CHAPTER 6

NON-LIFE INSURANCE POLICES

 TYPES OF NON-LIFE INSURANCE POLICIES
1. MOTOR INSURANCE

Motor insurance is a major class of insurance

providing the highest insurance premiums for
EIC during the past several years

There are two types of policies are issued by

the Corporation regarding Motor Insurance
–Private Vehicle Policy and

–Commercial Vehicles Policy

The policy provides two types of insurance cover:
1. Comprehensive Cover :
Indemnifies the insured for losses or damages
caused by a wide range of perils; and
2. Third Party Liability Cover:
Which gives cover against third party liability
death or bodily injury to third parties
•Additional Risks
Motor insurance policies can be extended to
include other risks as well.
These includes
Personal Accident Benefits (PAB) and
Bandits, Shiftas & Guerillas, (BSG) risks.
 BSG (Bandits, Shiftas & Guerillas)Cover
A Comprehensive Motor policy; subject to
additional premium, can be extended to cover
the risk of damage arising out of a direct or
indirect actions of bandits, shiftas and guerillas,
but excluding any third party liability.
CLASSIFICATION OF MOTOR POLICIES
–Private Vehicle Policy and
–Commercial Vehicles Policy
 1. Private Vehicle Policy
• Motor vehicles covered by this policy are
– Those exclusively used for private purposes:
social, domestic, pleasure or professional.
• This policy, then, indemnifies the insured
against loss of or damage to motor vehicles
resulting from any accidental collisions.
• The policy also provides payment for
liabilities to third parties, i.e. compensation
for death or bodily injuries to any person
caused by the use of the motor vehicle that is
mentioned in the policy.
 Private Vehicle Policy cont’d…….
The policy makes payment to cover the cost of
protection and removal of any insured vehicle to
the repair shops following an accident.
The policy does not provide for payment to the
insured in respect of:
₋ Losses or damages or liability arising outside the
geographical areas specified in the policy.
₋ Consequential losses
₋ Wear and tear or depreciation of any vehicle
₋ Mechanical or electrical breakdown of the vehicle
₋ Damages caused by catastrophes like flood,
windstorm, earthquake, war, invasion, etc.
 2. Commercial Vehicle Policy
₋ Gives the same protection as with that of the
private vehicle policy except, that the vehicles
insured under this policy are those used for
commercial purposes.

₋ A wide range of vehicles used for transporting

goods and passengers are covered by this policy.

₋ Premium rates differ depending on the type and

use of the vehicles insured.
 Types of Commercial Vehicle Policy
A. Goods Carrying Vehicles :
These are vehicles primarily manufactured
for carrying goods.
– Own Good: used for only insured’s goods
– General Cartage: Used for higher light & heavy
vehicles
B. Tankers: that transport liquid substances
C. Buses
D. Taxis, Car-Hero Cycles
E. Special Type Vehicles
These include mobile cranes, earth moving
equipment's, Ambulances, agricultural vehicles,
dumpers, fire brigade vehicles, etc…
 2. Burglary & Housebreaking Insurance
₋ This is a policy to protect property from loss by
theft, but only if accompanied by actual forcible
& violent breaking into or out of a building.
₋ The insured will, then, be indemnified either
by payment, reinstatement, replacement or
repair which is at the option of the Insurer.
₋ This policy provides cover for two categories
of risk: Private Residence and
Business Premises
 3. Fire & Lightning Policy.
₋ This policy provides indemnification to the
insured for loss of or damages to property
by fire or lightning at any time during the
tenure of the policy.
₋ Indemnification is equal to the value of the
property at the time of the happening of its
destruction without exceeding the policy
amount.
₋ The insurer will not be liable for any
misrepresentations, omissions of description
of the insured property
 Fire & Lightning Policy Cont’d ……..
The policy does not cover:
₋ Losses by theft during or after the
occurrence of a fire.
₋ Loss/damage to property arising out of
climatic conditions, inherent chemical
reaction, etc…
₋ Burning of property by order of any public
authority or subterranean fire.
₋ Fundamental risks
 Special Clauses
Several clauses can be incorporated in a policy.
Rent Clause
Provides cover against loss of rental income
due to an insured peril
Architects, Surveyors, Consulting, Engineering & Legal Fee
The sum insured on buildings would include
architects, surveyors, consulting, engineers,
legal and other fees incurred in the
reinstatement of the building damaged by fire or
any other peril insured against.
Such payment, however, will not exceed 7.5% of the
amount of loss paid.
Debris Removal Clause
This clause extends the insurance to
include costs & expenses necessarily
concerning the removal of debris,
dismantling or demolishing
All Other content Clause
This would include money and stamps,
documents, manuscripts and business
records no exceeding a specified
amount in respect of any one
document, manuscript, etc…
 Electrical Clause
Under this clause, the Corporation shall
assume no liability for losses in respect
of a plant or fittings which caused the
fire occasioned by self-circuiting, self-
heating or leakage of electricity.
• However, indemnification will be made for
losses in respect of any other plants or
fittings damaged or destroyed in
consequence of the fire.
 4. All Risks Policy
₋ The insured protects his property from misfortune
not specifically excluded in the policy

₋ Insurance cover under all risk policy is not

provided for property other than personal
effects and household items.

₋ The maximum period for the issuance of this

policy is one year
 5. Public Liability Policy
₋ This policy is to indemnify the insured against all
payments the insured becomes legally liable to pay
for compensation in respect of bodily injuries to or
illness of any person; loss of or damage caused to
the property of others.
₋ The policy also covers the insured from all costs
and expenses of court cases recovered by any
claimant against the insured.
₋ The Policy is issued for a maximum period of 1 year
₋ If the insured dies while the policy is in force, the
insurer will indemnify the personal representative
of the insured in respect of the liability incurred by
the insured.
 6. Money Policy
₋ This policy gives cover for any loss of money
belonging to the insured or for which the insured
is responsible in the circumstances occurring
during any period of insurance.
₋ Money under this Policy means cash, bank notes,
currency notes, checks, postal orders, current
postage and revenue stamps.
₋ The policy protects the insured from two types or
risks related to money:
–Transit Risks and
–Premise Risks (refer to the possibility of
loss of money kept in locked safes)
The insurer, however, will not be liable for
losses caused by the following factors:
war and war like operations.
dishonesty of any messenger or employee
of the insured
loss from an unattended vehicle, etc…
7. Fidelity Guarantee Policy
₋ This policy protects employers from all
direct losses arising from any act or acts of
fraud or dishonesty committed by any of
the employees listed in the Schedule
 8. Plate Glass Policy
₋ This policy protects the insured against the
destruction or breakage of the glass fixed in
the insured’s premises by any accident of
misfortune of a fortuitous character.
₋ The policy, does not provide compensation for
Damages directly or indirectly traceable to fire
explosion, earthquake, volcanic eruption,
hostilities, riots, sticks and he like.
Cracked or imperfect glass
Damage to window frames and other fittings.
Consequential losses and any legal liability, etc…
 9. Marine Insurance
₋ Indemnifies the insured for loss of or damages to
the property insured arising out of sea perils such
as storm, fire, explosion, and the like.
Types of Marine Policies
1. Time policy
Provides coverage for a specified duration. The
contract begins at a specified date and terminates
at a specified date. Thus protection is only for a
given period of time.
2. Voyage Policy
This policy is issued to cover a specific voyage,
i.e, to give protection to the insured from port of
departure to port of destination.
3. Mixed Policy (Time and Voyage Policy)
It combines both time and Voyage Policies
4. Valued Policy
Under Valued Policy, the value of the subject-
matter is specifically declared at the beginning of
the policy, and this value becomes the basis for
premium determination.
5. Unvalued Policy (Open Policy)
In this case, the value of subject-matter is specifically
declared at the time issuance of the policy
The value is left to be proved later upon the
occurrence of a loss or damage.
The Insurable value is the basis for making
compensation.
 Marine Insurance Clauses (Ship Cargo)

• Cargo insurance incorporates all types of cargos

transported by sea, air or inland waterways,
including land transportation by road or rail
incidental to sea or air cargo.

• The type cover to be provided is based on the

current clauses published by the Institute of London
Underwriters only.
Several Clauses are included in the policy

Risk Clause

It indicates the risks to be covered by the marine

insurance policy.

General Average Clauses

This indicates the amount that the insurance

policy covers.

The next four clauses specify exclusions from the

policy, i.e, risks that are not covered by the policy.
General Exclusions Clause
Such as deliberate misconduct of the insured,
losses due to inadequate packaging, inherent
shortcomings of the property itself etc…
Un sea worthiness and Unfitness Exclusion Clause
This clause excludes payment for loss or
damages to the subject-matter insured arising
out of the nature of the vessel that carries the
property & the appropriateness of the container.
War Exclusion Clause
This clause excludes any payment to be made to
the insured for losses or damages caused by war
and war like operation.
Strike Exclusion Clause
This clause excludes payments to the insured
for losses or damage to the property insured
arising out of strikes and other similar acts.
The duration of the insurance policy is
specified by three clauses:
Transit clauses,
Termination of Contract of Carriage Clause &
Change of Voyage Clause.
A. Transit Clause
This clause describes when and where
transit activities begin and terminate.
B. Termination of Contract or Carriage Clause
If the contract of carriage is terminated, due to
circumstances beyond the control of the
insured, before delivery of the goods at the
destination specified in the policy, the insured
under this clause will be allowed to continue
with the insurance cover.
– But, he/she will be subject to any additional
premiums required by the underwriter.
C. Changes of Voyage Clause
Enables the insured to adjust the insurance
cover when, he/she changes the destination that
is mentioned in the policy.
• The following four clauses relate to claims
settlement.
Insurable Interest Clause
This clause provides that the insured shall have
an insurable interest in the subject-matter
insured at the time of the loss.
• This means that the insured must be financially
affected by the occurrence of a loss.
Forwarding Charges Clause
This clause provides the insured with a
repayment to be made to him where the transit
is terminated prior to the destination initially
mentioned in the policy.