not less than ten days thereafter such cancellation shall be effective. The
mailing of notice as aforesaid shall be sufficient proof of notice and the effective date and hour of
cancellation stated in the notice shall become the end of the Policy period. Delivery of such written
notice either by the Insured or by the Underwriters shall be equivalent to mailing.
If the Insured cancels, earned premiums shall be computed in accordance with the customary short
rate table and procedure. If the Underwriters cancel, earned premiums shall be computed pro-rata.
Premium adjustment may be made at the time cancellation is effected and, if not then made, shall
be made as soon as practicable after cancellation becomes effective. The Underwriters' check or
the check of their representative mailed or delivered as aforesaid shall be sufficient tender of any
refund of premium due to the Insured.
No Return Premium shall be paid to the Insured as to any aircraft on which a loss under this Policy,
adjustable on the basis of a total loss, has occurred.
13. TERMS OF POLICY CONFORMED TO STATUTE.
Terms of this Policy which are in conflict with the statutes of the state wherein this Policy has
application are hereby amended to conform to such statutes.
14. ACTION AGAINST UNDERWRITERS.
No action shall lie against the Underwriters unless as a Condition precedent thereto the Insured
shall have fully complied with all the terms of this Policy nor until sixty days after proof of loss shall
have been filed and the amount of loss shall have been determined as provided in this Policy nor
unless such action shall have been commenced within twelve months next after the happening of
the loss.
15. SERVICE OF SUIT.
It is agreed that in the event of the failure of the Underwriters to pay any amount claimed to be due
hereunder, the Underwriters, at the request of the Insured, will submit to the jurisdiction of any
court of competent jurisdiction within the United States and will comply with all requirements
necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in
accordance with the law and practice of such Court.
It is further agreed that service of process in such suit may be made upon
............................................................................................................................., and that in any suit
instituted against any one of them upon this Policy, the Underwriters will abide by the final decision
of such Court or of any Appellate Court in the event of an appeal.
The above-named are authorized and directed to accept service of process on behalf of the
Underwriters in any such suit and/or upon the request of the Insured to give a written undertaking
312
to the Insured that they will enter a general appearance upon the Underwriters' behalf in the event
such a suit shall be instituted.
Further, pursuant to any statute of any state, territory or district of the United States which makes
provision therefor, the Underwriters hereby designate the Superintendent, Commissioner or
Director of Insurance or other officer specified for that purpose in the statute or his successor or
successors in office, as their true and lawful attorney upon whom may be served any lawful
process in any action, suit or proceeding instituted by or on behalf of the Insured or any beneficiary
hereunder arising out of this Policy and hereby designate the above-named as the person to whom
the said officer is authorized to mail such process or a true copy thereof.
16. SCHEDULE OF STATEMENTS.
By acceptance of this Policy the Insured agrees that the statements in the Declarations are his
agreements and representations, that this Policy is issued in reliance upon the truth of such
representations and that this Policy embodies all agreements existing between himself and the
Underwriters relating to this insurance.
17. MISREPRESENTATION AND FRAUD.
This Policy shall be void if the Insured has concealed or misrepresented any material fact or
circumstance whether under the Declarations or not concerning this insurance or the subject
thereof or in the case of any fraud, attempted fraud or false swearing by the Insured touching any
matter relating to this insurance or the subject thereof, whether before or after a loss.
AVIATION INSURANCE QUESTION
1. Gas Turbine engines are also called as

i. Piston engines
ii. Jet engines
iii. Either
iv. Neither
2. Main body of the aircraft is called
a. Fuselage
b. Aileron
c. Elevator
d. Cockpit
3. The purpose of the horizontal tail plane is
a. To provide stability
b. To house the rudder
c. To ascend/descend
d. None
4. Purpose of Vertical tail plane is
a. To provide stability
b. To house the rudder
c. To ascend/descend
d. None
313
5. Purpose of undercarriage is
a. To provide braking
b. To support the aircraft when at rest
c. To absorb landing shocks
d. All the above.
6. The purpose of ailerons is
a. To help aircraft to roll
b. To help aircraft to turn directions
c. To help aircraft pitch
d. All the above.
7. Purpose of rudder is
d. All the above
8. Purpose of elevators is
d. All the above
9. The control room of the aircraft is
a. Cockpit
b. Aileron
c. Rudder
d. Any of the above.
10. Most of air crashes have occurred during
a. Take off and landing
b. Taxying
c. Bad weathers
d. Any of the above
11. Main risk whilst in hanger is
a. Taxying
b. AOG perils
c. Take off and landing
d. Any of the above
12. Night flying is
a. Recommended as traffic is less
b. Dangerous and merits additional premium
c. Modern aids have made night flying more safe than day flying
d. All are true
13. Which is a safe risk?
a. Pilots of private flying clubs
314
b. Pilots of charter companies
c. Pilots of large schedule airlines
d. All are equally risky
14. Which is a safe risk?
a. Private club and tuition flying
b. Aerial photography, mapping and surveying
c. Both
d. Neither
15. Rates are generally quoted in Aviation crew PA on
a. Percentage on sum insured
b. Per mille on sum insured
c. Percentage on sum insured plus loading for type of craft
d. None of the above
16. In crew PA for aviation, Landing on and taking off from unlicensed landing areas
a. is covered
b. is not covered
c. is not covered unless due to force majeure
d. Either b or c
17. Which of the following covers available under the normal pa policies is not available in a crew pa
policy generally?
a. Death
b. PTD
c. PPD
d. TTD
18. A loss of licence policy can be issued to
a. Pilots & co-pilots, Flight engineers
b. Steward/stewardess
c. Air Traffic controllers
d. All the above.
19. Licencing of pilots is done by
a. DGCA
b. ICAO
c. Both
d. Neither
20. One of the Following need not be carried on board the aircraft
a. Certificate of registration
b. Certificate of airworthiness
c. Journey logbook
315
FIRE
1
TRADE QUESTIONS
1. Which one of the following is a mega risk? c) For minimum period of 5 years
a) Apetroleum refinery with sum insured Rs d) None of the above
3000 cr 7. Following Add on covers are not available in
b) An organization having 25 different standard fire Special Perils
location with overall SI of Rs 2500 cr Policy
c) Apower plant with sum insured Rs 2000 cr a) Spontaneous combustion
d) Afertilizer plant with SI of Rs 600 cr b) Loss of rent clause
2. Silent risk under fire policy in manufacturing c) Start up expenses
premises are treated as silent d) None of the above
risk when? 8. Which of the following losses is not covered
a) The factory is closed for 1 week under fire insurance policy?
continuously a) Process losses
b) The factory is closed for 15 days b) Impact Damage
continuously c) Missile testing operations
c) The factory is closed for 30 days or more d) Aircraft damage
continuously 9. In consequential Loss(Fire) Insurance policy,
d) None of the above the sum insured is arrived at
3. Please indicate which of the following by
statements is true. a) All standing charges plus net profit
a) Tsunami is a peril covered in standard fire b) Specified standing charges plus net profit
policy c) Only net profit
b) Fire policies are agreed value policies d) None of the above
c) Stocks can be covered with replacement 10. Subsidence and landslide loss covers
value clauses a) Coastal and River Erosion
4. Which one of the considerations are not b) Visible physical damage to property
taken into account for processing c) Defective design
fire claims: d) Demolition by government authority
a) Condition of average 11. Standard Fire Policy contains the following
b) Breach of warranty numberof conditions
c) Confirmation of Surveyor about a) 13
verification of books of accounts b) 14
d) Distance from fire station c) 15
5. Which will be treated as Hazardous goods d) 16
under Fire and special perils 12. As perAIFThow many earthquake zones are
policy? available?
a) Methylated spirits a) 3
b) Common salt b) 4
c) Sodium carbonate c) 5
d) Sugar d) 6
6. Long term Fire Policy can be issued for 13. Loss or damage to property caused by
dwellings sprinkler leakage is covered under
a) For minimum period of 2 years Fire Policy if leakage is caused by
b) For minimum period of 3 years a) Heat due to fire
316
b) Leakage due to repair or alteration to the a) For short period
building or premises b) Stocks undergoing process
c) Loss or damage to property caused by c) Stocks in Rly Slidings
sprinkler installation d) Fluctuation in stock
d) Sprinkler installation by either repaired or 22. Minimum SI for floater declaration policy
extended a) Rs. 5 Crores
14. Stock is divided into how many categories b) Rs. 10 Crores
for spontaneous combustion c) Rs. 15 Crores
cover d) Rs. 2 Crores
a) 3 23. Co-Insurance in Fire Policies pertain to
b) 4 a) SI distributed over no. of locations
c) 5 b) Policy shared amongst various insurers
d) 6 c) Double insurance
15. Which of the following risks is not d) Insured opting for an higher excess
considered as add on cover? 24. Reinstatement value policy can be given to
a) Spontaneous combustion a) Stocks
b) Lightning b) Building, Plant & machinery
c) Earthquake 80 81
d) Startup expenses c) Stock in process
16. What is meant by spontaneous combustion? d) All the above
a) Charring due to self heating 25. Which of the following statements is
b) Spread of fire incorrect under fire policy subject to
c) Change of color or deterioration in quality agreed bank clause?
due to self heat a) Material change in risk does not affect the
d) Loss or damage due to fire caused by own interest of the Banker
fermentation or natural heating b) Valued policies can be issued whose mkt.
17. Reinstatement value policy can be issued for value cannot be ascertained
a) Stock in process c) In multiple occupancy building per se
b) Building ratings is permitted
c) Stock in go down d) Insurable interest does not automatically
d) None of the above pass onto the legal heir
18. Standard Fire policy covers 26. Ex-gratia settlement in fire policies are
a) Loss due to explosion of boiler a) Under Insurance
b) Loss due to explosion of domestic boiler b) Loss outside the ambit of the policy
c) And (b) c) Contribution
d) None of the above d) Subrogation
19. Terrorism cover under fire policy can be 27. Policy wording after 01/01/2007 cannot be
granted on First loss limit up to altered earlier than
a) Rs. 200 crore a) 30.06.2007
b) Rs. 300 crore b) 30.09.2007
c) Rs. 500 crore c) 01.04.2008
d) Rs. 600 crore d) 31.12.2007
20. Declaration Policy has minimum SI of 28. Project Policies are
a) Rs. 5 Crores a) All Risk
b) Rs. 10 Crores b) Named Perils
c) Rs. 1 crore c) Consequential Loss
d) Rs. 0.50 crore d) Agreed value
21. Declaration policy can be issued 29. Fire Business is U/Won the basis of
317
a) Long tail liability d) Rs. 40,000/-
b) Loss Reserve 35. Material damage proviso under the
c) Profit Margin consequential loss (Fire Insurance)
d) Probable Maximum Loss means:
30. Percentage of obligatory cession to GIC is a) Claims admissible under standard Fire and
a) 30 Special Perils Policy
b) 20 b) Occurrence of the loss
c) 15 c) Loss discovered during stock taking
d) 10 d) Loss of goodwill
31. CPM is 36. In an LOPpolicy, Auditor fees is
a) Coverage all risk policy with inclusion of a) An Extension
breakdown b) Abuilt in cover
b) All risk policy with exclusion of breakdown c) Apart of standing charges
c) Self propelled machineries on d) Not to be covered
public/Private Road 37. Fire at supplier's premises can be a part of
d) None of the above a) a Material Damage Fire policy
32. FOES is an extension under: b) An LOPpolicy
a) CPM c) Is a stand alone policy
b) CAR d) Has no relevance
c) DOS 38. Common utilities outside the premises can
d) MBO be
33. DSU stands for a) Rated per se
a) Delay in start up insurance b) Rated as per the main risk
b) Derivatives stock units c) Highest rate to apply
c) Dead stock under insurance d) Insured separately
d) Diluted stock undertaking 39. Storage of Hazardous chemical upto 5% of
34. Amachine worth Rs. 40,000/- insured for Rs. value at risk
30,000/- under Fire Policy. It a) Does not affect a claim
was damaged due to fire and the amount b) Renders a claim non-standard
assessed in Rs. 16,000/- . The claim c) Renders a claim as no claim
payable is: d) Can be covered after collection of extra
a) Rs. 30,000/- premium
b) Rs. 12,000/- 40. Cracks appearing in a buildi
c) Rs. 16,000/-
ng on account of subsidence of land below d) Some other insurance should have been
a) Fire Policy will cover the loss without any taken
extension 42. The adjustment of sum insured in EAR policy
b) Claim is payable on repair basis is not done in respect of
c) Claim is not payable a) Freight and Handling charges
d) Fire policy would have covered the claim b) Custom duties
had an extension been c) Cost of erection
taken. d) Increase or decrease in cost of
41. Adish antenna(Covered under fire policy) contractors' plant and machinery
breaks as a monkey jumps on it 43. Standby machinery in MBD is
a) The claim is payable a) Not covered
b) The claim is not payable b) Covered at a discount of 50% in rate'
c) The claim is payable as non standard c) Discount of 75%
318
d) Only covered when it is put to use a) Cost or rebuilding the subject matter on
44. Preliminary investigation of loss under Fire date of loss
Policy includes b) Cost of reinstatement of subject matter at
a) Whether the loss caused by an insured time of taking policy
peril c) Cost of rebuilding subject matter less
b) Whether the damaged is covered under depreciation on age on date of
the policy loss
c) Whether adjacent property is damaged d) None of the above
d) All of the above 52. Indemnification for stocks in Fire policy is
45. It is not the duty of the insured in the event based on
of a claim undera fire policy to a) Invoice value
a) Save as much as possible of the insured b) Market value or cost whichever is less
property c) Reinstatement value
b) Take all reasonable steps to extinguish the d) Book value
fire 53. The material damage proviso
c) Shift the operations immediately underFLOPpolicy states that
d) Diminish their loss a) Loss under LOP is admitted only after
46. If the insured proposes to get add on cover there is a loss under the fire
for STFI during the middle of material damage policy
the policy b) The loss of profit policy is independent
a) The same cannot be covered from the fire material damage
b) The same can be covered policy
c) Covered with a waiting period of 15 days c) The loss under Fire and LOP policies
d) Covered with a waiting period of 30 days cannot exceed the S.I. under
47. Ultra sound machines can be covered under fire policy
a) Machinery Breakdown Policy d) None of the above
b) Electronic Equipment Policy 54. The basis rate under Fire LOPpolicy is based
c) Any of (a) & (b) on
d) None of (a) & (b) a) The average rate of the process blocks
48. Fire policy covers under the Fire policy
a) 12 named perils b) The average rate of all blocks under Fire
b) Unnamed peril policy policy
c) All risk policy c) Aseparate rate for selected block as per
d) None of the above FLOPtariff
49. Basis of settlement in Fire policy can be d) None of the above
a) Market value basis only 55. The FLOPpolicy covers
b) Reinstatement value basis only a) Loss of profit due to reduction in turnover
c) Market value or reinstatement value basis during indemnity period
d) None of the above b) Loss of profit during the financial year
50. Fora RIV Policy the insured has to give his c) Loss of turnover due to fire
concurrence for settlement at d) None of the above
market value basis 56. The gross profit insured underFLOPpolicy
a) On day of loss would cover
b) Within 12 months from date of loss a) Net Profit
c) Within 180 days from date of loss b) Standing Charges
d) Not at all 84 85
51. Sum Insured on Reinstatement value policy c) Both the above
should show d) None of the above
319
57. For covering marine portion under an MCE d) Aircraft damage
policy you would require 64. Fire policies can be issued for a period of
information more than 12 months in the
a) S.I. for Inland transit following case
b) S.I. for overseas transit a) Shops
c) Both the above b) Factory
d) None of the above c) Dwelling
58. Industrial All Risk policy allows under d) Godown
insurance up to 65. Issue of Fire declaration policy is not
a) 15% of Sum Insured possible for
b) 20% of Sum Insured a) Raw material
c) No allowance for under insurance b) Finished goods
d) Underinsurance to be computed as per c) Process stock
fire tariff d) None of the above
59. The advanced loss of profit policy covers 66. The maximum possible refund undera fire
a) Loss of projected profit due to declaration policy is
interruption of project by an insured a) 60%
peril b) 50%
b) Loss of turnover after the commencement c) 40%
of project d) 30%
c) Loss of projected profit due to non- 67. Under Std. Fire & special perils policy debris
completion of project removal upto 1% of the SI
d) Due to insolvency can be covered at an additional premium of
60. Rating under Petrochemical tariff is based a) 15%
on b) 10%
a) Material factor of the raw materials and c) 5%
hold up capacity d) Nil
b) Pressure and temperatures 68. In a fire floater policy the minimum sum
c) None of the above insured at one location should
d) Both 1 & 2 above not be less than
61. Facility of installment premium is available a) 50%
for project policies if the b) 25%
project periods exceeds c) 10%
a) 12 months d) None of the above
b) 15 months 69. In which of the following is not applicable in
c) 18 months a RIV policy
d) 24 months a) Designation of property
62. Which one of the following could not be the b) Under insurance
basis of valuation of Fire c) Depreciation
insurance d) Salvage value
a) Market value basis 70. In Fire LOP policies, indemnity period means
b) RIVbasis a) Specified policy period
c) Contract price basis b) Specified interruption period opted
d) Original cost basis c) Specified reinstatement period
63. Standard Fire Policy doesn't cover d) None of the above
a) Fire 71. Unless specified, Fire insurance policy
b) Spontaneous combustion covers works of Art up to a limit of
c) Lighting a) Rs. 10,000
320
b) Rs. 15,000 c) Off site storage and fabrication
c) Rs. 5000 d) Debris of uninsured property
d) None 80. Terrorism pool is managed by
72. Loss due to flood on account of Tsunami is a) Head office of companies
covered only when b) Reinsurance committee
a) STF I cover is not deleted c) GIC
b) Add on cover EQ is opted d) IRDA
c) RSMD is not deleted 81. In which of the following testing is an inbuilt
d) a & b above cover
73. Afire policy on residence attracts an excess a) CAR
of b) CECR
a) Rs. 10,000 c) EAR
b) Rs. 20,000 d) MBD
c) Rs. 5,000 82. Maximum permissible escalation underan
d) Nil EAR policy is
74. ACAR policy can be issued where civil work a) 25%
in a project is more than b) 50%
a) 60% c) 75%
b) 50% d) None
c) 40%
d) 25% 83. Which of the following is not a standing
75. Which one of the following is not charge forLOP/ ALOP
underwritten in Engg. Dept. a) Insurance premium
a) CAR b) Advertisement & publicity
b) EAR c) Rent and Tenants
c) IAR d) Raw material cos
d) CECR 84. Time Excess underMLOPpolicy is
76. Which policy is not issued fora period of a) Three days
more than 12 months b) Fourteen days
a) CAR c) Ten days
b) MCE d) None
c) SCE 85. How many classified group of machineries
d) CPM available under CPM policy?
77. Which equipment cannot be covered a) Seven
underEEI policy b) Five
a) Personal Computer c) Ten
b) Laptop d) Three
c) Sonography 86. Mobile construction equipments can be
d) MRI Scanner Equipments covered under
78. Excess is not applicable is case of a) Motor Policy
a) EAR policy b) CAR Policy
b) EEI policy c) CPM Policy
c) Boiler & Pressure plant policy d) Both a & c
d) MBD policy 87. Fire Material damage policy does not cover
79. Which of the following is not an add on a) Furniture & Fixtures
cover under a project policy b) Stock
a) Surrounding property c) Standing Charges
b) Third party liability d) Stock in process
321
88. The word CONDITION OFAVERAGE is d) Both of 'a' and 'b'
associated with 97. The force which causes the current to flow
a) SUBROGATION through circuit is known as
b) CONTRIBUTION a) Electro-magnetic Force (EMF)
c) UNDER INSURANCE b) Watt
d) REINSURANCE c) Horsepower
89. PMLmeans d) None of the above
a) Probable Maximum Loss 98. Certain discount may be given in electric
b) Probable Minimum Loss equipment policy if the same
c) Possible Minimum Loss property covered under Fire Policy
d) Probable Maximum Loss a) 5%
90. F.E.A. means b) 10%
a) Fire Eliminating Application c) 25%
b) Fire Extinguishing Appliances d) 50%
c) Fire Electrical Appliance 99. Selection of sum insured under Fire policy
d) Fire Equipments Allowance a) Can be allowed
91. AOG peril does not include b) Can be allowed only after charging short
a) Terrorism period premium rate
b) Earthquake c) Cannot be allowed
c) Flood d) None of the above
d) Inundation 100. Local Authorities clause under Fire policy is
92. Fire Policy does not cover applicable under
a) RSDMD a) Declaration policy
b) Electrical/ Mechanical Breakdown b) Standard Fire policy
c) Terrorism c) Reinstatement value policy
d) AOG peril d) Floater Declaration policy
93. In the event of a claim under FIRE Policy 101. Peril is
a) Sum Insured is reduced by the amount of a) Acause of loss
claim b) Adegree of loss
b) Sum Insured is reduced by amount c) System to reduce the loss
intimated d) None of the above
c) Sum Insured is not reduced at all 102. “Without prejudice” mean
d) None a) Proof of admission of liability
94. Under EAR policy “Cold Testing” means b) Proof of non-admission of liability
a) Plant is situated at cold place c) Both a & b above
b) Checking of parts under cold condition d) None of the above
c) Testing of parts under “No Load” 103. “Ejusdem generics” rule means
condition a) Of different kind
d) Testing of parts under full load conditions b) Of same kind
95. “HOT Testing” under EAR policy means c) None of the above
a) Plant is situated at hot place d) Both of the above
b) Checking of parts under hot condition 104. Which of the following is operational
c) Testing of parts under full or partial load phase policy and not construction
d) Testing of parts under full load conditions phase policy under engineering insurance
96. Annual Gross profit means a) Contractors All Risk
a) Net profits plus standing charges b) Electronic Equipment
b) Turnover minus variable cost c) Erection All Risk
c) None of the above d) Marine-cum-Erection
322
105. Machinery Loss of Profits Policy (MLOP) d) No refund of premium
does not provide indemnity 112. Silent rates allowed forthe one of the Fire
against which one of the following Tariff Section
a) Loss of net profit a) Section I
b) Insured standing charges b) Section II
90 91 c) Section IV
c) Increased cost of working d) Section VIII
d) Civil engineering works 113. Fire declaration policy cannot be issued for
106. Which of the following perils form part of the one of the following items
the basic package of standard a) Stock
fire and special perils policy b) Stock in process
a) Earthquake c) Raw materials
b) STFI d) Finished goods
c) Spontaneous combustion 114. FEAdiscount can be granted by one of the
d) Leakage & Contamination following methods. Choose the
107. STFI peril can be deleted from Standard correct one
Fire Policy a) Mere installation of FEA
a) At inception only b) Inspection of company
b) After 3 months from the issuance of engineers/accredited engineers/ agencies by
policy IRDA
c) Can be deleted any time during the c) Insurer can grant at their wishes
currency of policy d) None of the above
d) Cannot be deleted at all 115. The sum insured at any one location for
108. If a policy is cancelled at the option of issuing Mega risk policy is:
insured a) Rs. 5000 crores
a) Premium adjustment is made on pro-rata b) Rs. 10000 crores
basis c) Rs. 12000 crores
b) Premium cannot be refunded d) None of the above amount
c) Premium adjustment is made on short 116. The Fire Policy covers the following perils
period basis except one on payment of
d) Policy cannot be cancelled by the insured additional premium
109. Which of the following peril is not wind a) Landslide
related b) Architects etc. feels
a) Storm c) Debris removal
b) Inundation d) Forest fire
c) Cyclone 117. The one of the peril not covered under the
d) Hurricane basic fire policy
110. Rates for5 months short period insurance a) Damage by smoke and heat of the fire
a) 40% b) Damage caused deliberately or
b) 50% accidentally by fire-brigades in the
c) 60% discharge of their duties
d) 70% c) Damage to property removed from a
111. Cancellation at the option of insured the burning building caused by
premium retained by one of the exposure to weather
following method d) Destruction or damage to property
a) Short period scale insured by its own fermentation or
b) Pro-rata basis spontaneous combustion
c) 50% of premium should be retained 118. Exgratia settlements are made by
323
a) Claim settlement authority 125. An IAR Policy can be issued to an Industrial
b) One step above Risk:
c) Regional claims committee a) With sum insured > Rs. 100 crs.
d) Board of Directors b) With sum insured < Rs. 75 crs.
119. Compulsory excess and A.O.G. excess are c) Housing petrochemical risks
not applicable to fire policy d) All of the above
issued to following properties 126. Compulsory excess for a Standard Fire
a) Power Plant Policy having sum insured Rs. 15
b) Cloth Shop crs. undera non- AOG peril claim is:
c) Textile Factor a) 5% of claim amount, minimum Rs. 25,000
d) Dwellings b) 5% of claim amount, minimum Rs. 10,000
120. Excess in Fire policy is c) 10% of claim amount, minimum Rs.
a) Same amount of excess for fire peril & 10,000
AOG peril d) None of above
b) Different amount of excess for fire perils 127. An Engineering Policy can be issued to
& AOG peril cover:
92 93 a) Moveable equipment
c) Different percentage of excess for the b) Portable equipment
peril & AOG peril c) a) & b)
d) None of the above d) None of above
121. Which of the following policy normally 128. Boiler and Pressure Plant (BPP) policy has
cover lift cranes, Material minimum deductible:
handling plant and equipment in the a) Rs. 10,000
construction and project sites b) 5% of claim amount
a) Contractor Plant & Machinery c) 5% of claim amount, minimum Rs. 10,000
b) Contractor All Risk d) No deductible is applicable
c) Marine cum erection policy 129. IAR Policy is subject to maximum
d) Erection All Risk deductible of:
122. Long term Fire policy can be issued for a) Rs. 50,00,000
dwellings fora maximum period b) Rs. 25,00,000
of: c) No upper limit
a) 5 years d) None of above
b) 2 years 130. CECR (policy) stands for:
c) 4 years a) Civil Engineering contractors' risk
d) None of above insurance
123. Standard fire policy covers which one of b) Civil Engineering completed risks
the following perils: insurance
a) Forest fire c) Civil Engineering construction risks
b) Earthquake insurance
c) Hailstorm d) None of the above
d) Tsunami 131. IRDA has not permitted General Insurers to
124. Standard fire and special perils policy does effect:
not cover: a) Variations in deductibles
a) Lightning b) Issuance of IAR policy for S.I. less than
b) Forest fire Rs.100 crs.
c) Impact damage c) Changes in basic Policy wordings of
d) Subsidence and landslide erstwhile Fire Tariff
324
d) Issuance of IAR policy for petrochemical c) ELOP
risks d) MLOP
132. Complete pricing decontrol was made 139. A D.G. set covered under SFSP Policy
effective from: removed to repairer's workshop
a) 01st Sept. 2007 for repairs caught fire on 73rd day of such
b) 01stNov. 2007 removal. The loss under the said
c) 01st Jan. 2008 SFSP policy will be:
d) 01stApr. 2008 a) Payable
133. Insurers are permitted to delete Impact b) Payable as a 'non-standard' claim
damage cover from SFS PPolicy: c) Not payable
a) By allowing additional discount in d) Either of a) & b)
premium 140. The term 'Time Excess' is applicable to:
b) Without allowing a discount in premium a) LOP
c) Even without the consent of the Insured b) MBD
d) None of the above c) EEI
134. Machinery Breakdown loss of profits d) CPM
(MLOP) policy has compulsory 141. While assessing a LOP claim, Annual
time excess of: Turnover is used to determine:
a) 14 days a) Reduction in Turnover
b) 21 days b) Increase in cost of working
c) 7 days c) Adequacy of Sum Insured
d) No time excess is applicable d) Saving in insured standing charges
135. Material damage section of IAR Policy 142. Aclaim towards Architects, Surveyors and
having S.I. more than Rs.100 cr. Consulting Engineers Fees as
but up to Rs. 1500 cr. is subject to deductible of: an Add on cover underSFSPpolicy can be paid
a) 5% of claim amount minimum Rs. 10 lacs up to maximum of:
b) 5% of claim amount maximum Rs. 10 lacs a) 5% of adjusted loss
c) 5% of claim amount minimum Rs. 10 lacs, b) 5% of Sum Insured
maximum Rs. 50 lacs c) 10% of Sum Insured
d) 5% of claim amount minimum Rs. 5 lacs, d) 7.5% of adjusted loss
maximum Rs. 50 lacs 143. Sum Insured under Escalation clause in
136. Designation of property clause relates to: Fire policies is automatically
a) Machinery Insurance increased:
b) Fire Insurance a) Instantly
c) CPM Insurance b) On daily basis
d) BPPInsurance c) Monthly
137. IAR Policy does not cover: d) Quarterly
a) Plant and Machinery in open 144. Aclaim is reported underan IAR Policy. It is
b) Vehicles registered for general road found that the property was
use under insured to the extent of 17.5%. Payable
c) Stocks in open amount will be:
d) Movement of materials within the a) Assessed loss less 2.5%
premises b) Assessed loss less 17.5%
138. Name of the policy under which c) Assessed loss less 15%
operation of several occurrences will d) Assessed loss
also constitute a single claim: 145. Which one of the following statement is
a) FLOP incorrect?
b) ALOP
325
a) IAR policy is an All risks policy with named 152. Machinery Breakdown Insurance policy
exclusions can now be issued to cover
b) IAR policy provides for compulsory a) moveable/portable equipments like
FLOPcover portable DG sets, etc. cannot be
c) IAR policy provides for compulsory covered under MI policy
MLOPcover b) moveable/portable equipments like
d) IAR policy provides for compulsory MI portable DG sets, etc. can be
cover covered under MI policy without any loading
146. Which one of the following statement is on the basic policy rate
incorrect? c) moveable/portable equipments like
a) Fire declaration policy is not permissible portable DG sets, etc. can be
on short period basis covered under MI policy with 20% loading
b) Earthquake is a peril not covered in on the basic policy rate
Standard fire policy d) moveable/portable equipments like
c) Fire policies are not agreed value policies portable DG sets, etc. can be
d) Stocks can be covered with replacement covered under MI policy with 10% loading
value clause on the basic policy None
147. Midterm cover against Terrorism can be of the above
granted: 153. Which of the following policy normally
a) At short period scale of rates effective cover lift cranes, Material
from date of request handling plant and equipment in the
b) At pro-rata premium from date of request construction and project sites
c) At short period scale of rates with 15 days e) Contractor Plant & Machinery
waiting period f) Contractor All Risk
d) Can not be granted at all g) Marine cum erection policy
148. Add on covers underSFSPpolicy can be h) Erection All Risk
included midterm: 154. Explosion though a general exception
a) At applicable annual premium under the policy, but certain
b) At pro-rata premium occurrences 'which fall within the term
c) At short period scale of rates “explosion” are covered under
d) Can not be included midterm a) Marine cum erection policy
149. An Engineering policy which is not an b) Contractor Plant & Machinery
annual policy: c) Contractor All Risk
a) Contractors' Plant & Machinery policy d) Machinery Insurance Policy
b) Contractors' All Risks Policy 155. In MI policy, basis of indemnification for
c) Civil Engineering Completed Risks Policy total loss/constructive total loss is
d) BPP Insurance Policy a) New replacement value plus cost of
150. Machinery Insurance does not cover: removing the damaged
a) Internal fires machinery less value of salvage
b) Breakage of parts due to entry of foreign b) New replacement value
object c) Market value plus cost of removing the
c) Gross negligence damaged machinery less
d) All of the above value of salvage
151. Exclusion K of CPM policy relates to: d) Market value
a) Machinery working under ground 156. In MI policy, Sum Insured represents
b) War Perils a) Current market value
c) Nuclear perils b) New Replacement value
d) Transit risks between sites
326
c) Current market value including KEY MODEL QUESTIONS
transportation cost to site, customs (ii) Copies of contracts giving insurance
dues and all installation costs. requirements
d) New Replacement value including (iii)Detailed description of the project
transportation cost to site, including any civil works.
customs dues and all installation costs. a) only (i) is only
157. All movable/portable electronic b) (i) &(ii) only
equipments can now be covered under c) (i) & (iii) only
standard EEI policy d) All the above
a) with 30% loading 159. In EAR policy
b) with 20% loading a) Prime Cost of materials is subject to
c) without loading premium adjustment
d) with 10% loading b) Freight and handling charges, customs
158. General Information required for framing dues and construction cost is
construction phase insurance not subject to premium adjustment
fora project c) Prime Cost of materials is not subject to
(i) Wind, flood and rainfall statistics at site as premium adjustment
well as geological, d) None of the above is correct
hydrological& meteorological reports
1. A 22. D 43. B 64. C 85. B 106.B 127.C 148.A
2. C 23. B 44. D 65. C 86. D 107.A 128.C 149.B
3. A 24. B 45. C 66. B 87. C 108.C 129.C 150.C
4. D 25. A 46. C 67. D 88. C 109.B 130.B 151.A
5. A 26. B 47. B 68. C 89. A 110.C 131.C 152.C
6. B 27. C 48. A 69. C 90. B 111.A 132.C 153.A
7. D 28. A 49. C 70. B 91. A 112.C 133.D 154.D
8. A 29. D 50. B 71. A 92. B 113.B 134.A 155.C
9. B 30. C 51. A 72. B 93. A 114.B 135.A 156.D
10. B 31. B 52. B 73. D 94. C 115.B 136.B 157.D
11. D 32. C 53. A 74. B 95. D 116.D 137.B 158.D
12. B 33. A 54. A 75. C 96. A 117.D 138.B 159.C
13. C 34. B 55. A 76. D 97. A 118.D 139.C
14. B 35. A 56. C 77. B 98. A 119.D 140.A
15. B 36. A 57. C 78. C 99. C 120.A 141.C
16. D 37. B 58. A 79. D 100.C 121.A 142.D
17. B 38. A 59. A 80. C 101.A 122.D 143.B
18. B 39. A 60. D 81. C 102.D 123.C 144.B
19. C 40. C 61. A 82. B 103.B 124.B 145.C
20. C 41. A 62. D 83. D 104.B 125.D 146.D
21. D 42. D 63. B 84. B 105.D 126.A 147.C
327
MULTIPLE CHOICE QUESTIONS ON HEALTH INSURANCE
1. Mediclaim policy is basically a: 8. The TAC collects health Insurance data from
Benefit policy TPAs and Insurers in respect of:
Indemnity policy Policy, members and claims
Neither benefit nor indemnity policy Policy and claims only
Both indemnity and benefit policy Policies and members only
2. Group mediclaim policies are of: Claims only
High volume & high margin 9. Critical Illness policy is a:
Low volume & high margin Indemnity policy
Low volume & low margin Benefit policy
High volume & low margin Both indemnity and benefit policy
3. The penetration of health insurance in India Neither of the two
is around: 10. Insurers, TPAs and Broking Companies
5% of the total population cannot raise capital except through:
2% of the total population Preference Shares
4 % of the total population Equity capital
10% of the total population Hybrid Instruments
4. The coverage of pre-existing diseases was a Transfer of shares
major bone of contention in case 11. IRDAgrievance redressal department deals
of mediclaim policies over the years. Who with only:
has defined the pre-existing Cases of delay & non response
diseases recently for use by all Indian non-life Claims dispute
Insurance Companies? Policy contract dispute
Insurance Regulatory & Development Complaints written on behalf of policy
Authority holders by Advocates, agents or
General Insurance Council any third party
Health Insurance Council 12. Atakes a mediclaim policy with coverage of
GIPSA Rs 5 lacs for a year from 1.1.09.
5. Mediclaim policy was introduced by PSU In May 2009, he prefers a claim for Rs 1.5
Insurers in the year: lacs. The coverage available to A
1986 for the balance period is:
1973 Rs 1.5 lacs
1976 Rs 3.5 lacs
1996 NIL
6. Medical underwriting is practiced in case of: Rs 5 lacs.
Group health policies 13. All factors other than one stated below does
Community based health policies not determine the premium
Individual mediclaim policies payable under a health policy:
All the above Age
7. The new definition of pre existing disease is Occupation
being implemented by Insurers Sum insured
with effect from: TPAoption
1.4.08 14. Mediclaim policy generally has a post and
1.6.08 pre hospitalization benefits for:
1.4.07 30 days and 60 days
1.6.07 60 days and 30 days
30 days and 15 days
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15 days and 30 days Both are group policies
15. Under the Rashtriya Swasthya Bima Scheme 22. Group Discount is generally not offered
the Central and State under a Group Mediclaim Policy if
Government share the premium in the ratio the group size is:
of: < than 51
50:50 < than 101
75:25 > than 101
25:75 > than 51
80:20 23. The underwriting practices of a health
16. Under the UHIS policy, a portion of the insurance company provides for
premium is borne by: loading of a tailor-made group policy if loss
State Government ratio is > than 70 % to keep it at
Central Government 70% as if basis. In a particular tailor-made
Both Central & State Government group policy, the loss ratio is 150%.
Neither the Central and State Government What would be the loading on renewal to
17. World Health Day is celebrated on: maintain the loss ratio at 70%?
April 7 120%
August 15 114%
December 7 70%
December 15 100%
18. Ahealth insurance policy may be cancelled 24. Group Discount under a group mediclaim
for all reasons except one. Which one: policy is allowed on the group size:
Misrepresentation At the end of the policy period
Fraud On anticipated group size
Non-disclosure or non co-operation Actual size at the commencement of policy
Claims history To be adjusted on average group size
19. The World Health Organization is 25. The basic premium under a group
headquartered at: mediclaim policy is:
Geneva The total premium computed before
Berne applying Group Discount, High
New York Claims Ratio Loading/ Low Claims Discount
Tokyo and Special Discount, if
20. All but one statement is not correct in any
respect of Jana Arogya policy: The total premium computed after
The coverage is for poorer sections of the applying Group Discount
society between the age of 5 to The total premium computed after
70 years. applying all discounts
The sum insured per person is restricted to None of the above
Rs 5000/- 26. All except one statement is correct in
Tax benefit under Section 80 D is available respect of Cancer Medical Expenses
for premium paid Policy of the Indian Cancer Society. Which
The policy can be taken for parents as well. one is incorrect?
21. What is common to Jana Arogya Policy and The policy is available for members of the
group mediclaim policy? society maximum upto the age
Cumulative and health check up are not of 70 years.
payable under both. The policy is available to individual
Maternity benefit extension is available ordinary, Well Wisher Ordinary,
Renewal is subject to Bonus/ Malus clause
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Well Wisher Corporate and Well Wisher Life Accept as it comes
Member 32. There could be many ways to reduce health
The policy covers the member and spouse insurance premium. Which one of
for Rs 50,000/- and in case of the below listed does not help in reducing
claim by one the partner is not entitled for premium:
any benefit under the policy. Reduction of benefit
The sum insured of Rs 50,000/- is paid as a Curtailment of coverage by imposing co-
benefit in case of detection of payment
cancer. By getting subsidy
27. Mr A has enrolled himself along with his TPAoption
spouse as members of Cancer 33. ACompany needs to have a license from
Society from 1.1.09. The insurance will IRDAto act as TPA. The amount of
commence from: non-refundable processing fees and license
1.1.09 fees payable are:
1.2.09 Rs 20,000/- and Rs 30,000/-
15.1.09 Rs 30,000/- and Rs 20,000/-
None of the above. Rs 25,000/- and Rs 50,000/-
28. Which statement is correct in case of No fees payable
Overseas Mediclaim policy? 34. ATPAwhose application for license has been
Premium is payable in foreign currency and rejected may apply afresh after:
claim is payable in foreign 2 years
currency. 1 year
Premium is payable in rupees and claim is 5 years
payable in foreign currency. 3 years
Premium and claim is paid only in US 35. The license issued to a TPAis valid for a
dollars period of:
None of the above. 3 years
29. The premium under OM policy depends on 2 years
all except: 5 years
Age band 1 year
Trip band and country of visit 36. What is the threshold limit of transfer of
Coverage shares of a TPA to be informed to
Income IRDA?
30. Which is not a government supported 5%
health policy? 1%
UHIS (BPL) 10%
Varishtha/ Sr Citizens policy 26%
RSBY 37. One of the conditions is not relevant to act
Rajiv Arogyashree as TPAin India. Which one:
31. ABC Company has a tailor-made group A company with share capital and
mediclaim policy with an Insurer. registered under the Companies Act
The Insurer has 4 TPAs in panel and the 1956
policy will be serviced by a TPA. The minimum paid up capital shall be in
What is the best way to select the TPA? equity shares of Rs one crore and
Any TPA should have working capital not less than Rs
Leave it to the option of Insurer one crore any time of its
Arrange for a presentation from TPAs and functioning
then select The TPAto carry on only health services
330
Aggregate holding of equity shares by a period?
foreign company may be upto • 15 days
50%. • 7 days
38. The look back period for pre-existing disease • 1 month
from first commencement date • 3 months
of mediclaim policy is: 45. Any change in the premium structure and
48 months terms of health insurance policy can
36 months be implemented only after the approval of
No limits IRDA. However Insurer has to
12 months intimate the changes/ revisions to all
39. The look back period for pre-existing disease policyholders at least:
from the policy commencement 3 months prior to the date of renewal of
date under Overseas Mediclaim policy: policy
One year 1 month prior to renewal
Six months Not necessary to inform before renewal
No limits 6 months prior to renewal
48 months 46. The fees payable to TPA for rendering
40. The any one-trip limit and total duration of health services in the eastern and
stay under CFTare restricted to: western India is:
60 days and 180 days 6% of premium
30 days and 60 days 5.4% of premium
14 days and 180 days 5.5% of premium
15 days and 30 days None of the above
41. The mediclaim policy if claim free earns a 47. The Sr citizens are entitled for tax benefit
cumulative bonus. However in case under Section 80 D of the Income
of a claim the earned benefit is reduced by: Tax Act up to:
5% of the accrued benefit Rs 20,000/-
10% of the accrued benefit Rs 15,000/-
10% of the sum insured Rs 50,000/-
10% of the claim amount Rs 25,000/-
42. Adisease is said to be acute when: 48. The co-branded health insurance policy with
It has an abrupt beginning and quick ending Banks has become very popular
Gradual beginning and long persistence in India. It is an example of:
Left alone can be fatal B2B business model
Disease without complication B2B2C business model
43. The minimum hospitalization period for B2C business model
accrual of benefit under mediclaim None of the above
policy is: 49. Which one of the following policy is a
24 hours deferred mediclaim policy?
48 hours Jana Arogya
No time limit Arogyashri
12 hours Bhavishya Arogya
44. According to recent regulation of IRDA all Sampoorna Arogya
health insurance policies should 50. The beneficiary under CGHS and Central
have a mechanism to condone delay up to a Services (Medical Attendance)
specified time for continuity of Rules 1944 can opt for mediclaim policy.
benefit in respect of waiting period and pre- State which statement is incorrect?
existing disease. What is that
331
They can claim reimbursement from both 55. The Rashtriya Swasthya Bima entails only:
the sources subject to the total Cashless hospitalization
reimbursement not exceeding the total Re-imbursement
expenditure incurred for Both cashless and re-imbursement
treatment Pre-paid system
The beneficiaries first have to claim on 56. The age for calculation of premium under
original documents with Insurer mediclaim policy is:
and secondly claim with CGHS on photocopy Completed age
and certification from Running age
Insurer Either of the two
The reimbursement from CGHS or other 57. The riders in a health insurance policy give
department source will be additional benefits to a policy
restricted to admissible amount as per holder but it does not have any investment
approved package subject to the or saving element. As per IRDA
amount not exceeding total expenditure on regulation the benefit arising out of an
treatment. individual rider cannot exceed the basic
The amount of treatment will be shared sum insured and the premium paid for the
under contribution clause. rider is capped at :
51. The Rashtriya Swasthya Bima is a smart card 30 % of the basic policy cost
based health scheme for BPL 40% of the basic policy cost
families in states across the country. What is 20% of the basic policy cost
the sum insured under the policy? 10% of the basic policy cost
Rs 30,000/- 58. The DTC will be implemented in the country
Rs 25,000/- from effect from 01.04.2012.
Rs 50,000/- The premium paid for health policies for an
Rs 20,000/- individual assessee will be
52. The Rashtriya Swasthya Bima Scheme eligible for tax benefit under Income Tax Act
provides for pre and post for :
hospitalization beneft up to: ` 50,000 /-
1 day and 5 days ` 1,00,000/-
7 days and 15 days ` 35,000/-
Does not provide for it at all ` 15,000/-
Total 10 days 59. The health insurance portability in Indian
53. The BPL families can enroll themselves health insurance market will be
under Rashtriya Swasthya Bima implemented with effect from :
Scheme by payment of registration fees of: 1.7.2011
Rs 10/- 1.1. 2012
Rs 30/- 152 153
Rs 50/- 1.4.2011
Free of cost 1.9.2011
54. Under Rashtriya Swasthya Bima a fixed 60. As per IRDA guidelines on portability on
transport allowance per visit is health insurance policies ,which
allowed subject to an annual limit of Rs 1000/-, one of the following is not correct :
what amount? Provide credit for the period of cover for
Rs 100/- PED in terms of waiting period
Rs 50/- with previous insurer.
Rs 60/- Provide credit of the sum insured under
Rs 30/- previous insurer including
332
bonus. 66. The standardization of billing procedures in
Provide credit to the sum insured only & hospitals, contents of discharge
not bonus. summary & standardization of TPA/insurer &
Provide credit to both PED & existing sum TPA/hospital contract have
insured including bonus. been done by:
61. As per portability rules, the existing insurer FICCI Health Insurance Group
has to share the entire data base IRDAHealth Self
including the claim details of the policies General Insurance Council
with their counterparts in: Health Insurance Council
7 days 67. When a Insurer knows more about
10 days consumers expected costs than the
3 days consumer themselves and uses marketing or
15 days plan design to enroll healthier
62. The application for portability has to be people than usual population, it is called:
acknowledged by insurer within : Cream skimming
3 working days Adverse Selection
7 working days Lemon dropping
15 working days Information Asymmetry
10 working days 68. It is estimated that health insurers' loss due
63. For online filing of health insurance to fraud is around 10% of the claim
products the IRDA has provided for outgo. When normally honest people pad
submission for : legitimate claims to get higher
Data base sheet amount of claim or to cover excluded items
Self administered checklist under policy, it is known as :
Customer information sheet Soft fraud
Hospital & TPAlist Hard fraud
64. As per Section 64 VB of the Insurance Act, Application fraud
1938 no risk to be assumed by an Eligibility fraud
Insurer unless premium is received in 69. The PSGICs shortlisted providers with
advance. Rule 58 & 59 of Insurance package rates for identified
Rules 1939 provide relaxation in the procedures in four cities of Mumbai, Delhi,
payment of premium in all policies Chennai & Bengaluru for
except: implementation from 1.7.2010. This exercise
Group Hospitalization Insurance Scheme & by PSGICs is called the:
Sickness Insurance PPN
Medical Benefit Insurance PPP
Group Personal Accident Policies Select Networking
Individual health policies Neworking
65. The Insurance Rules provide that the group 70. Health insurance market has many
Health Premium may be accepted imperfections and informational
in installments covering a particular period: asymmetry is common. Health insurance
Before the due date underwriting is successful when:
Before the policy commencement date If both insured and insurer are informed
Within 15 days of commencement of the If both the insured and insurer are under-
period informed
Within 7 days of the date of If insured is un-informed and insurer is
commencement of the period informed
If insured keeps insurer uninformed
333
c) Permanent partial disability
1. B 37. D 19. A 55. A d) Temporary partial disability
2. D 38. A 20. D 56. A 5. Contribution clause is not applicable for
3. B 39. A 21. A 57. A a) All risk insurance for valuables
4. B 40. A 22. B 58. A b) Fidelity Guarantee Insurance
5. A 41. C 23. B 59. A c) PApolicy
6. C 42. A 24. C 60. C d) Burglary Insurance
7. B 43. A 25. A 61. A 6. Floating cover is not allowed in
8. A 44. A 26. D 62. A
a) PAinsurance
9. B 45. A 27. B 63. A
b) Fidelity Guarantee insurance
10. B 46. B 28. B 64. D
c) Burglary insurance
11. A 47. A 29. D 65. C
12. B 48. B 30. B 66. A
d) Health insurance
13. B 49. C 31. C 67. A 7. Standard Burglary Insurance (business
14. B 50. D 32. D 68. A premises) covers
15. B 51. A 33. A 69. A a) Loss occurring without any forcible entry
16. D 52. A 34. A 70. A b) Loss detected while taking inventory
17. A 53. B 35. A c) Loss arising out of snatching of goods
18. D 54. A 36. A d) Loss occurring as a result of forcible
violent entry
8. Householder's insurance policy does not
cover
a) WC of servants
b) Money in transit
c) All risk of valuables
HEALTH & d) PAinsurance
LIABILITYINSURANCE 9. Which one is not an insurance policy of
indemnity?
1. First loss cover is available under a) Health
a) House Holders Insurance b) Personal accident
b) Shopkeepers insurance c) Burglary insurance
c) Bankers Indemnity d) Cash in transit
d) Burglary Insurance 10. Which of the following rules is not
2. Bankers Indemnity Insurance Policy covers applicable to air travel insurance?
a) Burglary from vault a) Duration of coverage is limited to period
b) Wrongful and dishonest acts on the part from embarking to
of employees disembarking of the passenger
c) Fire of Bank Building b) Flight coupons are normally purchased by the
d) Cash in transit policy holder at the airport
3. Which insurance policy has worldwide c) Maximum limit of compensation in case of
geographical scope? Death / PTD is Rs. 12 lacs if
a) Overseas health insurance Individual is of 12 years of age and above
b) Cash in transit d) Maximum limit of compensation in case of
c) Personal accident insurance Death / PTD is Rs. 7.50 lacs if
d) Fidelity guarantee insurance cover Individual is of 12 years of age and above
4. PAinsurance Policy doesn't cover 11. “Retroactive period clause” is relevant to
a) Death a) Personal accident policy
b) Permanent total disability b) Bankers indemnity insurance
c) Workmen compensation insurance
334
d) Health insurance a) Manufacturer of aircraft
12. “Pair and Set” clause is not a special b) Operator of aircraft
condition under c) Lessor of the aircraft
a) Fire Insurance d) All the above
b) Burglary insurance
c) All Risk Insurance 20. Age group of girl child in Bhagyashree policy
d) Baggage insurance is revised to
13. Agreed value condition is applicable to a) Upto 10 years
a) Valuable and curios under fire insurance b) 10 to 25 years
b) Marine cargo insurance c) Upto 18 years
c) Vintage car motor insurance policy d) Upto 21 years
d) All of the above
14. Under Sec.I of shopkeeper policy which risk 21. Workmen's compensation policy is not
is not covered guided by
a) Lightning a) WC Act
b) Flood b) Fatal Accident Act
c) Aircraft falling c) Indian Contract Act
d) Loss of money d) Trade Union Act
15. “Environmental Relief Fund” is compulsory
along with premium of 22. Under which policy insured's residence and
insurance of its contents are covered
a)Public liability (Act) insurance a) Transit insurance
b) Workmen's compensation insurance policy b) Mobile insurance
c) Erection insurance policy c) Aviation insurance
d) Cancer insurance policy d) Householder's insurance
16. Which of the following policies has 23. What is the regulatory requirement of
compensation fixed exactly as per capital for setting up a stand alone
statute? health insurance company in India?
a) Workmen's compensation insurance a) 100 crores
b) Public liability Act insurance b) 50 crores
c) Motor third party insurance c) 35 crores
d) (a) and (b) above d) 200 crores
24. Meaning of 'legally liable' in a liability policy
17. Service tax is not chargeable along with is
premium under a) Breach of legal duty to take care
a) Burglary insurance b) Contractual liability
b) Personal accident insurance c) Statutory liability
c) Health insurance d) (a) and (c)
d) Janata Personal Accident Insurance 25. The Policy and the Schedule shall be read
together as one contract and any
18. Stamp duty is to be paid by insured under wording or expression to which a specific
a) W.C. Policy meaning has been attached in any
b) Marine cargo transit policy part of this Policy or Schedule, shall bear
c) Short period insurance policy specific meaning wherever it may
d) Personal accident insurance appear.
a) This applies to Public Liability policy
19. Aviation Hull Insurance policy can be b) This applies to Professional Indemnity
purchased by policy
335
c) This applies to Workmen's Compensation b) If premium is paid by cheque
policy c) (a) and (b)
d) Only (a) and (b) d) None of the above
26. Which of the following is exclusion under 33. The tax relief for annual premium for a
the Workmen's Compensation health policy for senior citizens is
policy? a) Rs. 10,000/-
a) Insured's liability to employees of b) Rs. 15,000/-
contractors c) Rs. 20,000/-
b) Liability in respect of employees of d) Rs 25,000/-
insured 34. Which of the following is covered under
c) Liability in respect of workmen contracting mediclaim insurance policy
any disease whilst a) Dental treatment
discharging duties b) Cost of Spectacles
d) (b) and (c) c) Cost of Pacemaker
27. Reinsurance of Public Liability is generally d) Cosmetic Surgery
done on which basis 35. Claim Series Clause in Liability insurance
a) Facultative means
b) Excess of loss treaty a) Single Accident may result in only one
c) Quota Share claim
d) Stop loss b) Single Accident may result in several
28. Under Bhavishya Arogya Policy, premium is claims
not based on c) Single Accident may result in a series of
a) Age at entry claims which has to be clubbed
b) Retirement age chosen d) (a) and (b)
c) Sum assured opted 36. In liability insurance premium is based on
d) Sex of the insured AOAand AOYratio. Under which
29. Which of the following is not a health ratio limit of liability may get exhausted after
insurance product one accident.
a) Kisan Package policy a) 1 : 1
b) Cancer Insurance policy b) 1 : 2
c) Critical Illness policy c) 1 : 3
d) Bhavishya Arogya policy d) 1 : 4
30. Which of the following diseases is not 37. Under which mediclaim policy , the benefit
covered in the first year after inception is paid in cash but not
of a health policy reimbursed
a) Cataract, Piles and Hernia a) Universal Health Insurance
b) Diabetes, Jaundice and Stroke b) Jan Arogya
c) Kidney Failure, Cataract and Piles c) Critical Illness
d) Hypertension, Stroke and Piles d) None of the above
31. Reinsurance of a health portfolio is normally 38. Products Liability policies are normally
done on issued on which of the following
a) Facultative basis basis
b) Excess of loss basis a) Risk Attaching basis
c) Quota Share basis b) Losses occurring basis
d) Stop loss basis c) Turnover basis
32. Income tax benefit under Section 80(D) of d) None of the above
ITAct is admissible 39. Find the correct answer: The premium
a) If premium is paid in cash under Mediclaim policy is based on
336
a) Age expenses incurred during the period of how
b) Job many days after hospitalization
c) History of previous surgery are treated as part of the claim:
d) Sex a) 15
40. Under which of the following liability b) 45
policies, compulsory excess does not c) 30
apply? d) 60
a) Industrial risks 46. The Standard Mediclaim policy excludes any
b) Non-Industrial risks disease (other than diseases
c) Products excluded during the first year of operation)
d) Compulsory Public liability policy. for how many days from
160 161 commencement of policy.
41. Which of the following risks fall under a) 30
Industrial Risks Liability policy? b) 45
a) Exhibitions c) 15
b) Permanent Amusement Parks d) 60
c) Film Studios 47. Under Standard group Mediclaim policy,
d) None of the above which of the discounts are not
42. In the limits of indemnity under Industrial granted?
Risks Public Liability, which a) Long term discount
combination of any one Accident and Any b) Group discount
one year cannot be generally c) Low claims discount
allowed under the Market Agreement?* d) None of the above
a) Rs.10 lakh and Rs.40 lakh 48. Which of the following expenses are 'not'
b) Rs.10 lakh and Rs.50 lakh payable under Maternity Benefit*?
c) Rs.10 lakh and Rs.20 lakh a) Cesarean
d) Rs.10 lakh and Rs.30 lakh b) Abdominal operation for extra-uterine
43. Which of the following statements is true in pregnancy
relation to Standard group c) Miscarriages due to accident
Mediclaim policy? d) Pre-natal expenses prior to hospitalization
Statement A: Cumulative Bonus is not 49. Under Public Liability Insurance Act, a
available. company has to insure for an amount
Statement B: Health checkup expenses are not less than the amount of the insured's.
not payable. a) Good will
a) Neither of the Statements b) Paid up capital
b) Statement a only c) Turnover
c) Statement B only d) Value of assets
d) Both statements 50. The maximum amount of premium paid by
44. Under Public Liability Insurance Act 1991 other than Senior Citizens under
the owner is not liable to pay relief Mediclaim policy that qualifies for income tax
in the event of: benefit is*:
a) Damage of property of any person a) Rs. 10,000
b) Death of workman as defined in the b) Rs. 20,000
Workmen's Compensation Act c) Rs. 7,500
c) Death of any person d) Rs. 15,000
d) Injury of any person 51. Which of the following factor does not
45. Under Hospitalization claim in Standard affect premium for Overseas
Mediclaim policy, relevant medical Mediclaim Policy?
337
a) Age a) Sudden Heart Attack.
b) Country/Countries to Visit b) Child birth.
c) Nationality of the Insured. c) Accidental injuries.
d) Duration of cover. d) Tooth ache.
52. Daily compensation benefit is available 59. TPAs are not involved in which of the
under which of the following: following policies
a) Individual mediclaim a) Group Mediclaim policies
b) Group mediclaim b) Individual Mediclaim policies
c) Cancer insurance c) Universal Health policies
d) Universal Health insurance d) Bhavishya Arogya policies
53. Accidental death is covered only under: 60. The Mediclaim policy was first introduced in
a) Group mediclaim India in
b) Ind. mediclaim a) 1986
c) Cancer insurance b) 1985
d) Universal Health Insurance. c) 1987
54. Pricing of Mediclaim policy is made based d) 1990
on 61. What is the minimum number of persons to
a) The pure risk cost method be covered for the eligibility of
b) Experience rating cost Family Discount under the Mediclaim Policy?
A) a only a) 1
B) b only b) 2
C) Both a & b c) 4
D) None of the above d) 5
55. No fault liability concept is applicable to 62. Post Hospitalization and Pre Hospitalization
which of the following: expenses are covered for the
a) Public liability (industrial risk) following number of days under the
b) Public liability (non industrial) Mediclaim policy
c) Compulsory public liability under PLI act a) 45/45
1991 b) 60/30
d) Product liability c) 30/30
56. Family discount of 10% in the total premium d) 75/15
cannot be allowed to a family 63. Which of the following statement is TRUE in
comprising the insured and any or more of respect of a claim under a new
the following: mediclaim policy?
a) Spouse a) The coverage starts after 15 days from
b) Dependent Children inception of the policy
c) Dependent Parents. b) There is a waiting period of 30 days
d) Dependent Sisters/Brothers. except for accidents
57. What is the maximum Cumulative Bonus, c) There is a waiting period of 60 days
which can be earned in a Group d) None of the above
Mediclaim Policy? 64. Which of the following is excluded in the
a) 10% Standard Mediclaim Policy?
b) 15% a) Simple Tooth Extraction
c) 50% b) Cataract Operations
d) None of the above. c) Hysterectomy
58. Under which of the following situations, one d) All the above
month waiting period under 65. In respect of Mediclaim Policy, TPAdenote
Mediclaim Policy claim is not required: a) Third Party Availability for claims
338
b) Third Party Administrator facility at least
c) To Pay Afterwards a) 20 Beds
d) None of the above b) 15 Beds
66. Which of the following is / are exclusion/s in c) 10 Beds
the Overseas Mediclaim policy d) 25 beds
a) All pre existing disease 74. Which of the following conditions is not
b) Travel against Medical Advice necessary to be fulfilled to consider a
c) First USD 100 on every claim claim under Domiciliary Hospitalization of
d) All of the above. Mediclaim Policy?
67. Following is not an ADD ON COVER under a) There is no availability of beds in the
OMP Hospital
a) Personal Accident b) The condition of the patient is such that
b) Loss of Check in Baggage he cannot be taken to Hospital
c) Delay of checked in Baggage c) The disease is such that necessitates
d) Loss of Spectacles hospitalization
68. Premium rate under the Overseas d) Admission into a Government hospital
Mediclaim policy does not depend on 75. Limit of liability in respect of Death under an
a) Country of Visit ACTonly public liability policy
b) Trip band a) Rs.25000/-
c) Age band of the insured b) Rs.50000/-
d) Family status of the proposer c) Rs.12500/-
69. Universal Health Insurance Policy for d) Rs100000/-
BPLfamilies is issued by 76. Environment Relief Fund is collected by
a) Private and PSU Insurers a) APublic Sector Banker
b) PSU Insurers only b) State Treasury
c) Central Government c) Wild Life Society
d) State Government d) Insurance Company
70. UHIS will not cover 77. Rate of Commission Payable under “Act
a) Earning Member only” Public Liability Policy
b) Earning Member spouse and 3 Dependent a) Nil
Children b) 5 %
c) Earning Member Spouse, 3 Dependent c) 10%
Children and Parents d) 12.5%
d) Only dependent children 78. In group health insurance covers, the least
71. Medical Benefit under UHIS is restricted to important underwriting aspect is
a) Rs. 30000/- per family a) Financial resources of the client firm
b) Rs. 30000/- per member b) Male to female ratio among employees
c) Rs.50000/- per family c) Age group profile of employees
d) Rs.12500/- per member d) Past claims experience
72. Claim are settled under the Overseas 79. In individual health insurance, normally
Mediclaim Policy which contingency is not
a) By the Policy Issuing Office automatically covered?
b) Overseas Claim Settlement Agent a) Cancer
c) Insured pays to the Hospital and seek b) Maternity
reimbursement c) Minor surgery
d) Lloyds of London d) Accidental fall
73. Under the Mediclaim Policy a Hospital in an 80. In underwriting group health insurance, the
urban area is one which has underwriting factors that we do
339
not consider are 87. What is the waiting period in respect to
a) Occupation of employees Maternity Benefit extension under
b) Age of employees Group Medical Policy?
c) Previous claims experience a) 10 MONTHS
d) Longevity of life of average Indian b) 12 MONTHS
81. Cost of health check-up is available to the c) 7 MONTHS
insured after an interval of: d) 9 MONTHS
a) ONCE IN THREE CLAIM FREE YEARS OF 88. Which one of the following diseases do not
POLICY form part of first year exclusion
b) ONCE IN FOUR CLAIM FREE YEARS OF a) CATARACT
POLICY b) HYSTERECTOMY
c) ONCE IN TWO CLAIM FREE YEARS OF c) FISTULA
POLICY d) APENDICITIS
d) Once in every five years 89. Contribution to Environmental Relief Fund is
166 167 under the PLI Act
82. What is the cost of Health check-up under a) Rs.50000/-
Individual Mediclaim? b) Rs.100000/-
a) 1% OF Average SI c) AN EQUIVALENTAMOUNTOF PREMIUM
b) 2% OF SI d) AN EQUIVALENTAMOUNTOF PREMIUM
c) 5% OF SI WITH SERVICE TAX
d) MAXIMUM Rs.2500. 90. Retroactive date means
83. Domiciliary Hospitalization Benefit is a) INCEPTION DATE OF FIRSTPOLICYwithout
available break
a) MEDICALTREATMENTEXCEEDING 7 DAYS b) DATE OF RENEWALPREMIUM without
b) MEDICALTREATMENTEXCEEDING 3 DAYS break
c) MEDICALTREATMENTEXCEEDING 10 DAYS c) EXPIRYDATE OF LASTPOLICY
d) MEDICALTREATMENTEXCEEDING 5 DAYS d) EXPIRYDATE OF FIRSTPOLICY
84. Family discount is available under individual 91. Which is not a NON-INDUSTRIALRISK under
Mediclaim Policy if taken for Public Liability Policy?
the family a) HOTEL
a) @ THE RATE 5% b) LIBRARY
b) @ THE RATE 15% c) PAINTFACTORY
c) @ THE RATE 10% d) SHOP
d) @ THE RATE 33 1/2% 92. For claims made Basis Liability insurance
85. When Insured opts for Mediclaim cover with policies
cashless facility the Premium a) Policy period and period of insurance are
amount is loaded by always different
a) 10% b) Policy period and period of insurance are
b) 6% always same
c) 5% c) Policy period and period of insurance may
d) 7.5% or may not be same
86. When Maternity Benefit is extended to d) There is no difference between the two
Group Mediclaim Policy the 93. Which policy is mandatory if your client is in
additional Premium is hazardous industry dealing in
a) 10% hazardous substance?
b) 12.5% a) Product liability
c) 15% b) Professional liability
d) 17.5% c) Public Liability (Non-Industrial)
340
d) Public Liability Act Policy b) 60 days from the Order of National
94. For claiming compensation under WC policy, Commission.
accident should c) 90 days from the Order of National
a) Always be within factory premises Commission.
b) Always be outside factory premises d) No time limit.
c) May be within or outside factory premises 101.In W.C. cases we can go for appeal only on
d) Always be at workers residence only the ground of: -
95. Bhagyashree Child Welfare Policy is a) On guan m
applicable to:- b) Finding of facts
a) Girl Child in the age group of0 to 18 years. c) Substantial Question of Law is involved.
b) Whose Parents age does not exceed 60 d) None of above.
years? 102.In Employers Liability Insurance one of the
c) This Scheme is for one Girl Child in a following not covered:-
family. a) Personal negligence of the Employer.
d) All above. b) Negligence of Employees in the
96. Generally Blood Stock Insurance relates to performance of their employment
a) Blood Stock in Blood Bank. duties.
b) Testing of Blood. c) The willful disobedience of the Workman.
c) Indemnity in respect of death of a horse d) Personnel negligence of fellow employee.
occurring from accident, illness 103.In relation to Standard Mediclaim Policy
of disease etc. which of the following statement is
d) No such Insurance cover is available. correcta)
97. Under Mediclaim Policy the term “Medical Condition with respect to number of beds
Practitioner means:- must be observed in all the
a) Aperson who holds a degree/ diploma cases
from recognized institution. b) Condition with respect to number of beds
b) Person who is registered by Medical is applicable only if the
Council of respective State of India. Hospital is not registered with local authority
c) Both of above. c) Condition with respect of number of beds
d) None of above. has been waived by IRDA
98. Under Liability Insurance the terms “AOA” d) None of the above is correct
relates to:- 104.The benefit of section 80D of Income Tax
a) Assessment of Assets. Act in 2007 Budget has beena)
b) Against one Accident. Scrapped
c) Any one Accident. b) Increased
d) Any other Accident. c) Decreased
99. Under Legal background “Trespassers” d) Kept unchanged
means: - 105.Which of the following expenses are not
a) Aman found guilty of cutting trees. covered under Standard Mediclaim
b) Aman who enters in forest and passes Policy-?
through. a) Expenses related to Psychological
c) Aman who enter property without any right disorders
or permission. b) Expenses related to Cancer
d) All of above. c) Expenses related to MTP
100.The time limit for appeal for National d) Expenses incurred towards pace-maker in
Consumer Forum to Supreme Court is:- case of hear disease
a) 30 days from the Order of National 106.Which one of the following expenses is not
Commission. covered under Standard
341
Mediclaim Policy-? 113.Which of the following parties can bring an
a) Expenses towards HIV Test of patient action against a director of a
before operation which is covered company giving rise to a claim under the D&O
under this policy POLICY?
b) Registration Charges of Hospital a) Customers
c) Dialysis Charges in case of renal failure b) Employees
d) Angioplasty expenses c) Regulator
107.As per the Public liability act policy the d) All above
compensation in case of an accident is 114.What costs cannot be usually covered
a) Structured compensation under a Product Recall cover
b) Unlimited liability a) Product Guarantee
c) As per sum insured b) Cost of recovering defectives products sent
d)None of the above out in the market
108.Equal amount of premium collected c) Cost of advertising to the public
under the PLI Act Policy goes to d) None of the above
a) Prime Minister's Relief fund 115.Claims under Product Liability policy can be
b) Environment relief fund paid in
c) Disaster management fund a) Foreign currency
d) None of the above b) Indian rupees only
109.Claim settling authority incase of claims c) In Foreign currency with RBI permission
under PLI Act Policy is d) None of the above
a) Divisional Manager/ Sr. Divisional
Manager 116.The retroactive clause under a liability
b) Regional Manager/ Chief regional policy defines that
Manager a) Under a claims made policy the loss should
c) General Manager occur within policy period in
d) District Magistrate/ Collector case of renewal without break
110.Claims under Public Liability Policy are in b) The date of inception of cover and the time
the nature of within which the legal
Legal liability proceedings should be completed
a) Agreed liability c) The period of keeping provisions for claim
b) Vicarious liability made under the policy
c) None of the above d) None of the abov
111.Under Public Liability Industrial risks Policy
pollution risk is 117.Liability policies are called long tailed
a) automatically covered policies because
b) can be taken as an add on cover a) Actual liability may arise a long period after
c) cannot be covered expiry of the policy for
d) any of the above claims arising during the policy period
112.Premium rating for Public liability policy b) Provisions for claims have to be maintained
depends on on the insurers books for a
a) Turnover, Limit of indemnity, No. of Units long period
covered, Risk group c) Both of the above
b) Sum insured selected, location of the Risk, d) None of the above
Surrounding Property, Past 118.Which one of the following statement is
claims experience not correct in respect of Liability
c) Both of the above Insurances-?
d) None of the above
342
a) Implied principle of Good faith is not b) Matters pertaining to Aviation.
applicable. c) Deals with structure and position of body.
b) Claims are paid to persons other than the d) None of above.
insured 124.Under Pedal Cycle Policy Legal Liability for
c) The insurer provides indemnity to the insured Bodily injury, property damage
in respect of his potential is:-
legal liability. a) Rs.5, 000/-
d) Legal costs of the insured incurred with the b) Rs. 10,000/-
consent of the insurers are c) Rs. 15,000/-
reimbursed. d) Rs. 20,000/-
119.Which one of the following statements is 125.Which of the following criteria may not be
not correct in respect of the liability complied with in the definition of
Insurance covers ? hospital/nursing home, if it is not registered?
a) It covers Civil Liability arising under Common a) Fully equipped OT
Law b) At least 10/15 in-patients beds
b) It covers Civil liability arising under Statutory c) Tie up with TPA
Law d) Fully qualified nursing staff
c) It covers both (a) and (b) 126.For admissibility of expenses on
d) It cover neither of (a) and (b) hospitalization, the period of hospitalization
120.In Liability insurance policies should be
a) Policy period and period of insurance are a) Minimum 24 hours in all the cases
always different b) Minimum 24 hours except in some cases of
b) Policy period and period of insurance are specific treatment
always same c) Minimum 3 days
c) Policy period and period of insurance may or d) No such condition
may not be same 127.Which of the following does not fall under
d) There is no difference between the two the definition of Family under the
121.If your client is in hazardous industry Mediclaim policy for family discount?
dealing in hazardous substance, which a) Spouse
policy would you suggest b) Dependent children
a) Public liability (Non industrial risk) c) Dependent sister
b) Product liability d) Dependent parents
c) Professional liability 128.In which of the following aspects,
d) Compulsory public liability act policy Mediclaim and Jan Arogya differs
122.Under Personal Accident Policy Payment of a) Definition of hospital
Compensation in respect of b) Cumulative bonus
death, injury or disablement of the insured c) Tax benefit under sec 80D
Directly or indirectly caused by d) None of the above
Venereal diseases or insanity is: - 129.Which of the following is a deferred
a) Cover. Subject to 2% pf capital Sum insured. mediclaim policy?
b) Cover subject to2% of Sum insured or 2,500/- a) Bhavishya Arogya
whichever is less b) Jan Arogya
c) Full amount is payable. c) Cancer medical policy
d) Not covered. d) Overseas mediclaim
123.Anatomy is a science, which deals with: - Key Multiple Choice Questions on Health
a) Matter pertaining to TVAntenna. Insurance
343
Key –Health & Liability
1. D 15. A 29. A 43. D 57. D 71. A 85. B 99. C
2. B 16. D 30. A 44. B 58. C 72. B 86. A 100. A
3. C 17. D 31. D 45. D 59. D 73. B 87. D 101. C 115. C 113. D 127. C
4. D 18. B 32. B 46. A 60. A 74. D 88. D 102. C 116. A 114. A 128. B
5. C 19. D 33. C 47. A 61. B 75. A 89. C 103. B 117. C 129. A
6. A 20. C 34. C 48. D 62. B 76. D 90. A 104. B 118. A
7. D 21. D 35. C 49. B 63. B 77. A 91. C 105. C 119. C
8. B 22. D 36. A 50. D 64. A 78. A 92. A 106. B 120. C
9. B 23. A 37. C 51. C 65. B 79. B 93. D 107. A 121. D
10. D 24. D 38. B 52. D 66. D 80. D 94. C 108. B 122. D
11. B 25. D 39. A 53. D 67. D 81. B 95. D 109. D 123. C
12. A 26. A 40. D 54. C 68. D 82. A 96. C 110. A 124. B
13. D 27. B 41. D 55. C 69. B 83. B 97. C 111. B 125. C
14. D 28. D 42. B 56. D 70. D 84. C 98. C 112. A 126. B
MOTOR.
QUESTIONS d. We can appeal directly to Supreme
1. Under the Motor Vehicles Act, a public place Court.
is 4. The risk of overturning as a tool trade is
a. Aplace owned by a public limited covered in respect of a dumpers under
company. a. Astandard commercial Goods
b. Aplace where public meetings are carrying vehicle B policy.
held. b. Astandard miscellaneous type of
c. Aplace where any member of public vehicles B policy.
has a general right of access. c. A standard miscellaneous type of
d. Aplace where the public grievances vehicles A policy at an additional
are heard. premium.
2. TPpool is formed to share the profit or loss of d. None of the above.
Motor TPbusiness of all general 5. The concept of No fault liability as envisaged
Insurers in the following classes of business. in MVAct 1939 is reflected in
a. Motor TPClaims and premium of a. Section 163 of MVAct
Private Cars. b. Section 149 of MVAct
b. Motor TPClaims and premium of 2 c. Section 140 of MVAct
wheelers. d. None of the above.
c. Motor TPClaims and premium of 6. Constitution of Motor Vehicle Claims tribunal
Commercial Vehicles. falls in the jurisdiction of
d. Motor TPClaims and Premium of All a. Central Government
Class Motor Business. b. State Government
3. In Motor TP claims even if we did not take c. Supreme Court
place under sec 170 of Motor d. District Courts
Vehicle act in lower courts, we can go on appeal 7. Compensation payable in case of death under
on quantum. the relevant section of 'No Fault
a. True Liability' is
b. False a. Rs. 25,000
c. Joint appeal with insured b. Rs. 12,500
c. Rs. 30,000
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d. None of the above Sec 173 is to be made at the MACTfor appealing
8. Solatium Fund established under M.V. Act in this case is
1939, deals with a. Rs 10000/-
a. Accident cases b. Rs 25000/-
b. Death cases c. Rs 20000/-
c. Injury d. Rs 40000/-
d. Hit and run cases 15. A MACT awards Rs 9000 for a pedestrian
9. As per M.V. Act, following injuries are treated who meets with an accident.
as simple injuries Insurance Company wants to go on appeal as
a. Fracture of wrists the injury was very minor. The
b. Dislocation of bone option available is
c. Scar on the face a. Go on appeal on normal course
d. Loss of vision b. File a writ I high court
10. Which of the following about multimodal c. File a SLPin the Supreme Court
transporter is not true d. Company has to satisfy the award
a. MTO is to be registered 16. Owner resides at Kanpur had taken a Motor
b. He is responsible for the transportation of TP Policy from Delhi. The
the consignment vehicle meets with an accident at Kolkata
c. Liability of MTO is unlimited injuring a person, who had retired
d. He is not responsible for arranging insurance from services and resides at Guahati. He had
of the consignment very simple injuries. Find out
11. The concept of Lok Adalat was mooted by from the list the places where he can file
a. Dr. S.N. Bhagwati MACTcase.
b. Mr. P.N. Bhagwati a. Anywhere in India
c. Mr. Lok Naik b. Kolkata/Gauhati
d. Mr. P.N. Adlakha c. Gauhati/Kanpur/Kolkata
12. Which of the following documents is not d. Gauhati/Kanpur/Kolkata/Delhi
relevant to bodily injury claims for 17. Amarried person dies in road a accident. His
processing third party claims under motor wife files a case in MACTPune,
policies? whereas his parents file the case at Mumbai.
a. Coroner's report What is the correct step to be
b. Driving Licence taken to handle the situation from the list of
c. Police Report option below?
d. Medical Certificate a. Wait till the Court decides in one case and
13. Application for compensation under then go for appeal.
Solatium scheme has to be made to: b. Go the high court for stay in both the cases in
a. Corporate office of an insurance company the initial stages itself.
b. Claims enquiry officer nominated by State c. Wait till one case is decided and bring this
Government fact to another court for
c. Nominated divisional office of the insurance dismissal of the pending case.
company d. Take affective steps in both the courts by
d. Claims settlement commissioner nominated filling certified petition copies
by the State Government. FIR sets to transfer the case to either of the
14. AMACTaward for Rs. 40000/- for a courts for clubbing together.
petitioner for simple injuries. Insurance 18. Sec 163Aof MVAct 1988 related to
Company wants to go on appeal to High Court. a. No fault Liability
The minimum deposit under b. Hit and run case
c. Structured Compensation
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d. Insurer's defense d. Nil
19. Insurers' defense available under following 26. Can CNG/LPG fuel attachment to a vehicle
sections under MVAct be insured provided the insured
a. Sec 140 and 147 submits:
b. Sec 149(2) and 170 a. Invoice copy
c. Sec 165 and 166 b. Proof of endorsement in the RC
d. None of the above. c. Declaration in proposal form
20. Motor Vehicle's Act 1939 was amended in d. Physical verification of unit
a. 1960 and 1999 27. The most essential document required for
b. 1988 and 1994 filing of an appeal before high court
c. 1995 and 2002 in MACTcases
d. None of the above a. Award deposit receipt
21. Motor Vehicle's Act 1994 was promulgated b. Petition filed before the lower court
mainly for the purpose of c. Lower court order obtained under Section
a. Doing away with the provisions of previous 170 of MVAct
acts d. Insurer's Vakalat
b. Protecting the loss arising out of the 28. Under which section of MVAct 1988, no
use/carrying of hazardous goods person shall allow any other person
c. Improving upon the provisions of previous to use a vehicle in a public place unless the
acts. vehicle is covered by an insurance
d. All of the above policy complying with the requirements of the
22. For registration of vehicles, the RTO's ACT
requirement as per the provisions of a. 146
MVAct is submission of b. 147
a. Policy schedule c. 148
b. Policy schedule and certificate of insurance d. 149
c. Original certificate of insurance 29. Section 161 (3) of MVAct pertains to
d. Proof of sale a. Structured compensation
23. Grace period for filing of an appeal before b. No fault liability
High Court in MACTcases is c. Hit and run compensation
a. 180 days d. None of the above
b. 90 days 30. Of the following exclusions under the Motor
c. 120 days Policy, which one does not
d. No grace period at all appear under general exclusions of the policy?
24. Under which section of MV Act, an insurer a. Driving without a valid driving license
can defend the liability before b. Driving under the influence of intoxication
MACT c. Geographical area
a. Section 163 d. Breach of limitations as to use clause
b. Section 170 31. Under the motor comprehensive policy,
c. Section 149 (2) towing charges in respect of a
d. Section 166 damaged vehicle include the cost of –
25. Abrand new vehicle meets with an accident a. Protecting the vehicle
on the first day of insurance cover b. Removing it to the nearest repairers
and what percentage of depreciation the c. Re-delivery to the insured
vehicle's fibre part attracts d. All of the above
a. 50% 32. Amotorcar with manufacturing date as
b. As per percentage table 12/04/1939 is
c. 30% a. An obsolete car
346
b. Is a vehicle not insurable and Brother, the applicable multiplier is as per
c. Is a car classified as classic the Schedule of M.V. Act, will
d. None of the above be
33. Avehicle not road worthy can be ideally a. Multiplier applicable to the deceased as per
offered the following covers his age
a. Burglary policy b. Multiplier applicable to the father of the
b. Motor policy covering fire deceased as per his age
c. Motor policy covering theft c. Multiplier applicable to the brother of the
d. Motor policy covering fire/theft as per GR 45 deceased as per his age.
34. One passenger bus was covered under d. None of the above.
Motor package policy while parked in 39. Under the motor tariff, “Miscellaneous
the garage at night extra horn, tyres and Vehicles” do not include
decorative fittings were stolen. The a. Motorised rickshaws
claim is payable: b. Mobile dispensaries
a. In full c. Ambulance
b. Only 50% is payable d. Hearses – vehicles to carry coffins to funeral
c. Payable on Non-standard basis 40. The liability of the owner of the motor
d. Not payable vehicle to pay compensation for death
35. Premium from the following classes of claims on no fault of him under the Motor
vehicles goes to the Motor insurance Vehicles Act, 1988 is
pool: a. Rs. 50000
a. Total premium collected on private car & 2 b. Rs. 10000
wheelers c. Rs. 25000
b. OD premium and liability premium collected d. Unlimited
on commercial vehicles.
c. Liability and PApremium collected on 1C 11 B 21 B 31 D
Commercial vehicles. 2C 12 A 22 C 32 D
d. Total premium collected from Goods carrying 3B 13 D 23 B 33 D
vehicles. 4D 14 C 24 C 34 D
36. Important documents required to process 5C 15 D 25 A 35 C
the Motor Third Party claim 6C 16 C 26 B 36 D
include: 7D 17 D 27 C 37 A
8D 18 C 28 A 38 A
a. Copy of FIR charge sheet
9C 19 B 29 C 39 A
b. Name and address of the person injured and
10 D 20 B 30 A 40 A
killed in accident.
c. Certified copies of injury/post mortem report.
d. All of the above
37. What is the trump card for the success of
the TPPool
a. 10% commission on the Premium
b. Distribution of Premium and liabilities
amongst insurer.
c. Commitment of insurers to serve insuring
public
d. All of the above
38. In a MACTClaim, in case of a death of a
married male with dependent Father
347
a. Two wheeler attached with the side car
MOTOR MODEL QUESTIONS b. Ambulance with oxygen cylinder
c. Amotor vehicle to which a semi trailer is
1. In which year MVAct was first enacted attached
a. 1929 d. None
b. 1939 10. Third party means employees
c. 1959 a. Insured and its employees
d. 1988 b. Insurer
2. What is meant by the term IDV c. Any other person other than a & b
a. Insenes Declared Value d. None
b. Insured's Depreciated Value 11. Motor Insurance Amendment Act 1989
c. Insured Declared Value came into effect
d. Insurance determining value a. 1stApril 1989
3. Motor cover note is generally issued for b. 1st June 1989
a. In all cases c. 1st July 1989
b. For renewal only d. 1st Sept. 1989
c. For new vehicles 12. Which section of the Motor Vehicle Act
d. Only for third party & theft deals with Act liability cases?
4. The maximum validity period of a motor a. Section 140 & 166
cover note is b. 140 & 161
a. 15 days c. 140
b. 30 days d. 166
c. 60 days 13. What is the maximum NCB allowed under
d. 365 days Motor OD Premium
5. Motor insurance is statutory in respect of a. 30%
a. Comprehensive risks b. 50%
b. Act only cover c. 45%
c. Act only fire and theft extension d. 65%
d. Trade Risk 14. Which of the following vehicles is
6. In case of break in insurance recognized as Vintage Car
a. Pre-inspection of vehicle is mandatory a. Vehicle manufactured before 31.12.1960
b. Insurance is not available at all b. Vehicle manufactured before 1940
c. Mere declaration from insured only will c. Vehicle manufactured before 1959
suffice d. Vehicle manufactured before 1939
d. None is required 15. Which document is not required in settling
7. Which is the single largest portfolio in PSU motor TPinjury claim
non life insurance companies a. Policy copy
a. Fire b. Coroner's Report
b. Health c. Road challan
c. Motor d. Driving License
d. Marine 16. Mr. A sold his vehicle to B who was enjoying
8. Under what circumstances the concept of 50% NCB what % of NCB
total loss settlement is considered would be enjoyed by 'B'
a. Repairing cost exceeds more than 75% of IDV a. 50%
b. Insured's refuses to get it repaired b. 25%
c. Repairing cost exceeds more than 50% c. 15%
d. None d. Nil
9. Articulated vehicle means
348
17. Maximum liability under TPPD without d. None of the above
payment of premium under 2 24. While underwriting a commercial vehicle
wheeler is which of the following is not
a. Rs. 2000 considered?
b. Rs. 3000 a. Past OD claim history
c. Rs. 5000 b. Break in insurance
d. Rs. 6000 c. Vehicle type
18. Vehicle enjoying 50% NCB lodged an OD d. Past TPclaim history
claim. What would be NCB 25. For an investigator's report in a TPclaim,
allowable in its next renewal? following is not true:
a. 15% a. Investigator's report brings out the
b. 25% location/time of accident
c. Nil b. Report should provide number of passengers
d. 30% being carried at time
19. Maximum amount of discount available accident
under Motor OD premium in case c. The report is an accepted legal document in
where owner is having Automobile Association court
membership d. The report should verify the authenticity of
a. 10% the RC book
b. 20% 26. Motor Policy does not cover
c. Rs. 200 a. Property damage
d. Rs. 500 b. Liability
20. Under hit and run case what amount is c. Health
payable in case of death? d. Personal Accident
a. Rs. 20,000 27. The IDVis based on
b. Rs. 30,000 a. The market value
c. Rs. 25,000 b. Invoice value
d. Rs. 40,000 c. Book value
21. In case of partial loss settlement, % d. Commercial value
depreciation applicable to rubber items is 28. Motor Trade Policy can be given to
a. 30% a. Motor Dealers
b. 40% b. Motor vehicle financiers
218 219 c. Individuals
c. 50% d. Motor vehicle inspector
d. 60% 29. Lok Adalat settlement for MACTcases are
22. Which of the following type of the vehicles a. Compromise settlement
do not generally carry overturning b. Award given by court
risk as a tool of trade? c. Award given by a special tribunal
a. Auto rickshaw d. None of the above
b. Dumper 30. Sec 140 of MVAct deals with following
c. Mobile drilling rigs a. Appeal to High Court
d. Both b & c b. Structural Compensation
23. IDV of a vehicle is 2.5 Lakhs, assessed loss is c. No fault liability
2.05 lakhs. What would be d. Defenses available to insurer
insurer's liability? 31. Depreciation is applicable on the basis of
a. Rs. 2.05 Lakhs the following
b. Rs. 2.05 Lakhs less excess a. Age of the party
c. Rs. 2.50 lakhs b. Driving license
349
c. Age of the vehicle 39. Maximum towing & spot repair charges
d. Route permit payable in event of claims under
32. Which one of the following loss is not commercial vehicle
payable under Motor Package Policy? a. Rs. 1500
a. Cost of motor parts b. Rs. 1000
b. Cost of Glass pats c. Rs. 500
c. Labour charges d. Rs. 2500
d. Consequential loss 40. Maximum towing & spot repair charges
33. In case of Total loss which one is considered payable under Pvt. Cars vehicle
for settlement of claim a. Rs. 1000
a. Market value of the vehicle b. Rs. 1500
b. Depreciated value of the vehicle c. Rs. 1200
c. Cost of parts and labour charges d. Rs. 2000
d. Insured declared value 41. Which of the following statement is correct?
34. Which type of cases are placed before Lok a. Motor policy issued for a short period can be
Adalat extended
a. Hit and run cases b. Motor policy can be extended by collecting
b. Workmen's compensation cases difference of premium on
c. Consumer forum cases short period basis.
d. Cases pending before motor acct. claims c. Motor policy can be extended by collecting
35. The amount of compensation payable in difference of premium on
case of death u/s 140 of MVAct is pro-rata basis.
a. Rs. 15000 d. Motor policy issued on short period rating
b. Rs. 7500 cannot be extended.
220 221 42. Rating of goods commercial vehicle is based
c. Rs. 25000 on
d. Rs. 50,000 a. Carrying capacity of vehicle
36. The amount of compensation payable in b. Unloaded weight of the vehicle
case of Grievous injury in Hit and c. Gross vehicle weight of vehicle
Run case is d. Age of the vehicle
a. Rs. 40000 43. Which of the following does not have policy
b. Rs. 15000 excess?
c. Rs. 2500 a. 2 wheeler
d. Rs. 25000 b. Commercial vehicle
37. Long term Motor Insurance Policy is now c. Private car vehicle
available for the following classes d. None of the above
of vehicles 44. Which of the following statements is true
a. Private Car for NCB?
b. Two wheeler a. Policy is renewed after 12 months of expiry
c. Commercial vehicle b. NCB earned can be substituted
d. None of the above c. Vehicle stands transferred to spouse
38. Agreed value policy in Motor Insurance can following death of insured
be issued for d. All the above
a. Classic cases 45. Which section of the MVAct deals with the
b. Commercial vehicle defense available to the insurers
c. Vintage car under Motor Policy in respect of MACTClaims?
d. Private cars a. Section 140
b. Section 143
350
c. Section 170 b. Insured Vehicle
d. Section 163 (A) c. Third Party
46. Amotor accident claim victim can file a case d. Insurers
in MACTfor compensation 53. Which of the following is relevant for hit and
a. At the place of accident run cases?
b. At the place where he resides a. Prime Ministers relief fund
c. At the place of issuance of policy b. Environment relief fund
d. All of the above c. Solatium fund
47. 'Dealer' means a person who is engaged in d. Public Provident Fund
a. Building bodies for attachment to chassis 54. The transferee is entitled for a OD claim
b. In repair of motor vehicle only when
c. In the business of hypothecation, leaving etc. a. RC is transferred in his names
d. Authorized entity for sales and service of new b. Sale consideration is paid
vehicles c. Insurance policy is transferred in this name
48. Which of the following statement is correct? d. He holds a valid driving license
a. Transfer of ownership shall not affect 55. The categorization of surveyor is done by
admissibility of liability in respect a. Head office of the company
of Act only policy b. GIPSA
b. Transfer shall apply within 10 days to the c. IRDA
insurer d. Institute of Surveyors
c. Fresh proposal form is required for transfer 56. Which one of the following is relevant for
d. Transfer of own damage portion is automatic calculating repair liability under
222 223 Motor OD?
49. Which of the following is not relevant in a. New for old
Motor Vehicle Insurance? b. Depreciation
a. Sec 146 of the Motor Vehicle Act 1988 c. Survey fees
b. WC covers for workmen in charge of d. Garage rent
operation & maintenance of 57. Compulsory Excess for two wheelers is
vehicle. a. Nil
c. IDV b. Rs. 50
d. Reinstatement c. Rs. 100
50. By which section of Motor Vehicle Act d. Rs. 150
Motor Vehicle Insurance is made 58. The Cover note issued for a motor vehicle
obligatory for plying in public places does not contain
a. See 146 a. Name of insurer
b. See 170 b. Engine and chases No. or registration no.
c. See 176 c. Name of the driver
d. See 420 d. Validity Period
51. Which of the following is not relevant for 59. Non disclosure of a material fact shall make
determination of TP compensation the policy
under motor policy? a. Valid
a. Age b. Void
b. Income c. Voidable
c. Sex d. Enforceable
d. Dependency 60. Which is not a factor for rating a two
52. No Fault liability means No fault on the part wheeler policy?
of a. Side car
a. Public b. Membership Automobile Association
351
c. Make c. Claim has to be totally rejected as it is a
d. Age of the owner drunken driving
61. Geographical extension is not allowed to d. 25% of the SI can be settled not more than
which one of the following that.
countries 66. In case of sale of motor vehicle:
a. Nepal a. Transfer of motor insurance policy is
b. Bhutan automatic to the purchaser
c. Afghanistan b. Transfer of name in the motor policy
d. Maldives can be effected at the time of next
62. Under Total loss claim settlement basis: renewal
a. Wreck need not be surrendered to the c. Transfer of insurance policy to the
insurer purchaser can be effected any time
b. Partial salvage – can be surrendered and between name transfer in the RC to the
partly can be retained by the expiry date of the policy
insured. d. The transferee should apply within 14 days
c. Full wreck has to be surrendered before claim from the date of transfer of
settlement ownership of the vehicle
d. Full salvage/wreck can be surrendered after 67. Which of the following is not an accessory in
settlement motor vehicle?
224 225 a. Fog light Assy
63. In case of Motor accident involving TPinjury b. Steering wheel cover
as well as own damage: c. Driver seat assy
a. FIR is a must d. Sun visor
b. Only police certificate is sufficient 68. Cash less settlement can only be done
c. Intimation to the insurer alone is sufficient when:
d. Driver statement a. Total loss is not possible
64. In a goods carrying vehicle: b. Salvage cannot be evaluated
a. Six persons can be carried as passengers c. When the vehicle/claimant owner had died in
b. Any number of persons as passenger can be the accident
carried d. Repairing of vehicle is economically not
c. Only six persons as coolies for the purpose of viable
loading/unloading can be 69. In case of motor vehicle accident, report of
carried motor vehicle inspector is called
d. Strictly neither coolies nor any other persons for to know
can be carried a. The quantum of loss
65. In a 2 wheeler motor cycle policy, where b. The model of the vehicle
owner/rider, who died in a road c. Whether the accident was caused due to any
accident whilst on drunken driving. Identify the mechanical breakdown
correct statement d. Third party loss
a. As there is no prohibition in the State, 100% 70. IDVprinciple brought peace in motor claim
PAclaim can be settled to his settlement because:
wife who is the claimant. a. It liability at minimum
b. As it is a death due to drunken driving, b. It guides total loss settlement
considering contributory c. It reduces disputes over total loss valuation
negligence 75% can be settled on non-standard d. Both (b) and (c)
basis, on compassionate 71. Breach of trust occurs when:
ground. a. Theft takes place from guarded parking lot
b. Theft takes place from owners' friend's house
352
c. Theft takes place due to negligently forgotten b. Vehicle laid up in garage and not in use for
of key with the vehicle more than one month
d. Theft takes place with disappearance of c. Vehicle laid up in garage and not in use for
driver with the vehicle more than 2 months
72. Percentage of depreciation in airbag is: d. Vehicle under police custody
a. Depending on the age of the vehicle 80. Motor pool takes care of the following
b. Like depreciation of plastic parts business
c. Like fibre glass components a. Obligatory cession
d. None of the above b. Declined insurers
73. Which feature is not a u/w consideration for c. Third party commercial vehicles
Motor Dept? d. Third party all vehicles
a. Color of car 81. Motor reinsurance is normally done on the
b. Cubic capacity following basis
c. Age of vehicle a. Quota share
d. Hire & reward b. Facultative
74. IDVof new vehicle represents c. Surplus treaty
a. Invoice price d. Excess of loss
b. Invoice price less 5% 82. Motor trade road risk policy can be
c. Ex factory price underwritten on the basis of
d. Cost on road less 5% a. Type of vehicle
75. IMT23 deals with b. Trade certificate
a. Compulsory excess c. Dealership
b. Exclusion of special perils like flood, storm, d. Vehicle in transit
typhoon 83. Motor third party insurance is not required
c. Exclusion of riot, strike and terrorism for two wheelers only when the
d. Replacement of lamps, tyres etc. cubic capacity is less than
76. Which of the following is Miscellaneous and a. 100 cc
special type of vehicle? b. 35 cc
a. Scooter c. 50 cc
b. Trailer d. None
c. Agricultural tractors 84. Section 173 of MVAct relates to
d. Taxi a. TPproperty damage
77. IDVof a vehicle of 7 years old is b. Appeal cases
a. Current invoice price less 50% c. Fault liability
b. Market price of 7 years old vehicle d. None of the above
c. Invoice less 70% 85. No appeal lies in High Court if the
d. Not to insure at any value MACTcompensation amount is less than
78. Which of the following countries is not a. Rs. 1 Lakhs
covered under extension of b. Rs. 50,000
geographical areas? c. Rs. 10,000
a. Bangladesh d. Rs. 25,000
b. Bhutan 86. Non Motor Policy can be issued in the
c. China following case
d. Nepal a. Mobile crane
79. Concession for laid up vehicle can be given b. Private car
in which of the following cases c. Commercial vehicle
a. Vehicle can not be used due to accident d. Motor cycle with 50cc
353
87. Under section 170 of MVAct insurer can get 94. TPpremium on a private car
the right to contest the TP claim a. Ceded entirely of GIC
on all grounds as of the owner in which of the b. Ceded entirely of India Motor Pool
following cases c. Retained by U/WCompany
a. Collusion between driver and conductor d. Shared by all PSUs
b. Collusion between insured and claimant 95. TPProvision in a claim is kept
c. Collusion between driver and claimant a. Present trend of local courts
d. Collusion between insurance co. and claimant b. Age factor of deceased
88. Which of the following losses are not c. Rate of interest prevalent
excluded under OD section of package d. All above factors
policy? 96. What is not required in a Theft Case?
a. Consequential loss a. DL
b. Depreciation of wear and tear b. Subrogation Bond
c. Mechanical and electrical failure c. FIR
d. Fire damage d. FR
89. The Insurer can cancel the policy by sending 97. TPinsurance was first made mandatory in:
notice of a. India
a. 10 days b. England
b. 15 days c. USA
c. 7 days d. Soviet Union
d. 30 days 98. An MACTcase can be filed:
228 229 a. In the area of accident
90. No claim discount can be allowed provided b. Anywhere in India
a fresh policy is obtained within c. Any place near to U/Woffice
a. 30 days d. At the place where the victim belonged to
b. 180 days 99. Which of the following is incorrect?
c. 90 days a. Insurance of a Motor Vehicle is compulsory
d. 15 days of the expiry of the previous policy b. Policy can be insured for TPcover only
91. In case of a private car package policy, the c. Educational qualification of the proposer
insured may authorize repairs d. Anti theft devices fitted in the vehicle
necessitated by damage caused under policy 100.Which of the following doesn't have a
provided estimated cost of such bearing while accepting a motor
repairs does not exceed: proposal?
a. Rs. 1000 a. Moral hazard of the insured
b. Rs. 500 b. Roadworthiness of the vehicle
c. Rs. 250 c. Educational qualification of the proposer
d. Rs. 1200 d. Anti theft devices fitted in the vehicle
92. As regards risk of 'explosion' to be covered, 101.Owner of goods traveling along in a goods
it means: vehicle will be treated for the
a. Only internal purpose of claims as:
b. Both internal and external a. Insured
c. Only external explosion b. Third party
d. Covered only by additional premium c. Gratuitous passenger
93. Sum insured of a vehicle is based on: d. Employee
a. Insured Market value 102.“Claim Enq. Officer” and “Claim Settlement
b. Insured Declared value Commissions” are part of:
c. Insured Draft value a. MACT
d. Insured Estimated value b. ESTAct
354
c. Soratium Fund b. Compliance of notice period
d. WC Act c. Timing requirements
103.OD Claim under Comml. Vehicle chemical d. Geographical limits
tanker will be considered if the 110.Athird party liability is often awarded
driver has: against more than one insurer in case of
a. Valid DLto drive any vehicle a. Dispute on admissibility of claim
b. Valid DLto drive a tanker b. Absence of insurance policies
c. Valid DLendorsed with handling of hazardous c. Unenforceable policies produced
chemicals d. Contributory negligence
d. Valid DLwith 5 years experience in driving a 111.By collecting additional premium Rs. 25 to
tanker cover the workmen in-charge of
104.Application for compensation to be made the vehicle, the policy provides an option for
at MVAct preferring a claim under:
a. Place of accident a. MVAct only
b. Place of insurance b. WC Act only
c. Place of residence of the claimant c. Either MVAct or WC Act
d. Any of the above d. Common law
105.The time limit normally allowed for 112.Refund of premium on account of double
presenting claim petition u/s 166 is insurance of motor vehicles can be
a. 3 months allowed on pro-rata basis only for the period
b. 6 months during which
c. 9 months a. The policy proposed for cancellation is in
d. 1 year force
106.In respect of TPClaims, the insurance b. The policy not proposed for cancellation is in
company can repudiate liability force
a. Only if it proves that the DLwas not valid and c. Both the policies are in force on the date of
the driver was disqualified cancellation
from having a license on the date of accident d. Both the policies are concurrently in force
b. If the driver was in possession of the learning 113.WC Claims under Motor Policies can be
license appealed only after
c. If the DLhad expired a. Conditional satisfaction of the order of the
d. None of the above labor commissioner
107.On the date of accident, the Insured had b. Compliance of notice period
sold the vehicle and the policy was not c. Approval of competent authority
transferred under the circumstances d. Satisfaction of the award
a. The Insured Co. can deny TPLiability 114.Which of the following statement is
b. The Insured Co. cannot deny TPliability correct?
c. The insured Co. can pay OD claim and deny a. Misc. type of vehicles warranting registration
TPclaim as per MC Act can not be
d. None of the above covered under CPM policy
108.OD claims arising out of collision of vehicles b. Excess applicable to miscellaneous type of
are processed on the basis of: vehicle is 0.5% of IDV
a. Normal claims handling procedure subject to a minimum of Rs. 2500.
b. Knock for knock agreement c. An ambulance can be insured as a private car
c. Market agreement d. Claims arising out of accident due to
d. Memorandum of understanding overturning of vehicle whilst in
109.Red lining in Motor Insurance means operation as a tool of trade is payable under a
a. Scope of the policy standard motor policy
355
115.Which document is not required for OD b) Mechanical Break Down
claim processing? c) Meteorite strike
a. Registration book of vehicle d) Personal Accident coverage to employees
b. Assessed loss statement 123.Which is not a factor for structured
c. Driving license of driver while accident compensation under Motor Third Party
d. Driving license of the insured liability?
116.Following documents are not required for a) Age of the deceased
TPclaim processing: b) Dependency of the complaint
a) Summon from Court c) Income of the deceased
b) Purchase receipt of vehicle d) Income of the insured
c) Police report 124.Insurance Agency Commission is not
d) Insurance Policy allowed under
117.For which type of vehicles India is divided a) Commercial vehicles
into three zones: b) Two wheelers
a) Private Car c) All Third party insurances
b) Commercial Vehicle – Passenger carriers d) Only third party private car insurance
c) Two Wheelers 125.Insurer's liability towards third party ceases
d) Motor trade a) When owner is not the insured
118.What are the other countries, which cannot b) When new owner shows another insurance
be covered under motor vehicle policy
insurance issued in India? c) After motor total loss claim is paid
a) Nepal d) On the death of the insured
b) Bangladesh 126.Motor vehicle insurance is not compulsory
c) Myanmar if:
d) Pakistan a) Engine is below 35 cc without gear
119.Sunset clause refers to b) If it is registered as per MVAct
a) Vintage vehicles c) If it is being used within a premises all the
b) Constructive total loss time
c) No claim bonus 127.What is not a factor for making provision
d) Expiry of the policy for Motor TPclaim?
120.Public place is defined under MVAct as: a) Applicant's amount claim
a) Factory premises b) Legal expenses
b) Public needs c) Interest on delayed settlement
c) All places where public can access d) Interest already gained on incurred claim not
d) Public sector companies premises yet paid
121.For constructive total loss under motor
vehicle policy payable loss has to
constitute more than what percentage of IDV
a) 50%
b) 60%
c) 75%
d) 90%
122.Which one is an add-on cover under motor
vehicle insurance?) Volcanic outburst
356
KEY – MOTOR INSURANCE MODEL QUESTION
1. B 36. C 71. D 106. A

2. C 37. B 72. B 107. B
3. C 38. C 73. A 108. A
4. C 39. D 74. B 109. B
5. B 40. B 75. D 110. D
6. A 41. D 76. C 111. C
7. C 42. C 77. A 112. D
8. A 43. D 78. C 113. D
9. C 44. D 79. C 114. B
10. C 45. C 80. C 115. D
11. C 46. D 81. D 116. B
12. A 47. D 82. B 117. B
13. B 48. A 83. B 118. C
14. B 49. D 84. B 119. C
15. B 50. A 85. C 120. C
16. D 51. C 86. A 121. C
17. D 52. B 87. B 122. D
18. C 53. C 88. D 123. D
19. C 54. C 89. C 124. C
20. C 55. C 90. C 125. B
21. C 56. B 91. B 126. A
22. B 57. B 92. B 127. A
23. B 58. C 93. B
24. D 59. B 94. C
25. C 60. D 95. D
26. C 61. C 96. A
27. B 62. C 97. B
28. A 63. A 98. B
29. A 64. C 99. D
30. C 65. C 100. C
31. C 66. D 101. B
32. D 67. C 102. C
33. D 68. D 103. C
34. D 69. C 104. D
35. D 70. D 105. B
357
c. The IRDAchief
FINANCE d. The CVO
ACCOUNTS, INVESTMENT, i. a, b, c, d
ii. a, b and c
AUDIT & RELATED iii. a and c
iv. a and b
REGULATIONS 7. Incurred Claim Ratio for direct insurance
TRADE QUESTIONS business means
1. Compulsory investment by an insurer of its a. Paid Claim/Prem. during any policy period
total assets, in Infrastructure and b. 3 years avg. claim/3 years avg. prem.
social sector is c. Incurred claim/3 years avg. prem.
a. Not less than 10% d. Incurred claim/ prem. during any policy
b. Not less than 7.5% period
c. Not less than 5% 8. After formation of IRDA, Statutory Auditors
d. No such limit of PSU Insurance Companies
2. Mark the most unlikely for calculation of are appointed by
solvency margin. Asset of Insurance a. IRDA
Company includes b. CVC
a. Agent's balance amount c. CAG
b. Realizable sundry debtors d. Board of Directors of respective Company.
c. Realizable advance 9. Which is correct pair?
d. Furniture, Fixture, Dead stock and stationery a. Statutory Audit-Continuous Audit
3. “No risk to be assumed unless the Prem. Is b. Internal Audit-Periodical Audit
received in advance” the same has c. Government Audit-Continuous Audit
been provided in d. None of the above
a. Section 41 of Insurance Act 10. As per the Statutory Requirement the
b. Section 40 C of Insurance Act following may not be prepared for
c. Section 64 VB of Insurance Act Annual Financial Results by Insurance Company
d. Section 64 UM of Insurance Act a. Revenue Account
4. State which of the following may not be a b. Trading Account
liability of Insurance Company c. Profit and Loss account
a. Provision for dividend declared or d. Balance sheet
recommended 11. The auditors who are required to express
b. Reserve for unexpired risk their opinion on whether the balance
c. Estimated liability in respect of outstanding sheet gives a true and fair view of the insurers'
claim affairs as at the end of the
d. Reserve for bad and doubtful debts financial year are
5. Solvency Ratio means a. Internal Auditors
a. Available Solvency Margin Less required b. Statutory Auditors
Solvency Margin c. Govt. Auditors
b. RSM less ASM d. Auditor for Tax Audit
c. RSM/ASM 12. The auditors will verify that the financial
d. ASM/RSM statements are prepared in
6. Who of the following can be members of accordance
Investment Committee of an insurer a. The requirements of the Insurance Act, 1938
constituted under IRDARegulation? b. The requirements of the IRDAAct, 1999
a. The principal officer of the Company c. The requirements of the Companies Act, 1956
b. The appointed actuaries d. All above
358
13. The Auditors shall verify that the a. The actuarial valuation of liabilities is duly
investments in the Balance Sheet have been certified by the appointed
valued in accordance with actuary
a. The provisions of the IRDAAct, 1999 b. The valuation of liabilities is based on the
b. The provisions of the IRDAAct, 1999 and IRDA assumptions for such
Reg. on Accounts and valuations
Audit c. Valuation in accordance with the guidelines
c. The provisions of the Companies Act, 1956 and norms issued by ASI
and Accounting Standard d. Valuation is made in accordance with above
(AS) 13 all provisions
d. Market Value 18. For claim audit the auditor should look into
14. The auditors express opinion on the the following aspect(s)
accounting policies to the effect that a. Legal aspects
a. The Accounting policies are appropriate and b. Technical aspects
in compliance with c. Financial aspects
applicable Accounting Standards d. All Above
b. The Accounting Policies are appropriate and 19. For corporate underwriting audit, the
in compliance with internal auditor shall examine
applicable Accounting Standards and a. Underwriting Policy and practice
IRDARegulations b. Risk Management Policy and Reinsurance
c. The Accounting Policies are appropriate and Policy
in compliance with IRDA c. Underwriting results
regulations d. All above
d. The Accounting Policies are appropriate 20. For investment audit, the Auditors look into
15. The auditor shall express their opinion that the following aspects
the Revenue Account gives a. Verification and valuation of investments
a. Atrue and fair view of the surplus or the b. Verification of Exposure Risks
deficit for the financial period c. Verification of performing and non-
b. Atrue and correct view of the surplus or performing status of investments
deficit for the financial period d. All above
c. Afair view of the surplus or the deficit for the 21. Accounts audit covers the following aspects
financial period a. Verification of Financial Statements
d. None of the above b. Recognition of Premium Income
16. As per IRDA(Accounts and Audit) Regulation c. Valuation of Assets and Liabilities and
the auditors are required Solvency Margins
a. To review the management report d. All above
b. To certify that they reviewed the 22. For motor TP claims audit, the auditors need
management report not consider the following
c. To certify that they have reviewed the aspects
management report and there is no a. The investigation Report and Income
apparent mistake or material inconsistency with Statement
F S. b. Charge Sheet, Post-mortem Report and
d. Not to certify or review the management Police report
report c. Policy particulars and 64 VB compliance
17. As per IRDA (Accounts and Audit) d. Premium charged and claim ratio
Regulation, the auditor's report shall 23. To verify the admissibility of FLOPclaims,
specify that auditor shall first look into:
359
a. The admissibility of Material damage claim in a. 10% of the gross premium
Fire Policy b. 20% of the gross premium
b. Whether the claim under Fire policy is c. 15% of the gross premium
payable d. None of the above
c. The admissibility of FLOP policy claim with 30. The IRDARegulation that deal with Audit
reference to its coverage, Requirements is called:
exclusions, terms, conditions, clauses a. IRDA (Preparation of Financial Statements
irrespective of the admissibility of and Auditor's Report of
claim Insurance Companies) regulation, 2000.
d. None of the above b. IRDA (Preparation of Financial Statements
24. The auditor will examine the receipts and and Auditor's Report of
payments accounts (cash flow General Insurance Companies) regulation, 2000.
statement) to verify mainly: c. IRDA (Preparation of Auditor's Report of
a. Liquidity of the company Insurance Companies)
b. Solvency of the company regulation, 2000.
c. Profitability of the company d. IRDA(Preparation of Auditor's Report of
d. All above General Insurance Companies)
25. As per IRDA regulation each Indian insurer regulation, 2000.
shall render its accounts in 31. The report of the Auditors on the Financial
respect of obligatory cessions to Indian reinsure Statements of every insurance
on company shall be inconformity with the
a. Monthly basis requirements specified in schedule(s)
b. Quarterly basis to the particular regulation thereof
c. Half-yearly basis a. Schedule A
d. Annual basis b. Schedule B
26. IBNR stands for c. Schedule C
a. Insured before now reported d. All above
b. Insured before not reported 32. The Audit Committee in Insurance Company
c. Incurred but now reported is constituted by one of the
d. Incurred but not reported following ways:
27. Reserve for unexpired risk is calculated at a. The specified provisions in the companies Act
100% of the net premium in the 1956 (As Amended)
following class of business b. The specified provisions in the Insurance Act,
a. Finance 1938 (As Amended)
b. Marine Hull c. The specified provisions in the IRDAAct, 1999
c. Misc. (As Amended)
d. Marine Cargo d. The specified provisions in the specified
28. Reserve for unexpired risk is calculated on IRDARegulations
a. Premium received including reinsurance 33. The Financial Statements of a general
ceded but excluding insurance company to be audited are:
reinsurance received a. The revenue account (Policyholder's Account)
b. Including reinsurance ceded and reinsurance b. The balance sheet and profit & loss account
received (Shareholders' Account)
c. Excluding reinsurance ceded and including c. The Receipts and Payments account (Cash
reinsurance received Flow Statement)
d. Excluding reinsurance ceded and excluding d. All above
reinsurance received 34. C & AG Audit of Government companies is
29. Unearned premium refers to the following carried out as per the provisions
360
a. The provisions Sec. 617 of the Companies Act a. The Lok Sabha of the Parliament U/S 619A&
1956 (As Amended) 619B of the Co's Act
b. The provisions Sec. 618 of the Companies Act b. The Rajya Sabha of the Parliament U/S
1956 (As Amended) 619A& 619B of the Co's Act
c. The provisions Sec. 619 of the Companies Act c. Both the Sabhas of the Parliament U/S 619A&
1956 (As Amended) 619B of the Co's Act
d. All above d. None of the above
35. For the purpose of PSU Audit Laws and 40. In the audit report the auditor is required to
regulations applicable are comment on valuation of liabilities
a. The provisions of the Companies Act and the to the effect that;
insurance act a. The actuarial valuation is true and correct
b. The IRDAregulations and the Insurance b. The actuarial valuation is true and fair
principles c. The actuarial valuation is proper and justified
c. The Accounting Standards and the Auditing d. The actuarial valuation has been certified by
and Assurance Standards the appointed actuary and
issued by the Insurance Chartered Accountants the said certificate has been relied upon for
of India their opinion
d. All above 41. In the audit report the auditor is required to
36. The Audit Committee that oversees, reviews comment on Management Report
and evaluates the financial to the effect that
results and their disclosures is constituted a. There is no apparent mistake or material
a. Under the directives of the Controller & inconsistency with the financial
Auditor General of India statements
b. Under the provisions of the IRDAAct, 1999 b. There is no mistake or inconsistency with the
c. Under the provisions of the Insurance Act financial statements
d. Under the provisions of Sec. 292A of the c. Management is true and correct
Companies Act, 1956 (As d. None of the above
amended) 42. In the audit report the auditor is required to
37. The audit committee legally constituted is comment on Investment with:
required to a. Investments have been valued in accordance
a. Oversee, review and evaluate the financial with the provisions of the
results of the company Insurance Act
b. Examine the reporting process and b. Investments have been valued in accordance
disclosures of performance of the with the provisions of the
company Insurance Act and the prescribed
c. Review the audit of all the offices of the IRDAregulations
company, discuss with the c. Investments have been valued in accordance
statutory auditor and recommend the same to with the prescribed IRDA
the Board. regulations
d. All above d. None of the above
38. The Statutory Auditor of PSU Insurance 43. The Statutory Audit Report of PSU Company
Company is appointed by is required to address to:
a. The C&AG a. The Members
b. Shareholders in AGM b. The Government
c. The Board of Directors c. The IRDA
d. The regulatory authority d. The Board
39. The audited annual accounts of PSU 44. The certification on company's compliance
Insurance Company is submitted to of Sec. 40 (c) of the Insurance
361
Act, 1938 in regard to debit of all management 50. When a listed equity instrument is traded in
expenses to Revenue Account volume not below ten thousand
is required to be done by: units in any session or trading value exceeds 10
a. The C&AG Auditor lac in any session in past 12
b. The Internal Auditor months it is termed as
c. Statutory Auditor a. Actively traded instrument
d. Special Auditor b. Liquid traded instrument
45. The Statutory Auditor comments on c. Actively traded and liquid instrument
amortization of expenses on account of d. None
Pension, Gratuity and Leave Encashment in 51. One of the exposure norms of IRDAsets the
accordance with the limit on investment as under
requirements of; a. Limit per investor company
a. Accounting Standard 15 b. Limit per investee company
b. Accounting Standard 22 c. Limit per investor company & per investee
c. Accounting Standard 18 company
d. None of the above d. None
46. Certificate to the effect that no part of the 52. In which of the following General insurance
assets of Policyholders Funds has Companies in India invests
been directly applied in the contravention of insurance funds:
the Insurance Act, 1938 is given a. Indian Central Govt. securities
by b. Govt. securities issued by foreign countries
a. The C&AG Auditor c. Shares issued by Private companies
b. The internal auditor d. Shares issued by public companies
c. The Statutory auditor 53. General insurance companies are allowed to
d. The Special Auditor invest in Growth schemes of
47. The general insurers are required to invest mutual funds
and keep invested the following a. True
minimum percentage of total assets in Govt. b. False
Securities and Guaranteed 54. Approved securities/investments for non-
Securities life insurance companies are
a. 10% prescribed in
b. 20% a. Section 27Aof Insurance Act
c. 30% b. Section 27B of Insurance Act
d. 40% c. Section 27A& B of Insurance Act
48. For general insurer, investment in other d. None of the above
than approved investment cannot 55. Exposure norms for investment suggested
exceed for IRDARegulations relating to
a. 10% of total assets a. Investee company
b. 15% of total assets b. Group Company
c. 25% of total assets c. Sector
d. 50% of total assets d. All of the above
49. The minimum rating for investment in social 56. The investment committee that reviews
sector and debt instrument investment policy and supervises and
should be controls all investments activities is constituted
a. AAA by
b. AA a. Sec. 292Aof the Companies Act, 1956 (As
c. +A Amended)
d. A b. The Insurance Act, 1938 (As Amended)
362
c. Sec. 9 of the IRDA(Investment) Regulation, 9D 29 D 49 C
2000 10 B 30 A 50 C
11 B 31 C 51 C
57. The figure in financial statements are
12 D 32 A 52 C
rounded off to the nearest
a. Rupee 13 B 33 D 53 B
b. Hundred rupees 14 B 34 C 54 B
c. Thousand rupees 15 A 35 D 55 D
d. Lac rupees 16 C 36 D 56 C
58. Accounting of claim costs does not include 17 D 37 D 57 C
a. Survey expenses on claim
18 D 38 A 58 D
b. Legal expenses on claim
c. Investigation expenses on claim 19 D 39 C 59 A
d. Management expenses on claim 20 D 40 D 60 D
59. For accounting 'Investment Property' means 61 C
land or building held
a. For capital appreciation
b. For use in services ACCOUNTS MODEL
c. For administration purpose
d. All of the above QUESTIONS
60. Short term Loan means loan repayable 1. Accounting entry for Depreciation of Assets
within will be:
a. 1 month a. debiting depreciation crediting asset
b. 3 months b. debiting depreciation crediting P/LA/c
c. 6 months c. debiting depreciation crediting Accumulated
d. 12 months depreciation
61. In which of the following, the General d. debiting depreciation crediting loss on asset
Insurance companies in India invests 2. Service Tax on Reinsurance Premium sent to
funds in: foreign reinsurer will be paid by:
A. Indian Central Govt. securities a. foreign reinsurer
B. Govt. securities issued by foreign countries b. domestic cedent
C. Shares issued by private companies c. both
D. Shares issued by public companies d. none
a. Only A 3. Expenses of management other than those
b. Only A& B charged to P/LA/C are apportioned
c. Only A& D to revenue A/C on the basis of GDPplus
d. All of the above Reinsurance accepted Premium
a. 75% marine business 100% fire and misc.
1.A 21 D 41 A b. 50% marine 50% fire and misc.
2D 22 D 42 B c. 25% marine 75% fire and misc
d. 100% marine 75% fire and misc.
3C 23 A 43 A
4D 24 A 44 C 4. Rate of service tax has been changed from
5D 25 B 45 A 12% to 10% from
6D 26 D 46 C a. 1st February, 2009
7D 27 B 47 C b. 24th February, 2009
8C 28 A 48 C c. 20th February 2009
d. 1stApril, 2009
363
5. Depreciation on fixed asset is charged on b. Personal Accident
WDV at the rate prescribed laid c. Health
down in: d. Rural
a. companies Act, 1956 13. Premium for rent shall include only
b. IT Rules 1952 a. Realized Rent
c. Both b. Notional Ret
d. Higher of the two c. Outstanding Rent
6. Terminal benefits paid are amortised over a d. Prepaid Rent
period: 14. Claims Paid shall not include:
a. five years a. IBNR
b. three years b. Survey Fees
c. seven years c. Legal And Other expenses
d. eight years d. Claims settlement cost
7. For Assessment Year 2009-10 no income tax 15. Short term loans shall include those, which
is to be levied for senior citizen are repayable within:
upto income of: a. 12 months
a. Rs. 3,50,000 b. 24 months
b. Rs. 2,25,000 c. 6 months
c. Rs. 1,25,000 d. 3 months
d. Rs. 2,50,000 16. Earned Premium is:
8. Provision for gratuity, pension, leave a. Direct Premium
encashment is made on actuarial b. Direct Premium + Reinsurance Accepted
valuation 1n accordance with Accounting c. Direct Premium + Reinsurance Accepted –
Standard: Reinsurance Ceded
a. AS 15 d. Direct Premium + Reinsurance Accepted –
b. AS 3 Reinsurance
c. AS 26 Ceded + Adjustment for change in reserve for
d. AS 10 unexpired risk
9. Statutory Auditor appointed by the C &AG 17. Cash flow statement shall be prepared
under: according to:
a. 619 ( 1 ) a) AS 3
b. 619 ( 2 ) b) Company Act
c. 619 (3) c) IT act
d. 619 (4) d) Insurance Act
10. Gross Profit Ratio denotes: 18. The term of office of CMD shall be for a
a. Sales X 100 / GP period:
b. Net Profit X 100 /GP a. not exceeding five years from the date of
c. Gross Profit X 100/ Sales appointment
d. Gross profit X100 / Purchase b. not exceeding three years from the date of
11. An Insurer shall prepare separate Revenue appointment
Account for: c. Until his retirement
a. Fire, Cargo, Hull and Misc. d. None of the above
b. Fire, Marine, Motor and Misc 19. Auditors in PSUs are appointed by:
c. Fire, Marine, Motor and Misc. a) CAG
d. Fire, Marine and Misc. b) Company Board
12. Separate schedules shall not be prepared c) Head Office
for: d) Internal Audit Dept.
a. Aviation 20. Combined Ratio is:
364
a) (Gross claims paid + expenses) *100/ Gross
Premium
b) (Gross claims paid + expenses) *100/ Net Q.11. What percentage of Investment Assets
Premium has to be maintained in Central
c) (Net claims paid + expenses) *100/ Gross Government Securities as prescribed by IRDA
Premium for General Insurance
d) (Gross claims paid *100)/ Gross Premium Companies?
INVESTMENT
1. C 6. A 11. D 16. B
2. B 7. B 12. D 17. A 55%
3. A 8. A 13. A 18. A
4. B 9. B 14. A 19. A INVESTMENT MODEL
5. D 10. C 15. A 20. A QUESTIONS
Q.1. Insurance Regulatory and Development
Authority (Investment) Regulation
362 363
came into force and became applicable in the
Q.7. Regulation 5 of IRDA(Investment)
year –
Regulation, 2000 specifies
f Investment
Q. 2. Insurance Regulatory and Development

Q.8. What percentage of Investment Assets is
Authority came into force in the
subject to Exposure / Prudential
year –
norms of Investment as prescribed by IRDA?
Q. 3. Which of the following is the last

Q. 9. What minimum percentage of Investment
amendment to IRDA (Investment)
Assets has to be maintained in
Regulation, 2000?
Infrastructure category as prescribed by IRDA
for General Insurance
Companies?
Q. 4. When was IRDA(Investment) Regulation,

2000 last amended - -
Q.10. What minimum percentage of Investment
Assets has to be maintained in
Housing category as prescribed by IRDA for
General Insurance
Q. 5. Regulation 4 of IRDA(Investment)
Companies?
Regulation, 2000 specifies ----
365
16. Fair Value valuation applicable to ---
Insurance Business
Business
General Annuity Business Q.17. General Insurance Company's Exposure in

equity, preference and
Q. 6. What minimum percentage of Investment convertible debentures of a company allowed
Assets has to be maintained in by IRDAis restricted to----
Mandated / Statutory Investment category
prescribed by IRDAfor General face value) or 10% of
Insurance Companies-? 40% Investment assets
face value) or 10% of

Investment assets
face value) or 10% of

Q.12. What percentage of Investment Assets Investment assets
has to be maintained in Government
Securities including State Government face value) or 15% of
Securities as prescribed by IRDAfor Investment assets
General Insurance Companies? Q.18. General Insurance Company's Exposure in
Debt and Loans of a company
allowed by IRDAis restricted to----
-up share capital, free
reserves and debenture /
Q.13. What is the maximum percentage allowed Bonds of the Investee company or 10% of
for Investment in Other Investment Assets
Investment category by IRDAfor General -up share capital, free
Insurance Companies--- reserves and debenture /
Bonds of the Investee company or 10% of
Investment Assets
5% -up share capital, free
Q.14. What is the minimum Credit Rating Bonds of the Investee company or 10% of
required for Instruments for investment Investment Assets
to qualify for Approved Investment category— -up share capital, free
- Bonds of the Investee company or 15% of
Investment Assets
Q.19. General Insurance Company's GROUP
15. What is the minimum Credit Rating required Exposure in equity, preference and
to consider an Instrument for convertible debentures of a company allowed
Investment by Insurance Companies—? by IRDAis subject to----
366
Q.20. General Insurance Company's INDUSTRY Q.26. Investment Policy of an Insurer needs to
Exposure in equity, preference be approved by its---
and convertible debentures of a company
allowed by IRDAis subject to----
exposure to the industry

sector as a whole Q.27. Schedule II of IRDA(Investment)
s total investment Regulations, 2000 specifies---
sector as a whole
exposure to the industry the above

sector as a whole Exposure Norms Q.28. The Classification of
Industrial sectors has to be done in line with---
sector as a whole
Q.21. Regulation 6 of IRDA(Investment)
Regulation, 2000 specifies—
Q.29. Regulation 2(cc) of IRDA(Investment)
Insurer Regulations, 2008 specifies—
Approved Investments
Q.22. Investment Returns to be filed with

IRDAon --- Q.30. Section 27B of Insurance Act, 1938 deals
in---
onthly Basis isions regarding Dividend

Q.23. What is period within which the returns
need to be submitted to IRDA— Q.31. Section 27C of Insurance Act, 1938
specifies—
India
Q.24.How many Investment Forms need to be ed
filed with IRDA by General companies
Insurers---
Q.32. 'Accretion of funds' means---
redemption of the existing

investment and operating surplus
Q.25. Every Insurer shall review the Investment
Policy on—
ve
Q.33. Investment Assets in the case of a General
Insurer means---
367
c. Economically vulnerable & backward classes
d. Rural sector
margin and Policy holders' 6. The penalty for non-compliance of Social
funds at their carrying value as shown in its sector obligations, for the insurers
balance sheet as per IRDA. is
a. Rs 5 lac per defaulting year and continuous
REGULATORY FRAME WORK failures, cancellation of
1. B 11. A 21. A 31. B license
2.B 12. B 22. C 32. A b. Every year fine of Rs 5 Lacs
3. A 13. C 23. B 33.C c. Warning letters to be issued
4. D 14. A 24. C d. None of the above
5. A 15. C 25. B 7. Section 64 VC of insurance act provides
6. C 16. A 26. A a. No risk can be assumed without collection of
7. A 17. A 27. B Premium in advance
8. C 18. A 28. A
b. No insurer can open office at a new place
9. B 19. B 29. C
without permission from the
10. C 20. C 30. A
authority
ACCOUNTS MODEL c. The controlling office has authority to waive
advance collection of
QUESTIONS premium
1. The Maximum number of whole time d. Insurers need not seek permission from any
Members IRDAcan have is authority.
a. 4 8. Insurance Ombudsman has come into
b. 5 existence due to
c. 7 a. IRDAAct
d. None of the above b. Redresses of Public Grievances rules 1998
2. IRDA can have following part times members under Insurance Act
in addition to whole time c. Public Liability Insurance Act 1991
members: d. Consumer Protection Act
a. 4 9. Under Sec 64 UM, of Insurance act 1938 the
b. 8 controller of Insurance
c. 6 reserves the rights to
d. None of the above 1) To appoint a second surveyor to reassess the
3. Tenure of the Chairman IRDAis loss
a. 3 years 2) Directs insurers to settle a claim at a figure
b. 5 years less than or higher than that of
c. 4 years at which it was assessed originally
d. None of the above a. Both 1 & 2 are correct
4. Sec 40 C of Insurance Act stipulates about b. Only 1 is correct
limits of expenses of c. Only 2 is correct
management. In case of violation: d. Both are incorrect
a. IRDAcan cancel the license of the insurer 10. The minimum credit rating permitted of a
b. Govt can cancel the license, re-insurer chosen by an Indian
c. Govt can relax the provisions insurance company should be
d. None of the above a. IAAAof Crisil
5. Social Sector business includes all except b. BBB of S & P
a. Unorganized sector c. Any Registered Reinsurance company of
b. Informal sector repute
368
d. A+ of AM Best c. Govt. of India
11. The powers of ombudsman d. IRDA
1) Non issuance of any insurance document to 17. Which of the following relating to Direct
the customer after receipt of Brokers License Fee is incorrect?
premium a. At the time of being Licensed shall pay a
2) Any partial or total repudiation of claim by License fee of Rs.25, 000/-
the insurer b. 0.5% of the remuneration earned in the
3) Any dispute in regard to premium paid or preceding financial year subject
payable in terms of policy to minimum of Rs.25, 000/- and a maximum of
4) Only delay in settlement of claim Rs.1, 00,000/- on every
a. All are correct renewal.
b. Only 1 & 2 are correct c. 0.5% of the remuneration received subject to
c. Only 4 is correct a minimum of Rs.75,000/-
d. Only 3 is correct and Maximum of Rs.3,00,000/-
12. Ombudsman can take up the disputes d. The prescribed License fee shall be paid
between within 15 days from the date of
a. Insurer and Corporate clients receipt of intimation of acceptance of the
b. Insurer and co-operative societies application.
c. Insurer and individual clients 18. To which of the following entities can not be
d. All of the above issued Corporate Agency
13. A TPA has been licensed to perform its License?
functions from 1.1 2006. It has to a. Private Limited Company the Memorandum
renew its license on /articles of Association is
a. On or before 1st January 2009 silent about insurance business
b. On or before 30thNovember 2008 b. AMunicipal Corporation
c. On or before 1st January 2010 c. Ascheduled Commercial Bank
d. On or before 1st January 2011 d. Primary Co operative Bank
14. While sending the policy to the insured, the 19. Which of the following relating limit of
insurer is obliged to send the indemnity under Brokers
following Professional indemnity Policy is incorrect?
a. Claim Form a. 3 Times remuneration received at the end of
b. Name & Address of surveyor every financial year subject
c. Name and Address of Regional Office to a minimum limit of Rs.50 lacs for Direct
d. Address of the Insurance Ombudsman Broker
15. For calculation of solvency Ratio of a non b. 3 Times remuneration received at the end of
life insurance Company, The every financial year subject
formula applied is to a minimum limit of Rs.2.50 Crores for a
a. ASM is multiplied with RSM Reinsurance Broker
b. ASM is divided by RSM c. 3 Times remuneration received at the end of
c. RSM is divided by ASM every financial year subject
d. RSM over net premium/ Net Claims which to a minimum limit of Rs.5 Crores for a
ever is higher Composite Broker
16. No General Insurer can open a new place of d. 3 Times remuneration received at the end of
business or change the existing every financial year subject
place of business in India without the to a minimum limit of Rs.10 Crores for
permission of Composite Broker
a. GIPSA 20. As per the Insurance act the General
b. GIC Insurance Business has been classified
369
into a. Fire 50%, Misc 50%
a. Fire, Motor, Miscellaneous, Marine b. Marine cargo 50 %, Hull 100%
b. Fire, Marine, Motor, Engineering c. a & b are correct
c. Fire, Marine, Health, Miscellaneous d. Only a is correct
d. Fire, Marine, Miscellaneous 27. Which one of the following is correct in
21. As per the Insurance Act 1938 under Sec 40- respect of solvency margin?
C Companies have to operate at a. Excess of value of liabilities over excess of
Management Expenses ratio of value of assets.
a. under 30% b. excess of value of asset over liabilities;
b. under 25% c. Both the above are correct
c. under 15% d. None of the above.
d. under 20% 28. Which one of the following is correct in case
22. GIBNAwas introduced for making of cancellation of registration
a. General Insurance affordable to people of general insurance company which defaults
b. To help insurance grow in rural sector repeatedly to adhere to the
c. To help Policy holders code of conduct?
d. To Nationalize the General Insurance sector a. No cancellation of registration is permitted as
to make it meaning full to the per IRDA.
masses b. Penalty of suspension for a stated period,
23. Which one of the following is not correct for imposed by the IRDA.
general insurance companies to c. Impose penalty of cancellation of certificate
undertake in respect of social sector business, of Registration.
of the total gross premium? d. Penalty coupled with cancellation of
a. 2% of the total gross premium in the first certificate of registration, by the
financial year. IRDA
372 373 29. WHATIS THE COMPOSITION OF IRDA?
b. 3% of the total gross premium in the 2nd a. AChairperson
financial year. b. Not more that five Whole-time Members
c. 5% of the total gross premium thereafter c. Not more than four part-time members
d. 10% of the total gross premium every year. d. All the above.
24. Which one of the following is not incorrect 30. What are the reasons by which the central
minimum qualification for any government can remove any
person to become an agent, where the Member of IRDA?
population is less than 5000? a. Physically or mentally incapable
a 12th pass b. Has been convicted any offence which
b Degree from any recognized university involves moral turpitude
c 10th standard c. Any time adjudged as insolvent
d None of the above. d. All the above
25. Which one of the following is not incorrect 31. What is the full form IRDA?
in case of approval for a. INSURANCE REGISTRATION &
appointment of Actuary in case of general DEVELOPMENTACT
insurance? b. INSURANCE REGULATORYAND
a. IRDAshall within 30 days approve or reject DEVELOPMENTAUTHORITY.
b. IRDAshall within 60 days approve or reject. c. INSURANCE RURALAND
c. IRDAshall within 15 days approve or reject. DEVELOPMENTAGENCY
d. None of the above d. NONE OF THE ABOVE.
26. Which of the following is correct in respect 32. CHAIRPERSON OF THE AUTHORITY CAN
of reserve for unexpired risk? HOLD OFFICE UPTO
370
THE AGE? d. Aperson who has not committed any breach
a. 62 YEARS of professional conduct
b. 65 YEARS 39. The required minimum Solvency Ratio as
c. 60 YEARS per IRDAAct is
d. NO AGE LIMIT. a.1.00
33. WHERE IS THE REGISTERED OFFICE OF b.1.20
IRDALOCATED? c.1.50
a. KOLKATA d. none of the above
b. BANGALORE 40. Function of Actuaries is
c. MUMBAI a. Certification of pricing
d. HYDERABAD b. ensuring of solvency margin
34. WHAT IS THE REQUIRED PAID-UP CAPITAL c. ensuring the accuracy & completeness of
TO QUALIFY TO ACT data
AS NON-LIFE INSURER IN INDIA? d. all the above
a. Rs. 40 crore 41. Rural sector shall mean any place having
b. Rs, 100 crore population of
c. Rs. 35 crore a. not more than 5000
d. Rs. 75 crore b. Density not more than 400 per sq. km.
35. ACCORDING TO 'IRDA ACT' RURAL c. At least 75% of the main working population
INSURANCE BUSINESS IN is engaged in agriculture
NON-LIFE IS d. All the above
a.2 % in first financial year 42. Social Sector excludes
b.3 % in 2nd financial year a. un-organized sector
c.5% thereafter b. informal sector
d. all the above c. economically vulnerable
374 375 d. formal sector
36. ACCORDING TO IRDAREGULATION, SOCIAL 43. Un-organized sector excludes
SECTOR BUSINESS a. bidi workers
MINIMUM REQUIREMENTTO NON-LIFE IS AS b. handloom and khadi workers
UNDER EXCEPT c. gents tailor
a. 5000 lives in the first year d. rickshaw puller
b. 7500 lives in 2nd financial year 44. Which one shall be considered as an
c. 10000 lives in 3rd financial year advertisement as per IRDA
d. 12000 lives in 4th financial year a. materials used by an insurance company
37. Who regulates Re-Insurance business in within its own organization
India? b. communications with the policy holders
a. IRDA other than materials urging them
b. GIC to purchase, increase modify a policy
c. Reinsurance Corpn of India c. General announcement sent by a group
d. Govt. of India. policy holder to a member of the
38. Which one is not the criterion for eligible group
appointment of Actuaries under IRDA d. Materials used by an insurance company to
ACT? distribute to the public.
a. Afellow member of the Actuarial Society of 45. If any insurer fails to maintain the required
India Solvency Margin, then he shall
b. Not over the age of 65 years be liable to a penalty by IRDA
c. An appointed Actuary of another Insurer a. not exceeding Rs. 5 lac
b. not exceeding Rs.10 lacs
371
c. not exceeding Rs. 4 lacs c. Assisting in negotiation of claims.
d. no such penalty d. Assisting in filling the proposal.
46. An important regulation by IRDAthat was 58. hich is relevant out of the following in
made in 2005 in the area of connection with the Objective of
a. Macro insurance IRDA
b. Micro insurance a. to protect the interests of holders of
c. Motor insurance insurance policies
d. Re-insurance b. ensure orderly growth of the insurance
47. Which is an un-approved investment as per industry to regulate, promote and
IRDA for matters connected therewith or incidental
a. investment in secured loans thereto
b. investment in secured debt instruments 1) Both a and b
c. investment in secured bonds 2) Only a
d. investment in short or long term loans with 59. As per IRDAAct 1999 Internmediary or
pvt. Ltd. companies. Insurance Intermediary means
48. Which one of these is not under the powers a. Insurance and Re-insurance brokers,
of Ombudsman to consider: insurance consultants, surveyors
a. Delay in settlement of claims. and loss assessors
b. Non-issuance of any insurance document to b. Agents
customers after receipt of c. Development Officers
premium. 4.Third Party Administrators.
c. Any dispute with regard to premium paid in 60. The composition of IRDAshall include
terms of the policy. a. Finance Secretary
d. Repudiation of a claim of a commercial firm. b. Chairman of GIPSA
49. Which of the following is not a c. Minimum of five whole-time members and a
disqualification for an individual to become minimum of four part-time
an insurance agent (Sec.42): members
a. He is a minor. d. Chairman of GIC
376 377 b. He is of sound mind.
Insurance Act.1938: c. He is a known criminal.
i.Voluntary; ii.By Court; iii.By Central d. His connivance in a fraud is proved
Government; iv.By Shareholders 50. As per the IRDA guidelines one of the
and Policyholders. following is not mentioned as the
a. i., ii, and iii. only. duty of an agent:
b. ii., iii., and iv. only. a. To sell the insurance policy to the public.
c. All of the above. b. To pay the premium collected from the
d. None of the above. insured to the insurer.
56. A Corporation can be granted license to act c. To claim the remuneration from the insurer
as a Broker if it has in it's for the business procured from
employment minimum: the insured.
a. One qualified person. d. To disclose the material information about
b. Two qualified persons. the insured to the insurer.
c. 50% qualified persons. 51. To work as a Fresh Individual General
d. 100% qualified persons. Insurance Agent, number of hours
57. Unlike an agent the duty of the Broker training required is:
includes: a. 150 hours.
a. Advising the insured on products. b. 100 hours.
b. Advising the insured on rates. c. 50 hours.
372
d. 25 hours. b. Rs.200 Crores
52. Who can cancel an agency license? c. 20 Crores
a. Branch Manager. d. None of the above
b. Divisional Manager. 64. Every insurer shall, in respect of the General
c. Designated Person. Insurance business carried on
d. Authorized Person. by him in India should deposit
53. The insurance agent shall be obliged NOTto a. Rs. ten crores with GIPSA
reveal the following: b. Rs.20 Crores with GIC
a. Disclose his license fee to the prospect on c. Rs.10 Crores with Reserve Bank
demand. d. Rs.20 crores with IRDA
b. Disclose the scale of commission. 65. Which one of the following bodies are
c. Disclose his commission income. covered / governed by IRDA (
d. Requisite information on insurance products. Insurance Advertisement and disclosures)
54. Which of the following is correct as per IRDA Regulations 2000.
regulations about minimum a. Insurer's
capital requirement with reference to insurance b. Intermediaries
brokers: c. a & b
a. i. Direct Broker: Rs50 lakhs; ii.Reinsurance d. None of a & b
Broker: Rs.100 lakhs; 66. Which of the following statements is/are
iii.Composite Broker: Rs.200 lakhs. correct.
b. i. Direct Broker: Rs100 lakhs; ii.Reinsurance Statement A:-
Broker: Rs.200 lakhs; All communications made to policy holders are
iii.Composite Broker: Rs.250 lakhs. covered under IRDA
c. i. Direct Broker: Rs50 lakhs; ii.Reinsurance (Insurance Advertisement and disclosures)
Broker: Rs.200 lakhs; Regulations 2000.
iii.Composite Broker: Rs.250 lakhs. Statement B:-
d. None of the above. Communications urging public to purchase
55. An Insurance Company can be wound up in Insurance policies only are
the following ways as per the covered under IRDA (Insurance Advertisement
and disclosures)
61. As per IRDAACT out of five whole time Regulations 2000.
members at least ____ members a. AOnly
from Life and General Insurance or Actuarial b. B Only
Science c. Both A& B
a. 2 d. None of A& B
b. 3 67. Composite Insurance Agent can sell
c. 4 a. Health Insurance Products and Micro
d. 5 Insurance Products only.
62. Maximum percentage of paid up equity b. Micro Insurance Products only
capital by a foreign company in c. Heath Insurance Products only
Indian Insurance Company is d. Any Life and General Insurance Product
a. 51 68. Recently IRDA( Licensing of Insurance
b. 49 Agents) Regulations 2000 has been
c. 26 amended, the amendments is with respect to
d. 74 a. Qualifications for Agents.
63. Minimum paid up equity capital for a b. Practical Training for Agents.
Reinsurance Company in India is c. Code of conduct of Agents
a. Rs.100 crores d. All of the above.
373
69. Which one of the following statements c. 25% of its cost in the3rd year
is/are correct d. All the above.
Statement A 74. On receipt of any notice of loss arising
Available solvency margin means the excess of under contract of insurance, the
value of assets over the General Insurer shall appoint a Surveyor
value of liabilities a. Within 7 days from the receipt of intimation
Statement B b. Within 7 hours from the receipt of intimation
Solvency Ratio means the ratio of the amount c. Within 24 hours from the receipt of
of available solvency margin intimation
to the amount of required solvency margin d. Within 72 hours from the receipt of
a. Statement Aonly intimation
b. Statement B only 75. Ageneral insurance policy need not state
c. Statement A& B both a. Policy terms, conditions and warranties
d. None of the A& B b. Full description of the property or interest
70. Which one of the following statement is/are insured
correct c. Any franchise or deductible applicable
Statement A d. None of the above
A cooperative Society registered under relevant 76. Which is the most unlikely answer
Law can promote an a. Under special circumstances the Surveyor can
insurance company in India seek an extension of time
Statement B from the Insurer for submission of his Report.
A Company formed under the Company's Act b. The Insurer may request the Surveyor to
1956 can promote an submit an additional Report.
insurance company in India c. There is a fixed time limit for an Insurer to
a. Statement Aonly offer settlement of claim to the
b. Statement B only Insured.
c. Statement A& B both d. IRDAhas recently relaxed the norms for
d. None of the A& B payment of Interest by an Insurer
71. Under IRDAregulation act 2000 Rural Sector in the event of delay beyond the stipulated
shall not be any place period.
a. Population of not more than 5000 77. Statement I: At least two Directors of TPA
b. Density of Population is not more than 400 shall be qualified Medical
per sq km Doctors registered with the Medical Council of
c. At least 75% of the male working population India.
is engaged to agriculture Statement II: The minimum paid up capital of a
d. Place which is Hilly areas. Company in equity shares
72. Social Sector does not include should be Rs. 1 crore , for the purpose of
a. Economically vulnerable or backward classes TPAlicense.
b. Un organized and informal sector a. Both the statements are correct.
c. Persons with disabilities b. Only Statement I is correct.
d. Senior citizens c. Only Statement II is correct.
73. Under IRDA ( Assets, Liabilities and Solvency d. Both the statements are incorrect.
Margin of insurers) 78. As per IRDA (Appointed Actuary)
regulations ,2000, the value of Computer Regulations 2000 of IRDAAct 1999, a
equipment including its Software, person shall not be eligible to be appointed as
is computed as under :- an appointed actuary for an
a. 75% of its cost in the year of purchase. insurer if he/she is
b. 50 % of its cost in the 2nd year.
374
a. Not a fellow member of the Actuarial Society (Licensing of Insurance Agents)Regulations 2000
of India of IRDAAct 1999.
b. An appointed actuary of another Insurer a. Indicate the premium to be charged by the
c. Over the age of 70 years insurer for the insurance
d. Not an employee of the insurer or a product offered for sale
consulting actuary in case of general b. Render necessary assistance to the
insurance business. policyholders or claimants or
79. I - An appointed actuary shall have access to beneficiaries in complying with the
all the information or requirements for settlement of
documents in possession, or under control, of claims by the insurer.
the insurer if such access is c. Disclose the scales of commission in respect
necessary for the proper and effective of the insurance product
performance of the functions and offered for sale, if asked by the prospect.
duties of the appointed actuary. d. None of the above.
II- An appointed actuary is entitled to attend all 82. The provision that any Insurance Co-
the meetings of the operative Society registered under Cooperative
management except the Board meetings of the Societies Act can carry on General Insurance
insurers. Business was
As per IRDA (Appointed Actuary) Regulations incorporated in the Insurance Act in the year
2000 which of the above a. 1938
statement/s is/are correct b. 2002
a. Statement I is correct c. 1950
b. Statement II is correct d. None of the above
c. Both statements are correct 83. Any Insurance Co-operative Society can
d. Both statements are incorrect transact Insurance Business if its
80. What is/are not the duties and obligations paid-up capital is minimum of
of an appointed actuary in a. Rs.50 crs
accordance to the IRDA (Appointed Actuary) b. Rs.100 crs
Regulations 2000 of IRDA c. Rs.150 crs
Act 1999. d. Rs.200 crs
a. Rendering actuarial advice to the 84. The Paid-up Share Capital required for an
management of the insurer, in particular Indian Insurer carrying on RI
in the areas of product design and pricing, Business is
insurance contract wording, a. Rs.100 crs.
investment and reinsurance. b. Rs.10 crs
b. Complying with the provisions of the section c. Rs.200 crs
64VAof the act in regard to d. Rs.50 crs
maintenance of required solvency margin in the 85. Which is condition precedent to filing a
manner required under product for approval with IRDA
the said sections under File and Use Procedure
c. Informing the authority in writing of his or a. Approval of the product by appointed actuary
her opinion, within a b. Certification of the product by lawyer of the
reasonable time whether the insurer has company
contravened the act or any other c. Approval of the underwriting policy of the
act. company by the Board of the
d. None of the above. company and its filing with IRDA
81. What is not in code of conduct of an d. Filing copy of Policy and Endorsement
insurance agent appointed as per IRDA wordings
375
86. Aproduct is required to be filed with c. Both Aand B are correct
IRDAunder the signature of d. Both Aand B are incorrect
a. General Manager Technical 92. While sending the policy to the insured, the
b. Appointed Actuary insurer is obliged to send the
c. CEO or Designated authority following
d. By any one of the above a. Claim Form
87. Acompliance officer under file and use b. Name & Address of surveyor
requirement should be c. Name and Address of Regional Office
a. General Manager Technical d. Address of the Insurance Ombudsman
b. Chief Underwriter of the company 384 385
c. Appointed Actuary of the company 93. For calculation of solvency Ratio of a non
d. A person who is not responsible for the life insurance Company, The
underwriting function of the formula applied is
company a. ASM is Multiplied with RSM
88. Amoderator of the rates under file and use b. ASM is divided by RSM
procedure of the IRDAcan be c. RSM is divided by ASM
a. General Manager Technical d. RSM over net premium/ Net Claims which
b. Chief Underwriter ever is higher
c. CEO of the Company 94. Which of the following statements is true?
d. The Financial Advisor of the Company Statement A: As per IRDARegulations, there is a
89. No Insurer shall accept the business at a legal obligation on the part
premium rate below the rates of insurers to issue a renewal notice to the
indicated without the approval of moderator of insured
rates Statement B: Issue of a renewal notice means
a. 1.0 %0 that the policy is automatically
b. 0.1%0 renewed, if the premium is paid.
c. 0.5%0 a. Neither of the statements
d. 1.5%0 b. Only Statement A
90. What is not permissible under File and Use c. Only Statement B
procedure of IRDA d. Both Statements
a. Underwriting business at a loss 95. While submitting a tender, a company
b. Experience rated pricing insists for payment of Earnest Money
c. Exposure Rated pricing Deposited along with quotation
d. Chief Underwriting Officer acting as a. You will pay according to the terms of tender
Compliance Officer b. You will have to seek permission from you
91. Statement A: An aggrieved claimant whose corporate office before
petition is pending before The depositing
State Consumer redressal Commission can also c. You will not deposit as it is against the norms
approach The Insurance d. Before depositing, you seek the permission of
Ombudsman for speedy redressal of his IRDA
grievance. 96 Whose certificate is not mandatory while
Statement B: Acitizen of India whose claim for filing a general insurance product
Rs.15 Lacs was denied by a with IRDAas per the file and use guidelines?
Insurer can approach either Insurance a. Certificate by the CEO of the company
Ombudsman or State Consumer b. Certificate by the CVO of the company
Grievance Redressal Commission for remedy c. Certificate by the appointed actuary
a. Only statement Ais correct d. Certificate by the company's lawyer
b. Only statement B is correct
376
97. What is the minimum share capital for a 103. The Corporate Agents as per the IRDA
company to be a corporate agent of (Licensing of insurance Agents)
an insurance company? Regulations could be;
a. Rs.1 Lakh a. Firms, Companies, Co-op. Society
b. Rs.5 Lakhs b. Banks, Regl. Rural Banks, Co-op. banks,
c. Rs.10 Lakhs c. Local authorities, NGOs
d. Rs.15 Lakhs d. All above
98. Adissatisfied customer will lodge his/her 104. As per code of conduct prescribed in the
grievance through the company's IRDA regulation an insurance
website by browsing agent shall not to (Tick the right statement)
a. Company's own Grievance Redressal cell a. interfere with any proposal introduced by any
b. Ombudsman other insurance agent
c. IRDA's site b. disclose his licence to the prospect on
d. GIPSA's site demand
99. Till 1971 in total number of insurance c. disclose the scales of commission in respect
companies operating in the insurance of the insurance products
market were; offered for sales
a. 307 d. indicate the premium to be charged by the
b. 207 insurer for the insurance
c. 107 product offered for sale
d. None of the above 105. Regarding advertisement by Insurance
100. Govt. took over the undertaking of all the intermediaries IRDA regulations
companies in 1971 and brought provide that
them under the Act called; a. Only duly licensed intermediaries may
a. The Insurance Act, 1938 (as amended) advertise or solicit insurance
b. The General Insurance Business through advertisement
(Nationalization) Act, 1972 b. Agents or Intermediaries cannot advertise or
c. The General Insurance Business solicit insurance through
(Nationalization) Act, 1971 advertisement
d. None of the above c. Only duly licensed intermediaries may
101. The Act or IRDA regulation which removed advertise or solicit insurance
the prohibition existing in the through advertisement if the insurer in writing
GIBNAAct 1972 relating to formation of approves it.
insurance companies other than d. None of the above.
four PSU companies under GIC. 106. For the purpose of audit of financial
a. The IRDAAct, 1999 statements, the auditor shall ensure that
b. The Insurance (Amendment) Act,2002 a. Premium has been recognized as income over
c. The IRDA(insurance and reinsurance) the contract period
Regulations,2000 b. Premium has been recognized as income
d. None of the above over the period of risk
102. The players in the market are required to c. Premium has been recognized as income over
maintain required solvency margin the contract period or the
(RSM) based on period of risk, whichever is applicable
a. Gross Direct Premium d. Premium has been recognized as and when
b. Gross Direct Claims collected
c. Net Premium and Net Claims 107. The Auditor shall verify that real estate-
d. All above investment property has been
measured
377
a. At historical cost 114. Under “protection of policy holder's
b. At historical cost less accumulated interest” on receipt of a claim
depreciation intimation the General Insurer will respond
c. At historical cost less accumulated within
depreciation and impairment loss a. 24 hours
d. At market value b. 48 hours
108. In General Insurance business the Actuarial c. 72 hours
advice is to ensure the d. 100 hours
following 115. Under 'PPI' regulation the Surveyor has to
a. the rate is fair submit his report ordinarily
b. the wage is fair. within
c. the tariff is fair a. 15 days
d. the tax is fair b. 30 days
109. For the purpose of determination of c. 45 days
solvency the following asset is placed d. 60 days
with zero value except 116. The Laws which specifically regulate
a. Sundry debt not realizable insurance business in India are :
b. Advances not realizable. a. The LIC Act 1956
c. Pre paid expenses. b. The Insurance Act 1938
d. Furniture, fixtures, stationery. c. The GIB (Nationalistaion) Act 1972
110. The following is not considered as asset for 388 389
solvency except d. The IRDAAct 1999
a. Agents balance not realized in thirty days. e. All of the above
b. Agents balance not realized in sixty days 117. The Indian Marine Insurance Act 1963 is
c. Agents balance not realized in ninety days based on
d. Agents premium not realized in fifteen days. a. The Fatal Accidents Act 1885
111. Which of the following persons cannot be b. The Workmens' Compensation Act 1923
appointed as an actuary c. The UK Marine Insurance Act 1906
a. Fellow of Actuarial Society of India d. None of these
b. A person against whom no disciplinary action 118. Which of the following is not a stipulation
is pending by Acturial in the IRDA Guidelines about
Society. advertisement by Insurers?
c. An employee of the insurer a. Advertisement should disclose full particulars
d. Aperson aged 75 years. of the insurer
112. The value of computer equipments and b. The name and address of the Chief Marketing
software in the year of purchase after Officer of the company
depreciation would be should be published in the advertisement.
a.100% c. Display the registration / licence numbers on
b.75% their websites.
c. 50% d. Acopy of the advertisement should be filed
d. 25% with the IRDA
113. Solvency Ratio means the ratio of 119. Which of the following is not a parameter
a. available solvency margin to premium base specified by IRDA in defining
b. required solvency margin to premium base “Rural Area” ?
c. Available solvency margin to required a. ATleast 75% of the male working population
solvency margin is engaged in agriculture
d. required solvency margin to available b. Population of the area not to exceed 5000,
solvency margin according to the last census
378
c. Each household must own at least two heads 127. The R.T.I Act, 2005 does not extend to the
of cattle. following state
d. The density of population must not exceed a. Nagaland
400 per square km. b. Arunachal Pradesh
120. The institution of “Insurance Ombudsmen” c. Jammu & Kashmir
came in to effect in the year d. Uttaranchal
a. 1988 128. As per IRDA regulations (without prejudice
b. 1999 to section 27 % 27 (b) of the
c. 1997 Act), every insurer carrying General Insurance
d. 2001 Business shall in must and at
121. Insurance “Ombudsman” are appointed all times keep invested his total assets in
and administered directly by: Central Govt. securities.
a. The Union Finance Ministry a. upto 5%
b. The IRDA b. upto 12.50%
c. The GIC and LIC of India together c. not less than 20%
d. The General Body of Insurance Councils d. upto 13.66 %
e. None of the above 129. Aperson can apply for and be granted
122. Institutions have accountability and licence to act as an agent for
responsibility to : a. One general insurer only
a. Its shareholders only b. One life insurer only
b. Its shareholders and stakeholders only c. Either 1 or 2 above
c. The Govt. Authorities only d. Both 1 & 2 above
d. Entire society 130. The minimum qualification to act as an
123. Insurance companies are registered under agent residing in urban area is
: a. 8th pass
a. Insurance Act 1938 b. 10th pass
b. Marine Insurance Act 1963 c. 12th pass
c. Companies Act 1956 d. Graduate
d. IRDAAct 1999 131. For renewal of Agency Licence the agent
124. The 'Date of Notification' of General has to complete practical training
Insurance Business Amendment act is for a minimum of
a. 01.07.2001 a. 25 hours
b. 07.08.2002 b. 50 hours
c. 01.04.2002 c. 100 hours
d. 03.10.2001 d. 150 hours
125. Right to Information Act 2005 come in to 132. As per IRDAnorms a Corporate Agents
force on portfolio should not have premium
a. 01.04.2005 from one person/organization/group of
b. 15.11.2005 organization exceeding
c. 02.10.2005 a.10%
d. 12.10.2005 b.25%
126. The first fully Indian Owned Insurance c. 50%
Company of India is d.75%
a. United India Insurance Company Ltd 133. An Agent, whose licence has been
b. The Oriental Insurance Company Ltd cancelled, cannot apply for fresh licence
c. National Insurance Co. Ltd for
d. New India Assurance Co. Ltd a. 1 year
b. 2 years
379
c. 3 years
d. 5 years
134. Required solvency margin in respect of INFORMATION TECHNOLOGY
premium income is _____ % of
gross adjusted premium or net premium TRADE QUESTIONS
whichever is higher. 1. In computer hardware specification, we see a
a. 10% term like 1 GB RAM or 512 MB
b. 20% RAM or something like this. What does RAM
c. 25% mean?
d. 50% a. Read and manage
135. Required solvency margin in respect of b. Randomly Arranged Memory
claim is _____ % adjusted gross c. Random Access Memory
incurred claim or net incurred claim whichever d. Read and Memorise
is higher. 2. You want to write a letter to be sent to your
a. 10% valued customers. What software
b. 20% will you use for creating and editing the letter?
c. 30% a. Aword processor
d. 40% b. Aspreadsheet software
1. B 25. A 49. B 73. D 97. D 121. D c. An internet browser
2. A 26. C 50. C 74. D 98. A 122. D d. ACOBOLcompiler
3. B 27. B 51. C 75. D 99. C 123. C 3. Which of the following device is an input
4. C 28. C 52. C 76. D 100. B 124. B device that can be used for inputting
5. D 29. D 53. C 77. C 101. A 125. D data or instruction to the computer
6. A 30. D 54. C 78. B 102. D 126. D a. Monitor
7. B 31. B 55. C 79. A 103. D 127. C b. Keyboard
8. B 32. B 56. B 80. D 104. A 128. C c. Printer
9. A 33. D 57. C 81. D 105. C 129. D d. Speaker
10. B 34. B 58. C 82. B 106. C 130. C
4. For preventing unauthorized usage of
11. A 35. D 59. A 83. B 107. C 131. A
computing facilities, authorized users
12. C 36. D 60. C 84. C 108. A 132. C
are given unique user-id and password.
13. B 37. A 61. A 85. C 109. D 133. D
14. D 38. B 62. C 86. C 110. D 134. B Apassword should be
15. B 39. C 63. B 87. D 111. D 135. C a. Simple and easy to remember
16. D 40. D 64. C 88. D 112. B b. Complex and be made known to as many
17. C 41. D 65. C 89. B 113. C persons as possible to minimize
18. A 42. D 66. B 90. D 114. C loss of time in case one forgets his password
19. D 43. C 67. D 91. X 115. B c. Complex and be changed time to time
20. D 44. D 68. B 92. D 116. E d. Same password should be given to all the
21. D 45. D 69. C 93. B 117. C users
22. D 46. B 70. C 94. C 118. B 5. Which is the odd man out?
23. D 47. D 71. D 95. C 119. C a. 80 GB
24. C 48. D 72. D 96. B 120. A b. 512 MB
c. 1 GHz
d. 2 KB
6. Acomputer with 160 GB HDD will be about
two times faster than a computer
with 80 GB HDD in doing same set of
operations, remaining configuration
remains same.
380
a. The statement is wrong d. Delete it and create it with the preferred
b. The statement is rightc. It depends on set of name.
operations 14. In data structure, stack is a list of data
d. It depends on volume of data being used following
7. Which of the following is the most common a. First in first out (FIFO)
way of spreading a computer b. Last in first out (LIFO)
virus c. In from one end and out from other end
a. By installing a hardware in the network d. None of these.
b. Through attachments in e-mails containing 15. If n devices are to be connected in network
malicious codes using ring topology, what is the
c. Through application software having number of cable links required?
malicious codes a. n
d. Through data files containing malicious data b. n-1
8. Aspreadsheet software like Ms. Excel is c. n(n-1)
normally used for d. 2n
a. Editing photographs 16. Afile with the extension pps is used for
b. Preparing presentations a. Creating an e-mail
c. Doing data analysis b. Making presentations
d. Sending e-mail c. Preparing graph
9. Bits per second (bps) is a common unit of d. Storing large volume of data
a. bandwidth 17. Out of the following, which statement is
b. resolution of monitor correct
c. typing speed a. Same user-id can be used by different users
d. none of the above by assigning different
10. Open source software is one which passwords
a. doesn't require installation of source code b. Primary key value can be same for more than
b. can work without any hardware one record in a table
c. has no licensing policy c. Arithmetic operations can be done with
d. source codes are available to all for use and alphanumeric data
modifications. d. Data can be stored in ascending as well as
11. When a file is saved descending order
a. it is stored in RAM of the computer 18. If the premium collection in a branch in
b. it is stored in ROM of the computer month 2 decreases by 20% compared
c. it is stored in the secondary storage device of to month 1, and again goes up by 20% in the
the computer month 2, then
d. it gets printed a. Month 1 premium collection is same as
12. Out of the following, which is an advantage month 3 collection
of using a database management b. Month 1 premium collection is less than
system? month 3 collection
a. controlling redundancy c. Month 1 premium collection is greater than
b. data isolation month 3 collection
c. data manipulation d. it depends on the premium amount
d. none of this 19. User acceptance testing should be done by
13. If you don't like the name of the file what a. Those who are involved in programming
would you do? b. Likely users of the new systems
a. Save it with different name c. Software vendor
b. Can not do anything d. Third Party
c. Rename the file
381
20. For using an application software effectively d. Line Graph
a person should be trained on 27. What is the importance of phone number
a. Programming language in which software is 1551 in India?
developed a. It's a toll free number dedicated to farmers in
b. Features of the hardware on which the India
software is to be used b. It's a toll free number for getting medical
c. Functional features of the software assistance
d. Soft skills c. It's a toll free number for getting Insurance
21. Business Intelligence Software are such related information
software d. It has no significance
a. That make human being intelligent 28. Data related to a variable having high level
b. That enables the transactions to happen in of uncertainty will have
faster way a. High average
c. That uses statistical techniques to show b. High variance
useful patterns in the data c. Low average
d. That integrates various functional systems d. low variance
22. Oracle is commonly understood as a 29. An Insurance company targets to double its
a. Database system premium collection in next two
b. Programming language years. But in the first year it could increase by
c. ERP only 25%. What is the %
d. Operating Sytem increase required in the 2nd year to meet the
23. Malware are software initial target?
a. Used by stock exchange a. 25%
b. Developed to do harm to the computer or b. 75%
network c. 100%
c. Used by cyberforensic experts to identify the d. 60%
cybercriminals 30. Out of following, which is not necessary for
d. None of the above starting a corporate website?
24. Firewall is a. Domain name
a. An antivirus software b. Web Space
b. is an internet browser c. Internet Connection
c. Both of the above d. Web Pages
d. None of the above 31. As per the Information Technology Act 2000
25. 1 KB is equal to in India, Network Service
a. 1024 bytes Providers are fully liable for the data made
b. 1000 bytes available through that service
c. 100 bytes a. The above statement is wrong
d. None of the above b. The above statement is right
26. You have data related to premium collection c. The ITAct 2000 doesn't have any section for
in various regions of your network service providers
organization in different months. You want to d. There is no Information Technology Act in
get relative idea about the rate India
of increase/decrease in premium collection. 32. Any electronic record can be legally
What kind of report should be authenticated by
preferred? a. Putting the company logo in the document
a. Tabular report b. Including the name of the directors in the
b. Bar chart document
c. Pie chart c. Affixing digital signature
382
d. None of the above columns should be
396 397 a. As many as can be accommodated in the
33. Adata warehouse in an Insurance company report
should not be used for b. About ten
a. Data analysis c. About 5
b. Insurance Policy Administration d. At least 15
c. Data mining 41. Out of the following, which biometric
d. None of these template will have largest size in terms
34. The Disaster Recovery site for information of computer memory required
system should be located a. Fingerprint
a. In the same premises to minimize time of b. Retina
recovery from disaster c. Signature
b. In a nearby premises d. Voice
c. In the DR manager's house 42. Out of following, which has lowest cost per
d. None of these storage unit
35. Data mining is not used for a. RAM
a. Updating transaction records b. ROM
b. Finding patterns in existing data c. Hard disk
c. Associating new data with existing group d. Magnetic tape cartridge
d. Clustering the existing data 43. Abranch collected half of its annual
36. In managing an IT implementation project, premium target at a rate of Rs. 1 crore per
the project completion time is month and remaining half at the rate of Rs. 50
mostly Lakhs per month. What was the
a. Equal to the sum of all the activity times annual target?
b. Less than the sum of all the activity times a. Rs. 9 crores
c. Greater than the sum of all the activity times b. Rs. 8 crores
d. They are not related c. None of the above
37. While allocating resources in any project, d. Require more information to get it.
we should give priority to activity 44. Abranch collected half of its annual
having premium target at a rate of Rs. 1 crore per
a. Highest activity time month and remaining half at the rate of Rs. 50
b. Lowest activity time Lakhs per month. What is the
c. Highest delayed time average premium collected per month?
d. Lowest float time a. Rs. 2/3 crores per month
38. Which is more harmful to the information b. Rs. 75 lakhsper month
security in an organization c. None of the above
a. Giving multiple user-id to same person d. Require more information to get it
b. Giving same user-id to many persons 45. Let h1, h2….h20 be heights of 20 persons
c. Both are equally harmful and d1, d2....d15 be depth of water
d. They have nothing to do with info security at 15 points across the river bed. They have to
39. In a System Development Life Cycle, end cross the river by walking. The
users have least role to play during decision maker computes the average of
a. System requirement determination heights and water depth. He finds
b. System development 398 399
c. System testing that the average height of persons is more than
d. System implementation the average depth of water. He
40. For best results in information processing decides that group should cross the river. Did
from a tabular report, the number of he use correct analysis for
383
decision-making? Choose the most appropriate a. It makes the file secured
answer from following b. It will get automatically deleted after some
a. Yes pre-decided time
b. No c. Compression makes the file virus free
c. He should have collected depth of water data d. It creates lesser load on communication
at more number of points infrastructure
d. Flow of current is also important 51. What are the links generally available, in a
46. While sending an e-mail if you write address company's website:
of a person in Bcc (blind carbon a. Our office, our people, our work
copy) b. About us, FAQ, home
a. The person will not receive the mail c. First page, address, details
b. He will receive the mail but wouldn't get the d. none of the above
attachment if any 52. What do we understand by the term 'http'
c. He will not know about other recipients of a. Hypo test transmission programme
the mail b. Hyper text transfer protocol
d. Other recipients of the mail will not know c. Higher text transfer provision
about him d. Hard text transport promotion
47. If you are sending a document file to your 53. What stands for 'www' generally prefixed
colleagues and want that they before a website address:
should not be allowed to make changes in that, a. World wide workgroup
you will in normal b. World wide web
circumstances c. World wide wan
a. Make it a read-only file d. World wide wall
b. Make a PDF and send that 54. Which programming language is used while
c. Both the above options will serve the purpose designing a website:
d. None of the above options will serve the a. Cobol
purpose b. Fortran
48. You have a file of about 5MB size which is c. Html
requiring by many of your d. Http
colleagues. What option from following will be 55. In the Web Site of an Insurance Company
the best which of the following normally is
a. Sending the file as attachment to all who not displayed?
need that a. Company profile
b. Storing in a folder and share that with all who b. Annual reports
need that c. Product Profiles
c. Storing in some free web space and inform d. Employee profile
them about the URL 56. The common language used in Web site
d. Copying the file on machine of all who need architecture is:
that a. XML
49. Most significant advantage of b. HTML
OLAPimplementation is that c. SQL
a. IT department can generate the standard d. None of the above
reports with greater convenience 57. During business negotiation with a
b. Users can do analysis of data online corporate client, the financial
c. Business transaction becomes faster performance of your company is requested by
d. Need of taking back up gets eliminated their finance director to be
50. Why should large files be compressed presented authentically. The most impressive
before attaching in an e-mail? way to do it is
384
a. To take the relevant portion of your lap-top a. Product information
presentation b. Financial health of a company
b. To ask for the office to show the last year's c. Number of hyperlinks provided in the Home
balance sheets page
c. To show Brochures d. Bilingual presentation
d. To open company's web site 63. Which should be the most important
400 401 feature for any Company's website
58. The ID of all the websites starts with 'www', a. Scrolled information
what is the full form b. Number of links
a. World wide workgroup c. Time taken to access
b. World wide web d. Visitor's status
c. World wide wan
d. World wide wall 1c 16 b 31 a 46 d 61 a
59. PSU Insurance company websites do not 2a 17 d 32 c 47 c 62 a
have the following details for the 3b 18 c 33 b 48 b 63.A
public 4c 19 b 34 d 49 b
a. Right to information Act 5c 20 c 35 a 50 d
b. Various Insurance policies 6a 21 c 36 b 51 b
c. Registration number allocated by the IRDA 7b 22 a 37 d 52 b
8c 23 b 38 b 53 b
d. The promotion policy for the employees of
9a 24 d 39 b 54 c
the company
10 a 25 a 40 c 55 d
60. An employee of Public Sector Insurance
11 c 26 d 41 d 56 b
company can view the promotion 12 a 27 a 42 d 57 d
results 13 c 28 b 43 b 58 b
a. By logging on to his Co's website using 14 d 29 d 44 a 59 d
his/her ID and Password 15 a 30 c 45 b 60 a
b. By going to company's web site
c. By going to GIPSA's website
d. By going to NIAwebsite
61. Which of the following areas does not come
under obligation in the formation
of Company's website
a. Downloading system
b. Hindi Version of Contents
c. Contents of RTI Act
d. Contact Address
62. From the customer point of view which one
is not the most inappropriate
information one should have in the Company's
website
HRD / VIGILANCE MODEL QUESTIONS SET “A”

1. As per Leave Rules, two types of leave from amongst the following cannot
be availed in conjunction c. Casual leave with Sick leave
a. Earned leave with Casual leave d. Quarantine leave with Sick leave
b. Earned leave with Sick leave
385
2. As per LTS rules for officers in Scale IV, where 8. Which of the following does not constitute a
the entitlement is by air and major penalty under CDArules?
the employee has traveled partly by air and a. Termination from service
partly by rail in AC Ist class total b. Withholding of one increment permanently
travel not exceeding 1900 kms, what will be the c. Withholding of one increment for 2 years
basis of reimbursement d. Compulsory Retirement
a. Full reimbursement by air for 1900 Kms 9. Which one of the following is not a minor
b. Full reimbursement by rail AC II tier fare for penalty under CDArules?
1900 Kms a. Censure
c. Full reimbursement by rail AC Ist Class fare b. Withholding one increment for 6 months
for 1900 Kms c. Reduction in time scale
d. Prorata reimbursement by air on actuals and d. Recovery of pecuniary loss caused to
balance on AC II tier basis company from salary
for rail journey. 10. Dismissal from services order can be issued
3. If the services of a person who has opted for by
pension, is terminated by way of a. Officer in charge
imposing a major penalty, which of the b. Competent Authority for imposing major
following benefits are not payable? penalty
a. Provident Fund c. Appellate Authority
b. Voluntary Provident Fund d. The Appointing Authority
c. Pension 11. Leased Accommodation for a Scale III officer
d. None of the above in Metro cities is allowed
4. Qualification pay is granted for the following upto
qualifications in case of a. 2000
supervisory and clerical staff b. 3000
a. A.I.I.I. c. 4000
b. F.I.I.I. d. ……… (Answer to be filled)
c. M.B.A 12. An employee under suspension is entitled to
d. All of the above a. Living allowance
5. Hill Station Allowance is payable for the cities b. Subsistence Allowance
having mean sea level above c. Dearness Allowance
a. 1000 mts d. Family Allowance
b. 1200 mts 13. Briefcase allowance is made for officers
c. 1500 mts once after a period of
d. 2000 mts a. 2 years
6. In Encashment of earned leave, which of the b. 3 years
following allowance is not paid c. 4 years
a. Basic Pay d. 5 years
b. Dearness Allowance 14. Uniform is provided to
c. HRA a. Sweeper and sub staff
d. Conveyance Allowance b. Clerical employees
c. Part-time sweepers
7. Which of the following does not constitute d. Casual Labourers
misconduct under CDArules? 15. Which of the following does not constitute
a. Sleeping in office during office hours misconduct under CDArules?
b. Taking bribes a. Habitual late or irregular attendance
c. Accepting gifts valued Rs. 250/- at a time. b. Absence from employee's appointed place of
d. Accepting a watch valued at Rs. 1000/- work without permission or
386
sufficient cause. a. Home Guard duties
c. Commission of any act amounting to criminal b. Appearing in Ins. Institute Exams
offence involving moral c. Trade Union Activities
turpitude d. All three above
d. Absence from duty for one day without 23. Casual Leave admissibility per Annum is
permission. a. 15 days
16. General Insurance (conduct, discipline & b. 22 ½ days
appeal) rules were frame in which c. 12 days
year. d. 10 days
a. 1973 24. Accrual of one day Earned Leave is based on
b. 1975 duties spent on
c. 1976 a. 10 days
d. 1978 b. 15 days
17. CDARules are not applicable to c. 11 days
a. Class I officers d. 14 ½ days
b. Class III & IV Employees 25. Types of leave which can't be given in
c. Class I Officers on deputation from Govt. conjunction with
Sector a. C.L. & Exam
d. P.T.S. b. E.L. & S.L.
18. Which of the following Act of Omission & c. E.L. & Quarantine
Commission shall not be treated as d. C.L. & S.L.
misconduct? 26. Leave Travel Subsidy can be availed for a
a. Taking/ Giving bribes block of
b. Sleeping on duty a. One year
c. Gambling within office b. Three years
d. Occasional late attendance c. Four year
19. An employee may be suspended under the d. Two years
following circumstances except 27. LTS for Class I Officers can be granted for a
a. Contemplating Disciplinary Proceeding block of two years on
b. Criminal offence under investigation/ ___ a. Even to odd years
c. Detained in custody for more than 48 hours b. Odd to even years
d. Smoking in office premises c. Both are correct
484 485 d. Both are incorrect
20. The following are treated as Minor Penalties 28. LTS for Class III & IV employees can be
except granted for a block of two years on
a. Suspension from duty a. Even to odd years
b. Censure b. Odd to even years
c. Withholding one or more increments for a c. Both are correct
specified period d. Both are incorrect
d. Recovery from pay the pecuniary loss to the 29. Encashment of E.L. for officers can be
company granted for 15 days once in a block of
21. Leave rules permit leave on following two years
grounds, except one a. Even to add years
a. C.L. b. Odd to even years
b. E.L. c. Both are correct
c. S.L. d. Both are incorrect
d. Paternity leave 30. D.H.A. permissible under T.E. rules for a
22. Special leave is period less than six hours is
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a. 30% 37. Purchase of briefcase to officers is
b. 40% reimbursed on the expiry of
c. 60% a. 2 years
d. 20% b. 3 years
31. C.V.C. guidelines stipulate Bids for acquiring c. 4 years
office premises on lease/ d. 5 years
purchase as under: 38. In the following sequence for acquiring
a. Technical Bid company property, tick the odd
b. Financial Bid choice
c. Preliminary Scrutiny a. Agreement for sale
d. Both (a) & (b) b. Sale deed
32. Carpet area prescribed for Divisional office c. Mutation
is d. Registration of property
a. 3000 sq. ft. + 10% 39. Domestic enquiry under vigilance comprises
b. 2500 sq. ft. + 10% of all except one
c. 3500 sq. ft. + 10% a. Preliminary learning
d. 2000 sq. ft. + 10% b. Regular learning
33. Carpet area prescribed for Branch office is c. Defense proceedings
a. 1000 sq. ft. + 10% Addl d. Enquiry by C
b. 1500 sq. ft. + 10%
c. 850 sq. ft. + 10%
d. 1200 sq. ft. + 10%
34. Regional office premises committee
constitution requires the following
SELF
minimum members to complete the quorum
a. Officer from Estate Dept., officer from A/cs
ASSESMENTQUESTIONS
1. Source and Designation of
Dept., officer from
CVOS in PSU Insurance
Technical Dept.
Companies are
b. Officer from Estate Dept., officer from IA & ID
a) From Ministry and equivalent
Dept., officer from
to DGM
Technical Dept.
b) From LIC and equivalent to
c. Officer from A/cs Dept., officer from
GM
Technical Dept., officer from
c) From other PSU Insurance
Personnel Dept.
Companies and equivalent to
d. All the above three options
DGM
35. For a work/ purchase valued at more Rs. 2
d) From the same company
lacs can be done by calling
2. Vigilance department works
a. 5 quotations
in close * with
b. 3 quotations
a) Institute of Chartered
c. Sealed tenders
Accountants of India
d. Open tenders
b) Central Vigilance Commission
36. Officers on transfer are permitted to have
c) Central Bureau of
residential accommodation except
Investigation
a. Company owned accommodation
d) Ministry of Finance and
b. Company leased accommodation
Economic Affairs
c. Self leased accommodation
3. CDARules of General
d. Employee's own property on self leasing
Insurance stands for
388
a) Central Department of 10. For which benefit it is * to
Appraisal Rules take leave
b) Character Discipline * Rules a) Leave travel subsidy
c) Conduct Discipline Approval b) Leave encashment
Rules c) Transfer benefit
d) Confidential Departmental * d) Hospitalization Expenses
Rules Reimbursement
4. Officer depending on behalf 11. If one employee is having
of the company in department only 25 days of PL in his
enquiry is account. Maximum how
a) Presiding officer many days leave encashment
b) Enquiry officer he can avail
c) Defending officer a) 20
d) Defaulting officer b) 15
5. In departmental enquiry and c) 10
after major penalty is imposed, d) Nil
the defaulting 12. Under Preventing
officer may go for memorial to Corruption Act, a servant can
a) TG overseeing GM be prosecuted for
b) CVO a) Wrongful gain
c) CMD of the company b) Misappropriation
d) President of India c) Wrongful loss to
6. Asuspended employee is d) All of the above
eligible for * allow maximum up 13. Perquisite Tax is not
to what percentage applicable in
of his salary a) Reimbursement of fuel for
a) 25% the use of vehicle on company's
b) 50% loan
c) 75% b) on a leased accommodation
d) 100% c) Subsidized housing loans
7. Casual leaves cannot be d) Leave travel subsidy
tagged up with 14. If one employee received a
a) Holidays gift item, above what price of
b) Privileged Leaves the gift he is required
c) Sick Leaves to intimate company
d) Examination Leaves a) Rs. 500/-
8. Maximum how may days CLs b) Rs. 1500/-
can be taken at a time. c) Rs. 2500/-
a) 4 d) Rs. 5000/-
b) 5 15. On promotion to which
c) 6 cadre one officer will be on
d) 7 probation
9. Who is not free from a) AM
CDArules in our company b) Dy. Manager
a) CMD c) Manager
b) GM d) CMD
c) Non Executive Director 16. In which cadre delegation of
d) formal authority is not required
389
a) Manager b) Maximum 5 years
b) Dy. Manager c) Maximum 7 years
c) AM d) 10 years
d) Vigilance Officer 23. Which of there is not a
17. For suspending an minor penalty
employee which condition is to a) Sensor
be fulfilled b) With holding one or more
a) He is charge sheeted by increment for a specified period
company c) With holding one or more
b) He is arrested by police increment permanently
c) He is under * for more than d) Recovering from pay or the
48 hours amount as may be due to him
d) He is convicted by a Court of the while or
18. Which cadre is outside the part of precautionary
purview of Transfer of
Morbidity Policy
a) AM
b) Dy. Manager
c) Manager
d) CM HR PERSONNELAND
19. For entitlement to avail
retirement pension minimum VIGILANCE TRADE
how many years service
has to be completed
QUESTIONS
a) 10 years
1. Which is correct sequence as per CDARules?
b) 15 years
a. Investigation-Domestic Enquiry-Charge
c) 20 years
Sheet-Office order
d) 25 years
b. Investigation- Charge Sheet-Domestic
20. For entitlement of benefit
Enquiry-order
of Gratuity minimum how many
c. Domestic Enquiry- Investigation- order-
years of service
Charge Sheet
has to be completed
d. Domestic Enquiry-Charge Sheet-
a) 10 years
Investigation-order
b) 15 years
2. Penalties for leakage of confidential
c) 20 years
electronic data of clients without the
d) 30 years
knowledge of the insured (by employees or
21. Maximum how many days
otherwise) can be made a subject
PLcan be encashed at the time
matter of insurance under
of retirement
a. Electronic Equipments policy
a) 6 months
b. Errors and omissions policy
b) 8 months
c. Cyber liability insurance policy
c) 10 months
d. Directors and officers liability policy
d) No limit
3. What action is appropriate in respect of an
22. Notional extension of
employee going abroad with
service for compensation of
sanctioned ELfor 90 days, thereafter staying
pension for VRS optees
there itself, and not returned?
under Pension Schemes
a) 5 years
390
a. To wait till his arrival, take leave application 7. Statement I – Major penalty may be imposed
and ratify the leave on an employee against whom a
b. To recall him by issuing letters, telegram to major penalty charge sheet has been issued.
his last known address. Statement II – Minor penalty may be imposed
c. To issue him show cause notice to his last on an employee against whom a
known address and wait for minor penalty charge sheet has been issued.
reply Statement III – Minor penalty may be imposed
d. Issue show cause notice, initiate enquiry on an employee against whom
proceeding as per CDA rules a major penalty charge sheet has been issued
and terminate him from the services. Statement IV– Major penalty may be imposed
24. Which one of the following cities, does not on an employee against whom
fall under the category Afor travel a minor penalty charge sheet has been issued
rules Encircle the most appropriate option
a) Mumbai a. Only statements I,II,III are correct
b) New Delhi b. Only statements I & II are correct
c) Bangalore c. Only statements II, III, IV are correct
d) Patna d. All statements are correct
25. Which * is not a dependent on the 8. An assistant can be placed under suspension
employee for the consideration of Leave by
Travel Subsidy a. Head of the department
a) Son below 18 years b. Disciplinary Authority
b) Father above 60 years earns below Rs. 1000/- c. Appointing Authority
c) Daughter unmarried d. All the above
d) Widowed sister 9. The authority competent to impose the
492 493 penalty of “reduction to a lower
4. What procedure is to be followed for service”
acquiring office premises on rent as per a. Will always be competent to impose the
CVC Guidelines? penalty of “removal from
a. Advertisement in the news paper service”
b. Placing the advertisement on the website of b. Will always be competent to impose the
the company penalty of “Dismissal”
c. Putting the advertisement on the notice c. Both a & b
board of the company d. Neither Anor B
d. All the above 10. Statement I – In case a domestic enquiry is
5. An employee placed under suspension will instituted against an employee, the
not get subsistence allowance as competent authority may himself conduct the
mentioned below, under any circumstances inquiry proceedings
a. 25% Statement II – In case a domestic enquiry is
b. 50% instituted against an employee,
c. 75% the Inquiry officer may conduct the enquiry
d. None of the above proceedings
6. What is not taken into consideration while a. Only statement I is correct
calculating the subsistence b. Only statement II is correct
allowance? c. Both the statements are correct
a. CCA d. Both the statements are incorrect
b. HRA 11. Which is the most appropriate in respect of
c. Hill Station Allowance cases pertaining to public sector
d. None of the above general insurance companies?
391
a. Only an officer of the insurance company can b. Planning labor needs and recruiting suitable
conduct domestic enquiry candidates
proceedings c. orienting and training new employees
b. Apublic servant may conduct domestic d. managing wages and salaries
enquiry proceedings 16. HR Management practices are followed by
c. Only a Central Government Officer can managers because they don't want
conduct domestic enquiry 1. To hire the wrong person for the job
proceedings 2. To experience high turnover on costing
d. None of the above 3. To find employees not doing their best
12. As per general insurance employees' 4. To allow lack of training to undermine the
pension scheme, no departmental Organization's effectiveness
proceedings, if not initiated while the employee a. Only 1 & 2
was in service, shall be b. Only 3&4
instituted in respect of a cause of action which c. All are wrong
arose or in respect of an event d. All are correct
which took place more than ___________ 17. Many successful organizations do use HR
before such institution practices to help employees
a. One year become more productive. These practices
b. Two years include:
c. Three years 1. leadership training
d. Four years 2. technical training
13. In case CBI seeks sanction for prosecution of 3. mentoring programs
an employee of a public sector 4. career workshops
general insurance company and the competent a. only 1 & 2
authority does not intend to b. Only 3&4
accord sanction, which would be the most c. All are wrong
appropriate option d. All are correct
a. CBI would initiate action against the 18. Pick out the right statement
Competent Authority 1. HR Manager are generally staff managers
b. The CVO of the company will resolve the 2. The managers for production and sales are
dispute between the CBI and generally line managers
the Competent Authority by taking final 3. HR managers have no authority and
decision regarding the course of responsibility for advising the
action production managers in areas such as
c. The matter will be reported to CVC and the recruiting, hiring and
competent authority will take compensation
further action after considering CVC's advice 4. Managers may move from line to staff
d. None of the above positions and back over the course
14. Chief Technical Examiner's Organization of their careers
functions under the administrative a. All are correct
control of b. Only 3 are incorrect
a. CPWD c. All are incorrect
b. GIPSA d. Only 1 & 4 are correct
c. IRDA 19. Which one of the following is inappropriate
d. CVC for any big, progressive, growing
15. Human Resource Management does not HR proactive organization?
include a. People and product oriented systems
a. Job analysis b. Organization creating value for shareholders
392
c. Organization creating wealth for Board of d. The way the organization treats its
Directors employees
d. Designations/Job title based on Hierarchy 22. Executive turn over is increasing at a higher
rather than function of rate than the sales turn over.
position Which one of the following is not a relevant
20. Which of the following is not a characteristic reasons
feature of an effective manager a. Better prospects
in a MNC b. Bad Boss
a. Courage, Solid nerves and capacity to handle c. Organization Climate
stress d. Health grounds
b. Ability to learn, open mindedness 23. Choose the type of leave not available to
c. National experience and understanding of PSU General Insurance employees
markets a. Restricted Holiday
d. The way the organization treats its b. Half day casual leave
employees c. Trekking leave
21. Which of the following is appropriate d. Study leave
response for secret of success of a 24. Which one of the following is correct in
business organization? respect of special sick leave due to
a. The profit made by the organization major sickness
b. Efficiency and Effectiveness with which a. 90 days in the entire period of service
business is being run b. 120 days in the entire period of service
496 497 c. 240 days in the entire period of service
c. The way recruitment is carried out in an d. None of the above
organization
KEY – HR & VIGILANCE MODEL QUESTIONS SET “A”
1. A 7. C 13. B 20. A 27. B 35. C
2. D 8. C 14. A 21. D 28. A 36. D
3. C 9. C 15. D 22. D 29. A 37. B
4. D 10. D 16. B 23. C 30. A 38. C
5. A 11. D 17. C 24. C 31. D 39. D
6. D 12. B 18. D 25. D 32. D
19. D 26. D 33. A
34. B
KEY - HR PERSONNELAND VIGILANCE TRADE QUESTIONS SET “B”
1B 9D 17 D
2C 10 C 18 B
3D 11 B 19 C
4D 12 D 20 D
5D 13 C 21 D
6D 14 D 22 D
7A 15 C 23 B
8D 16 D 24
EXAM ORIENTED APPROACH TO MARINE HULL

a. Interests that can be covered under Hull insurance
i.Hull & Machinery

393
This includes : Hull, materials & outfit, stores & provisions for officers & crew, Ordinary fittings
required for the trade, machinery, boilers, coals & engine stores owned by shipowner.
Qn.: What is the percentage up to which you can cover freight, disbursements and stores in a vessel?
a. 25% of total sum insured
b. 20% of total sum insured
c. 50% of total sum insured
d. No limits
i.Hull & Machinery
This includes : Hull, materials & outfit, stores & provisions for officers & crew, Ordinary fittings
required for the trade, machinery, boilers, coals & engine stores owned by shipowner.
Qn.: What is the percentage up to which you can cover freight, disbursements and stores in a vessel?
a. 25% of total sum insured
b. 20% of total sum insured
c. 50% of total sum insured
d. No limits
Ans to Previous slide qn. : both
Types of freight
Ordinary Freight(Cargo owner to ship owner)
Chartered Freight(Charterer to ship owner)
Shipowners Trading freight(own goods)
Qn. Which one of the following cannot be termed as freight?
a. Ordinary freight
b. Chartered freight
c. Passage money
d. Ship owner’s trading freight
394
Ans to previous slide: Passage money
Freight Can be insured separately
or
Insured as a part of the H&M value.
Qn.: P&I means
a. Protection & Indemnity
b. Profession & Indemnity
c. Practice & Indemnify
d. None of the above.
Ans: Protection & Indemnity
Iii. Liabilities
That which are generally insured: Collission Liability
That which are taken up by P&I club
Qn.: P&I liabilities are
a. Covered under the H&M policies
b. Not covered under H&M policies
c. Limited P&I cover is available under some H&M policies
Ans: Limited P&I cover is available under some H&M policies
iv. Subsidiary Interest
Disbursements
Premium Reducing
Loss of Hire or earnings
Charterers' Interest
Types of Charter – Time & Bareboat
395
Time Charter – H&M by owner and liabilities by Charterer
Bareboat Charter – H&M and liabilities by Charterer.
Qn.: Generally the Charterer takes H&M cover if
a. It is a Bareboat Charter terms
b. It is a time charter terms
c. Both
Neither
Ans: It is a Bareboat Charter terms
Mortgagee's Interest
Policy is issued in name of owners and interest is noted by way of an assignment on the policy.
Ship Builders' Interest
Ship Repairers interest
Qn: A marine hull policy is
a. Freely assignable
b. Cannot be assigned at all
c. Can be assigned with the consent of the insurer and insured
d. None
Some Terms connected with Hull Insurance
• Deductible
• Classification
• International Safety Management Certificate(ISM)
• Document of Compliance(DOC)
• Cancellation Returns only(CRO)
• Lay-up Returns
• Premium Instalment clause
396
• 4/4th collision liability
• GRT (Gross registered tonnage)
• Bow = Fore part of the ship
• Aft = Rearmost portion
• Bulkhead : Wall of compartment not formed by the ship side
The speciality of hull deductibles is that:
• It is not applicable in case of total loss
• It is not applicable in case of partial losses
• There is no deductible in hull
• None of the above
ISM means
• Institute of safe management
• Institute of ship management
• International safety management
DOC means
• Doctorine of completion
• Director of commerce
• Document of compliance
• Document of course
CRO means
• Cross reference office
• Cape Referred Office
• Cancelation returns only
• Case return only
397
If you want to cancel the benefit of lay up terms which condition is to be imposed?
• DOC
• CRO
• ISM
• FOC
The foremost part of the ship is called
• Bow
• Aft
• Starboard side
• Port side
The rearmost part of the ship is called
• Bow
• Aft
• Starboard side
• Port side
The speciality of hull deductibles is that:
• It is not applicable in case of total loss
• It is not applicable in case of partial losses
• There is no deductible in hull
ISM means
• Institute of safe management
• Institute of ship management
• International safety management
398
DOC means
• Doctorine of completion
• Director of commerce
• Document of compliance
• Document of course
CRO means
• Cross reference office
• Cape Referred Office
• Cancelation returns only
• Case return only
If you want to cancel the benefit of lay up terms which condition is to be imposed?
• DOC
• CRO
• ISM
• FOC
The foremost part of the ship is called
• Bow
• Aft
• Starboard side
• Port side
The rearmost part of the ship is called
• Bow
• Aft
• Starboard side
• Port side
399
TONNAGE
• DISPLACEMENT :- This is the actual weight of the vessel measured by the weight in tones of
water she displaces when loaded with the fuel,water,stores and with crew on board.
• Gross Tonnage :- Measure of the total internal volume of the ship,with certain exception such as
radio room,wheel house, chartroom etc.
• Net Register Tonnage :- This represents the earning capacity of a merchant/passenger ship. It is
a measure in tones of cubic capacity of the space which can be used for carrying passengers and
cargo
• Dead weight :- Total carrying capacity of the vessel including cargo, crew machine,passenger,
stores,fuel, water when loaded down to the waterline level.
Qn.: The earning capacity of a vessel is represented by its
a. Deadweight b. Gross Registered Tonnage c. displacement d. Net registered tonnage
INFORMATION TECHNOLOGY
TRADE QUESTIONS
1. Which of the following will have the LEAST impact on the changing role of technology in
our lives?
a. Environment
b. Health care
c. Dangerous job
d. Transportation
2. Computers are commonly used in all of the following, EXCEPT:
a. Evaluating art
b. Medical and health care
c. Transportation
d. Weather forecasting
3. The most frequently used output device is the:
400
a. Scanner
b. Monitor
c. Mouse
d. Digital camera
4. Devices such as the keyboard, trackball, scanner, and microphones are known as:
a. Input
b. Output
c. Processing
d. Storage
5. What does the letters RAM stand for?
a. Random Access Memory

b. Read Always Memory
c. Ready Always Memory
d. Routine Access Memory
6. Which software application creates cards, flyers, calendars, and banners?
a. Desktop publishing
b. Database
c. Word processing
d. Spreadsheet
7. Which application software organizes data such as names and addresses?
a. Spreadsheet
b. Word processing
c. Desktop publishing
d. Database
8. Which of the following is NOT an example of a document?
a. A school report
b. A drawing
c. A spreadsheet
d. System software
9. Which software application calculates numbers such as in a teacher's grade book program?
a. Spreadsheet
b. Database
c. Word processing
d. Desktop publishing
401
10. Which of the following is NOT an output device?
a. Speakers
b. Monitor
c. Scanner
d. Disk drive
11. When a line gets too long and the extra words are moved automatically to the next line as
you key, this is known as:
a. Wordiness
b. Page format
c. Page layout
d. Word wrap
12. Which key backs up over characters and removes them from the document?
a. Home
b. End
c. Delete
d. Backspace
13. The way that the text lines up on the page is known as:
a. Boldface
b. Alignment
c. Italics
d. Underlining
14. The type of line spacing that leaves a blank line between each line keyed is known as:
a. Single spacing
b. Triple spacing
c. Quadruple spacing
d. Double spacing
15. Which of the following is an error that spell check would NOT identify?
a. New York
b. Tomorrow
c. Using the word TWO for TOO
d. Wednesday
402
16. If you have overused the word, EXCITING, in an essay, what word processing feature can
suggest other words with the same meaning?
a. Spell Check
b. Thesaurus
c. Search and replace
d. Help
17. A printed copy of a document is known as a :
a. Soft copy
b. Print preview
c. Copy and paste
d. Hard copy
18. Creating a word processing document would accomplish all of the following tasks EXCEPT
which one?
a. Developing a table of historical events

b. Calculating the expenditures for candy sales
c. Typing a letter to a friend
d. Writing an essay for history class
19. Which of the following special function keys would be used to key the sentence: "Today is
Tuesday."?
a. Return
b. Shift
c. Tab
d. Esc
20. For correct keyboarding, what is the recommended placement of fingers on the home row
keys?
a. Fingers of the left hand on asdf and fingers on the right hand jkl;
b. Fingers of the right hand on asdf and fingers on the left hand jkl;
c. Fingers of the left hand on asef and fingers on the right hand jkop
d. Fingers of the left hand on qwer and fingers on the right hand on UIOP
21. Spreadsheets are made up of which of the following
a. Rows and fields

b. Rows and records
c. Records and columns
d. Columns and rows
403
22. An example of a cell range is:
a. B6:B18
b. C1+C2
c. Label
d. B9
23. The intersection of a row and column is called a:
a. Formula
b. Cell
c. Label
d. Value
24. Which is NOT a label:
a. Test
b. Johnny
c. 9/30/99
d. 1,453
25. The best type of chart to show the relationship of each part to the whole is:
a. Bar
b. Line
c. Pie
d. Scatter gram
26. An advantage of a database program is:
a. All of the records can be seen at one time

b. Data can be added and edited easily
c. Records are easily reversible
d. Communication can be added
27. A student might use an electronic database to:
a. Keep track of names and addresses of friends

b. To write a report
c. To average his or her grades
d. To send an e-mail message
28. Which is NOT a benefit of a computerized database?
404
a. Sorts records quickly and accurately.
b. Communicates with other computers in remote locations
c. Can help keep accurate records of almost any type
d. Can find specific records that match certain conditions
29. In a database, all the information about one subject is called:
a. Data
b. Information
c. Field
d. Record
30. The four parts of a database listed in ascending order are:
a. File, record, field, entry

b. Entry, field, file, record
c. Entry, field, record, file
d. Record, file, field, entry
31. If books are organized from the most expensive to the cheapest, what is the sort order?
a. Criterion order
b. Numerical order
c. Ascending order
d. Descending order
Employee Database
Name Salary Experience
Holland, Lou $6.60 3
Franklin, Steve $7.50 7
Williams, Joe $5.55 2.5
Stevens, Nancy $8.25 9
32. To find out which employee is paid the most per hour, the database would need to be:
a. Searched by experience, is equal to, 7

b. Sorted by Salary, ascending
c. Sorted by Name, descending
d. Sorted by Salary, descending
33. Software that can be given away free, but the author owns the copyright is called:
a. Public Domain
b. Commercial
c. Shareware
d. Freeware
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34. Most commercial software prevents users from making multiple copies because it is
a. Copyrighted
b. Patented
c. Bitmapped
d. Locked
35. A virus that is activated at a certain time or date is called a:
a. Worm
b. Hacker
c. Trojan Horse
d. Bomb
36. A person who sneaks into your computer files with bad intentions is known as:
a. Operator
b. Hacker
c. Nerd
d. Enthusiast
37. Which is NOT a computer crime?
a. Making a copy of the file that contains your social studies report
b. Making a copy of your teacher's electronic grade book without permission
c. Threatening to put a virus on someone else's computer
d. Changing your grade on the teacher's computer without permission
38. A program that intended to scare a computer users into thinking they have a virus is called a:
a. Domain virus
b. Trojan horse
c. Hoax
d. Worm
39. Which of the following statements about software programs is considered illegal:
a. Throwing away used software diskettes

b. Using commercial software without paying for it
c. Using shareware on a trial basis
d. Distributing freeware to everyone you know
40. Mark figured out his teacher's password to unlock her electronic grade book. What is the
ethically correct thing for him to do?
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a. Tell the teacher so she may change it
b. Give the password to all the other students
c. Use the password to change his grade
d. Use the password to change his classmates' grade
41. Which of the following is NOT considered unethical behavior on the Internet?
a. Downloading software
b. Using profanity in a chat room
c. Breaking into chat room conversations uninvited
d. Uploading a virus to others
42. The standards of good moral conduct or principles is known as:
a. Security
b. Solutions
c. Ethics
d. Privacy
43. All of the following are advantages to e-mail over traditional or snail mail EXCEPT for:
a. E-mail messages travel faster

b. Responses to e-mail can be made faster
c. E-mail requires specialized stationary
d. E-mail is an easy way to correspond with people all over the world.
44. Shopping on the Internet allows the user to:
a. Try on clothes in a virtual dressing room

b. Making purchases without leaving home
c. Buy items at 50% over what is offered at the mall
d. Saves on banking charges
45 What is one disadvantage encountered when using telecommunications?
a. It can be expensive to set up initially

b. It allows the user to have access to current information
c. Users can send messages all over the world quickly
d. Users can download software from different sites
46 Telecommunications is widely used because it allows:
a. Information to be sent and received over long distances

b. It is easy to set up
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c. It is inexpensive to gather necessary hardware
d. Specialized software is not necessary
47 The largest computer network in the world is known as the
a. Information Highway
b. Internet
c. E-mail
d. America On-Line
48 Which of the following would be least likely to use telecommunications?
a. A bulldozer operator clearing land

b. A baker searching for new recipes
c. A student researching current issues in Africa
d. An investor needing the latest stock market quotes
49 The piece of hardware that transmits the computer's information through the telephone lines
is called a:
a. Modem
b. Baud rate
c. Server
d. Fax
50 Because the number of people using telecommunications is increasing, which of the

following is likely?
a. Less phones lines available

b. Telephones will be eliminated
c. More miscommunications will occur
d. More people will be able to work at home
51 In order to set up a system capable of telecommunications, which of the following is NOT

necessary?
a. A computer
b. A printer
c. A phone line
d. A modem
52 Sending data from one computer to another is called:
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a. Log-on
b. Log-off
c. Downloading
d. Uploading
INFORMATION TECHNOLOGY QUESTION 3
Q. A Computer system at the management level of an organization that combines

data, analytical tools and models to support semi-structured and unstructured
decision making best describes an
a. Decision support system
b. Group decision support system
c. Expert system
d. Executive support system
Q. Stored information from an organizations history best describes:
a) rational database b) A DASS database
c) Organizational memory d) A model
Q. Important evaluation criteria to use when selecting a software package include:
a. Flexibility b. User-friendliness C. Database requirements
d All of the above.
Q. Which of the following defines the contents of data flows and data stores so that
system builders understand exactly what pieces of data they contain?
a. Data dictionary b. Database c. Data module
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d. Object module
Q. HTML is an acronym for what?
a. Hypertext markup Language

b. High Tone modifier loop
c. Hypertext makeup loop.
Q. WWW is an acronym for what?
A. world wide web. B. web wide world. .
C. world web wide D. wide world web
Q which one of the following can hold more data?
a. a book b. A floppy disk, c. A compact disk. D None of the above
Q Because the number of people using telecommunications is increasing which of

the following is likely?
a. Less phones lines available

b. Telephone will be eliminated
c. More miscommunications will occur
d. More people will be able to work at home
Q. In order to set up a system capable of telecommunications, which of the

following is NOT necessary?
A. A Computer b. A Printer C A phone line d A modem
Q Sending data from one computer to another is called
a. Log-on b. Log-off c. Downloading d. Uploading
Q. To access intranet agent must go to insurers office
A True b. False
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Q By use of intranet delay can be avoided.
A True b False
Q. Communication through intranet is at a
A Low cost b High cost
Q. This approach to information systems emphasizes mathematically based models

to study information systems.
A Behavioral approach B. Management approach
C Social approach D. Technical approach
Q. An example of strategic level system is
A. Machine control B. Relocation analysis
C. Electronic calendars D. Personnel planning
Q. Each of the following is a true statement regarding system integration except.
a. Different types of systems are tightly couple in most organizations.
Disseminate and coordinate the flow of information in an organization best

describes:
b. It is advantageous to have some measure of integration among systems

so that information can easily flow between different parts of the
organization
c. There is no One right level of integration or centralization
d. Integration cost money is time consuming and it complex.
Q. Which of the following is a true statement :
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a. Early information systems were responsible for implementing core
institutional activities.
b. Information systems in the 1960s and 1970s brought about primarily

technical changes.
c. Today’s information systems are smaller in scope and are less complex
than those of the 1950s, 1960s and 1970s.
d. contemporary systems bring about managerial changes and institutional

changes.
Q. The physical devices and software that link various computer hardware
components and transfer data from one physical location to another best
describes:
A.Hardware b storage c. Communications d Networks
Q Output that is returned to appropriate members of the organization to help them

evaluate or correct the input stage is called
a. Turnaround data. B standards. C Feedback d A format system
Q. An organization using networks linking people, assets and ideas to create and
distribute products and services without being limited by traditional organizational
boundaries or physical location bet describes an:
a. Intranet b) Network enterprises
c) virtual organization d) Information architecture
Q. What is computer science?
a. Learning how to use computers?
B Designing circuits for computers?
C Designing web pages
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D learning about algorithms programme and computers.
Q Now a days which one amongst the following is most commonly used mobile
device with high storage capacity?
A hard disk b floppy disk c CD d None of these
Q Which one of the following is a network operating system?
A. Windows 2000 b. windows 99 c. O/S 2 d. None of these
Q A Program that provides a software interface to hardware device?
A. support b. driver c. extended support d. none of these
Q Decision support systems serve the
A. knowledge level of the organization
B. management level of the organization
C. Operational level of the organization
D. strategic level of the organization.
Q. The most frequently used output device is the :
a) scanner b) Monitor c) mouse d) digital camera
Q. Device such as the keyboard trackball scanner and microphones are know as :
a. Input b Output c Processing d storage
Q. What does the letter RAM stand for?
A. Random access memory B. Read always memory
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C. ready always memory D. routine access memory
Q. Which software application creates cards, flyers, calendars and banners?
A. desktop publishing b database c word processing d spreadsheet
Q. Which application software organizes data such as names and addresses?
A spreadsheet b word processing c desktop publishing d database
Q which of the following is NOT an example of a document?
A. A school report b. A drawing c. A spreadsheet d. system software
Q. Which software application calculates number such as in a teachers grade book

program?
a. Spreadsheet, b database c word processing d desktop publishing
Q. Which of the following is not an output device?
A. Speakers b. Monitor c. scanner d. disk drive
Q. When a time get too long and the extra words are moved automatically to the
next line as you key this is know as:
a. wordiness b page format c page layout d word warp
Q which key backs up over characters and removes them from the document?
A. Home B. end C. delete D. backspace
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Q The way that the text lines up on the page is known as
A. Boldface B. Alignment C. italics D. understanding
Q. The type of line spacing that leaves a blank line between each line keyed is know
as :
A. single spacing B. triple spacing C. quadruple spacing d double spacing
Q which of the following is an error that spell check would not identify?
A New York b tomorrow c using the word TWO for TOO d Wednesday
Q If you have overused the word exciting in an essay what word processing feature
can suggest other words with the same meaning?
A spell check b Thesaurus c Search and replace d help
Q A printed copy of a document is know as a
a. soft copy b. print preview c. copy and paste d. hard copy.
Q. creating a work processing document would accomplish all of the following tasks
except which one?
A developing a table of historical events
B calculating the expenditures for candy sales
C typing a letter to a friend
D writing an essay for history class.
Q Which of the following special function key would be used in key the sentence
Today is Tuesday.
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A. Return b. shift c tab d Esc.
Q. For correct keyboarding what is the recommended placement of figers on the

home row keys?
a. Fingers of the left hand on asdf and fingers on the right had jkl:
b.. Fingers of the right hand on asdf and fingers on the left hand jkl:
c. Fingers of the left hand on asef and fingers on the right hand jkop
d. Fingers of the left hand on qwer and fingers on the right hand on UICOP.
Q. Spreadsheets are made up of which of the following
A. Rows and fields b. Rows and records
c . Records and columns d. columns and rows
Q An Example of a cell range is

a. B6:B18 b. C1 + C2 c. Label d. B9
Q. The intersection of a row and column is called a:
A. Formula b. Cell c. Label d. value
Q. Which is not a label:
A. Test B. Jonny C. 9/30/99 D. 1,453
Q The best type of chart to show the relationship of each part to the whole is:
A. Bar B. Line C. Pie D. scatter gram
Q. An advantage of database program is
A. all of the records can be seen at one time
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B. Data can be added and edited easily
C. Records are easily reversible
D. communication can be added
Q. A student might use on electronic database to
A. Keep track of names and addresses of friends
B. to write a report
C. to average his or her grades
D. to send an email message
Q. Which is NOT a benefit of a computerized database?
a. Sorts records quickly and accurately.

b. Communicates with other computers in remote locations
c. Can help keep accurate records of almost any type
d. Can find specific records that match certain conditions
Q. In a database, all the information about one subject is called
a. data b Information c field d Record.
Q The four part of a database listed in ascending order are:
a. Fire record field entry. B Entry field file, record
c. Entry field record file. D Record file field entry.
Q. If books are organized from the most expensive to the cheapest what is the sort
order?
a. Criterion order B. Numerical order
c. Ascending order d. Descending order
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Employee database
Name Salary Experience
Holland, LOU $6,60 3
Franklin, Steve $7,50 7
Williams, Joe $5.55 2.5
Stevens, Nancy $8.25 9
Q. To find out which employee is paid the most per hour, the database would need
to be :
a. Searched by experience is equal to 7

b. Sorted by salary ascending
c. Sorted by Name, descending
d. Sorted by salary, descending
Q. Software that can be given away free, but the author owns the copyright is
called
a. Public Domain b Commercial c Shareware d Freeware
Q. Most commercial software prevents users from making multiple copies because
it is
a. Copyrighted b Patented c Bitmapped d Locked
Q A virus that is activated at a certain time or date is called a
a. worm b Hacker c Trojan hose d Bomb
Q A person who sneaks into your computer files with bad intentions is known as
A. Operator b. Hacker c. Nerd d. Enthusiast
418
Q. Which is NOT a computer crime?
a. Making a copy of the file that contains your social studies report
b Making a copy of your teacher’s electronic grade book without permission
c Threatening to put a virus on someone else’s computer.
d. changing your grade on the teachers computer without permission
Q A program that intended to scare a computer users into thinking they have a
virus is called a
A domain virus b Trojan horse c Hoax d worm
Q Which of the following statements about software programs is considered illegal:
e. Throwing away used software diskettes

f. Using commercial software without paying for it
g. Using shareware on a trial basis
h. Distributing freeware to everyone you know
Q. Mark figured out the teacher’s password to unlock her electronic grade book.
What is the ethically correct thing for him to do?
a. Tell the teacher so she may change it.

b. Give the password to all the other students.
c. Use the password to change his grade.
d. Use the password to change his classmates grade
Q. Which of the following is NOT considered unethical behaviour on the internet?
a. Downloading software.
b. Using profanity in a chat room
c. Breaking into chat room conversations uninvited
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d. Uploading a virus to other
Q. The standards of good moral conduct or principles is known as:
a. Security b Solutions c Ethics d Privacy
Q. All of the following are advantages to email over traditional or snail mail EXCEPT
for:
a. Email messages travel faster
b. Responses to email can be made faster
c. E-mail requires Specialised stationary
d. E-mail is an easy way to correspond with people will all over the world.
Q. Shopping on the internet allows the use to:
a. Try on clothes in a virtual dressing room
b. Making purchases without leaving home.
c. But items at 50% over what is offered at the mail
d. Saves on banking charges
Q. What is one disadvantage encountered when using telecommunications?
a. It can be expensive to set up initially.
b. it allows the user to have access to current information.
c. Users can send messages all over the world quickly.
d. Users can download software from different sites.
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Q. Telecommunications is widely used because it allows:
a) Information to be sent and received over long distance.
e. It is easy to set up.

f. It is inexpensive to gather necessary hardware
g. Specialized software is not necessary.
Q. The largest computer network in the world is known as the
A. Information highway. B Internet c. email d America on-line
Q Which of the following would be least likely to use telecommunications?
a. A buildozer operator clearing land
b. A baker searching for new recipes
c. A student researching current issues in Africa
d. An investor needing the latest stock market quotes
Q The piece of hardware that transmits the computers information through the
telephone lines is called a
A Modem b Baud rate c server d fax
1. Which of the following will connect you to the Internet?
a) A commercial online service.

b) An Internet service provider.
c) A network connection.
d) All of the above.
2. What software allows you to view Internet sites?
a) A cyber cafe
b) A browser
c) A modem
d) Your Computer
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3. What does the "F" mean on the F1, F2, F3, F4, and etc. keyboard keys?
a) File
b) Find
c) Format
d) Function
4. "HTML" is an acronym for what?
a) Hypertext Markup Language

b) High Tone Modifier Loop
c) Hypertext Makeup Loop
5. "WWW" is an acronym for what?
a) World Wide Web

b) Web Wide World
c) World Web Wide
d) Wide World Web
6. Which one of the following can hold more data?
a) A book
b) A floppy disk
c) A compact disk
7. What is computer science?
a) Learning how to use computers.

b) Designing circuits for computers.
c) Designing web pages.
d) Learning about algorithms, programs, and computers.
8. Now a days, which one amongst the following is most commonly used mobile storage device with
high storage capacity?
a) Hard Disk
b) Floppy Disk
c) CD ROM
d) None of these
9. Which one of the following is a Network operating System?
a) Windows 2000
b) Windows 98
c) O/S 2
d) None of these
10. A program that provides a software interface to hardware device?
a) Support
b) Driver
c) Extended support
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d) None of these
11. Each of the following is a true statement except: (Too long text)
a) In general, the shape of organizations historically changes with the business cycle and with the
latest management fashions.
b) Information technology may encourage networked organizations in which groups of
professionals come together face-to-face or electronically for short periods of time to
accomplish a specific task.
c) Research suggests that all modern organizations will, at some point, undergo a
transformation to self-managed teams.
d) Some research suggests that computerization increases the information given to middle
managers, empowering them to make more important decisions than in the past, thus reducing
the need for large numbers of lower-level workers.
12. Decision support systems serve the:
a) Knowledge level of the organization.
b) Management level of the organization.
c) Operational level of the organization.
d) Strategic level of the organization.
13. Which of the following refers to information systems that help managers identify external
changes that might require an organizational response?
a) Target marketing
b) Mass customization.
c) Environmental scanning.
d) Intelligence.
14. An example of an operational-level human resources information system is a:
a) Career pathing system.
b) Compensation analysis system.
c) Training and development system.
d) Human resources planning system.
15. An example of a management-level system is:
a) Machine control
b) Relocation analysis.
c) Electronic calendars.
d) Manpower planning.
16. To confront the globalization challenge, managers must: (Text too long)
a) Develop global hardware, software, and communications standards and create cross-
cultural accounting and reporting structures.
b) Rethink and redesign the way goods and services are designed, produced, delivered, and
maintained.
c) Develop new information architecture.
d) Develop islands of information and technology to facilitate the decision-making process.
17. Supporting information systems for the liaison role are:
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a) Electronic communication systems.
b) Management information systems.
c) Office and professional systems.
d) DSS systems.
18. Characteristics of management information systems include each of the following except:
a) MIS rely on existing corporate data and data flow.
b) MIS have an internal rather than an external orientation.
c) MIS have little analytical capability.
d) MIS address non-routine decisions requiring judgment, evaluation, and insight.
19. Of the following, the best example of information would be:
a) A student identification number.
b) An address.
c) A sales analysis report.
d) A person's age.
20. The types of information systems at the management level of an organization that serve the
functions of planning, controlling, and decision making by providing routine
summary and exception reports are:
a) Transaction processing systems.
b) Decision support systems.
c) Executive support systems.
d) Management information systems.
21. Information systems that support the monitoring, controlling, decision-making, and
administrative activities of middle managers are:
a) Knowledge-level systems.
b) Strategic-level systems.
c) Management-level systems.
d) Operational-level systems.
22. A "task force" organization that must respond to rapidly changing environments describes
a(n):
a) Machine bureaucracy organizational structure.
b) Divisionalized bureaucracy organizational structure.
c) Professional bureaucracy organizational structure.
d) Adhocracy organizational structure.
23. Supporting information systems for the resource allocator role are:
b) Management information systems.
c) Office and professional systems.
d) Decision Support System.
24. The management level responsible for making long-range strategic decisions about which
products and services to produce is the:
a) Technology level.
b) Operational level.
c) Middle level.
d) Senior level.
25. A Web site or other service offering a broad array of resources or services such as e-mail, on-
line shopping, discussion forums and tools for locating information best describes a:
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a) Portal
b) Protocol.
c) Internet service provider.
d) Search engine.
26. Which of the following refers to a cooperative alliance formed between two
corporations for the purpose of sharing information to gain strategic advantage?
a) Intraorganizational system
b) Interorganizational system
c) Information partnership
d) Information linkage
27. The transformation of the business enterprise has resulted in the new manager relying on
each of the following except: (Text too long)
a) Informal commitments and networks to establish goals.
b) A customer orientation to achieve coordination among employees.
c) Appeals to professionalism and knowledge to ensure proper operation of the firm.
d) A structured arrangement of specialists that typically rely on a fixed set of standard
operating procedures.
28. This approach to information systems emphasizes mathematically based models to study
information systems.
a) Behavioral approach
b) Management approach
c) Social approach
d) Technical approach
29. An example of a strategic-level system is:
a) Machine control.
b) Relocation analysis.
c) Electronic calendars.
d) Personnel planning.
30. Each of the following is a true statement regarding system integration except:
a) Different types of systems are tightly coupled in most organizations.
b) It is advantageous to have some measure of integration among systems so that
information can easily flow between different parts of the organization.
c) There is no "one right level" of integration or centralization.
d) Integration costs money, is time consuming, and is complex.
31. Which of the following is a true statement?
a) Early information systems were responsible for implementing core institutional
activities.
b) Information systems in the 1960s and 1970s brought about primarily technical
changes.
c) Today's information systems are smaller in scope and are less complex than those of
the 1950s, 1960s, and 1970s.
d) Contemporary systems bring about managerial changes and institutional changes.
32. The physical devices and software that link various computer hardware components and
transfer data from one physical location to another best describes:
a) Hardware.
b) Storage.
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c) Communications.
d) Networks.
33. Output that is returned to appropriate members of the organization to help them evaluate or
correct the input stage is called:
a) Turnaround data.
b) Standards.
c) Feedback.
d) A formal system.
34. An organization using networks linking people, assets, and ideas to create and distribute
products and services without being limited by traditional organizational boundaries or physical
location best describes a(n):
a) Intranet.
b) Network enterprise.
c) Virtual organization.
d) Information architecture.
35. The information inputs characteristic of a Knowledge Work Systems (KWS) are:
a) Low-volume data on massive databases optimized for data analysis, analytical models,
b) Design specifications and knowledge base.
c) Aggregate data, external, and internal.
d) Documents and schedules.
36. An internal network based on Internet and World Wide Web technology standards best
describes:
a) An electronic market.
b) An intranet.
c) An interorganizational system.
d) E-mail.
37. The set of fundamental assumptions about what products the organization should produce,
how and where it should produce them, and for whom they should be produced defines:
a) Corporate policy.
b) Organizational culture.
c) Mission statement.
d) Standard operating procedures.
38. Office automation systems serve the:
b) Management level of the organization.
d) Strategic level of the organization.
39. Software that allows two different applications to exchange data best defines:
a) Firmware.
b) Middleware.
c) Hardware.
d) Operating system.
40. A general-purpose language that describes the structure of a document and supports links to
multiple documents, allowing data to be manipulated by the computer best describes:
a) XML.
b) ActiveX.
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c) Visual Basic.
d) FORTRAN
41. The field in a record that uniquely identifies instances of that record so that it can be
retrieved, updated, or sorted best describes a (n):
a) Master key.
b) Master field.
c) Attribute.
d) Key field.
42. The smallest data element in the data hierarchy is a:
a) Byte.
b) Field.
c) File.
d) Bit
43. Problems with the traditional file environment include:
a) Data redundancy.
b) Poor data security.
c) Inability to share data among applications.
44. A large group of servers maintained by a commercial vendor and made available to
subscribers for electronic commerce and other activities requiring heavy use of servers best
describes:
a) A storage area network.
b) A server farm.
c) A local area network.
d) An information appliance.
45. The most prominent data manipulation language today is:
a) COBOL.
b) IMS.
c) SQL.
d) DDL.
46. A small data warehouse containing only a portion of the organization's data for a specified
function or population of users best describes a:
a) Database.
b) Tuple.
c) Relation.
d) Data mart
47. Computing on the Internet uses the:
a) Distributed processing model.
b) Centralized processing model.
c) Client/server computing model.
d) Decentralized processing model.
48. Approximately one trillion bytes is a:
a) Kilobyte.
b) Megabyte.
c) Terabyte.
d) Gigabyte.
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49. The smallest unit of data for defining an image in the computer best describes a:
a) Bit.
b) Nibble.
c) Word.
d) Pixel
50. The detailed instructions that control the operations of a computer system defines:
a) Software
b) Hardware
c) System specifications.
d) Procedures
51. The determination of whether or not a customer's claim was paid in full would be performed
by:
a) RAM.
b) ROM.
c) The ALU.
d) The control unit.
52. The largest cost component for both large and small client/server systems is:
a) Downtime.
b) Operations staff.
c) Applications development staff.
d) Software.
53. Common technologies for wireless data transmission include:
a) Cellular telephones.
b) Microwave transmissions.
c) Personal digital assistants.
54. Problems posed by the new information technology infrastructure include:
a) The need for organizational change.

b) The hidden costs of client/server computing.
c) The difficulty of ensuring network reliability and security.
55. A project management technique that ensures that the implementation team operates as a cohesive
unit best describes:
a) External integration tools.

b) Internal integration tools.
c) Formal planning and control tools.
d) Data flow diagramming tools.
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56. The Internet benefits to organizations include:
a) Connectivity and global reach.

b) Reduced communication costs.
c) Lower transaction costs.
57. During conversion, the most time-consuming activity is the:
a) Development of the logical design.

b) Conversion of data.
c) Development of a physical design.
d) Feasibility study.
58. The IT-enabled change that has the highest risk and the highest return is:
a) Automation
b) Reengineering
c) Paradigm shift
d) Rationalization
59. The Internet is owned by:
a) The U.S. Department of Defense.

b) Microsoft.
c) The U.S. Department of Education.
d) No one.
60. The most common form of IT-enabled organizational change is:
a) Disintermediation.
b) Reengineering.
c) Rationalization.
d) Automation.
61. Requirements analysis involves: (Text is too long)
b) Laying out the components of a system and their relationship to each other, as they
would appear to the users.
c) Translating the abstract logical model into the specific technical design for the new
system.
d) Changing from the old system to the new system.
e) Defining the objectives of the new or modified system and developing a detailed
description of the functions that the new system must perform.
62. The organizational impact/benefit associated with the disintermediation IT capability
is: (Text is too long)
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a) IT can transform unstructured processes into routinized transactions.
b) IT can bring vast amounts of detailed information into a process.
c) IT allows the capture and dissemination of knowledge and expertise to improve the
process.
d) IT can be used to connect two parties within a process who would otherwise
communicate through an intermediary.
63. Organizations can counteract problems created by the new information technology
infrastructure by:
a) Planning for and managing the business and organizational changes.

b) Asserting data administration disciplines.
c) Considering connectivity, bandwidth, and cost controls in their technology planning.
d) Doing all of the above.
64. Each of the following is a true statement except: (Text is too long)
a) If one of the computers in a star network fails, none of the other components in
the network are affected.
b) The star topology is useful for applications where some processing must be
centralized and some can be performed locally.
c) All communications on a star network must pass through a central computer.
d) Communication in a star network will come to a standstill if the host computer stops
functioning.
65. Which of the following argues that the firm's information requirements can only be understood by
looking at the entire organization in terms of organizational units, functions, processes, and data
elements?
a) Enterprise analysis
b) Strategic analysis
c) Informational analysis
d) Conceptual analysis
66. A collection of software tools that is used for data analysis is called:
a) A DSS software system.

b) An inference engine.
c) An AI shell.
d) A model base.
67. Advantages of using software packages for systems development include each of the
following except:
a) The time frame and costs for developing the new system should be considerably
reduced.
b) Most of the design work has been done in advance.
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c) The packages are geared to the most common requirements of all organizations.
d) Vendors supply much of the ongoing maintenance and support for the system.
68. A type of knowledge management system that helps disseminate and coordinate the
flow of information in an organization best describes a(n):
a) Decision support system.
b) Knowledge work system.
c) Group collaboration and support system.
d) Office system.
69. A tool used during the electronic meeting activity of idea generation is:
a) Group matrix.
b) Vote selection.
c) Topic commenter.
d) Enterprise analyzer.
70. A computer system at the management level of an organization that combines data, analytical
tools, and models to support semi-structured and unstructured decision making best describes
a(n):
a) Decision support system.
b) Group decision support system.
c) Expert system.
d) Executive support system.
71. Stored information from an organization's history best describes:
a) A relational database.
b) A DSS database.
c) Organizational memory.
d) A model.
72. Important evaluation criteria to use when selecting a software package include:
a) Flexibility.
b) User-friendliness.
c) Database requirements.
73. Which of the following defines the contents of data flows and data stores so that system
builders understand exactly what pieces of data they contain?
a) Data dictionary
b) Database
c) Data module
d) Object module
74. Organizations need to manage an outsourcer by:
a) Setting priorities.
b) Ensuring that the right people are brought in.
c) Guaranteeing that information systems are running smoothly.
75. Data mining may use:

a) Statistical analysis tools.
b) Genetic algorithms.
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c) Fuzzy logic.
76. Which of the following trends has the impact of copying data from one location to another
and easing access to personal data from remote locations?
a) The development of ergonomical keyboards
b) Rapidly declining data storage costs
c) Data mining advances
d) Networking advances
77. The social issue of privacy concerns:
a) The Development of "Expectations of Privacy" Or Privacy Norms, As Well As
Public Attitudes
b) The Development of Statutes That Govern The Relations Between Record Keepers
And Individuals.
c) Determining If A Person Should Be Informed That Her Credit History Information Is
Being Used For Employment Screening Purposes.
d) The Creation Of New Property Protection Measures To Protect Investments Made By
Creators Of New Software.
1. Software that allows two different applications to exchange data best defines:
a. Firmware b. Middleware C Hardware d. Operating system
2. A General purpose language that describes the structure of a documents and supports
links to multiple documents, allowing data to be manipulated by the computer best describes.
a) XML b) ActiveX c) Visual Basic d) FORTRAN
3. Characteristics of management information systems include each of the following

accept.
a. MIS rely on existing corporate data and data flow
b. MIS have an internal rather than an external orientation
c. MIS have little analytical capability
d. MIS address non-routine decisions requiring judgment, evaluation, and

insight.
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4. Of the following, the best example of information would be :
a) A student identification number: b) An address
c) A sales analysis report. d) a PERSON AGE
5. Information systems that support the monitoring, controlling decision-making and

administrative activities of middle managers are:
a) Knowledge level systems. b) Strategic level systems.

b) Management level system c) Operational level systems.
6. Which of the following refers to information systems that help managers identify
external changes that might require an organizational responses?
a. Target marketing b. Mass customization
c. Environmental scanning d. intelligence.
7. An example of an operational level human resources information system is a
a. career pathing systems b. Compensation analysis systems
c. Training and development d. Human resources planning system.
8. An example of management level system is
a. Machine control b Relocation analysis
c. Electronic calendars d. Manpower planning.
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9. To confront the globalization challenge, managers must
a) Develop global hardware, software and communications standards and create cross-
cultural accounting and reporting structures.
b) Rethink and redesign the way goods and services and designed, produced delivered and
maintained.
c)Develop new information architecture.
d) develop islands of information and technology to facilitate the decision making

process.
10. Supporting information systems for the liaison role are:
b) Management information systems
c) Office and professional systems
d) DSS systems.
11. The Management level responsible for making long range strategic decisions about which
products and services to produces is the
a. Technology level. B. Operational level C Middle level D. Senior level
12. A Web site or other service offering a broad array of resource or services such as e-mail,
on the shopping discussion forum and tools for locating information best describes a:
a. Portal B. Protocol. C. Internal service provider D. Search engine.
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13. Which of the following refers to a cooperative alliance forming between two corporation for
the purpose of sharing information to gain strategic activities?
a. intra organizational systems. b. Inter organisation system
c. Information partnership d. Information linkage.
14. The transformation of the business enterprises has resulted in the new manager
relying on each of the following except.
a. Informal commitments and networks to establish goods.

b. A customer orientation to achieve coordination among employers.
c. Appeals to professionalism and knowledge to ensure proper operation of the

firm.
d. A structured arrangement of specialists that that typically rely on a fixed set

of standard operating procedures.
15. The information inputs characteristic of a knowledge work systems [kws are:]
. a) Low-volume data on massive databases optimized for data analysis
analytical models, and data analysis tools.
b. design specification and knowledge base
c. Aggregate data, external and internal
d. Documents and schedules.
16. An internal network based on internal and world wide web technology standards best
describes:
a. An electronic market. b) An intranet
c. An interroganisational system d) E-mail
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17. The set of functional assumption about what products the organization should
produce, how and where it should produce them, and for whom they should be produced defines:
a) Corporate policy b) Organizational culture.

c) Mission statement d) standard operating procedures
18. Office automation systems serve the
b) Management level of the organization
d) Strategic level of the organization
19. statement – 1 Insurers traditionally have been quick to adopt latest advances in technology.
Statement -2 : The extent Of IT application vary between the insurers.
a. Both and true b Only 1st is true c. Only 2nd is true d. None is true
20. Internet is a _________ system.
a. statewide b national-wide c. world wide d. country wide
21. Information travels through internet at ________ speeds:
a) Variable B. Fixed c. semi-variable d. Incredible
22. Information posted on a website is available to anybody across the Globe…….
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a. at no cost b at a loss cost c at a cost d at a fixed cost.
23. Which of the following will connect you to the internal?
a. A commercial online service

b. An internet service provider
c. A Network connection
d. All of the above.
24. What software allows you to view internet sites?
a) A cyber café b) A Browser c) A Modem D Your computer
25. What does the “F” mean on the F1, F2,F3, F4 and etc. keyboards keys?
A. File B. Fine C. Format D Function
26. A Task Force organizational that must respond to rapidly changing environments
describes an:
a. Machine bureaucracy organizational structure

b. Divisionalsed bureaucracy organizational structure.
c. Professional bureaucracy organization structure
d. Adhocracy organization structure.
27. Supporting information system for the resource allocator role are
a. Electronic communication systems
b. Management information systems
c. Office and professional systems
d. decision support systems
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28. Access to a website may be granted to specified individuals only by means of……………..
a. Email b. Internet c. Website d. Password
29. While internet is accessible from anywhere internet is a
A. Citywide net work. B. State wide work.
C. In house network D. Inter house network.
30. The information in an intrnanet will be available to
A Insurers offices and personnel
B Insurers offices and policyholders
C Personnel’s and policyholders
D Both a and b above
Question Answer Question Answer Question Answer Question Answer Question Answer
1. B 2 A 3 D 4 C 5 D
6 C 7 C 8 B 9 A 10 A
11 A 12 A 13 B 14 D 15 B
16 B 17 B 18 A 19 A 20 C
21 D 22 A 23 C 24 B 25 D
26 C 27 D 28 D 29 C 30 A`
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Human Resource Management: Test 1
Q1. What is meant by the term 'management by objectives'?
(a) A system of giving the authority to carry out certain jobs by those lower down the
management hierarchy.
(b) The system of management that is based on bringing together experts into a team.
(c) The setting of objectives to bring about the achievement of the corporate goals.
(d) The control of the organisation by those in the 'head office'.
Q2. A manager may delegate any of the following except
(a) authority.
(b) workload.
(c) responsibility.
(d) attendance at meetings to represent the department.
Q3. Workforce planning involves all of the following except
(Select one answer)
(a) organising the training of staff.
(b) forecasting future personnel requirements.
(c) examining production plans in a factory.
(d) preparing and maintaining personnel records.
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Q4. Maslow, in his triangle of human needs, showed that
(a) having challenging new tasks is a basic human need.
(b) money always motivates workers.
(c) safety and security is a low order human need.
(d) workers will not give of their best unless they have good social events provided by the firm.
Q5. Piecework is a payment system where the worker is
(a) paid overtime for any hours worked beyond 25 per week.
(b) rewarded for good conduct.
(c) is paid a minimum of £4.20 per hour.
(d) is paid for what he or she achieves.
Q6. Which of the following will NOT result following the introduction of a more decentralised
system of management?
(a) Increased motivation amongst those empowered to make decisions.
(b) Greater consistency in the decisions made.
(c) The development of skills amongst the junior members of the management team.
(d) An increase in the speed at which essential decisions are made.
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Q7. An advantage of recruitment from outside the company is
(a) that it is cheaper than internal recruitment.
(b) that there is no need to advertise the vacancy.
(c) that it brings in new experience and skills to the firm.
(d) that it avoids jealousy within the firm.
Q8. When designing his hierarchy of needs triangle Maslow did NOT include one of these. Was it?
(a) Good wages and salaries and working conditions.
(b) The need to feel secure at work with adequate financial rewards such as pensions to assist
one later in life.
(c) The need to build a career path .
(d) Opportunities for teamworking and social events that allow a sense of belonging to emerge.
Q9. When deciding on objectives for management it is advised that companies should aim to
achieve 'SMART' within these. Which of the following is NOT part of the SMART scheme?
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(a) The need to be Specific in the choice of objectives.
(b) The need to make objectives Tangible.
(c) All objectives must be Measurable.
(d) For personnel to feel capable of reaching objectives they must be Achievable.
Q10. Which of the following is a reason for introducing a matrix management system?
(a) Because it allows for an easily understood functional responsibility chart to designed.
(b) The management can increase the use of delegation within the organisation.
(c) The senior management wants to develop a clearly defined set of responsibilities.
(d) A more centralised system of control is required.
Q11. What is meant by the term functional management?
(a) A system of business organisation that is based on an individual having a wide range of skills
needed to administer a business..
(b) A type of management that is based more on personality.
(c) A system that groups together various jobs and is organised by departments, sections or
functions.
(d) A system that supports a flat form of command chain.
Q12. What is meant by the term delegation?
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(a) A system of management that relies on consulting employees before making decisions.
(b) The process of using goals as the best way of motivating managers to achieve corporate
targets/objectives.
(c) The giving of tasks by a manager to a subordinate.
(d) A style of management supported by FW Taylor.
Q13. Which of the following is a reason for supporting a wider span of control within an
organisation?
(a) The management wants to reduce the opportunities for delegation.
(b) There is a need for tighter control within the business.
(c) The business accepts that within its management there will be increased contact between
managers and employees.
(d) Management wishes to introduce a process of de-layering.
Q14. Which of the following is NOT a characteristic of a narrow span of control?
(a) There is less opportunity to delegate.
(b) This form of span of control creates a smaller hierarchy within the business.
(c) Supervision and control are tighter.
(d) The distance between the top and bottom of the organisation is greater.
Q15. The effectiveness of wide spans of control will depend on
(a) The ability of the chosen manager to control effectively those under their control.
(b) Designing a complex set of tasks for less senior personnel to perform.
(c) Employees being treated in a more Theory X way (McGregor) and not left to supervise their
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own working environment.
(d) The senior management wishing to encourage promotion from within its current staff.
Q16. Which of the following is the best definition of a centralised management system?
(a) A system that encourages empowerment of workers.
(b) A management structure that concentrates on developing the skills of junior personnel.
(c) A system that involves authority and responsibility for decision-making being in the hands of
senior managers.
(d) A system that encourages faster decision-making.
Answer:C-1,2,3,4,7,12,16.[ a=11&15],b=6,9,10,14, d=5,13.
4444444
MCQs on Industrial and Labour Laws
1.Appoi ntment of W elfare Officer under Factories Act, 1948 is compulsory where_______
employees are employed.
( (a) 50
(b)500
(c) 1000
(d) 100)
2.Crèche is mandator y under the Factories Act where ______________ workers are
employed
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( (a) 30 (b) 10(c) 30 women(d) 250)
3.A c anteen for use of workers providing subsidized food is statutory under the Factories
Act where _____________ workers are employed.
250(b) 1000 (c) 100 (d) 150)

4.Under Fa ctories Act, appointment of a Safety Officer is mandatory where the no. of
employees exceeds ________
1000 (b) 500 (c) 100 (d) 50)

5.Under Pl antation Labour Act, 1951 a W elfare Officer is required to be appointed where
the no. of workers is __________ (
100 (b) 300(c) 500 (d) 1000).
6.Under P lantation Labour Act, crèche is to be set up where ______________ women

workers are employed or the no. of children of women workers exceeds ________ (
50 and 20 (b) 30 and 20 (c) 50 and 30 (d) 30 and 5)

7.Under P lantation Labour Act, canteen is compulsor y where ________ workers
are working(
100 (b) 250 (c) 500(d) 150 )
8.An adult w orker under the Factories Act is eligible for leave with wages @ I day for
every________ days worked during the preceding year
 ( (a) 50 (b) 20(c) 15 (d) 240)9.
9.Under t he Factories Act no worker is permitted to work for more than _____ hours in a
day
 ( (a) 8 (b) 9 (c) 10 (d) 24)
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10.Under the Factories Act, white washing of the factory building should be carriedout in every
_________ months
 ( (a) 12 (b) 24 (c) 26(d) 14

11.Repainting or re varnishing under the Factories Act is required to be carried out inevery
________ years
5(b) 10 (c) 3 (d) 1)
12.Certification of Standing Orders under the Industrial Employment (StandingOrders) Act, 1946 is
mandatory where ________ workers are employed
 ( (a) 500 (b) 1000 (c) 250 (d) 100
13.In order to be eligible for maternity benefit under the Maternity Benefit Act, 1961,a woman worker
should have worked for not less than_________ days in the 12months immediately preceding
the date of delivery(
160 (b) 240 (c) 30 (d) 150)14.

Under the Maternity Benefit Act, a woman worker is eligible for ______ weeksleave with wages(
6 (b) 24 (c) 15(d) 12
15.In case of miscarriage, a woman worker shall be allowed______ weeks leave withwages
 ( (a) 12 (b) 6(c) 4 (d) 24)
16.Under the Payment of W ages Act, 1936 payment of wages of establishmentsemploying not more
than 1000 employees shall be paid within _______ of thewage month
( (a) 10thday (b) 7thday (c) 2nd day (d) 15thday
17.Under the Payment of W ages Act, payment of wages of establishments employingnot less than
1000 employees shall be paid within __________ of the wage month
( (a) 7thday (b) 15thday (c) 2nd day(d) 10thday
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18.An employee is eligible to get bonus under the Payment of Bonus Act, 1965 if hehad worked for
not less than ________ days in the preceding year (
(a) 30(b) 240 (c) 160 (d) 190 )
19.An employee whose salary does not exceed ____________ is eligible for Bonusunder the
Payment of Bonus Act.
( (a) Rs 3500 (b) Rs 2500 (c) Rs 6500(d) Rs 10000
20.The statut ory minimum bonus is ________ (
(a) 8.33%(b) 10% (c) 24% (d) 20%)
21.Maximum bonus under the Payment of Bonus Act is _______
(a) 8.33% (b) 10% (c) 24%(d) 20%
22.In order to be eligible for Gratuity under the Payment of Gratuity Act, 1972, anemployee should
have a minimum continuous service of __________
( (a) 10 years(b) 5 years(c) 7 years (d) 3 years)
23.Under the Payment of Gratuity Act, the rate of gratuity is _________ salary for every completed
year of service
( (a) 20 days (b) 30 days (c) 15 days(d) 2 months)
24.A news paper employee is eligible for gratuity if he has ______ years continuousyears of service(
(a) 10 (b) 5 (c) 7(d) 3
25.Employees who are drawing salary not more than __________ are covered under the Employees
State Insurance Act, 1948.(
(a) Rs 10000 (b) Rs 7500 (c) Rs 6500 (d) Rs 3500)
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26.Employees’ share of contribution under the ESI Act is ________
( (a) 12% (b) 8.33% (c) 1.75 %(d) 4.75% )
27.The employer’s share of contribution under the ESI Act is _____ (
(a) 12 % (b) 8.33 % (c) 1.75 % (d) 4.75 %
)28.Employees who are getting a daily average wages up to ________ are exemptedfrom contributing
employees’ share of ESI contribution.(
(a) Rs 70(b) Rs 50 (c) Rs 100 (b) Rs 384.60 )
29.Employees Provident Fund and Miscellaneous Provisions Act, 1952 is applied toestablishments
employing not less than _______ (
(a) 10 employees (b) 20 employees(c) 50 employees (d) 100 employees )
30.An employee whose salary at the time of joining does not exceed _________ shall become a
member of the provident fund under the Act.(
(a) Rs 10000 (b) Rs 7500 (c) Rs 6500 (d) Rs 5000 )
31.Employees’ share of provident fund contribution is __________ (
(a) 12 % (b) 8.33% (c) 1.75 % (d) 4.75% )
32.Employer’s share of contribution to the provident fund is ________
(a) 8.33% (b) 12% (c) 3.67 %(d) 4.75 % )
33.Employer’s contribution to Employees Pension Scheme is _______ (

448
a) 8.33% (b) 12% (c) 3.67 % (d) 4.75 % )
34.Employer’s contribution to Employees’ Deposit Linked Insurance is __________ (
(a) 3.67 % (b) 1.1 % (c) 0.5 % (d) 0.05 % )
35.Prior intimation to the appropriate Govt to lay off, retrench or close down anestablishment is
required under the Industrial Disputes Act, 1947 where there are ________ workers(
(a) 100 (b) 1000 (c) 50 (d) 500 )
36.Prior permission from the appropriate Govt to lay off, retrench or close down anestablishment is
required under the Industrial Disputes Act where there are ________ workers(
(a) 100 (b) 1000 (c) 50 (d) 500 )
37.Forming of a W orks Committee under the Industrial Disputes Act, is mandatorywhere the no.
employees is _________
( (a) 1000 (b) 100 (c) 500 (d) 250 )
38.Lay off compensation is to be paid @ _________ of average wages
( (a) 15 days
(b) 50%
(c) 60%
(d) 75 % )
39.The minimum no. of workers required to register a Trade Union under the TradeUnions Act,
1926 is _________
( (a) 10%
(b) 50%
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(c) 33 %
(d) 10% or 100 whichever is less
40.Continuous Service under major labour legislations means _______________ (
(a) work of 240 days if work is above the ground and 190 days if work isbelow the ground
(b) work of 240 days (c) work of 180 days ( d) work of 160days
41._______________________prohibits discrimination in fixing salary to men
andwomen engaged in the work of similar nature
( (a) Minimum W ages Act, 1948, (b) Payment of Wages Act, 1936, (c) Paymentof Subsistence
Allowance Act
(d) Equal Remuneration Act, 1976
42.Subsistence Allowance @ __________ shall be paid if suspension extends to a period beyond 90

days
( (a) 50%
(b) 75%
(c) 90% (d) 100% )
43.The wages under the Minimum Wages Act, 1948 shall include ______________
((a) CTC
(b) a basic rate of wages and dearness allowance variable accordingto cost of living
(c) basic rate of wages, DA, HRA and CCA
(d) A consolidatedamount decided by the employer )
44.______________ absolves the employer’s liability under the Maternity BenefitAct and W orkmen’s
Compensation Act.
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( (a) Employees Provident Fund Act
(b) Industrial Employment (Standing Order )Act
(c) Employees State Insurance Act
(d) Industrial Disputes Act
45.Any amount due from an employer under settlement or award can be recoveredfollowing the
procedures laid down in ______________ (
(a) The Standing Orders
(b) section 15 of the Payment of Wages Act
(c)Minimum Wages Act
(d)section 33 (C) of the Industrial Disputes Act
1. A policy that lays out the steps an employee can take to appeal a termination decision is
called a(n)
A. due process policy.
B. employment-at-will policy.
C. outsourcing policy.
D. affirmative action policy.
2. An advantage of statistical forecasting methods is that

A. under the right conditions, they provide predictions that are much more precise than
judgmental methods.
B. they are particularly useful in dynamic environments.
C. they are particularly useful if important events that occur in the labor market have no
historical precedent.
D. in the event of a legal dispute, they are more acceptable as evidence by juries.
3. In which job category or categories were there demotions?

A. Assistant manager, credit specialist, credit analyst, regional sales representative, and sales
representative
B. Clerical
C. Credit specialist
D. Credit analyst
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4. Which of the following options for reducing an expected labor surplus has the benefit of
being a relatively fast solution, but the disadvantage of being high in human suffering?
A. Downsizing
B. Retirement
C. Retraining
D. Work sharing
5. The sources from which companies recruit potential employees are

A. dictated largely by legal constraints.
B. determined by demographic patterns.
C. typically regulated by industry standards.
D. a critical aspect of its overall recruitment strategy.
6. Applicants from multiple recruiting sources

A. require more effort to get them “sold” on the organization than for most other applicants.
B. are more expensive because of necessary background checks.
C. tend to have lower turnover rates when compared with candidates from other sources.
D. tend to be much more diverse when compared with candidates from other sources.
7. Van Roehling Inc., located in a small town 40 miles from Detroit, is seeking to hire ten
production workers. The company also wants very much to improve the diversity of its
presently all-white, male workforce. Which of the following combinations of recruitment
sources would be the best for the company to use?
A. Referrals from current employees and walk-in applicants
B. A job search firm and an advertisement in the local newspaper
C. Referrals from current employees and an advertisement in the local newspaper
D. Advertisement in a metropolitan Detroit newspaper and Michigan's public employment
service
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8. A critical aspect of the program implementation step of human resource planning is
A. the setting of a benchmark for determining the relative success of a program.
B. selecting the best option for redressing a pending labor shortage or surplus.
C. making sure that some individual is held accountable for achieving the stated goals.
D. ascertaining whether or not the company has successfully avoided any potential labor
surpluses or shortages.
9. The first step in the human resource planning process is

A. forecasting labor demand and supply.
B. goal setting.
C. program implementation.
D. program evaluation.
10. Which job category appears to be the most diversely staffed?

A. Manager
B. Assistant manager
C. Credit analyst
D. Clerical
11. Recruiting advertisements in newspapers and periodicals

A. are exempt from the requirements of Title VII.
B. are most effective in attracting applicants who are currently employed.
C. are generally not needed.
D. typically generate less desirable recruits than direct applications or referrals.
12. An approach that pays higher than current market wages is called a
A. supreme approach.
B. lead indicator approach.
C. lead-the-market approach.
D. due process approach.
13. A small company that manufactures special-order wood furniture has kept its employees
busy on a 40-hour-a-week schedule for the past two years. The company just received the
largest contract in its history from a Saudi company opening offices in the area. There is no
expectation of repeat business from the Saudi company. In order to complete the contract in
the required six months, additional skilled woodworking manpower is needed. Under these
circumstances, to avoid an expected labor shortage, the best option would be
A. overtime.
B. the use of temporary employees.
C. turnover reduction.
D. new external hires.
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14. All but one of the following would enhance recruiter effectiveness. Name the exception.
A. Ensure recruiters provide applicants with timely feedback
B. Conduct dual-purpose recruitment and selection interviews
C. Ensure recruiters are knowledgeable about company policies and procedures and the
characteristics of the position
D. Do recruiting in teams rather than individually
15. Which of the following is an advantage of relying on internal recruitment sources?

A. They are likely to promote diversity in terms of race and sex
B. They minimize the impact of political considerations in the hiring decision
C. They are generally cheaper and faster than other means
D. For entry-level positions, there will always be many recruits from which to select
16. Organizational recruitment materials that emphasize due process, rights of appeal and
grievance mechanisms send a message that
A. the organization has many problems.
B. the organization values employee rights over productivity and profitability.
C. job security is high in the organization.
D. employee morale is low in the organization.
17. Companies that engage in human resource planning tend to use

A. statistical forecasting methods.
B. judgmental forecasting methods.
C. a balanced approach of statistical and judgmental components.
D. a balanced approach of statistical and quantitative components.
18. Your company's primary concern is to reduce an expected labor surplus fast; its
secondary concern is to minimize human suffering. The options that would best address the
company's concerns (in the priority indicated) are
A. layoffs and transfers.
B. transfers and work sharing.
C. retirement and retraining.
D. natural attrition and transfers.
19. The most typical organizational responses to an expected labor shortage are
A. fast response and low revocability.
B. fast response and high revocability.
C. slow response and high revocability.
D. slow response and low revocability.
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20. A “leading indicator” is
A. an objective measure that accurately predicts future labor demand.
B. a subjective measure that accurately predicts future labor supply.
C. an objective measure used to evaluate whether or not the organization successfully
avoided a pending labor shortage or surplus.
D. a subjective measure used to evaluate whether or not the organization successfully
avoided a pending labor shortage or surplus.
21. The process of attempting to ascertain the supply and demand for various types of human
resources is called
A. goal setting.
B. program evaluations.
C. forecasting.
D. strategic choice.
22. Identify and discuss three things that organizations can do to increase the positive
influence their recruiters have on the job choice.
1. Recruiters can provide applicants timely feedback.

2. Recruiters need to avoid behaviors that might convey the wrong organizational impression
(e.g., rudeness, boredom, incompetence).
3. Do recruiting in teams rather than by individuals.
1) A 2) A 3 ) C 4)A 5) D 6) C 7) D 8) C 9) A 10) C 11) D 12) C 13) A 14) B 15) C 16) C 17) C

18) B 19) 20)A 21) C 22) 2
MARINE INSURANCE QUESTION

1. All Marine policies are as a rule
a) Agreed Value policies
b) All risks policies
c) Be assigned freely
d) None of the above.
a) Marine hull policies are

a) issued subject to same terms and conditions
b) All risk policies
c) Named perils policies
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b) In Marine hull insurance, freight does not include:
a) The profit derivable by shipowner from the employment of his ship to carry his own goods
b) Freight payable by third party to carry his goods
c) Passage money that is earned by carrying passengers
1. One of the purposes of Draft Survey is to :

a) Find out the weight of commodity on board the ship.
b) Find out the extent of damage to commodity while being unloaded from ship.
c) Find out the weight of personnel on board the ship.
2. For covering various risks associated with port operation the following cover is an internationally
accepted cover :
a) Property all risk Policy b) Port package policy
c) Industrial All risk policy d) Special Contingency Policy
3. The Marine insurance cover is available as per following formats :

a) Open policies b) Open covers
c) Specific Voyage policy d) All the above.
4. Which one of the following marine cargo policy is not assinable

a) Marine Cargo Policy.
b) Certificate issued open policy
c) Certificate issued under open cover.
d) Annual Policy.
5. Premium quoted for cargo insurance does not based on :

a)Type of packing.
b) Overage of the vessel
c) Duration of the voyage.
d) Commodity type.
6. Identify the not a false one :

A) The commodity is considered by bank as physical security.
B) If the above point is correct then insurance policy may be required by the bank the financial
losses due to loss or damage in transit.
a) Neither b) Both c) Only A d) Only B.
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Which is a general average claim.
a) There was theft and missing of packages.
b) Vehicle on road carrying goods gets fire.
c) Water & chemical damages while extinguishing fire in the ship.
d) Due to collision with another ship and some cargo is discharged to enable to carry out the repairs.
e) c & d.
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7. Which one of the following cannot be said false.
Statement 1) Under FOB contract, the risk passes on to the buyer when the goods
delivered on board.
Statement 2) Proprietary interest in goods in Marine policy is indemnifified by the
existence of a Marine Cargo Policy.
a) Only 1 b) Only 2 c) Both 1 & 2 d) None.
8. Under Transit insurance the insured should have insurable interest :

a) When the insurance is effected.
b) At the time of the inception of the policy
c) At the time of loss.
d) Need not have insurable interest at any time.
9. ICC-C does not cover the following peril :

a) Fire/Explosion
b) Overturning or derailment of land conveyance
c) Earthquake, volcanic eruption or lightning.
d) Discharge of cargo at a port of distress.
10. Marine insurance detariffed on

a) 1.04.1994 b) 1.01.2007 c) 01.09.2006 d) 1.1.2006
11. One of the following is not a marine insurance clause, identify.

a) Cross liability clause b) Sue and labour clause c) Continuation clause
d) Inchmaree clause.
12. Which of the following is not true as the eligibility criterion for Special Declaration Policy.
a) The policy shall not be in a joint names, even though the companies may
be under control of same management or owned by a holding company.
b) The policy is not assignable or transferable.

c) Issue of SDP to transport operators/contractors etc. either in their own name
or jointly with the owner of goods is prohibited, accept on goods owned by them.
d) Acceptance of policy does not required any proposal form.
13. Which of the following is correct?

a) Marine Insurance is the oldest branch of insurance.
b) Marine insurance one of the most modern branch of insurance.
A) Only A B) Only B C) Neither D) Both.
14. CIF contract means :

a) Co-insurance form b) Cost input freight
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c) Cost incidental freight d) Cost insurance & freight.
15. Which of the following statement is correct?

Statement A) Certificate of insurance are issued under both open cover and open
policies.
Statement B) Certificates need not be stamped when original policy is stamped.
a) Only A b) Neither c) Only B d) All.
16. Which of the following is not true as the eligibility criterion for Special Declaration Policy.
a) The policy is not assignable or transferable.
b) Acceptance of policy does not require any proposal form.
c) The policy shall not be in joint names, even though the companies may be under
control of same management or owned by a holding company.
d) Issue of SDP to transport operators/contractors etc either in their own name or jointly
with the owner of goods is prohibited, except on goods owned by them.
17. The indemnity will not exceed under a marine open policy is :
a) Total sum insured b) Limit per bottom
c) Limit per location d) Total value of particular declaration.
18. Which one of the following differentiates the salvage charge from the sue and labour
charges.
a) Cost of food expenses for crew members.
b) Cost incurred independent of any contract.
c) Expenses for extra fodder for animals on board.
d) Cost incurred short of destination to complete the voyage.
19. How will the bank get convinced that the cargo is covered under marine insurance when
policy could not be made available.
a) By producing the Certificate of Insurance b) Certificate of college
b) Stewards note d) Log book.
20. What is the meaning of “PHANTOM VESSEL” in Maritime frauds de notes.

a) Poor quality vessels transporting high value cargo.
b) Vessel belonging to flags of convenience.
c) Nonexistent vessels which are shown transporting goods.
21. Which one of the following statement is true :

Statement A : For export/import policies, the Institute Cargo Clauses are drafted by the
Institute of London Underwriters.
Statement B : For inland transit the Inland Transit (Rail/Road clauses are drafted by the
459
Tariff Advisory Committee)
a) Both b) Neither c) only A d) Only B
22. Theft is covered under :

a) ICC-C b) ICC-b c) ICC-d d) ICC-A.
23. Recoveries from third parties who are liable for the loss is called :
a) Doctrine of contribution and subrogation.
b) Doctrine of contribution.
c) Doctrine of Subrogation.
d) Doctrine of assignment.
24. Which of the following are stamped document :

a) Open cover b) Open Policy c) both d) Neither.
25. As regards Marine-cum-Erection insurance one of the following statements is not correct.
Identify the same.
a) Transit cover is as per ICC-A, IWC(Cargo), ISC(Cargo), ITC-A with SRCC.
b) Erection cover meant for loss, damages or destruction by any cause other than those
specifically excluded.
c) Erection cover also covers loss or damage due to faulty design, defective material or
bad workmanship.
d) It is combined policy providing transit cover and erection cover for machinery and
equipments from the time of consignment leaves the suppliers’ warehouse till the plant is
erected and commissioned.
26. Stamp duty is collected from the insured under :

a) Marine insurance b) Miscellaneous insurance c) Fire d) None.
27. In a marine cargo policy, the insurable interest should exist

a) At the time of taking policy.
b) At the time of acceptance of proposal
c) At the time of loss.

d) At the time of purchase.
28. Which one of the following statement is true?
Statement A : Under Inland Transit (Rail/Road) clause © insurance attaches from the
time the goods leave the warehouse or at the place named in the policy as starting point.
Statement B : Under both Inland Transit (Rail/Road) (B) & (C) clause insrance attaches
with the loading of each bale/package.
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30 General Average arises when property involved in common maritime adventure.
a) The cost of vessel removal from one port to another.
b) Temporary repair of accidental damage effected during the course of voyage.
c) Cargo is discharged and or jettisoned to save the adventure.
d) None
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ANSWERS TO MARINE QUSTION NO.2
Q No. Answer Q No. Answer Q No. Answer Q No. Answer Q No. Answer
1. A 2 B 3 D 4 D 5 C
6 B 7 E 8 C 9 C 10 C
11 A 12 A `13 D 14 A 15 D
16 A 17 B 18 B 19 B 20 A
21 C 22 A 23 D 24 A 25 B
26 D 27 A 28 C 29 B 30 C
MODEL QUESTION PAPER MARINE
1.
Which are the following are true?
c) Open cover is a stamped document.
d) Open cover is a proof of an insurance cover.
e) Open cover enlists the terms and conditions of cover.
f) B & C.
2. Expenses/Loss arising out of effort of saving a marine adventure, the loss would be
apportioned by declaration of :
29. Particular average b) Subrogation C) General Average d) Average
clause.
3. Sue and labour charges are usually paid

a) As a fixed percentage of claim
b) In addition to damage to goods and not to exceed Sum insured.
c) Can exceed Sum Insured.
4. Which is true
Statement A : In case of a marine claim the claimant is expected to prepare a debit
note showing the amount claimed by him in respect of damage for incorporation in his
final accounts.
Statement B : The expenses for the tugs employed to tow the vessel to safety comes
under the perview of a General Average loss.
a) Neither b) Only A c) Only B d) Both.
5. As regards “Duty Insurance “ Specify the statement which is not applicable.

a) The insurance freely assignable
b) It excludes total loss or partial loss prior to duty becoming payable.
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c) It excludes GA or Salvage charges due to casualty before being payable
d) Claim is payable on the basis of actual duty paid or S.I. whichever is less.
6. Which of the following offers minimum covers?

a) ICC(A) b) ICC(B) c) ICC(C) d) None of the above
7. Import/Export Marine Policyunder ICC_B is a named policy and covers perils under ICC-C
plus another 3 out of following perils. Specify the wrong one.
a) Total loss of any consignment lost overboard.
30. Entry of Sea, lake or river water in vessel, craft, hold, conveyance container.
31. TPND
32. Washing over board.
8. Duration clause in marine policy for overseas consignment suggest cessation of risk.
a) The moment consignment reaches the consignees warehouse.
b) To moment consignment unloaded at the port of discharge
c) Within sixty days after dae of discharge at the final port of destination
d) Reaches consignees warehouse within forty-five days from date of discharge at port
of destination
9. The insurance company repudiated claim for loss of certain fluid carried in glass container.
Citing “TRADE ULLAGE”. What does the term means?
a) Self Destruction of subject matter
b) Unknown reason or mysterious disappearance.
c) Non-standard packing
d) Natural loss of fluid..
10. For which of the following, extra premium is chargeable?

a) Vessel Overage. B) Vessel under tonnage.
c) Non-classification d) All the above.
11. Which of the following can not be said false under marine insurance.
a) Under every marine policy for export ship shipments, a certificate of insurance is issued.
b) Claim survey fees are payable by insurers only if the claim is payable
c) General average losses are covered onlyunder institute cargo clause “A” All Risks.
12. As regards Marine-Cum-Erection insurance one of the following statements is not correct.
Identify the same.
a) Erection cover meant for loss, damages or destruction to any cause other than those
specifically excluded.
b) Erection cover also covers loss or damage due to faulty design, defective material or
bad workmanship.
c) Transit cover is as per ICC-A, IWC (Cargo), ISC(Cargo), ITC-A with SRCC.
d) It is a combined policy providing transit cover and erection cover for machinery and
equipment from the time the consignment leaves the suppliers’ warehouse till the
plant is erected and commissioned.
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13. What is expansion of FAS?
a) Free alongside Steamer b) Free alongside Ship c) Free alongside Sterrage d)
None
14. Which of the following is correct in relation to open cover.

a) The location clause never limits the liabilityof insurer at any time or place before shipment
b) The basis of valuation adopted is the prime cost of goods friegjht and other charges
incidental to shipment, costs of insurance but never cover
c) Any There is no limit to the total number of value of shipments that can be declared under
the open cover.
d) The limit per bottom means the value of a single shipment declared under the open cover
but may not be agreed at an amount exceed 100%.
15. Insurable interest can be transferred in Marine Insurance byway of

a) Negotiation b) Endorsement c) Subrogation d) Assignment
16. Marine Policy with ITC-A is an all Risk Policy. As regards its coverage specify the statement
which is most appropriate :
a) All basic covers available under ITC”B” plus TPND, leakage, Breakage, country
damage.
b) All Risk marine Policy (ITC-A does not have any exclusion
c) All risks as specified in ‘b’ above plus SRCC.
d) All perisl as specified in ‘A’ above plus delay and war perils. .
17. As regards coverage under sellers’ interest contingencyinsurance, which of the following
statements is not correct.
a) Only physical loss, but not Extra Exp. Incurred for reversion of cargo to the seller.
b) Claims, if any, payable in any currency.
c) Policy is not assignable, except to a banker in India.
d) It needs to comply with Government legislation for Compulsory Domestic insurances of

all imports on FOB or C & F terms.
18. Which of the following risks are covered with extra premium under Institute Cargo Clause
(B)?
a) Breakage and leakage b) Breakage only
c) Leakage only d) strike, riots and civil commotion.
19. For which of the following insurance cover has to be arranged by the buyer/importer?
a) Sale on FOB basis c) Sale on CIF basis c) both the above.
20. ITC “B” covsers 6 basic perils including 2 perils under ITC-C and additional 4 perils
mentioned below. One of the said 4 peris is wrongly mentioned. Specify the wrong one.
a) Breakage of Bridge
b) Collusion with or by the vehicle
c) Overturning of carrying vehicle
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d) Fresh water &/or Rainwater damage.
21. Bill of entry is prepared for

a) Sales Tax b) Octroi c) Custom duty c) For Railway booking.
22. As per the duration clause for marine insurance with ICC-A , insurance attached from the
time the goods leave the place of storage mentioned in the policy, continues during the
ordinary course of transit and terminates either any of following situations, one of which is
wrongly mentioned. Identify the wrong one.
a) On delivery of cargo to the consignee or final warehouse or place of storage at named
destination.
b) On delivery to any other warehouse or place of storage whether or not at the named
designation which the assured effect to use of storage allocation or distribution.
c) On the expiry of 60 days after completion of dischare of cargo from the overseas
vessel at the final port of discharge……………. Whichever shall occur.
d) On expiry of 7 days after completion of discharge of cargo from the overseas vessel at
the final port of discharge.
23. In case additional expenses are incurred to save an unrelated marine voyage the charges
incurred would be recovered under :
a) General average Clause. b) Sue and labor clause.
c) Increased value clause d) Limitation clause.
24. For Inland Transit ‘Duration Clause” limits the coverage to

a) 7 days of arrival of consignment to the warehouse or consignee.
b) 7 days of arrival of consignment at destination town.
c) 60 days of arrival of consignment at destination town
d) 60 days of arrival of consignment to warehouse of consignee.
25. When the loss can be declared as a CTL :

a)If there is excessive third party liability
b) If more than one interest is involved in the salvage
c) The cost of recovery of salvage exceeds the sum insured.
26. As regards termination of insurance due to termination of contract of Carriage at place or port
other than the destination mentioned in the policy one of the following statements is not
correct. Identify the same :
a) Insurance terminates if contract of carriage is terminated even for the circumstances
beyond the control of the assured.
b) Insurance does not terminate if contract of carriage is terminated for the circumstances
beyond the control of the assured.
c) Insurance does not terminate or termination of contract of carriage prior to destination for
the circumstances beyond the control of the assured provided prompt notice is given along
with additional premium if required before expiry of 60 days after arrival of the cargo at such
place or port.
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d) Insurance terminated on termination of contract of carriage prior to destination for the
circumstances beyond the control of the assured if the cargo forwarded to within the said
period of 60 days (or any agreed extension thereof) to the destination, until terminated in
accordance with provisions of duration clause.
27. Which one is correct/true?

a) In case of constructive total loss the subject matter is totally destroyed or damaged to such
an extent that it is no longer a thing of the kind insured.
a) Whenever a marine survey is arranged the fees are paid by the insured will be paid
along with claim.
b) The documents folr settling marine claims is common to all types of losses.
c) In case of marine claim both the original policy and certificates of insurance are
required to be submitted to the insurer.
28. What are the special discounts available in Marine SDP?

a) Turnover discount b) Good feature discount c) both a & b d) None
29. Which of the following policies are freely assignable without the consent of the insurance
company.
a. Marine Cargo b) Burglary c) Fire d) Marine Hull
30. Which cannot be false

A) Duty Insurance and increased value insurance may be issued for both imports & exports.
B) Marine Cargo Policies are assignable but Marine Hull policies are not.
c) Both
d) B only.
MARINE QUESTION PAPER 1
Q. No. Answer Q. No. Answer Q. No. Answer Q. No. Answer Q. No. Answer
1 D 2 C 3 C 4 B 5 A
6 C 7 C 8 D 9 D 10 D
11 B 12 B 13 B 14 C 15 D
16 A 17 B 18 A 19 C 20 D
21 C 22 D 23 B 24 B 25 C
26 B 27 B 28 C 29 A 30 B
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MARINE INSURANCE
Q.1. Which branch of Insurance is codified by way of an Act in India-
a. Marine Hull
b. Marine Cargo
c. Both (a) and (b)*
d. None of (a) and (b)
Q.2. ‘The Institute Clauses’ used in Marine Insurance were framed by –
a. Insurance Institute of India

b. Chartered Insurance Institute
c. Institute of London Underwriters*
d. Lloyds
Q.3. Marine Insurance offers:
a. Strict Indemnity
b. No indemnity
c. Modified Indemnity*
d. Revised Indemnity
Q.4. In case of which of the following insurances, the stamp duty is borne by the insured-
a. Fire Insurance
b. Personal Accident Insurance
c. Marine Cargo Insurance*
d. Health Insurance
Q.5. Insurance cover note can not be issued in case of –
e) Marine Insurance
f) Fire Insurance
g) Health Insurance
h) None of the above*
Q.6. What differentiates the Marine Insurance Contract from a Wagering Contract-*
a. Principle of Utmost Good faith

b. Principle of Indemnity
c. Principle of Insurable Interest*
d. All of above
Q.7. Which one of the following information is not reflected on the schedule of Marine
Insurance Policy (Cargo)-
a. Identification of Vessel or Conveyance

b. Type of contract between Seller and Buyer
c. Invoice details issued by Seller*
d. Description of Voyage or Transit
Q.8. Seller’s Contingency Policy Cover can be issued in case of –
g) CIF contract
h) FOB Contract*
i) Either of the above (a) and (b)
j) None of the above (a) and (b)
467
Q.9. In case of CIF contract the Insurable Interest of the seller ceases –
a. Once the goods leave the factory gate*

b. Once the goods are discharged at the port of discharge
c. Once the goods are put on board
Q.10. Which one of the following assertion is correct-
a. FOB contract is wider than CIF cover

b. CIF cover is wider than FOB cover*
c. C & I cover is wider than CIF cover
d. CIF cover is equivalent to FOB cover
Q.11. For an exporter having frequent exports which one of the following will be more useful-
31. Open Policy

32. Open Cover*
33. Open Declaration Policy
34. Annual Marine Policy
Q.12. In case of which one of following covers, war risk can be covered by paying extra
premium-
e) Personal Accident Policy

f) Health Insurance Policy
g) Marine Inland Transit Policy
h) Marine Overseas Transit Policy*
Q.13. In India Marine Cargo Insurance was detariffed in the year–
a. 1992
b. 1993
c. 1994*
d. 1998
Q.14. Which one of the following is unnamed peril cover -
a. Motor Insurance
b. ICC ‘A’ cover *
c. Fire Insurance
Q.15. Which one of the following perils is not covered under ICC – C Clause-
33. Washing Overboard*

34. General Average Sacrifice
35. Jettison
36. Entry of sea, lake or river water into vessel
Q.16. In case of Marine Insurance, Insurable interest is a must-
a. at the time of loss*

b. at the time of underwriting
c. both at the time of claim and underwriting
d. Either at the time of claim or at the time of underwriting
468
Q.17. Which one of the statement is correct in case of Indian Fishing Vessels Clause -
a. The clause covers ‘Latent Defect’*

b. The clause covers ‘Inherent Defect’
c. The clause covers ‘Any defect’
d. The clause does not cover any defect.
Q.18. In case of Marine Insurance, which one of the statement is correct with respect to GRT of
the ship-
a. Risk increases with the increase in GRT

b. Risk decreases with the decrease in GRT
c. Risk decreases with increase in GRT*
d. The GRT does not play any role on risk
Q.19. In case of Marine Insurance vessel approval is done by
e) GIC
f) GIPSA
g) Individual Companies*
h) IRDA
Q.20. Which one of the exclusion gets deleted in case where the full ship load cargo is
transported through duly ‘approved’ vessel-
a. Loss/ damage/expense caused by inherent vice or nature of the subject matter

insured
b. Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear.
c. Loss/damage/expense arising from insolvency or financial default of the owner ,
managers, charterers or operators of the vessel*
Q.21 In which of the following forms of contract, it is the buyer who normally takes
The insurance policy
e) C&F (After the goods reach ships rail)*

f) FOB (Before the goods reach ships rail)
g) CIF
h) Buyer cannot take the marine policy.
Q.22 Which types of following policies are freely assignable
a. Marine cargo*
b. Marine hull
c. Both cargo and hull
d. No insurance policy can be freely transferable.
Q.23 Which one of the following cannot be termed as the Valued Policy
e) Fire standard policy*

f) Marine cargo policy
g) Marine hull policy
h) Jeweler section under householder’s policy.
Q.24 Particular Average under marine claims would be categorized as
a. Total loss
b. Partial loss*
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c. Expenses
d. Extra charges
Q.25 If the expenditure required to prevent actual total loss exceeds the saved value, it
would be known as
a. Actual total loss

b. Particular average
c. Constructive total loss*
d. General average
Q.26 In marine insurance, even a voluntary and deliberate loss can be paid under
a. Total loss
b. Particular Average
c. No policy can cover voluntary and deliberate loss
d. General Average*
Q.27 If your client is a regular exporter/Importer engaged in international trade, which marine
policy would you recommend
a. Marine single transit policy

b. Open cover*
c. Annual policy
d. Open policy
Q.28 With regard to stamp duty in marine cargo policy, which one of the following statement is
correct?
e) Rate is different for sea voyages and for other than sea voyages*
f) Rate is same for all types of voyages
g) Rate for air voyage is different from road/rail
h) Rate is different for rail and road voyages.
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MARINE MODEL QUESTIONS
1. Time Charter hire is
a) To charter a vehicle for a specified period
b) To take a loan on vessel for a specified period
c) To take a vessel on hire for a specified period
d) To hire a vessel and pay after a specified time
2. Which of the following is not true forCOGSA,1971 (Carriage of goods by
sea Act)
a) It brings uniformity in condition of carriage by sea
b) It is compulsory for ship owners to issue a B/L
c) It is compulsory for shippers to mention particulars & conditions of the
goods
d) The liability of the carrier is limited to 666.7 SDRs per package per unit
3. Acarrier underCOGSA, 1971 is liable if
a) Open or uncovered vehicle is used
b) There is defective packing
c) Marks or numbers are used
d) Livestock is carried
4. What is a 'slip'
a) Amistake in the policy
b) Akind of dress
c) Acorrection in the policy
d) Evidence of contract of marine insurance
5. In marine insurance, the insurable interest should be there
a) At the time of issuance of policy
b) At the time of payment of claim
c) At the time of occurrence of loss
304 305
b) It is in force in many of the countries

c) It laid down the fundamental principles in so many legal aspects of
international travel by air
13. Which of the following is not true of the International Air Transport
Association (IATA)
a) It was founded in 1945
b) It seeks to promote safe, regular air travel
c) It promotes economical air travel
d) It is an association of governments
14. In Marine insurance, the term “Paint Brush Piracy” is used to denote
a) Akind of piracy of the goods from the vessel
b) Piracy of paintings and brushes
c) Change of the color of the ship to conceal its identity and escaping with
the goods on board
d) Entry of pirates into the vessel with paints and brushes
15. Which of the following is not relevant forGeneral Average
a) Insured perils
b) York Antwrep rules
c) General average Act
471
16. As per Marine Insurance Act 1963, which of the following is not an
Implied Warranty
a) Lawful adventure
b) Seaworthiness of the vessel
c) Seaworthiness of the cargo
d) Lost or not lost
17. “Subject to any express provision in the policy” is a standard phrase in
Marine Insurance Act 1963 to denote that
a) The Act is supreme
b) The Assured is supreme
c) The policy is supreme
d) The underwriter is supreme
18. Who can declare general average and who can appoint the average
adjusters?
a) The ship owner and the master of the vessel respectively
b) The ship owner and the underwriters of the vessel respectively
c) The master of the vessel and the ship owner respectively
d) The ship owner in consultation with the underwriters and the master of
the vessel
19. In marine insurance a p.p.i. policy is
a) An honor policy
b) Ano subrogation policy
c) An illegal policy
d) All the above
20. For an export marine consignment which one of the clauses will be
applicable
a) ITC (A)
b) ITC (B)
c) ITC (C)
21. Duty and increased value insurance can be granted for the following
consignments
a) Export consignments
b) Road risks in India
c) Rail risks
22. As perICC (C) following loss ordamage is not covered
a) Fire
b) Earthquake
c) General average sacrifice
d) Washing overboard
23. Under marine insurance, cover may be granted for shipments which
have commenced transit but may have been actually lost under the
following provisions /clauses
a) Sue and Labour clause
b) Not to inure clause
c) Lost or not lost clause
d) Losses not known clause
24. INCOTERMS are internationally accepted commercial terms defining
respective roles of buyerand sellerwhich of the following is odd term out
a) CIF
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306 307
b) CFR
c) FAS
d) WTO
25. Which of the following is not an important document fora Marine Cargo
claim in respect of an export consignments
a) Invoice and pacing list
b) Duly filled claim form
c) Bill of lading/ airways bill
d) Bankers certificate confirming export proceed
26. Which of the following risk is/are covered under aircraft hull/ liability
policy
a) Accidental physical loss or damage to the aircraft
b) Bodily injury / death to the passenger/s
c) Loss of passenger's baggage and bodily injury/ death and property
damage to the third parties
d) All the above
27. Which of the following is to be taken into account while underwriting
Marine Cargo Business
a) Nature of Cargo
b) Details of Convergence
c) Packing details
d) All of the above
28. Which of the following insurance policies does not require a formal
proposal form
a) Marine Hull
b) Fire
c) Marine Cargo
d) Aviation
29. Underthe Institute Cargo Clauses, the risk commence
a) When invoice is received
b) From the Time the Lorry receipt is issued
c) When the Cargo leaves the warehouse of the consignor
30. Which of the following represents the widest form of coverage?
a) ICC(A)
b) ICC(B)
c) ICC(C)
31. Forwhich of the following extra premium is charged?
a) Vessel's Overage
b) Vessel's under tonnage
c) Non classification
d) All the above
32. For which of the following term of sale, the buyer/ importer normally
arranges the cargo insurance cover forthe overseas transit
a) CIF basis
b) FOB basis
c) Both the above
33. For Inland Transit, 'Duration Clause' limits the coverage to
473
a) 7 days of arrival of consignment at destination town
b) 7 days of arrival of consignment to the warehouse of consignee
c) 60 days of arrival of consignment at destination town
d) 60 days of arrival of consignment to the warehouse of consignee
34. What is not true fora Marine Open Cover
a) Open cover is proof of an insurance cover
b) Open cover gives the term of cover during policy period
c) Open cover is a stamped document
d) All of the above
35. After issuance of Marine Open cover which document gives the
particulars of insurance for individual voyages?
a) Marine certificate
b) Marine Policy
c) Cover note
d) Any of the above
36. If a Marine consignment is being sent to an appreciating market, what
clause can be attached to ensure that the appreciation of value of
consignment is covered in case of loss?
a) Duty clause
b) Increased value clause
c) Protection and Indemnity clause
37. In case of various consigners are affected due to operation of a common
peril, for saving a marine adventure; the loss would be apportioned by
declaration of
a) General average
b) Particular average
c) Average clause
38. In case additional expenses are incurred to complete the voyage the
charges incurred would be recovered under
a) General average clause
b) Sue and labor clause
c) Increased value clause
d) Limitation Clause
39. What is the full form of sale term 'FAS'
a) Free Alongside Ship
b) Free Alongside Steamer
c) Free Alongside Steerage
40. AMarine cargo underwriter is expected to know
a) Port facilities
b) Shipping practices
c) Labour disturbances at ports
d) All the above
41. Undera marine Hull covera loss can be declared as a CTLif
a) The vessel is abandoned to discretion of the underwriters
b) If more than one interest is involved in the salvage
c) If there is excessive third party liability
42. In case of liquid cargo, the term “ullage” refers to
474
a) Quantity that cannot be discharged
b) Quantity that were destroyed
c) Quantity that disappeared
d) Non standard packing
43. Sue and labor charges are usually paid
a) In addition to damage to goods but limited by the sum insured
b) In addition to damage to goods and can exceed the sum insured
c) As a fixed percentage of sum insured
44. Particular charges means
a) Loss or damage caused by a sea peril insured against
b) It is a general sacrifice to save the marine adventure
c) It is an expense in addition to sue and labour charges incurred for
preservation of a subject matter
45. For covering various risks associated with port operation the following
cover is an internationally accepted cover
a) Property all risk policy
b) Mega project policy
c) Port package policy
d) Special contingency policy
46. One of the purpose of Draft survey is to
a) Find out the weight of commodity on board the ship
b) Find out the extent of damage to commodity while being unloaded from
slip
c) Find out the weight of personnel on board the ship
47. What does the term “Phantom vessel” in maritime frauds denotes
a) Nonexistent vessels said to be transporting goods
b) Poor quality vessels transporting high value cargo
c) Vessel belonging to flags of convenience
48. In a marine cargo policy, the insurable interest should exist
a) At the time of commencement of transit
b) At the time of acceptance of proposal
c) At the time of loss
d) At the time of proposal
49. Which of the following marine cargo policy is not assignable
a) Marine cargo specific policy
310 311
b) Certificate issued under open cover
c) Certificate issued under open policy
d) Annual policy
50. CIFContract means
a) Co-insurance form
b) Cost input freight
c) Cost insurance freight
d) Cost incidental freight
51. The maximum indemnity available under a marine open policy in
respect of a consignment awaiting shipment at the port is
a) Total sum insured under open policy
475
b) Limit per bottom
c) Total value of particular declaration
d) Limit per Location
52. Which of the following is not a stamped document
a) Open cover
b) Open policy
c) Specific policy
d) Special declaration policy
53. Running down clause in a marine policy relates to
a) Age of the vessel
b) Collision
c) Termination of insurance
d) Age of the consignment
54. Liability under “Both to blame collision” clause of ICC (A) has a
reference to
a) Shipping Bills
b) Lloyd's firm
c) Proforma Invoice
d) Bill of Lading
55. Which one of the following is an extra charge under a marine cargo
policy
a) Auction fee for disposal of salvages
b) Salvage charges
c) Sue and labour charges
d) Port charges
56. Which one of the following differentiates the salvage charge from the sue
and labour charge
a) Food expenses for crew members
b) Incurred independent of any contract
c) Incurred short of destination to complete the voyage
d) Expenses for extra fodder for animals on board
57. Which of the following is not a Trade Clauses
a) Institute Replacement Clause
b) Institute Bulk Oil Clauses
c) Institute natural rubber Clause
d) Institute Coal Clauses
58. Overseas Transit Policy Institute Cargo Clauses 'C' the duration of cover
comes to an end
a) 30 days after landing at the port
b) 45 days after landing at the port
c) 60 days after landing at the port
d) 90 days after landing at the port
59. The Institute clauses have been drafted by
a) TAC
b) Institute of London Underwriters
c) Lloyd's
d) GIC
60. In marine insurance parlance, 'average' means
a) Premium
b) Cost
c) Freight
476
d) Loss
61. “Shut out Cargo” means a cargo which is
a) Not loaded onto the ship due to late arrival
b) Thrown out of the ship
c) Shut in the bonded warehouse
d) Rejected by the buyer
62. PPI in marine cargo policy means
a) Pre & Post Inspections
b) Policy Proof of Interest
c) Post parcel Identification
63. Subrogation in marine insurance refers to transfer of
a) Right of recovery
b) Right of possession
c) Right of ownership
64. Proof of shipment is evidenced by
a) Bill of Lading
b) Bill of Exchange
c) Bill of Treasury
65. Marine Policy offers
a) Pure indemnity
b) Strict Indemnity
c) Adequate indemnity
d) Modified form of Indemnity
66. Survey fees reimbursable to the insured in a marine policy to the extent of
a) 25%
b) 50%
c) 75%
d) 100%
67. Find odd one out
a) Flag of convenience
b) Polish Register of Shipping
c) Lloyd's Register
d) Bureau veritas
68. In which of the following the loss assessed is not ratably reduced in the
proportion of sum insured bears to the value at risk
a) Particular Risk
b) Partial Loss
c) Total Loss
d) Sue and Labour charges
69. Which one of the following is an exclusion under¾ th collision clause of
ITC-Hulls
a) Loss of life in other vessel
b) Loss of life in insured vessel
c) Loss of property of other vessel
d) Both a & b above
70. In Marine hull policy the subject matter for insurance shall be
a) Hull & Machinery
b) Freight and Disbursement
477
c) Premium reducing
d) All the above
71. 1/ 4 collision liability is covered by
a) P& I club
b) Hull Underwriters
c) Lloyd's
d) Reinsurance
72. For issuing a marine cargo policy,
a) LR or R/R is a precondition
b) LR or R/R reference number above is sufficient
c) LR or R/R is not at all necessary
d) Undertaking from the consignor is sufficient
73. After settlement of a cargo claim
a) Proceeding against the carrier by the insurer is simultaneous
b) Only the insured has to proceed against carrier and to recover and remit to
the insurer
c) Anytime, at leisure recovery proceeding can be initiated
d) Recovery proceeding is not at all necessary
74. After issue of marine cargo policy shipment could not be effected due to
expiry of the L.C. Insured seeks repayment of premium of Rs. 100000/-.
In this case which of the following is appropriate
a) Insurer decline refund of premium, saying policy has been issued already
b) Retaining Min. Premium and effect refund for the balance amount is in
order
c) Retain 50% of the premium and to refund the balance
d) Substitute the premium for any subsequent transit
75. In an export policy, goods are sold in mid sea and the buyer changed the
destination. Insured was getting refund from insurance company stating
that the goods have not reached the destination stated in the policy. In
such case which of the following could be appropriate.
a) Refund is very well in order
b) Refund should not be granted, as the shipment and transit had
commenced
c) As transit, as per policy deviated in the mid sea pro rata refund of
premium according to the distance covered can be effected
76. General average means
a) Age of the ship and its year of built
b) It is the average age of the ship in a fleet
c) It is a sacrifice in terms of cargo and freight incurred in times of the peril
of the sea to save the adventure.
77. In a Hull policy Freight is to be covered by the ship owner in any of the
following manner
a) Has to be insured separately
b) To be included in the Hull policy itself
c) Both a & b
d) Freight cannot be insured at all
78. Particular charge in a hull policy means
a) Loss or damage caused by a sea peril insured against
b) It is a general sacrifice made in times of peril
478
c) It is an expense in addition to sue and labour for the prevention of the
subject matter
79. Which branch of insurance is codified by way of an Act in India
a) Marine Hull
b) Marine Cargo
c) Both (a) and (b)
d) None of (a) and (b)
80. In case of which of the following insurances, the stamp duty is borne by
the insured
a) Fire Insurance
b) Personal Accident Insurance
c) Marine Cargo Insurance
d) Health Insurance
81. Insurance cover note cannot be issued in case of
a) Marine Insurance
b) Fire Insurance
c) Health Insurance
82. Which of the following information is not reflected on the schedule of
Marine Insurance Policy (Cargo)
a) Identification of vessel or conveyance
b) Type of contract between seller and buyer
c) Invoice details issued by seller
d) Description of voyage or transit
83. Seller's Contingency Policy covercan be issued in case of
a) CIF contract
b) FOB contract
c) Either of the above (a) and (b)
d) None of the above (a) and (b)
84. In case of CIFcontract the Insurable Interest of the seller ceases
a) Once the goods leave the factory gate
b) Once the goods are discharged at the port of discharge
c) Once the goods are put on board
85. For an exporter having frequent exports which one of the following will
be more useful
a) Open policy
b) Open cover
c) Open Declaration policy
d) Annual Marine Policy
86. In which of the following, war risk can be covered by paying extra
premium
a) Personal Accident Policy
b) Health Insurance Policy
c) Marine Inland Transit Policy
d) Marine Overseas Transit Policy
87. In India Marine Cargo Insurance was detariffed in the year
a) 1992
b) 1993
c) 1994
479
d) 1998
88. Which of the following perils is not covered underICC C Clause
a) Washing Overboard
b) General Average Sacrifice
c) Both a & d
d) Entry of sea, lake or river water into vessel
89. In case of Marine Insurance, which one of the statement is correct with
respect to GRTof the ship
a) Risk increases with the increase in GRT
b) Risk decreases with the decrease in GRT
c) Risk decreases with the increase in GRT
d) The GRTdoes not play any role on risk
90. In case of Marine Insurance vessel approval is done by
a) GIC
b) GIPSA
c) Individual Companies
d) IRDA
91. Which one of the exclusion gets deleted in case where the full shipload
cargo is transported through duly 'approved' vessel
a) Loss/ damage/ expense caused by inherent vice or nature of the subject
matter insured
b) Ordinary leakage, ordinary loss in weight or volume or ordinary wear
and tear
c) Loss/damage/expense arising from insolvency or financial default of the
owner, managers, charterers or operators of the vessel
92. Which one of the following cannot be termed as the valued policy
a) Fire Standard policy
b) Marine cargo policy
c) Marine hull policy
d) Jeweler section under householder's policy
93. if the repair expenditure required to prevent actual total loss exceeds the
value, it would be known as
a) Actual total loss
b) Particular Average
c) Constructive total loss
d) General Average
94. In marine insurance, even a voluntary and deliberate loss can be paid
under
a) Total loss
b) Particular Average
c) No policy can cover voluntary and deliberate loss
d) General Average
95. With regard to stamp duty in marine cargo policy, which one of the
following statement is correct?
a) Different for sea voyages and for other than sea voyages
b) Rate is same for all types of voyages
c) Rate for air voyage is different from road/rail
d) Rate is different for rail and road voyages.
96. For damage claim of CARGO monetary claim notice with the SHIPOWNERS
should be lodged within
480
a) One month from the date of bill of lading
b) Fifteen days from the date of arrival of cargo
c) Seven days from the date of arrival of cargo
d) Five days from the date of arrival of cargo
97. Theft peril is covered under
a) ICC C
b) ICC A
c) ICC B
d) ICC I
98. Proximate Cause is
a) Remote cause
b) Indirect cause
c) Active and Efficient cause
d) Other
99. General Average arises when property involved in common Maritime
adventure
a) The cost of vessel removal from one port to another
b) Temporary repair of accidental damage effected during the course of
voyage
c) Cargo is discharged and or jettisoned to save the ship
d) None
100.Recoveries from Third Parties under Marine Policy is based on the
principles of
a) Contribution
b) Subrogation
c) Assignment
d) Contribution & Subrogation
101.What is not a Shipping document
a) Bill of Lading
b) Bill of Entry
c) Mate Receipt
d) Invoice
102.Bill of Entry is prepared for
a) Excise duty
b) Custom duty
c) Sales Tax
d) OCTROI
103.What is not a Marine Insurance Clause?
a) Inchmaree Clause
b) Sue and Labour Clause
c) Continuation Clause
d) Cross Liability Clause
104.Which is not a General Average Claim?
a) When Fire Breaks out on board the ship and in order to extinguish it water
is poured on and chemicals are applied.
b) When there is a collision with another vessel or other casualty and the
cargo is discharged to enable the vessel to be repaired
c) There is theft and missing of packages
105.Which of the following peril does not appear underICC C
a) Earthquake, Volcanic eruption or lightning
481
b) Fire or explosion
c) Overturning or derailment of Land conveyance
d) Discharge of cargo at a port of distress
106.The Marine Insurance Cover is available in the following forms
a) Specific Policy
b) Cover Note
c) Open Policies/ Open Covers
d) All of the above
107.Which document in the absence of specific policy helps the bank to
authenticate the existence of insurance cover and relate it to the
documentary bill?
a) Certificate of Incorporation
b) Certificate of Insurance
c) Certificate of college
d) None
108.Which of the following statement is not correct
a) A valued policy is one, which specifies the agreed value of the subject
matter insured.
b) The insured value is the amount specified in the policy as the value of the
insured property
c) Sum insured is the total amount of the subscriptions of the insurers in the
policy
109.Which of the following does not form part of a marine adventure
a) Ship
b) Freight
c) Ship owner's liability to cargo owner
110.Which of the principal factors affect the rating of every cargo insurance
a) Vessel
b) Nature of cargo
c) Conditions of insurance
320 321
d) All the above
111. Which loss ordamage is not covered under institute cargo clause 'C'
a) Fire & Explosion
b) Overturning & Derailment of Land conveyance
c) Vessel or craft being stranded, grounded, sunk or capsized
d) Washing overboard
112.Which peril is covered undermarine hull policy
a) Jettison
b) Fire & Explosion
c) Piracy
d) All the above
113.GRTmeans
a) Gross Rare Tonnage
b) Gross Report Tonnage
c) Gross Register Tonnage
d) None of these
114.To whom marine policy cannot be issued
a) Purchaser of goods
482
b) Seller of the goods
c) Transporter of goods
d) Bankers having financial interest
115. Identify incorrect statement
a) All marine policies are not freely assignable
b) Special declaration policy (SDP) is not assignable
c) Marine policy is not assignable when goods are on high seas
d) Marine policy is not assignable when goods are in bonded warehouse
116.Which of the following is not a term of sale in marine
a) C & F
b) CIF
c) FOB
d) CFP
117. Identify correct statement
a) Duty insurance cannot be granted
b) Duty insurance can be granted to overseas seller
c) Duty insurance can be granted to bankers
d) Duty insurance can only be granted to the holder of import license
118. Identify incorrect statement
a) All marine policies are valued policies
b) Special declaration policies are valued policies
c) Duty insurance policy in marine is a valued policy
119.Which of the following statements are relevant to underwriting of fishing
vessels
a) Geographical features of area of operation
b) Classification by one of the major classification society
c) Proposal form
d) All the above
120.State the correct statement among the following
a) Marine cargo policy is transferred by way of payment of additional
premium
b) Marine policy is transferred only after obtaining fresh proposal form
c) Marine policies are freely assignable
121.Which of the following statement is correct
a) Insurable interest should exist at the time of effecting marine insurance
b) Insurable interest need to exist only at the time of loss
c) Insurable interest should be present throughout the currency of the policy
122.Identify the wrong statement
a) Constructive total loss is a total loss claim
b) Constructive total loss is a loss occurred during the course of
construction
c) Notice of abandonment is necessary for a constructive total loss claim
d) Constructive total loss is affected midway between actual total loss &
partial loss
123.Which of the following is false in relation to marine cargo insurance
a) Claim survey fees are payable by insurers only if the claim is payable
b) Under every marine policy for export shipments, a certificate of
insurance is issued
483
c) General average losses are covered only under Institute cargo clause (A)
All risks
124.Which of the following policies are freely assignable without the consent
of insurers
a) Marine cargo
b) Burglary
c) Marine Hull
d) Fire
125.Which of the following risks are automatically covered without extra
premium under Institute Cargo Clause 'A'
a) Breakage only
b) Leakage only
c) Strikes riots and civil commotion
d) Breakage & Leakage
126.If loss or damage is not apparent at the time of taking delivery from ocean
carriers written must be given to the carrier's representative within
___________ days of delivery
a) 7
b) 30
c) 10
d) 3
127.Which of the following General Exclusions under Institute cargo clauses
can be covered at extra premium underICC (B) & (C) clauses
a) Malicious damage
b) Inherent vice
c) Ordinary leakage
d) Ordinary loss in weight
128.Which of the following statements is true?
Statement A: Marine cargo policies are valued policies.
Statement B: Marine Hull policies are valued policies.
a) Both
b) Aonly
c) Neither
d) B only
129.Which of the following statements is false in relation to marine cargo
insurance?
Statement A: The entire marine cargo tariff is governed by tariff or
market agreement.
Statement B: Special storage insurance is granted in conjunction with
inland transit policy.
a) Aonly
b) B only
c) Both
d) Neither
130.Which of the following covers is suitable for regular export/import
shipment?
a) Open cover
b) Special Declaration policy
c) Annual policy
d) Duty insurance
484
131.Which of the following insurances is not relevant to inland transit?
a) 'Increased value' insurance
b) Special storage risks insurance
c) Special declaration policy
d) Annual policy
132.Which of the following document is common to claims processing under
marine import policies and inland transit (Rail/Road) policies?
a) Invoice
b) Copy of protest
c) Bill of lading
d) Lost Overboard certificate
133.Which of the following statement(s) is true?
Statement A: Certificates of insurance are issued under both open covers
and open policies.
Statement B: Certificates need not be stamped when the original policy is
stamped.
a) Neither of the statements
b) Only statement A
c) Only statement B
Key Marine
d) Both statements
134.Which of the following documents provide evidence of loss of cargo
during loading operations?
a) Bill of entry
b) L.O.B. Certificate
c) Copy of protest by the master of the vessel
D) Ship, Survey Report
1. C 28. C 54. D
2. D 29. C 55. A
3. C 30. A 56. B
4. D 31. D 57. A
5. C 32. B 58. C
6. C 33. A 59. B
7. A 34. C 60. D
8. C 35. A 61. A
9. C 36. B 62. B
10. B 37. A 63. A
11. D 38. B 64. A
12. D 39. A 65. D
13. D 40. D 66. D
14. C 41. A 67. A
15. D 42. A 68. C
16. D 43. B 69. D
17. C 44. C 70. D
18. C 45. C 71. A
19. D 46. A 72. B
20. D 47. A 73. A
485
21. D 48. C 74. B
22. D 49. D 75. B
23. C 50. C 76. C
24. D 51. D 77. C
25. B 52. A 78. C
26. D 53. B 79. C
80. C 107. B
81. D 108. C
83. B 109. C
84. A 110. D
85. B 111. D
86. D 112. D
87. C 113. C
88. C 114. C
89. C 115. C
90. C 116. D
91. C 117. D
92. A 118. C
93. C 119. D
94. D 120. C
95. A 121. B
96. D 122. C
97. B 123. C
98. C 124. A
99. C 125. D
100. D 126. D
101. D 127. A
102. B 128. A
103. D 129. A
104. C 130. A
105. A 131. A
106. D 132. A
133. D
134. C
486
487

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standard spl pe- policy Flop policy

Flop policy MD policy must

dewelling- long term/ normal

FLERIA- fire, lightn,explosion

RSMD,Impact, Aircraft Damge 14/21-

BOPAT- Bursting &

MTO- Missile Testing—STFI- S&LS- subside

i) Individuals e.g. House owner, Shop owner, Warehouse owner etc.

ii) Body Corporate e.g. Manufactures, Trading, Industry etc.

iii) Boilers, Lessee etc.

VII. Impact Damage

VIII. Subsidence and Landslide including Rock slide

IX. Bursting and/or overflowing of Water Tanks, Apparatus and Pipes

IX. Missile Testing operations

X. Leakage from Automatic Sprinkler Installations

XII. Bush Fire

ii) Loss, destruction or damage caused by war.

viii) Expenses necessarily, incurred on

a Architects, Surveyors and Consulting Engineer’ Fees and

insured by an insured peril in excess of 3% and 1% of the claim amount respectively.

i) Fire Policies are generally issued for one year.

III) Long term policies dwelling houses

TEMPORARY REMOVAL OF STOCKS- CLAUSE

LOCAL AUTHORITIES CLAUSE

AGREED BANK CLAUSE

DESIGNATION OF PROPERTY CLAUSE

FLOATER DECLARATION POLICIES

LONG TERM POLICY

·Rates for Short Period Insurance: Premium on Pro-rata Basis+10%

FOR STORAGE RISKS RATING DEPENDS UPON OCCUPANCY- TYPE OF STORAGE

FOR MULTIPLE OCCUPANCIES:-

RATING OF RISKS IN MULTIPLE OCCUPANCIES

DUTIES & RESPONSIBILITIES AFTER LOSS (CLAIM PROCEDURE):

COST REDUCTION MEASURES

ISSUES RELATED TO FIRE CLAIMS:

SETTLEMENT OF CLAIM WHERE ALL RECORDS REQUIRED FOR

CLAIMS ARISING OUT OF ACT OF GOD PERILS:

LOSSES REPORTED UNDER THE RSMD & TERRORISM.

BUSINESS INTERRUPTION LOSSES:

DOCUMENTS REQUIRED FOR PROCESSING OFCLAIMS:

LOSSES REPORTED UNDER THE RSMD PERILS:

FOR “ON ACCOUNT” PAYMENTTO BE MADE:

PROCEDURES FOR FINAL PAYMENT:

PROCESS OF CLAIM SETTLEMENT IN CASE OF CO-INSURANCE:

CLOSE PROXIMITY CLAIM:

RECTIFICATION OF POLICY AFTER A LOSS:

RE-OPENING OF CLAIM FILES:

Fire Loss of Profit (FLOP)

Deduction on account of depreciation

Loss of Net Trading Profit

Rating depends on the

Average rate of contents of the process blocks under MD Policy

Sales – Variable Cost = Fixed cost + Profit

The policy can be extended to cover:

Insured Property at other locations

Special Exclusions to Business Interruption Policy

1.1 Any restrictions on reconstruction or operation imposed by any public authority.

(a) In respect of Reduction in Turnover :

(b) In respect of Increase in Cost of Working:

Fire and Special Perils including Earthquake

Exclusion under Section 1 (Material Damage)

Faulty or defective design material or workmanship

This Policy does not cover :