Fire, marine, Motor, and Personal Insurance

Group members
name Kusum Parmar Madhushree Rangrej Thrapti Sheety Kajal Singh Yadav Sanjoli Bhageria Roll no 65 77 91 110 115

ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave us the possibility to complete this project. I want to thank prof. Seema. S for her suggestions and encouragement in all the time research of the project. I would here by like to thank my parents and group members who helped me throughout the project.

INDEX

TOPIC INTRODUCTION TYPES OF INSURANCE FIRE INSURANCE MARINE INSURANCE MOTOR INSURANCE PERSONAL ACCIDENT INSURANCE INSURANCE REGULATORY AND DEVELPOMENT AUTHORITY (IRDA) ACT, 1999

PAGE NO 5-8 8 9-14 15-19 20-22 23-25

26-28

INTRODUCTION
Insurance is a means of protection of the economic value of assets. It is method of spreading over a large number of persons, a possible financial loss, which cannot be borne by an individual. The occurrences which cause any damage to the assets are called perils. The damage that these perils may cause to the assets is called risk that the asset is exposed to. The concept of risk is integral to the concept of insurance. The risk means, that there is a probability of loss of an asset. Whether the loss will actually occur is not certain. It is the uncertainty that gives rise to the risk. If there is no risk, there is no need for insurance.

Some assets have a value because of their incomegenerating capacity. Some assets may not generate an income but they have a value because of certain needs, which they fulfill. Loss of any assets could result in the loss of income or loss in value of assets. When the assets performs as expected, the owner could manage his affairs easily and his income or value is not lost. However, when the asset is lost, damaged, or destroyed or made nonfunctional, the owner will suffer losses because his income will be reduced or lost. Insurance is a mechanism through which assets are protected against the risk of damage or destruction. Thus, the owner of the assets can cope with the economic consequences of such events. Human being is considered as an income generating assets. Risk is a pervasive condition of human existence. It has a simple meaning in everyday usage but sometimes it has a specialized connotation, when used in a particular field. A car accident, fire, theft, natural calamities like earthquake, flood, etc. cause harm to some people which we call as a risk. Losses like these happen to some people, while others go along happily free from misfortune. Therefore, such losses are uncertain. Insurance is still in its infancy in India. The term risk is used by the people in the

business of insurance to mean-either a peril insured against a person or property protected by insurance. Insurance is a social device to reduce or eliminate risk of loss to life and property. A group of individuals transfer risk to another party in order to combine loss incurred. It includes statistical prediction of losses and provides for payment of losses from funds contributed by all members who transferred risks. Thus collective bearing of risks is immense. With Indias growing exposure to global markets is now being appreciated that the business of insurance with its unique feature has a special place in economy of our country. Insurance is essentially an arrangement for paying if losses they occur and thus is a risk which provides a much needed cover to industry thereby economizing its growth. Society cannot ignore risks or negative surprises, which are ever, present but can learn to live with them. According to D. S. Hansell, Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payments being made from the accumulated contributions of all parties participating in the schemes.

According to Riegel and Miller, Insurance is a social device whereby the uncertain risks of individual may to combined in a group and thus made certain small periodic contribution by the individuals, providing fund out of which those who sufex losses may be reimbursed. Insurance are of following types: 1. Life insurance 2. General insurance 3. Fire insurance 4. Marine insurance 5. Motor insurance 6. Crop/ agriculture insurance 7. Wedding insurance

FIRE INSURANCE
Fire insurance is a contract between the insurer and the insured whereby the insurer undertakes to indemnity the insured for destruction of or damage to the properly caused by fire or other specified perils during an agreed period of time, in return for payment of a premium in lumpsum or by instalments. Fire insurance is the oldest form of insurance. In the early development of industrial society, fire was the main source of energy. The industrial or commercial activities were not possible without fire. However, there was a need to insure the risk of uncontrolled or uncertain fire. Fire insurance is designed to provide for financial loss to property due to fire and a few other related hazards. Fire insurance is governed by a tariff

under the tariff advisory committee (TAC). The property that can be covered under fire insurance includes Building, Machinery, Equipments, Accessories, Goods, Raw Materials, Electrical Installation of building, Residential houses, Furniture and fittings, Pipelines located outside and inside the building. The standard fire policy covers the following hazards: 1. Fire i.e. burning of any property. 2. Explosion/implosion as may happen to boilers. 3. Aircraft damage caused by pressure waves. 4. Lightning. 5. Riot, strike, malicious and terrorism damage. 6. Impact damage by rail, road, vehicle or any animal by direct contact not belonging to, or owned by the insured or his employees. 7. Storm, cyclone, typhoons, tempest hurricane, tornado, flood. 8. Subsidence and landside including rockslides. 9. Missile testing operations. 10. Leakage from automatic sprinkler insatallation

General conditions in the fire policy: The following are the general conditions in the fire policy: a) The policy will become void in case of nondisclosure of material facts or misrepresentation. b) Cancellation of the policy is possible by either party. c) Notice of loss or damage should be given to the insurer immediately and the claims should be submitted within 15 days. d) The insurer has a right to enter and take possession of the building or premises where the loss has incurred, remove or salvage the insured property. e) If the claim is fraudulent or false, the insured will lose all the benefits under the policy. f) The insurer has the right to replace, re-instate the property lost or damaged instead of paying for the loss or damage. g) An insured is expected to insure his property to the fullest extent of its value, otherwise average clause is made applicate and then insured will get proportionate amount of loss or damage.

h) In case of one more policies covering the same property for the same hazard, all policies will contribute the claim in the proportion of sum assured. i) If the loss or damage is caused by a third party, the insured is required to help and assist the insurer to enable it to recover the loss from the third party responsible for the loss or damage. j) Any dispute regarding the amount of claim should be referred to arbitration. k) The amount of premium payable under this policy is deducted from net claim payable under the policy. l) All notices under this policy should be given in writing. Fire insurance procedure and documentation: a) Proposal Form: A typical proposal form of fire policy seeks information from the insured, which covers the important aspects of risk assessment such as description of this property, duration of the insurance, history of previous losses, proposed sum assured, history of insurance and risk inspection report of insurers engineer

b) Cover note: The cover note is an unstamped documents of the evidence of insurance cover until the issuance of the policy. The cover note provides insurance against specific perils on the usual terms and conditions of the insurer. It is issued after the insurer receives the duly completed proposal with the inspection reports and another information sought by insurance company. c) Policy: The policy document is the final contract between the insurer and the insured. It is a stamped document. It contains the details of the contract with relevant schedules and rates. d) Claims: The claim is a form prescribed by the insurer which contains the name and address of the insured, policy number, date, time, place, and cause of fire, the details of property damaged, etc. e) Survey report: A survey report is a report submitted by the survey to the insurance company giving the details of cause of the fire, event of loss, value of salvage, expenses, etc. the surveyor is appointed by the insurance company to assess the loss of the

policy. The surveyor has to give the amount of extent of loss incurred of the policy. On the basis of the survey report the insurance claim is to be settled with the insured.

MARINE INSURANCE
Marine insurance is a contract of insurance under which the insurer undertakes to indemnity the insured against losses incidental to marine adventure which may cover loss or damages to the ship, cargo, freight, vessels or any other subject of marine adventure.

Insurance was introduced to the world by the concept of marine insurance. The object of marine insurance is to make good losses exposed to the seafarers due to sea condition, war, pirates, weather, diseases, spoilage, etc. the legal framework of marine insurance is provided by the marine insurance Act, 1963. All the related subjects like the basis principles, basis of valuation under the policies, basis of settlements of losses are laid down in this act

Marine insurance has two important and broad components. The first one is cargo insurance and the second one is hull insurance. Cargo insurance provides cover from losses or damages that could occur to goods in transit on sea, rail, road or air. This insurance is purchased by the owners of cargo/ships. Cargo insurance covers shipments by inland ships, steamers, boats and crafts, costal shipments by steamers, sailing vessel, mechanized boats etc., export and import shipments and consignments shipped by rail, road or air and articles send by post of couriers.

Hull insurance covers the insurance of the carrier of the goods. This type of insurance is purchased by the owners of the transportation vehicle. In case of import- export trade, the responsibility for purchase of insurance lies with the seller if the price quoted is cost, Insurance and Freight (CIF). Then the seller or exporter includes the premium charges as part of the cost of goods sold. Moreover, the bank gets the goods as the security against the amount paid out to the exporter and hence it requires then the goods are insured against loss or damage in transit.

The important risks covered by the institute cargo clauses are as follows:

a) Fire b) Vessel or craft being stranded, grounded sunk or capsized. c) Overturning or derailment of land conveyance. d) Collision or contract of vessels, craft or any conveyance with any external object other than water. e) Discharge of cargo to a port of districts. f) Jettison. The following extraneous risks are also covered: a) Theft, pilferage or non-delivery.

b) Fresh water and rain water damage. c) Hook of oil damage. d) Damage by mud, acid and other extraneous substances. e) Heating and sweating. f) Breakage. g) Leakage. h) Country damage. i) Bursting or tearing of bags. However the marine insurance does not cover the following cases: a) Loss caused by wilful misconduct of the insured. b) Ordinary leakage loss, in weight or volume or wear and tear.

c) Loss caused by the inherent vice or nature of the subject matter such as perishable commodities. d) Loss caused by delay. e) Loss arising from insolvency or financial default of the owners/operators. f) Loss or damage due to inadequate packing. g) War and kindred perils. h) Strikes, riots, lock-out, civil commotions and terrorism.

MOTOR INSURANCE
The motor vehicle insurance act of 1939, introduced compulsory general insurance to protect those who may get injured in an accident. However, the insurance to the damage of vehicle is not compulsory. The tariffs advisory committee regulates motor insurance business in India. Motor insurance is one of the largest non-life insurance business in the world. All motor vehicle are required to be registered with the Road Transport Authorities. They are also insured for third part liability. This is based on the premises that the motor vehicles could either cause injury or be a subject of damage or injury. The motor vehicles require compulsory insurance because any motor vehicles can parked or drived in public places.

The liability that requires to be covered under this Act, includes the following: a) Any liability arising in respect of death or bodily injury to any person including the owner of the vehicle or his authorized person in the carriage. b) Any liability incurred in respect of damage to any person or property of a third party. c) Any liability incurred in respect of death or bodily injury of any passenger of a public service vehicle. d) Liability arising under workmens compensation Act, in respect of injury or death of a paid driver of the vehicle, conductor or workers carried in goods vehicle. e) Liability for bodily injury or death of passenger who are carried for hire by reason of contract of employment. f) The policy should carry a no fault liability limited to a sum of Rs. 50,000 in case of death, Rs. 25,000 in case of permanent disability and Rs. 6,000 in case of

damage to the property. No fault liability is based on the premises that the injured party does not have to prove any fault in order to claim this amount under the policy. Motor vehicle are classified into three categories for the purpose of insurance:

a) Private cars. b) Motor cycles and Scooters. c) Commercial vehicle carrying goods. Passengers and other miscellaneous items, which includes Auto Rickshaws, Taxis, Buses, Ambulances and Mobile utilities.

PERSONAL ACCIDENT INSURANCE

The purpose of this insurance is to pay fixed compensation for death or disablement resulting from accidental bodily injury. It is known fact that despite all possible precautions, accidents do occur. Accidents may occur while walking, driving or even in house due to fall from stairs or in toilet/bathroom. This may result into disablement or loss of limbs or even death. Personal insurance has divided into two categories of persons viz, normal risks and heavy risks as per their nature of job done, for heavy risks, the premium are loaded with extra amount. Such normal risks/heavy risks: Normal Risks: Persons engaged in occupation of accounts doctors/lawyers/architects/consulting

engineers/teachers/bankers engaged in administrative/secretarial and managerial functions/shopkeepers/shop assistants not using machinery/commercial travelers/builders/contractors/ engineers in superintending functions only/veterinary doctors, drivers to private motor cars and light vans and persons engaged in similar occupation. All persons engaged in manual labour/cash carrying employees garage and motor mechanics, machine operators/drivers of trucks or lorries and other heavy vehicles/professional athletes and sports persons/wood working machinists etc. Heavy Risks: Persons working in underground mines, explosives, magazines, electrical installation with high voltage supply/Jockeys Circus personnel/Mountaineering winter sports/ice hockey/and other similar hazards. Percentage of compensation Death 100% Loss of Two limb. 100% 2 years of 2 Limbs 100% Additional benefits at no extra premium: permanent total disablement i.e. 100%

i. Expenses incurred for carriage of dead body, (death due to accident) to place of residence are reimbursed @ 2% of sum assured or Rs. 2500, whichever is less. ii. Funds to dependent children of the decreased 10% of sum assured or maximum Rs.5000 per child

iii. 5% for every year the policy being in force subject to maximum 50% of capital sum insured. The sum insured is compared with the average monthly income of the insured. A policy for Rs. 1 lakh may not be granted to a person earnings. Rs. 1000 per month, because in the event of temporary disablement, his benefit per week is Rs. 1000 (Rs. 4000 per month) which is disproportionate to his monthly salary. The above benefits are allowed to capital sum policy holders.

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) ACT, 1999:

This Act was passed by parliament in December, 1999 and came into forces from 2000. This provides for the establishment of the: 1. Authority to protect the interest of holders of policies.

2. To regulate, promote and ensure orderly growth of insurance. 3. Matters connected there with or incidental thereto with the establishment of new authority IRDA, the UC Act and GIC Act stands amended, taking away their monopoly right to transact, life insurance and general insurance business respectively. Some of the important functions of IRDA are as below: 1. Licensing to transact insurance business. It fixes the financial and legal requirements for starting insurance business. It also gives licence to the intermediaries like agents and brokers and regulate their profession. 2. Providing security to the policy holders by supervising the functioning of the insurance companies. It shall insist on a periodical valuation and other financial requirements so that they have adequate assets to pay the claims of the policy holders.

3. Examine the quality of insurance products to ensure that they are fairly priced and honestly illustrated. The quality of sales literature is important. To maintain transparency in the product. 4. Monitor the functioning of the companies by spot inspection, whenever felt necessary and by maintaining close liaison with the various consumers forums and the other stake holds of the economy. 5. The paid up capital of companies wanting to transact life or general insurance business, should not be less than Rs.100 crores and in case of companies wanting to transact reinsurance business, the paid up capital will have to be not less than Rs. 200 crores. 6. Every insurance company will have to appoint an actuary, to be approved by the IRDA. And he/she would work till the 70 years of age.

THE END