Insurance Faqs

Q. What is Utmost Good Faith?

A. Utmost Good Faith is one of the principles that insurance is based on. It denotes a positive duty of the person seeking insurance to voluntarily disclose accurately and fully, all facts material to the risk being proposed whether requested or not.

Q. What is meant by Insurable Interest?

A. The financial interest that the assured possesses in whatever is being insured is known as “Insurable interest”. In other words, it is the right of a person to insure something which, when lost or damaged, would mean a financial loss to him. If a person is allowed to insure something that he does not own it becomes a wagering contract and therefore void under Section 30 of Indian Contract Act. Therefore Insurable interest is a pre-requisite for insurance and the compensation is limited by the value of the subject matter of insurance and the extent of insurance coverage. In Life Insurance, though human life value cannot be measured in monetary terms, insurers determine the sum assured as a multiple of the income of the life assured and his remaining productive years.

Q. What is the difference between an Insurance Agent and an Insurance Broker?

A. An insurance agent can represent only one insurer and do business for him. An insurance Broker is basically the representative of the customer and can sell the policies of more than one insurer. In the Indian context an Agent can represent one Life insurer, one Non-Life insurer and one Health insurer. In addition he can represent one credit insurance company and agricultural insurance company too. Detailed regulations have been framed by Insurance Regulatory and Development Authority (IRDA) for both Agents and Brokers and they govern them.

Q. What is an ‘insured peril’?

A. The purpose of insurance is to compensate you for a loss caused by an insured perils. If your stocks are destroyed in a fire, the cause of loss is fire which is payable under a fire policy. If the stocks are stolen, the loss is not payable under a fire policy as “Burglary” is not a covered peril.

Q. What is the meaning of Proximate Cause?

A. If the loss is caused by two or more causes acting simultaneously or one after the other, then it is necessary to chose the most important / effective cause which has caused the loss. This cause is termed “Proximate Cause” and other cause is termed as “Remote”.

Q. Can an insured claim any amount from his insurer regardless of the extent of loss?

A. No. The loss will be surveyed and amount payable assessed and this is subject to calculations like depreciation and policy excess so that the compensation is strictly for the loss suffered and to the extent suffered. The concept is that an insurance policy should not be the means to making a profit. However it is possible to take some policies on a ‘Reinstatement Value Basis’ so that, in the event of a loss, the claim will be paid on the basis of creating a new asset in the place of the old one rather than on the depreciated or market value of the old asset.

Q. What is the meaning of Deductibles?

A. In some policies there is a clause that a specified amount will be deducted from the claim amount. For example in Industrial Risks 0.5 per cent of the total sum insured subject to a minimum of Rs.1 lakh is the deductible if loss is due to Terrorist Act. This means that the first Rs one lakh of any claim and up to 0.5 per cent of the claim has to be borne by the insured. If the loss is below Rs one lakh then no claim is payable. This is a way for the insurance companies to avoid the administrative costs of small claims and the insured is usually given a premium rebate for accepting this burden.

Q. What is the meaning of Co-Insurance?

A. Corporate clients, who want to oblige more than one insurer, or benefit from the competitive forces among insurers, place their insurance business with more than one insurance company. While doing so, they select one company as the “Leader” who is given higher share of premium and others are given lesser share. Client deals only with the “Leader”. The leader will share the premium (in the ratio decided by the client) as well as claims with other participating insurers who are called Co-insurers. Depending on the total volume of premium, it can be placed with 2, 3, 4 or more insurers.

Q. Is the Insured responsible for Loss Minimisation?

A. Even when a property is insured, it is the responsibility of insured to take all reasonable steps to protect against or minimise the loss. Every insured is expected to behave as though he is “a prudent uninsured”. If the insured neglects to take such steps, as per the policy condition of “Negligence”, the claim can be repudiated or partially allowed.

Q. What are the Rules of the Insurance Ombudsman Scheme?

A. The objective of the Insurance Ombudsman Rules is to resolve all complaints relating to 1. Partial or total repudiation of claims 2. Any dispute regarding premium paid or payable in terms of the policy 3. Any dispute about the legal construction of the policy relating to claims 4. Delay in settlement of claims 5. Non-issue of any insurance document to customers after receipt of premium, in a cost effective, efficient and impartial manner. These rules are called Public Grievances Rules – 1998 and were notified by Government of India and published in the Gazette of India on 11.11.1998.

Q. What is a TPA and what are its functions?

A. A TPA is a Third Party Administrator. They are commercial entities duly licensed by IRDA. Their services are utilised by Insurance Companies, both Life and Non-Life, to render, on their behalf, post-sales services to health insurance policyholders. They provide services like: • Guiding the insured with regard to claims • Issuing photo ID cards to insured persons • Issuing pre-authorisation to hospitals to facilitate insured persons to avail of the cashless facility and Process and settle claims for reimbursement

Motor Insurance

Q. What Motor Insurance cover should I buy? Should I buy Comprehensive Insurance or Liability Policy only?

A. Third Party Liability insurance is mandatory for all vehicles plying on public roads in India. This covers Liability for injuries and damages to others that you are responsible for. In addition, it is prudent to cover loss or damages to the vehicle itself by way of Comprehensive/Package policy, which covers both “Liability” as well as “Own damage” to the insured vehicle. Liability Only cover is also known as Act Only cover.

Q. How is the premium determined?

A. Many factors determine the premium you will pay. For Own Damage cover different insurance companies charge different premiums for similar coverage. Shop around; getting three or more comparison quotes is worthwhile. Check various insurers’s websites; it will help you compare premiums. Do not forget to compare deductibles, coverage and IDV’s as premium may be lesser of one insurer but with higher deductibles, lower coverage and lower IDV, which will adversely impact you in the event of claim settlement. Be prepared to give your agent information about the following items that are commonly used to determine your premium: Vehicle registration details with Engine No., Chasis no., Class of vehicle, cubic capacity, seating capacity, etc. (In fact, all relevant details are in the RC book/card and a copy of same may be handed over) Tax paid details; Certificate of fitness, Driver details - age, gender, qualifications, licence validity Previous insurance history, if any. The Own Damage coverage is left to be rated by individual insurance companies after duly filing rates with the Insurance Regulatory and Development Authority. The same is determined on following factors amongst others -- Age of vehicle; Discounts / loadings- Appropriate Bonus / loading/ discounts along with past claims experience are taken into account while calculating premium. IDV (Insured Declared Value). Third Party Liability Premium rates are laid down by IRDA. In case of break in insurance, vehicle inspection would be required and extra charges will have to be incurred for the same.

Q. What coverage limits meet my needs?

A. The sum insured for the vehicle is called “Insured’s Declared Value” and should reflect the current market value of the vehicle. Under Liability insurance, Third Party Liability insurance is covered. There is unlimited coverage to Third parties injury and Third party property damage is covered up to a sum of Rs 7,50,000. The Insured has the option to restrict coverage for Third Party Property damage to Rs 6,000 and this will result in a lower ”Liability Only” premium.

Q. What is the period of the policy?

A. A motor policy is usually valid for a period of one year and has to be renewed before the due date. Pay the premium on time. No Insurer offers a grace period for paying the premium. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also lost.

Q. What is "No Claim Bonus"?

No Claim Bonus (NCB) is the benefit accrued to an insured for not making any claims during the previous policy period. As per current norms in India, it ranges from 20% on the Own Damage premium (and not on Liability premium) and progressively increases to a maximum of 50%. If, however, a claim is lodged, the No Claim Bonus is lost in the subsequent policy period. NCB is given to the insured and not to the insured vehicle. Hence, on transfer of the vehicle, the insurance policy can be transferred to new owner but not the NCB. The new owner has to pay the difference on account of NCB for the balance policy period.The original owner can, however, use the NCB on a new vehicle purchased by him.

Q. Will my No Claim Bonus get migrated if I want to change my insurance company?

A. Yes, you can avail of the NCB facility if you change the insurer on renewal. You would have to produce proof of the NCB earned by way of renewal notice from the current insurer. Alternately, you can produce your original, expiring policy along with a certification that you have lodged no claims on the expiring policy. For this the proof can be in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer.

Q. Are there discounts that will lower my premium?

A. In addition to NCB, there are additional discounts available under Own Damage Premium for membership of Automobile Association of India, Vintage Cars (Pvt. Cars certified by the Vintage and Classic Car Club of India); Installation of anti-theft devices approved by Automobile Research Association of India (ARAI), Pune and whose installation is approved by AAI; Concessions for specially designed/modified vehicles for the Blind, Handicapped and mentally challenged persons, which are suitably endorsed in the RC by the RTA concerned; - opting for voluntary additional deductible/excess.Under “Liability Only Section”, discounts.

Q. Is Service Tax applicable and how much is it?

A. Yes, Service Tax is applicable and would be as per prevailing rule of law.

Q. What is deductible?

A. Deductible or “excess” is the amount over and above, which the claim will be payable. There is a normal standard/compulsory excess for most vehicles ranging from Rs 50 for two-wheelers to Rs 500 for Private Cars and Commercial Vehicles which increases depending upon the cubic capacity/carrying capacity of the vehicle. However, in some cases the insurer may impose additional excess depending upon the age of the vehicle or if there is high frequency of claims.

Q. What is the procedure for recording any changes in the policy?

A. If there are any changes in the policy like change of address or modifications to the vehicle or its use, it will be done by an Endorsement by the insurance company. Submit a letter to the insurer with proof for the changes and obtain the endorsement. Some endorsements may require you to pay additional premium. Check the correctness of the endorsement.

Q. If I am using the car in a particular city, what premium rate is applied?

A. For the purpose of applying premium rate, the place where the vehicle is registered is reckoned (not the place where the vehicle is used). If your vehicle is registered in Chennai, the rate applicable for Zone A is charged. Even when you shift to a different city / town, the same rate will continue to be applied. Similarly if a vehicle is registered in a town, it attracts Zone B premium rate. Subsequently if the owner shifts to a metro, he will continue to be charged the Zone B rate.

Q. What is a Certificate of Insurance under Motor Vehicle Act?

A. As per Rule 141 of Central Motor Vehicle Rules 1989, a certificate of Insurance is to be issued only in Form 51. It is only in Motor Vehicle Insurance, apart from the policy, that a separate certificate of insurance is required to be issued by insurers. This document should always be carried in the vehicle. The policy should be preserved separately at home / office.

Q. If I fit CNG or LPG kit in my vehicle, is it necessary to inform the Insurance Company?

A. If a CNG / LPG kit is fitted in the vehicle, the (Road Transport Authority (RTA) office where the vehicle was registered should be informed so that they make a note of the change in the registration certificate (RC) of the vehicle. The insurance company should also be informed so that the kit is covered on payment of extra premium on the value of the kit under “OD” section and also under “LO” section.

Q. What are the documents to be kept in the vehicle while plying in public places?

A. Certificate of Insurance • Xerox copy of Registration Certificate • Pollution Under Control Certificate • Photocopy of Driving Licence of person who is driving the vehicle

Q. Can I transfer my insurance to the purchaser of my vehicle?

A. Yes, the insurance can be transferred to the buyer of the vehicle, provided the seller informs in writing of such transfer to the insurance company. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance along with pro-rata recovery of NCB from the date of transfer till policy expiry. It may be noted that transfer of ownership in comprehensive/package policies has to be recorded within 14 days from date of transfer failing which no claim will be payable for own damage to the vehicle.

Q. Can I continue the insurance in the name of the previous owner even after the vehicle is transferred in RTO records in my name?

A. No. Registration and insurance of the vehicle should always be in the same name with the same address. Otherwise the claim is not payable. A fresh proposal form needs to be filled in. There is a nominal fee charged for transfer of insurance.

Q. I have lost the insurance policy. Can I get a duplicate one?

A. Yes, please approach the same office, which had issued the policy, with a written request. A nominal fee is charged for issuing a duplicate policy copy.

Q. What are the documents that are required to be submitted for a Motor Insurance claim?

A. Generally, the following documents are required to be submitted. However, read through your policy to see the complete list—duly filled in claim form, RC copy of the vehicle, Original estimate of loss, Original repair invoice and payment receipt. In case cashless facility is availed, only repair invoice would need to be submitted and FIR, if required. For theft claims, the keys are to be submitted. Theft claims would also require non-traceable certificate to be submitted.

Health Insurance

Q. What is Health Insurance?

A. The term health insurance is a type of insurance that covers your medical expenses. A health insurance policy is a contract between an insurer and an individual /group in which the insurer agrees to provide specified health insurance cover at a particular “premium”.

Q. What are the forms of Health Insurance available?

A. The commonest form of health insurance policies in India cover the expenses incurred on Hospitalization, though a variety of products are now available which offer a range of health covers, depending on the need and choice of the insured. The health insurer usually provides either direct payment to hospital (cashless facility) or reimburses the expenses associated with illnesses and injuries or disburses a fixed benefit on occurrence of an illness. The type and amount of health care costs that will be covered by the health plan are specified in advance.

Q. Why is Health Insurance important?

A. All of us should buy health insurance and for all members of our family, according to our needs. Buying health insurance protects us from the sudden, unexpected costs of hospitalization (or other covered health events, like critical illnesses) which would otherwise make a major dent into household savings or even lead to indebtedness.Each of us is exposed to various health hazards and a medical emergency can strike anyone of us without any prior warning. Healthcare is increasingly expensive, with technological advances, new procedures and more effective medicines that have also driven up the costs of healthcare. While these high treatment expenses may be beyond the reach of many, taking the security of health insurance is much more affordable.

Q. What kinds of Health Insurance plans are available?

A. Health insurance policies are available from a sum insured of Rs 5000 in micro-insurance policies to even a sum insured of Rs 50 lakhs or more in certain critical illness plans. Most insurers offer policies between 1 lakh to 5 lakh sum insured. As the room rents and other expenses payable by insurers are increasingly being linked to the sum insured opted for, it is advisable to take adequate cover from an early age, particularly because it may not be easy to increase the sum insured after a claim occurs. Also, while most non-life insurance companies offer health insurance policies for a duration of one year, there are policies that are issued for two, three, four and five years duration also. Life insurance companies have plans which could extend even longer in the duration. A Hospitalization policy covers, fully or partly, the actual cost of the treatment for hospital admissions during the policy period. This is a wider form of coverage applicable for various hospitalization expenses, including expenses before and after hospitalization for some specified period. Such policies may be available on individual sum insured basis, or on a family floater basis where the sum insured is shared across the family members. Another type of product, the Hospital Daily Cash Benefit policy, provides a fixed daily sum insured for each day of hospitalization. There may also be coverage for a higher daily benefit in case of ICU admissions or for specified illnesses or injuries. A Critical Illness benefit policy provides a fixed lumpsum amount to the insured in case of diagnosis of a specified illness or on undergoing a specified procedure. This amount is helpful in mitigating various direct and indirect financial consequences of a critical illness. Usually, once this lump sum is paid, the plan ceases to remain in force.There are also other types of products, which offer lumpsum payment on undergoing a specified surgery (Surgical Cash Benefit), and others catering to the needs of specified target audience like senior citizens.

Q. What is cashless facility?

A. Insurance companies have tie-up arrangements with several hospitals all over the country as part of their network. Under a health insurance policy offering cashless facility, a policyholder can take treatment in any of the network hospitals without having to pay the hospital bills as the payment is made to the hospital directly by the Third Party Administrator, on behalf of the insurance company. However, expenses beyond the limits or sub-limits allowed by the insurance policy or expenses not covered under the policy have to be settled by you directly with the hospital. Cashless facility, however, is not available if you take treatment in a hospital that is not in the network.

Q. What are the tax benefits I get if I opt for Health Insurance?

A. Health insurance comes with attractive tax benefits as an added incentive. There is an exclusive section of the Income Tax Act which provides tax benefits for health insurance, which is Section 80D, and which is unlike the section 80C applicable to Life Insurance wherein other form of investments/ expenditure also qualify for the deduction. Currently, purchasers of health insurance who have purchased the policy by any payment mode other than cash can avail of an annual deduction of Rs. 15,000 from their taxable income for payment of Health Insurance premium for self, spouse and dependent children. For senior citizens, this deduction is higher, and is Rs. 20,000. Further, since the financial year 2008-09, an additional Rs 15,000 is available as deduction for health insurance premium paid on behalf of parents, which again is Rs 20,000 if the parents are senior citizens.

Q. What are the factors that affect Health Insurance premium?

A. Age is a major factor that determines the premium, the older you are the premium cost will be higher because you are more prone to illnesses. Previous medical history is another major factor that determines the premium. If no prior medical history exists, premium will automatically be lower. Claim free years can also be a factor in determining the cost of the premium as it might benefit you with certain percentage of discount. This will automatically help you reduce your premium.

Q. What does a Health Insurance policy not cover?

A. You must read the prospectus/ policy and understand what is not covered under it. Generally, pre-existing diseases (read the policy to understand what a pre-existing disease is defined as) are excluded under a Health Insurance policy. Further, the policy would generally exclude certain diseases from the first year of coverage and also impose a waiting period. There would also be certain standard exclusions such as cost of spectacles, contact lenses and hearing aids not being covered, dental treatment/surgery ( unless requiring hospitalization) not being covered, convalescence, general debility, congenital external defects, venereal disease, intentional self-injury, use of intoxicating drugs/alcohol, AIDS, expenses for diagnosis, x-ray or laboratory tests not consistent with the disease requiring hospitalization, treatment relating to pregnancy or child birth including cesarean section, Naturopathy treatment.

Q. Is there any Waiting Period for claims under a policy?

A. Yes. When you get a new policy, generally, there will be a 30 days waiting period starting from the policy inception date, during which period any hospitalization charges will not be payable by the insurance companies. However, this is not applicable to any emergency hospitalization occurring due to an accident.

Q. What is pre-existing condition in health insurance policy?

A. It is a medical condition/disease that existed before you obtained health insurance policy, and it is significant, because the insurance companies do not cover such pre-existing conditions, within 48 months of prior to the 1st policy. It means, pre-existing conditions can be considered for payment after completion of 48 months of continuous insurance cover.

Q. If my policy is not renewed in time before expiry date, will I be denied for renewal?

A. The policy will be renewable provided you pay the premium within 15 days (called as Grace Period) of expiry date. However, coverage would not be available for the period for which no premium is received by the insurance company. The policy will lapse if the premium is not paid within the grace period.

Q. Can I transfer my policy from one insurance company to another without losing the renewal benefits?

A. Yes. The Insurance Regulatory and Development Authority (IRDA) has issued a circular making it effective from 1st October, 2011, which directs the insurance companies to allow portability from one insurance company to another and from one plan to another, without making the insured to lose the renewal credits for pre-existing conditions, enjoyed in the previous policy. However, this credit will be limited to the Sum Insured (including Bonus) under previous policy. For details, you may check with the insurance company.

Q. What happens to the policy coverage after a claim is filed?

A. After a claim is filed and settled, the policy coverage is reduced by the amount that has been paid out on settlement. For Example: In January you start a policy with a coverage of Rs 5 Lakh for the year. In April, you make a claim of Rs 2 lakh. The coverage available to you for the May to December will be the balance of Rs.3 lakh.

Q. What is 'Any one illness’?

A. 'Any one illness' would mean the continuous period of illness, including relapse within a certain number of days as specified in the policy. Usually this is 45 days.

Q. What is the maximum number of claims allowed over a year?

A. Any number of claims is allowed during the policy period unless there is a specific cap prescribed in any policy. However the sum insured is the maximum limit under the policy.

Q. What is "health check" facility?

A. Some health insurance policies pay for specified expenses towards general health check up once in a few years. Normally this is available once in four years.

Q. What do you mean by Family Floater Policy?

A. Family Floater is one single policy that takes care of the hospitalization expenses of your entire family. The policy has one single sum insured, which can be utilised by any/all insured persons in any proportion or amount subject to maximum of overall limit of the policy sum insured. Quite often Family floater plans are better than buying separate individual policies. Family Floater plans takes care of all the medical expenses during sudden illness, surgeries and accidents.

Travel Insurance

Q. Why should I buy travel insurance?

A. To obtain a visa for some countries, overseas travel insurance is compulsory. Even where it is not, it is prudent to obtain a travel insurance policy when you are travelling on business or holiday or for education, research etc as medical treatment costs in many countries are much higher than what they are in India and are unaffordable.

Q. Can I extend the period of my travel insurance?

A. You must check with your insurer regarding this as it would depend on the policy. Read your policy document and understand what it provides. Most policies, especially overseas travel insurance policies have a provision for one or even two extensions.

Q. Is there a minimum duration of period for purchase of travel insurance?

A. Generally there will be a minimum stipulated period. Normally pricing of the policy goes by the “trip band” i.e., the number of days of travel involved and there would be a minimum trip band.

Q. Is a medical check -up required to purchase a travel insurance policy?

A. You must check up with the insurer and/or the agent or broker about medical tests required and reports that are required to be submitted along with the duly filled in proposal form. Check up about the validity period of such reports as well—normally reports within three to four weeks prior to departure are required.

Q. Do I need prior approval of the insurance company before proceeding with medical treatment should the contingency arise?

A. Please read the policy thoroughly and understand whether there are such requirements. Prior approval would be required in most cases though there could be exceptions depending on the emergency involved. Get this aspect clarified at the time of purchasing the policy.

Q. Who is a Third Party Administrator?

A. A Third Party Administrator is one who offers claims services on behalf of the insurer. In most cases, they offer cashless facility. You must confirm details from your insurer before you travel. Ensure that your policy document has all the contact details and other relevant information related to the services offered by the Third Party Administrator.

Q. Can I get a refund under my policy if I cut short my travel?

A. In case your travel doesn’t take off and you show proof of the same, policies would normally provide for premium refund subject to deductions towards administrative costs. Where travel is cut short, policies may or may not allow refund subject to certain conditions. You must read your document and understand whether there is such a provision and if so, how it operates.

Q. Is my visa status relevant to obtain overseas travel insurance?

A. In most cases it would be. Normally, such policies are meant for travellers who visit other countries on business or holiday or education or other purposes and not for those residing permanently abroad.

Property Insurance

Q. What are the requirements to purchase a property insurance policy?

A. The proposer of the policy should first and foremost have an interest in the assets being proposed for insurance, i.e. he/she should stand to lose financially in the event of loss or damage to such assets. Secondly, the proposer should submit a proposal form (which can be obtained at any insurer’s website or office). The proposal form should disclose all details, which are true to the insured’s best knowledge and other information, which the proposer may feel is relevant.

Q. What are the different types of Property Insurance Policies?

A. The most popular is the Standard Fire & Allied Perils policy which covers most of the perils the property is exposed to like fire, riots, flood, and storm. Loss of current assests due to burglary and theft can be covered under a Burglary & House Breaking Insurance Policy. Valuables can be covered under All Risks Policies and there are package policies for house owners and shopkeepers.

Q. How does one fix the sum insured?

A. Generally, there are two methods. One is Market Value (MV) and the other is Reinstatement Value (RIV). In the case of M.V, in the event of a loss, depreciation is levied on the asset depending on its age. Under this method, the insured is not paid amount sufficient to buy the replacement. In the RIV method, the Insurance Co. will pay the cost of replacement subject to ceiling of S.I. Under this method, no depreciation is levied. One condition is that the damaged asset should be repaired / replaced in order to get the claim. It may be noted that RIV method is allowed only for FIXED ASSETS and not for other assets like stocks and stocks in process.

Q. What will be the cost of a fire insurance policy?

A. The cost of a fire insurance policy or the Premium can depend on the • Perils to be covered • The value of the items covered • The usage of the premises proposed for insurance • The location details of the premises proposed for insurance etc. • The construction of building and occupancy Consequent to de-tariffing of the non-life insurance segment (except Motor Third Party Insurance where premium rates laid down by IRDA), premium rates charged by each insurer may differ. However, they should have been filed with the IRDA under File & Use procedure.

Q. How does one arrive at the value of assets in Dwellings or Offices or Industries?

A. Other than dwellings, industrial units or offices will maintain books of accounts showing therein value of assets, therefore it will not be any problem in arriving at the sum insured. In case of dwellings, one should take stock of assets under broad categories like furniture & fixtures, clothing, bed linen, kitchen equipment, electronic gadgets and arrive at the sum insured.

Q. Why should I insure my Building? Fire can't possibly do any harm to the building.

A. Fire and other perils (normally covered under a fire insurance policy) can cause loss / damage to buildings. There have been fire accidents that have completely destroyed multi-storey buildings. Floods can also bring about devastating losses. Similarly, Riots and Acts of Terrorism can also produce huge losses to human lives as well as property.

Q. Can I ask for cancellation of policy mid-term? Will I get any premium refund?

A. Yes, At Insured's option: Retention of premium on short period scale and balance if any, will be refunded. At Insurer's option: Pro-rata refund of premium will be given.

Q. In case of loss, what are the obligations of the insured?

A. Every insured is expected to behave as though he is uninsured. Take all precautions to prevent / aggravate the loss. Inform Insurance Company who have to be given an opportunity to inspect the damages. Inform fire brigade who will assist to put out the fire. During fire fighting, any damage caused to other insured property caused by water, will be paid by Insurance Company. Extend cooperation to surveyor while inspecting and assessing the loss. If arrival of surveyor is likely to be delayed, then, take photos / and shift unaffected assets to a place of safety. Give completed claim form and documents as required by Insurer, in support of your claim. After repairs / replacement, submit bills to Insurer.

Q. If I insure for a higher value, will I get a higher claim amount?

A. No. When you apply for a fire insurance policy, the current market value of the property or the Reinstatement value of the property, depending upon the basis of the Sum Insured, should be accurately calculated for arriving at the correct amount to be insured. The compensation payable when a covered loss or damage occurs shall be based on whether or not the property has been insured adequately. If the amount insured is excessive, it will mean overpayment of unnecessary premium; if the amount insured is inadequate you will receive amounts in proportion to the market value only.

Q. Can items like jewellery, ornaments and art works be covered by the general fire insurance policy?

A. Unless prior consent has been given by the Insurer, general fire insurance policy does not cover items like jewellery ornaments, art works, scripts, documentary information, computer system information, shares and stocks, cash. These can be covered on specific request and subject to valuation where necessary.

Q. What is the relevance of salvage?

A. In case of claims under various types of insurance policies, the partly damaged goods or the wreck of a car or any machinery or any other property settled on Total Loss Basis is known as “Salvage”. After settling the claim for the full amount the salvage becomes the property of insurance company. Generally the job of salvage disposal is entrusted by the insurance company to the surveyor who carried out the loss assessment, subject to observance of procedure for salvage disposal. The amount realized through salvage disposal will be set off by insurer against losses paid by them.

Q. I want to cover my goods against transit risk. What policy do I take?

A. The Marine Cargo policy offers cover for goods against transit risks. You can take this policy if you are, for instance, transporting your household goods from one place to another. You may either opt for a ‘Basic Cover’ or for an ‘All Risks’ one. The latter offers a wider scope of coverage. Please read the terms and conditions of the policy to understand what you are buying.

Q. Who has to arrange for Marine Cargo insurance-the buyer or the seller? Or do both need some protection?

A. This depends on the Sale Contract the two enter into. For each Sale Term such as Free on Board (FOB), Cost and Freight (C&F), Cost Insurance and Freight (CIF) etc, the responsibility for arranging for insurance varies.

Q. I need to cover my jewellery. What policy should I take?

A. Insurers offer 'All Risks' policy for covering jewellery. You must ensure that your jewellery is valued correctly and you are able to show proof of valuation should a claim occur. An All Risks policy also has exclusions, so go through the terms and conditions thoroughly.

Q. I want to cover my household goods against burglary when I am away. Can I get a burglary insurance policy?

A. A burglary insurance policy covers goods against the risk of burglary. A burglary insurance policy may also offer extension of cover against theft. A burglary insurance policy will usually cease to operate if the house is not occupied beyond a certain defined period unless you have intimated the insurance company and they specifically agree to extend the cover even when the house is not occupied. It’s a good idea to ensure that you have a burglary policy always rather than opting for one only when you are away. You might not get one if you want to insure the contents only when the house is locked.

Q. How do you define Small and Medium Enterprises (SME)?

A. The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under: (a) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below: (i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh; (ii) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and (iii) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

Q. Why buy Property Insurance?

A. If you are an SME, an entrepreneur or having any small or medium enterprise, you could look for a package policy that offers coverage against all your insurance requirements. It can also provide coverage under Workmen’s Compensation Act including coverage of accident and health insurance, fidelity guarantee, public liability, Money in transit insurance etc.

Q. As an SME, What property insurance can I buy?

A. There are a variety of insurance policies covering different kinds of risks like fire, flood, earthquake for the building and contents, sudden breakdown of your machinery or damage to the Electronic Equipment in your office, Workmen compensation, Public and Professional liability, Money-in-Transit, Fidelity Guarantee etc. You can choose the limits of Sum Insured for each section of coverage offered depending on the insurance needs of your enterprise. It could also include employer’s benefit policies such as Group Personal Accident and Group Health Insurance etc, all under a Comprehensive package insurance policy. For further details on property insurance, please refer to the sub-menu on Buying Property Insurance

Q. I am an exporter registered as SME and my overseas buyer requires me to have a Product Liability insurance cover? Can I get such covers in India?

A. Yes. Such covers are available in the Indian Insurance market and you may purchase them from any one of the non-life insurers offering such products.