Presentation on Mega Risk and Spl

Policies

Risk Factors Evaluation

Design, Plan and Specification
Site Topography
Construction Program
Prototype or Untried Features
Architect and Consultants Experience
Competence of Design and Supervisory Engineers
Competence of Contractors Supervisors and Artisan
Competence and Qualification of Crane Operators
Design and Effectiveness of Temporary Works

Risk Factors

Natural Hazards
Geological, Hydrological ,Climatic analysis
Inflammable Materials Handling
Availability and Adequacy of On-Site and Public Fire
Services
Noxious Substances
Storage Areas
Site Accommodation
Earthmoving Equipment
Lifting Devices
Construction Techniques
Commissioning Program me and Methods

Safety
Loss Control & Safety Manager(s) Qualifications
Safety Controls
Security Controls
Potential for Pollution or Impairment of the
Environment

Risk n Responsibility Instruments

Specific Requirements and wordings to suit particular
or peculiarities of the Projects are called for to
effectively divide the risks and responsibilities between
Principal and Contractors through contract conditions
FIDIC (Federation Internationale De Ingenieurs
conseils)Conditions are the most recommended and
widely used Form for Tenders .
FIDIC is based on the ICE Contract with indemnity and
insurance risk transfer provisions are quite similar.
Ichem.E
IME
IEE

Risk and responsibility

Obligations and responsibilities of the principal and

contractor.
Risk Retention. Transfer or sharing .arrangements
The obligation to insure
Risk assessment and specifications ,work time schedule
,penalty clauses and liquidated damages .
JCT Code of Practice:
The design Phase ,imposing a duty on architects,
engineers, contractors and the client
The construction phase: Involvement/appointment of
Fire safety coordinator to evaluate fire safety plans .
Emergency Procedures, signs in prominent locations for
fire access and escape routes ,dry riser inlets ,hydrants,
extinguishers. Fire protection, training etc.

Risk Management
Partnership" be entered into between Insurer
and Customer to establish a joint
RISK MANAGEMENT TEAM
To share and exchange knowledge from
professional expertise to Identify, Appraise and
Evaluate RISK FACTORS against all possible loss
producing scenarios /activities and events that
may affect the successful, time and economic
completion of the Construction Project.


Site Security, theft/burglary/arson.
Site storage of flammable materials and LPG. Electricity
and Gas supplies.
Hot work permit .
Waste material .
Temporary Buildings.
Plant
Construction ( Design and Management ) Regulation
:CDM Regulations 1994.
Construction ( Health ,Safety and Welfare ) Regulations
1996.

Perils Evaluation

Once the Risk Factors have been identified, they should

then be appraised and analysed in terms of the following
Perils:
Geotechnical
Load bearing capacity of the Foundations.
Moisture changes ,insufficient compactness of the ground

Supportive Capacity of the Ground

Subsidence, Landslip and Collapse
Rock-slide & Rock-fall
Ground heave
Vibrations
Hydrology
Underground water
Storm

Locational and AOG

Cyclone, Hurricane or Typhoon

Flood
Proximity to Ocean, Lakes, Dams, Rivers, etc
Fire/explosion
Arson
Spontaneous Combustion
Combustible Materials
Fuel, Oil, Paint, Feedstock or Catalysts
Proximity to adjacent Hazardous Premises
Proximity to Forests, Bush and the Like.
Socio political and workers /inhabitants relations

Explosion
Steam
Chemical
Gas
Feedstock and Catalysts
Electrical/Mechanical/Electronic Failure
Faulty or Inappropriate Design or Specification
Failure to follow Prescribed Methods
Nullifying of Safety Devices or Controls
Faulty Materials or Workmanship

Geophysical Analysis

Impact
Hoisting Operations
Vehicles
Hazardous Practices
Environment
Topography
Theft and Malicious Damage
Volcanic Activity
Seismology
Extremes of Temperature
Natural Hazards Wind, Whirlwind, Tornado etc
fault lines , earthquake
Terrorism Risk.

Risk Control

Risk Management Programme

Appraising Transport Contractors
Appraising Inland Transport Routes
Evaluating Temporary Storage Premises
Eliminating Hazardous Practices
Ensuring Adequacy of Fire Fighting Apparatus
Evaluating Quality Control Programme and
Procedures
Establishing Competency of Security Control
Approval (with Professionals) of Contractual
Payments

ALOP and DSU Evaluation

Delivery Programme of Contract Works Materials

Critical Path Programme.
Property that could cause Delayed Start-up
Percentage Contribution of Property to Project
Lead-time in reinstating damaged Property
Alternative (if any) Working Arrangements
Possible Expediting Methods - replacing Property
Critical Spares and Component Parts to be held
on Site
Critical Replacement Parts and Components at
Suppliers
Other Loss Minimising Factors

Suppliers (alop)

Suppliers of Machinery /Equipments

Suppliers of Various Services.
Shippers and Transporters.
Contract of Carriage.
Contract of Sale/Purchase
Power Purchase agreement/Captive power
arrangement.
Supplier of Fuel/gas/water
Financers/World Bank

Special Hazards of CAR Risks

High Rises : Foundations, Materials lifted to higher

floors are transported by hoist; the CPM used for
assisting construction
Collapse of Scaffolding can cause considerable
damage to the works and results in TP claims.
Fire in upper floor difficult to fight.
Special type of furnishing, timber increase fire
hazard.
Underground Risks :Satisfactory Geological ,soil
investigation reports are critical.
Collapse, flooding, inundation, EQ, damage to
cables, other pipes are major risks

 Pipelines Constructions : Study of the terrain

involving geological ,hydrological,and
environmental investigations
Excavations,welding,coating,wrapping,testing
are major risks.
Tunneling: Bored Tunnel,Cut and cover,and
immersed tube tunnel on sea or river bed.
Flood,collapse,failure of de watering
system,rock blasting ,rock fall,ignition of
underground gas pockets,
Hydroelectric : Difficult Terrain,Rock
fall,landslip,flooding ,loose soil,geological
difficulty.
Wet Risks : Bridges on Rivers Dams:

Foundations
Foundations: Intend
to carry weight of the building to
the ground.
The structure should rest in such a way that to avoid
uneven settlement and anchor against wind loads.
Information of Soil ,the nature of soil strata to
procure stability.
The depth and type of foundations should be that the
shear resistance of the soil coupled with weight of th
soil should prevent sinking/differential settlement (to
high rises) of foundations.
New structure for high rises, to go much below
compared to surrounding building can cause
subsidence /cracking to adjoining building.

Bridge

Bridge construction consists of : Foundations,

abutments, piers and superstructure.
Foundation should rest on high strength sub-soil or
rock ,concrete or steel piles to carry the loads to
deeper and more stable ground. Precautions for
foundations in water to counter long term tides or
current movements.
Abutments: It acts as end support to the bridge
superstructure. Slipping and collapse are main risk
from design defect ,excessive rain fall.
Piers: These acts as intermediate supports.
Superstructure: Terrain and length .Box sections are

Bridge
Box sections are used in long and high bridges as they
are strong. The main hazards are:
Temporary support and stability prior to fixing of
decking.
Height of decking and length of spans between
supports are important.
The size and weight of sections to be lifted .
DAM: It is for storage, regulate and divert water
Wash out, river diversion/cofferdam and flooding.
Loss of earth moving equipments, Knowledge of river
flow and use of diversion channels.

Foundations

Settlement of the foundations may be caused :

i)The weight of the structure.
ii)Moisture changes in the ground.
Iii)Insufficient compactness of the ground in areas
of mining/filled or made up ground.
General movement : downhill movement of upper
strata of clay soil on sloping sites /or landslips .
Construction Process:
Ground Work :i) Earth moving :road building ii)Mass
Excavation, iii) Trenching. iv)shaft sinking.
Road building : Large industrial complex, or power
plant .Damage to embankment caused by rain fall

Ground work continued

Or flooding , subsidence , or collapse, or inundation

of plant in flood water .
Mass Excavation :Foundation work or construction
of base ments. Support to the sides to stability Risk
of inundation , or breakdown of dewatering pumps.
Deep excavations may require internal stuttering
and other support work resulting restriction
.Necessary care to be taken for constructional plant
and machinery.
Trenching: Collapse of the sides or inundations of the
tench .Frequently trench collapsing are caused by
absence of planking and stuttering sides

Trenching and Tunnelling

Cohesive nature of the soil may be unstable and

collapse due to adverse weather conditions.
Trenches may be filled by water, mud, dust, sand
and requiring re-excavation or dewatering.
Insurer often put warranty of Max m length of trench
exposed at any point of time.
Shaft sinking/Tunneling :Trial bore hole along the
route will provide partial indication of the hazards
to be meet .A test bore hole on proposed shaft
should provide full information of all strata through
which the pilot shaft would pass. There are inherent
risk of explosives and working at great depths,

Tunnelling

The presence of ground water or water bearing

strata may be dealt by freezing by refrigeration
pipes or by curtain grouting in advance of sinking
the shaft.
Rail, Road, Dam Diversion ,rivers, harbours ,turbine
halls, surge chambers, tail races, sewers .
Bored tunnelling involves under ground in soft or
rock ground process including drilling or blusting.
Cut and cover tunnel for ground surface.
Immersed tube tunnels on river bed /sea.
Hazard analysis of Tunnelling: Ground conditions.
Subsoil conditions. adqequecy of design, and exp of

Tunnelling

Geological mapping, bore holes /small pilot tunnels,

The ground may need to be stabilised and sealed
from inflow of water.
Different conditions may be encountered like,
aquifers, made up ground, past mine working,
faults,
Continuous work is preferred .
Use of compressed air can create risks of fire
/explosion for New Austrian Tunnelling Method.
Warranty by Insurers :i)length of unsupported
surface where lining , grouting, or rock bolting are
necessary.

Warranty Tunnelling
Exclusion of force major perils .
Stand by pumping and other emergency facilities.
A clear definition on debris removal and cleaning up
costs.
An exclusion of abandonment or constructive total
loss.
An exclusion of over break.

Main hazards of tunnelling:

subsidence, collapse, vibration, withdrawal of
support and damage to underground services along
the route of the tunnel.

 ENGG/END-112: ENDORSEMENT REGARDING

DAMAGE TO CROPS, FORESTS ETC.
It is agreed and understood that otherwise
subject to the terms, exclusions, provisions and
conditions contained in the policy or endorsed
thereon, the Insurers shall not indemnify the
Insured for loss, damage or liability directly or
indirectly caused to crops, forests and/or any
cultures during the execution of the contract
works.

ENGG/END-115: SPECIAL CONDITIONS FOR OPEN TRENCHES DURING LAYING OF

PIPELINES DUCTS AND CABLES

It is agreed and understood that otherwise subject to

the terms, exclusions, and conditions , the Insurers
will indemnify the Insured for any loss or damage
due to storm, rainfall, flood, inundation such as
sanding, silting up, mudding up, erosion, collapse
and floating up of pipes, ducts or cables, sustained
by completely or partly excavated open trenches
and/or items laid therein, up to a maximum length
of _3___ Km open trench only one loss event.
Plugging facility should be made available near the
pipe ends for emergency and pipe ends exposed to
flooding or plugged during idle period of holidays
and nights

CONTD
The Insured shall make sure that plugging
facilities are available near the pipe ends for
emergency purposes and that pipe ends
exposed to flooding are plugged before any
interruption during idle work periods such as
nights and holidays.

ENDORSEMENT REGARDING SAFETY MEASURES on Flood/Storm

The Insurers shall only indemnify the Insured for loss,

damage or liability directly or indirectly caused by
flood and inundation if adequate safety measures
have been taken during planning and execution of
the project.
Adequate safety measures in this context shall
mean that the average monthly rainfall, flood and
inundation hazard as known from statistics of the
competent meteorological offices for the respective
month and location has been taken into account.
.

Safety precautions on Notice of

Storm
Receives weekly updates from local
meteorological office during period of
insurance and make continuous contact to
met office within 12 hrs notice of an imminent
storm

ENGG/END-110: ENDORSEMENT
CONCERNING STORAGE It is agreed and understood that otherwise
subject to the terms, exclusions, provisions and
conditions contained in the policy or endorsed
thereon, the Insurers shall only indemnify the
Insured for loss of or damage to the Insured items
during storage upto a value per storage unit not
exceeding the equivalent of Rs.______.
The individual storage units shall be either at least
50 m apart or separated by fireproof walls.

CONTRACT WORKS TIME SCHEDULE

a) The contract works time schedule together with
plans, documents and specifications supplied and
any other statements made by the Insured with
respect of works programme is deemed to be
incorporated herein. b) The Insurers shall not
indemnify the Insured in respect of loss or damage
caused by, or arising out of, or aggravated by
deviations from the contract works time schedule
exceeding four weeks, unless the Insurers had
agreed in writing to such a deviation before a loss
occurred. This memo applies only to the dam
works during period of river diversion.

SPECIAL CONDITIONS CONCERNING THE CONSTRUCTION OF DAM AND

WATER RESERVOIR
grouting of soft rock areas and/or other additional safety measure even
if their necessity arises only during construction,
expenses incurred for dewatering even if the quantities of water
originally expected are exceeded substantially,
loss or damage due to breakdown of the dewatering system if such
breakdown could have been avoided by sufficient stand-by facilities,
expenses incurred for additional sealing or water proofing and
additional facilities for the discharge of run off and or underground
water,
expenses incurred for the repairs of eroded slopes or other graded
areas, if the Insured has failed to take the measures required or to
take them in time,
loss or damage due to subsidence if caused by insufficient compacting,
cracks and leakage not caused by Insured peril.

SPECIAL CONDITIONS CONCERNING SAFETY MEASURES WITH

RESPECT TO PRECIPITATION, FLOOD AND INUNDATION -

The Insurers shall indemnify the Insured for loss, damage or

liability caused directly or indirectly by precipitation only if
adequate precautions have been taken in designing and
executing the project involved.
In this context, adequate precautions shall mean that
allowance is made for precipitation, flood and inundation
up to a return period of 20 years for the location insured
and the entire policy period on the basis of statistics
prepared by the Meteorological agencies.
Loss, damage or liability resulting from the Insureds not
immediately removing obstruction (e.g. sand, trees) from
watercourses, whether carrying water or not, in order to
maintain free water flow shall not be identifiable

ROAD CONSTRUCTION
It is hereby warranted and agreed that,
notwithstanding anything contained in this
policy to the contrary, the following special
conditions shall apply The length of the working area (excavation
and construction of coffer etc., however
except final surfacing) shall never exceed
_____ meters at any work face and a total of
_______ meters at all work faces combined.

Road Projects ,internal /Access roads of Hydel Power Projects

Maximum Length of Section :

A)1000 meters x 3 unconnected sections for flood
prone areas and hilly regions and any two
unconnected sections separated by a distance of
250 meters from each other.
B)1000Meters x5 unconnected sections for other
areas and any two unconnected sections seperated
by a distance of 500 meters from each other.
C)150 meters x3 unconnected sections for internal
& access roads of hydel power projects and any two
unconnected sections separated by a distance of 50
meters from each other.

PIPELINE CONSTRUCTION

Notwithstanding the conditions and provisions and endorsements of the

policy, it is understood and agreed that the following special
conditions shall apply a) Excavated material shall be deposited at least one meter away
from the trench.
b) The length of trenches totally or partially opened at any one time
shall never exceed in respect of any one work face __ meters all work
faces combined total ____ meters.
c) Pipe shall be secured against heaving or floating up by covering
them sufficiently and as soon as practicable.
d) The open ends of pipes shall be provisionally sealed at the end of
each working day or in the event of immediate danger of flooding,
otherwise expenses for clearing and cleaning of mud-filled pipeline
sections shall not be indemnified.

Pipelines Construction
e) Loss or damage arising from pressure testing
producing tensions exceeding the yield point
guaranteed by the manufacturer shall not be
covered. f) Loss of testing media shall not be
covered.
g) Cost incurred in searching for leaks are indemnified
- up to but not exceeding the limit per event of
________________ up to an aggregate limit for the
policy period of ________________ however only if
the leaks are a consequence of an insured event.
h) The Insurer is not liable for any claims due to
pollution from any cause whatsoever

Warranty concerning sections

It is agreed and understood that otherwise subject to the terms,
exclusions, provisions and conditions contained in the Policy or
endorsed thereon, the Insurers
shall only indemnify the Insured for loss, damage or liability directly
or indirectly caused to or by embankments, cuttings and benching,
ditches, canals or road
works if these embankments, cuttings and benching, ditches, canals
or road
works are constructed in sections not exceeding in total the length
stated below, irrespective of the state of completion of the insured
works, and the indemnification
for any one loss event shall be limited to the cost of repair of such
sections. Maximum length of section: metres

Special conditions concerning the construction of tunnels, galleries, permanent

underground / subsurface structures or installations
It is agreed and understood that otherwise subject to the terms, exclusions,
provisions and conditions contained in the Policy or endorsed thereon, the Insurers
shall not indemnify the Insured in respect of the expenses incurred for
alterations in the construction method or due to unforeseen ground conditions or
obstructions,
measures which become necessary to improve or stabilize ground conditions or
to seal against water ingress unless necessary to reinstate indemnifiable loss or
damage,
removing material which has been excavated, or due to over break in excess of
the design profile and/or for refilling cavities resulting there from,
dewatering unless necessary to reinstate indemnifiable loss or damage,
loss or damage due to breakdown of the dewatering system if such loss or
damage could have been avoided by use of standby facilities,
the abandonment or recovery of tunnel-boring machines,

Contd.,
the loss of bentonite, suspensions, or any media or substance
used for excavation support or as a ground-conditioning
agent.
In the event of indemnifiable loss or damage the maximum
amount payable under this Policy shall be limited to the
expenses incurred to reinstate the insured property to a
standard or condition technically equivalent to that which
existed immediately before the occurrence of loss or
damage but not in excess of the percentage as stated
below of the original average per-metre construction cost
ofthe immediate damaged area Maximum percentage
payable: %

Type of Policies
Constructing/Erection phase
a) Contractors All Risk (CAR)
b) Erection All Risk (EAR)/ / Also known as S.C.E
(storage cum Erection)
c) Marine cum storage cum Erection (MCE)
d) Advance loss of profit (ALOP)/ Delay in
startup (DSU)
This policy are issued for the Period of the
project depending on nature, size and
value.

Operational phase Policy

a) Machinery Insurance (MI) also known as Machinery
Breakdown (MB) Insurance.
b) Boiler and Pressure Plant (BPP) insurance.
c) Machinery, Loss of profits (MLOP) insurance.
d) Contractors Plant and Machinery (CPM) insurance.
e) Civil Engineering Completed Risks (CECR) insurance.
f) Electronic Equipment (EEI) insurance.
g) Deterioration of stocks (DOS) insurance.
Operational Policies are Annual Policies

Basic concept
Comprehensive cover against all the risk involved in

the
Storage
Erection
Testing and

Commissioning
of machinery & plant pertaining to various
Industries

What is Covered ?

Section I :

Material Damage : The Project / Plant

/Machinery/Civil Work
Sudden and unforeseen Physical loss or
damage by any cause, other than
specially excluded.
General Exclusions: War, Invasion, Wil ful Act ,
Nuclear reaction etc

Specific Exclusions:

Wear and tear, rust, Excess, Drawings, Bills,

faulty design, defective material or casting,
bad workmanship other than faults in erection.
Any Penalties for not full filling the contact

TPL : Sec II : for Property or persons

Subject Matter

Petrochemical Refineries
Power plants
Steel Plant
Cement/ Paper/Paint/Soap/Sugar/Rubber Plant
New Manufacturing Factories for Products/
Facilities Like Food, Drugs, Pharmaceutical etc
Civil Work : High Rises, Bridges, Tunnels, Roads,
Hotels, Restaurants, Jetties, Ports etc.

Main Perils Covered

All Risk That is not Excluded
Sudden and unforeseen loss or damage due to

Fire, lightning, explosion, aircraft damage

Riot, strike, malicious act
Flood, inundation, storm, cyclone and allied perils
Landslide, subsidence and rockslide
Burglary and theft
Faults in erection
Human errors, negligence, lack of skill
Short circuiting, arcing, excess voltage
Operators fault during testing
Collapse, damage due to foreign objects, impact damages
Earthquake (optional)
Terrorism (optional)
Any other sudden, unforeseen damages not explicitly excluded

Risk details /Proposal Form for

SCE/CAR
1.
2.
3.

a)
b)
c)
4.

5.
a)
b)
c)
d)
6.

Name and address of Principal/contractor/sub-contractor trade.

Insured interest.
The Contract works: Copies of the contract with insurance re q
uirements
Type of Plant/ Nature of Civil Work/Project.
Full description of plant and machinery/ capacity/construction work.
Geological, hydrological, metrological reports seismic design features
earth quake history
Plans, designs and materials tested earlier? Second-hand machinery?
Manufacturer/ buyer/contractor?
Contract site:
Distance from port/station
Flood/ fire/explosion risk
Distance from sea/river/lake
Elevation
Storage arrangements: Watchmen/security (theft MLD)

Contd..
7. Period of insurance
The period of insurance should not be less than the period of
contract and should commence from the date of unloading of the
first consignment at the site of the erection and shall continue up
to the conclusion of the first test operation or test loading subject
to a maximum of 4weeks from the date trial running is made and
/ or readiness for work is declared by the erectors. If a part of the
plant or one or several machines are tested and put into the
operation, the coverage under the policy for that particular part of
the plant or machine will cease, whereas the coverage will continue
for the remaining parts which are not yet ready.
In case approval of the plant or any part thereof is not given by the
concerned authorities even after expiry of 4weeks of trial running,
the policy can be extended and the extra premium to be arranged
beforehand.

Contd.
8. Sum insured:
Section: I

The sum insured selected under section I should not be less than the completely
erected value of the property inclusive of estimated freights, customs duty,

erection cost etc (for both imported and indigenous machinery).

In case of long term contracts, there is bound to be escalation in prices i.e. prime cost.
The basic policy will pay only as per the original cost and prices. However escalation
clause can be opted for, under which escalation upto 50%, can be selected to take care
of such increase in prices during the policy period.
The sum insured shall be adjustable on completion of the erection, on the basis of
actual values incurred by the insured in respect of freights, handling charges, customs
dues, cost of erection etc. and premium adjusted accordingly.

Section: II

Should represent the per accident limit (the maximum legal liability that may fall on the
insured as a result of an accident in the insured's site). The limit per policy period
should be fixed taking into account the maximum number of such accidents which can
reasonably be expected to occur.

SUM INSURED Definition For this purpose, the Sum Insured on the
following items are to be taken into account a) Marine (Imports) -landed cost at site
b) Marine (Indigenous) -landed cost at site
c) Cost of Erection (exclusive of preoperative
expenses but inclusive of cost of visits of
specialists and supervision charges).
d) Permanent Civil Engineering Works
e) Half the escalated value, if escalation is opted for.

Marine Extension
Combined and Comprehensive Policy
Warehouse to Warehouse bases: All risk or any other
contract.
Fragile items/ Cement
Per Bottom limit per shipment
War/SRCC extension

Extension/ Add-on cover

1.
2.

CLEARANCE AND REMOVAL OF DEBRIS

THIRD PARTY LIABILITY COVERWITH CROSS LIABILITY EXTENSION
CONSTRUCTION PLANT AND MACHINERY
SURROUNDING PROPERTY OF THE INSURED
ESCALATION PROVISION
ADDITIONAL RATE FOR EXPRESS FREIGHT (AIR FREIGHT
EXCLUDED) HOLIDAY AND OVERTIME RATES OF WAGES
ADDITIONAL RATE FOR AIR FREIGHT ONLY
ADDITIONAL CUSTOMS DUTY
MAINTENANCE EXTENSION: 6 to 12 months
Extended maintenance
Limited Maintenance

Rating

Nature of project
Period Of Insurance including testing period
Location, Size
Experience of the contractor/ insured
Higher Excess Opted.
Add on covers/ Extensions required.
Various Add on Cover facilities at low rates for S.I
more than 100 Cr Projects : Like Loss
minimization expences,50/50 Clause/72 hrs
clause

Excess For Sec I and II

A) For Storage & Erection Claims . . .
_______ % of the claim amount subject to a minimum of Rs ________
B) For Testing Period Claims. . .
_____% of the claim amount subject to a minimum of Rs ________
C) For Acts of God Claims (as per Memo 6)
_________% of the claim amount subject to a minimum of testing period
excess and a maximum of Rs __________

D) For Fire/Explosion Claims

______% of the claim amount subject to a minimum of testing period
excess and a maximum of Rs ___________

In the event of any occurrence of a claim under this Policy, the

Insured shall

a) immediately notify the Company by telephone or telegram as well as in

writing giving an indication as to the nature and extent of loss or damage.

b) take all steps within his power to minimize the extent of the loss or damage

c) preserve the parts affected and make them available for inspection by a
representative of the company or surveyor deputed by the Company.

d) furnish all such information and documentary evidence as the company may
require.

e) inform the police authorities in case of loss or damage due to theft or

burglary.
The Company shall not in any case be liable for loss, damage or liability of
which no notice has been received by the company within 14 days of its
detection.
Upon notification being given to the Company under this condition, the Insured
may carry out the repair or replacement of any minor damage not exceeding
Rs. 7,500/-. In all other cases a representative of the company shall have the
opportunity of inspecting the loss or damage before any repairs or alterations
are affected. If a representative of the company does not carry out the
inspection within a period of time which could be considered as adequate
under the circumstances the Insured is entitled to proceed with the repairs or
replacement.

BASIS OF LOSS SETTLEMENT

In the event of any loss or damage the basis of
any settlement under this Policy shall be a) in the case of damage which can be repaired,
the cost of repairs necessary to restore the items
to their condition immediately before the
occurrence of the damage less salvage, OR
b) in the case of a total loss the actual value of
the items immediately before the occurrence of
the loss less salvage;

PREMIUM ADJUSTMENT
The sum insured under the Policy representing
the completely erected value of the plant
machinery/project shall be adjustable at
completion of erection on the basis of the actual
values to be declared by the insured in respect

of freight and handling charges, customs

dues and costs of erection and the difference in

premium shall be met with by payment, at the

rate agreed to or by the insured as the case may
be.
Any increase or decrease in prime cost of Plant
and Equipment shall not be the subject matter of
premium adjustment.

Main Conditions
Statement/Answers in the proposal form: Good
faith
Reasonable precaution to prevent
losses/statutory requirements /Manufacturers
recommendations
Risk inspection: Insurers Engineers/Assessment
Notification of Material alteration
Conditions of Subrogation, contribution,
Arbitration, Fraud/False Declaration,
Contribution, Termination Of Insurance Policy.

Free Cover for having S.I More than 100 Cr.

50/50 Clause
72 Hrs clause
Free automatic reinstatement clause ( up to 10%
of S.I)
Loss Minimization expenses.
Debris Removal limit per occurrence up to 50 lacs.
Professional Fees
Expediting cost including Air Freight and Express
Freight ( up to 30% of net claim amount)
Additional Custom Duty ( up to 10 Cr
Owners surrounding property

Additional add on

T.P.L. Cover
Escalation costs
Waiver of Subrogation Clause
Expediting cost including Air Freight and Express
Freight
Extended maintenance cover (for every 12
months or part thereof)
Continuity of cover during operational phase for
Unit/Plant tested but awaiting integral testing
(along with other units/Plants

continued

Design Defect cover as per D4 wording of

Munich Re
Amendment in Fire fighting endorsement
wording
Nil
Additional Custom duty

Deemed to have commenced their first test operation

or test loading from the date of synchronisation of
the Turbo Generator set with the grid system/bus
bar provided the date of synchronisation is within
72 hours from the date of introduction of steam
into turbine and shall continue till the Turbo
Generator Set is operated at full load for a
continuous period of 72 hours or until expiry of
testing period granted under the policy whichever is
earlier. If, however, the date of synchronisation
exceeds 72 hours from the date of introduction of
steam of the first trial operation, test loading is
deemed to have commenced from the date of
introduction of steam into the turbine .

Cold Testing

Cold Testing ( Functional Testing): The checking of

parts and elements of insured property by
mechanical , electrical ,hydrostatic ,or other forms
of testing under no load conditions.
Correct rotation of electrical motors is to be
checked before coupling them to machines.
It excludes the operation of furnaces or the
application of any material for processing . In
electrical power stations , cold testing excludes
connection to a grid or other load circuit of
electrical generating , transforming, converting or
rectifying equipment.

Hot Testing
Hot-testing ( Operational and Commissioning
tests): The checking of parts,elements and/or
production lines of insured property under full
or partial load and normal or simulated or
operational conditions including the use of
feed stocks or other material for normal
processing or other media for load simulation.
In Power stations , hot testing means checking
after connection to a grid or another load
circuit of electrical generating ,
transforming,converting,or rectifying
equipment.

Commissioning
The taking into operation or the putting under
load of insured property or any part with feed
stock or other materials for processing;or in
electrical power stations the connection to the
grid or other load circuit of generating
equipment.
Acceptance Test : Operation of insured
property under production conditions for the
purpose of attaining performance of (
quantity,quality) specification requirements.
Hot testing, Commissioning , Acceptance Test
all are known as Testing Period.

Five Design Clauses offer five

distinct levels of Coverage against
defects in Design, Material and
Workmanship .
DE 1: Out right Exclusion of any
and all consequent damages to the
property in a defective condition.

DE2:Extended Defective Condition

Exclusion Exclusion: Excludes
damages to (a) property free of
defective condition, or (b) property
that relies on (a) for support .
Consequential Damages to any
other property free of defective
conditions are covered.

DE3: Limited Defective Condition

Exclusion :Excludes damages to
property that is in a defective
condition ,in whole or part; covers
consequential damages to any
other property free of defective
condition.

DE4: Defective Part Exclusion:

Excludes damages to only that
consequent part of the property that
is deemed defective ( the faulty part);
covers consequential damage to any
other property free of defective
condition.

DE5: Design Improvement

Exclusion: Covers all damages
excluding only the additional costs
of improvements to the original
design,material.

Defective Conditions is defined

as a defect in
design,plant,materials , or
workmanship. Here
Workmanship Means the
manufacture of the property
itself,not the on site construction
or erection of the property,which is
always covered.

Property lost or damaged to enable

the repair of the defect is not
covered ( e.g, if one tears down a
wall to gain access to repair the
property , the wall is not covered.

Design, Materials etc are not

considered damaged merely by
the presence of a defect . To trigger
the cover , the defect must result in
a sudden and unforeseen physical
loss event.

Case Study: A marble column fails

because its inner steel supporting
rod ( the faulty part)is defective in
design or material .The Roof
Collapses, causing extensive damage
to an expensive tile floor. Under the
circumstances

DE1 Covers nothing

DE2 Covers the floor, but does not

cover the roof or the column

DE3 Covers the floor and the roof

but does not cover the column.

DE4 Covers the floor and the roof, but

doesn't cover the supporting rod itself.

DE5 covers every thing, but does not

cover a different type of supporting
rod to be used in repairs.

Proper identification of risks and

appropriate covers for eventualities : If
a multi cores gas turbine is at risk from
a defective 100 Rs rivet , DE3 could
have catastrophic results for the
insured , while DE4 might result in
extensive payments from the insurer.

Contractors Plant and Machinery

Subject Matter
Earth movers, Cranes, Compressors
Excavators, Mixing Plant
Machinery/Equipments that assists in
Construction / Erection Activity
Machinery/ equipments, whether
registered with RTO or not, but
engaged at the Project site, the Insured,
has an option either to select the
Motor/Non-Motor Policy under Motor
Tariff or CPM Policy in the Engineering
Department.

R/I Mega Risk

Obligatory : 10% limited to Rs.500crs
SI (MD+LOP) per risk

Net Rs. : 120 Crs PML

Intergroup :(Listed/IAR) Rs.50crs PML each comp
FST
:Rs.250crs PML
SST
:Rs.250crs PML
Balance Facultative on Proportional/Excess of Loss
Basis

Mega Risk

S.I more than 2500 Cr.

M.D+ LOP. On S.I basis
PML Basis 850 Cr
All risk Basis (Comprehensive Package policy)
Part A
Section 1:Insuring Clauses with all risk physical
loss or damage.(With excepted causes and
excluded property)
Various extensions
Section 2: MB with Insuring clause ,exceptions
conditions.

Continuation
Business Interruption
S.I for 1 Lack Cr
B.I : G.P 20 Thousand Cr.
Excess: US $1 Million eel.(Section A)
B.I 30 Days.
Extensions under AR:
Public Authorities. Add cost of R/Inst
Fire Fighting Expenses/Foam
Property (P/M , stks) Outside Premises :Limit of 50
Cr .

Additional Coverage's

Leakage and overflowing from tank/pipelines

:Limit
Contamination of stocks in insured's care.
Catalyst
Transit of P/M ,Stocks.:50 Cr one sending.
Basis of indemnity : Selling price incl of profits.
72 Hrs clause: Flood, Rain/storm, Eq, tsunami,
seaquake etc.
Extn to part A:Safeguarding , temporary repair ,
over time, extra cost of express :limit of 25 cr.
Immediate repairs.

 Minor works: Automatically include alteration.

constructions, modifications, reconts etc up to limit
200 cr.
Inadvertent omissions 20 cr.
Architects, surveyors consulting engg fees: ,limit :
10 Cr.
Capital Additions: Newly acquired bldg, P/M, up to
7.5% of S.I.(Quarterly basis declaration).
Temporary removal for cleaning, renovation, repair
to other premises;50 Cr limit.
Exp for loss minimisation/loss prevention: Limit 75

continued

Deliberate Damage By aict /order of Government

Authority to prevent/mitigate pollution hazard,
resulting from property insured.
Shut down/Start up consequent upon a loss or
damage : Limit 75 Cr.
Computer Sys records: loss of data, data media,
records, and regeneration.
ROD: Limit : 75 CR.eel.

ENGG/END-109: HYDROCARBON ENDORSEMENT FOR TESTING &

COMMISSIONING

Commencing date of the initial start-up

operation referred to in the preceding paragraph
shall mean the date of the first introduction of
feed stock or initially filled mixture of oil or
Hydrocarbon for cleaning or purging or Naphtha
Fuel for burning into the plant, whichever date is
earlier. However the operation carried out for
cleaning and purging in each individual unit will
be considered a part of erection work provided
such cleaning and purging work does not exceed
a period of two weeks in each unit