Corporate Insurance

Property Insurance : Breakage of Fixed Glass.


Plutus Investments is an investment management company that has a modern two-floor office in the business district. They are a risk aware company and have insured their properties against all major perils.


Relationship Managers of Plutus were holding a meeting with the investment team of an important client. The meeting was being held in the boardroom on the second floor of their office building. This boardroom had a ceiling-to-floor glass wall on the side that overlooked the main road. When the meeting ended, one of the attendees pushed his chair back to get up. The chair, unfortunately, was pushed too hard and it crashed into a panel of the glass wall behind the chair. Owing to the impact, the glass panel shattered, creating a large hole in the wall. Plutus called in a carpenter who removed the broken panel, and proceeded to board up the space with a thick plywood to prevent any human intrusion and ingress of rain, wind etc. Plutus presented a claim for a new glass panel and the cost of boarding up the gap. Their insurer did not accept any liability stating that any accidental damage to the property, other than Fire and Special perils, was not covered under the policy.

What should have been done?

While Fire policy would cover loss or damage to the insured property by fire and special perils, it would not pay for accidental damage. However, Plutus could have extended their office fire Insurance policy to cover accidental damage to the fixed glass (including any outdoor signs). This extension would have paid for the broken glass as well as the cost of boarding up the hole created by the damage.

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Cyber Insurance : Own Business Interruption.


Akash Cloud Services are an information management company who offer a bouquet of cloud services in India and abroad. They have a state-of-the-art data centre and a team of 200 employees housed in their premises. They have taken insurance for all major exposures Cyber Liability insurance for their company.


Amidst July 2017, the cyber security team of Akash Cloud detected several cyber-attacks and discovered that some data from one of their cloud servers had been deleted. The affected cloud servers were isolated for investigation and a team of experts were called in to assess the extent of intrusion and loss of data. The cloud services were affected. Two clients sued Akash for data breach. Akash Cloud also had to spend money in upgrading their protections and restoring the data. Akash informed their insurers of the two cases and the expenses they incurred during investigation and restoration of data. The insurers agreed to provide protection to Akash against Third Party claims but refused to accept any liability for the losses suffered by Akash themselves.

What should have been done?

Usually, Cyber Liability insurance covers legal liability towards a Third Party arising out of an insured event. Akash should have also taken a cover for First Party protection. Under this cover, the insured can claim for Business Interruption Loss incurred as a direct result of the total or partial unavailability of the company’s computer system. The policy will also pay for Restoration Costs incurred by the insured because of the business interruption. The loss should have been discovered during the policy period and the interruption should be longer than the waiting period specified in the policy.

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Burglary Insurance : Theft by Staff.


Taste of India is a popular restaurant in the city. They have grown quickly and have achieved a significant turnover in just a few years. The restaurant is usually crowded in the evenings and weekends, which leads to a sizable cash collection all day. The cash counter is manned by a cashier and a qualified accountant takes care of the daily transactions while preparing final accounts. Taste of India is insured against a range of perils including Fire, Business Interruption and Burglary.


In April 2018, Mr. Kumar, their then hired accountant met with an accident and proceeded on long leave. Taste of India hired a temporary accountant to close books for their financial year. The new accountant discovered several bogus entries in the books and the owners realised that Mr. Kumar had been stealing cash from the restaurant. Taste of India lodged a police complaint against Mr. Kumar, and presented a claim to the insurers under their burglary policy. The insurers refused to the accept liability, stating that loss caused by business staff was excluded under the policy.

What should have been done?

Taste of India could have extended their burglary policy to cover infidelity of their employees. This extension covers any direct financial loss sustained due to any act of fraud or dishonesty committed by any employee of the insured. The fraud should have been discovered during the policy period or within a specified period from the date of death, dismissal or retirement of the employee.

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Single Project PI : Accidental Pollution.


Bhuvan Structures, a construction company was awarded the contract for building a large housing complex, comprising of three residential towers, a landscaped garden, a health centre along with a swimming pool, a restaurant and a community centre. As per terms of the awarded contract, Bhuvan Structures purchased a ‘Single Project Professional Indemnity Cover’ for this project, which was estimated to be completed within 3 years.


One day the construction team received a supply of paint. Their mini truck, carrying drums of paint to the storage area by the site, drove through a deep puddle of water and overturned. The paint drums fell from the truck, one rolled into the small lake beside the site. The paint leaked from the drum, spread over a part of the lake surface. The project owners called in pollution control experts to take urgent action to minimise harm to the lake’s ecosystem and extract the polluting paint. They found Bhuvan Structures negligent in handling the paint and held them responsible for the damage. Bhuvan Structures received a written demand for compensation, towards cost of pollution control and mitigation. Bhuvan Structures in turn, lodged a claim with their insurance agency. The insurers denied the claim on grounds that pollution risk was excluded from the policy.

What should have been done?

Since they were storing and handling a potential pollutant, Bhuvan Structures should have considered extending their insurance policy to cover sudden and accidental pollution. Under this extension the insurer is required to pay, on behalf of the insured, any losses resulting and arising out of the actual, alleged or threatened sudden, accidental and unexpected presence, discharge, dispersal, release, migration or escape of any Pollutant. This extension however, does not cover nuclear or radioactive materials.

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How Buyer’s Interest cover can keep your imported consignments secure from all hazards.


Bambi Toys Ltd. are toy retailers who source stuffed toys from manufacturers in various countries and sell them under their own brand. They have just signed an agreement with a Chinese manufacturer of stuffed toys. The first order of stuffed panda bears is placed on FOB basis and Bambi Toys arrange insurance from Shanghai Port to their warehouse in Pune. They also pay for the goods and take up the title documents in good faith.


The consignment arrives in Pune and the individual boxes are found damaged. The toys inside are stained by rain water and due to health and safety reasons, cannot be sold now. The damage appears to have taken place in China, prior to being placed on board the vessel. Bambi Toys present a claim of Rs. 5 Lacs to their insurer. The claim is rejected on grounds that the loss took place prior to FOB point. It is also discovered that the seller does not have a suitable insurance to cover this loss.

What should be done?

While dealing with a new supplier and not knowing his antecedents, buyers should arrange for Buyer’s Interest cover. This covers:

For FOB sales: Losses occurring during transit up to FOB point

For sales on Cost Insurance Freight (CIF) or Carriage & Insurance Paid to (CIP) basis:

The contingency of the seller not arranging insurance or not arranging adequate level or type of cover losses that cannot be recovered under the insurance arranged by the seller, due to circumstances beyond the buyer’s control.

This extension should not be disclosed to the seller as it could create a moral hazard.

For the best advice on your Business Insurance Needs, or any other queries, write to us at [email protected]

Thinking about getting insurance for your business’ factory expansion? Read this case to know how your insurance advisor can play a pivotal role in making sure you get the right insurance..


Wonder Foods Ltd are manufacturers of snacks who are undertaking a planned extension of their existing plant. It is decided that the existing plant will continue to run while the construction of the new phase is carried out. M/s Good Build have been given the contract to construct the structure and install the machinery. They have been asked to arrange for an insurance cover for the project. Good Build purchase an EAR policy for the extension project, on the advice of their insurance broker, they also take certain extensions: Third Party Liability Cover; Clearance & removal of debris; 50 / 50 clause; Express freight, overtime, holiday wages; Air Freight.


During the construction, an imported frying equipment is dropped by the crane, hitting a nearby storage shed causing a part of its roof to collapse, badly damaging the frying unit. Since the frying unit is the central piece of equipment, the replacement parts are flown in from Germany to avoid any delay to the project. The crane suffers only minor derangement. A claim for Rs. 10 Lacs is presented to the insurer for (1) damage to the storage shed, (2) repairs to the frying unit and (3) extra expenses in airlifting the replacement parts of the frying unit. The insurer admits the claim for 2 and 3 but rejects their liability in respect of the damage caused to the storage shed on grounds that the shed is not covered as part of the construction project.

What should be done?

Especially for extension projects, the insured should extend the CAR/EAR policy to cover any accidental damage to the owner’s surrounding property. This extension will cover loss of or damage to property located on or adjacent to the site and belonging to or held in care custody or control of the Principal(s) or the Contractor(s). However, the damage to surrounding property must occur directly due to the construction/erection of the items insured under the policy.

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How properly assessing your Indemnity Period can secure your revenue in time of crisis.


Taste of India is a popular restaurant in the city which has achieved a significant turnover in just a few years. Considering the business volume, their broker recommends a Business Interruption insurance in addition to the Fire insurance policy. In deciding the Indemnity Period, the owners estimate that following a fire, the process of cleaning the premises, redoing the interior and replacing the furniture, will not take more than 2 months. They feel that they can get back to their normal level of business in 3 months’ time.


In the 2nd year of the policy, a short-circuiting starts a fire in the kitchen which spreads to the entire restaurant, leaving considerable damage to the kitchen and the guest areas. A considerable time is consumed in informing the authorities, taking approvals, cleaning, debris removal, testing electricals, ordering the new equipment, refitting, getting clearance from health and fire departments and training the new staff.

At the end of 3 months, the insurers inform the owners that the indemnity period is exhausted and their claim is finalized on the gross profit for first 3 months of interruption. The restaurant is ready only after 6 months and it takes further 2 months to regain its pre-loss volumes. Even after payment of the BI claim (3 months), the owners carry a loss of nearly 4 months’ gross profit.

What should be done?

While estimating the indemnity period, all possible constraints must be considered and sufficient time should be provided for each.

  • Rebuilding planning time
  • Obtaining rebuilding permissions
  • Rebuilding time
  • Lead time to replace equipment/furniture
  • Re-training staff
  • Recommissioning equipment
  • Approvals/Clearances
  • Regaining pre-loss trading level

For the best advice on your Business Insurance Needs, or any other queries, write to us at [email protected]

How a Vicarious Liability cover can protect your business from damage done by contracted 3rd parties.

Professional Indemnity – Vicarious Liability


Great Spaces is an architect firm which has been taking Professional Indemnity insurance to cover civil liability claims arising out of provision of their professional services. They are engaged by a building owner to provide consultation & coordination for remedial work to waterproof the garden roof deck on an existing building and also landscape it with various trees and plants.

Great Spaces retain a specialist landscape architect to provide specifications for correct soil to be used.


Following completion of work, it is discovered that some plants are dying and others are showing signs of stress from roots sitting in water, due to insufficient drainage caused by incorrect soil type used for landscaping. Great Spaces are sued by their client for the cost of plants, repairs and re-landscaping. Great Spaces find out that the landscape architect has since passed away and has left no assets that can meet the claim. Great Spaces present the claim to their insurer who refuse to admit liability on grounds that the policy excludes any claim arising from professional services provided by the insured’s Consultants, Contractors & Agents (vicarious liability).

Before engaging an external firm/professional to provide advice on any part of their work, the insured should extend the policy to also cover vicarious liability. This will provide indemnify to the insured for any claim for civil liability arising from the professional services provided for and on behalf of the insured by a consultant, contractor or agent. However, this does not provide indemnity to the consultant’s, contractor’s, or agent’s own liability.

What should be done?

Before engaging an external firm/professional to provide advice on any part of their work, the insured should extend the policy to also cover vicarious liability. This will provide indemnify to the insured for any claim for civil liability arising from the professional services provided for and on behalf of the insured by a consultant, contractor or agent. However, this does not provide indemnity to the consultant’s, contractor’s, or agent’s own liability.

For the best advice on your Business Insurance Needs, or any other queries, write to us at [email protected]

Coverage in a Fire Insurance Policy.

Fire insurance is a quintessential cover for most businesses and industries. Any company formed under the provisions of the Companies Act, 1956 as well as any co-operative societies which have physical assets need to insure their business against the risk of fire and earthquake. This is where a fire insurance policy comes into the picture. The policy protects the assets of the business against fire and other perils and provides unmatched financial security.

A standard fire insurance policy covers other perils too besides fire. That is why the policy is called fire and special perils policy. A total of eleven perils are covered under a fire and special perils policy. These perils are as follows –


The first and obvious peril is fire. If the insured asset or property is damaged due to fire, the policy compensates the loss incurred. Fire should be accidental in nature and not deliberate.


The next peril which is commonly covered is lightning. If, due to a lightning strike, the insured property or asset is damaged or destroyed, claim is paid under the fire insurance plan.


Explosion from any cause and the resultant damage is covered. Explosion of commercial boilers are, however, excluded. Commercial boilers are those which generate steam to power the company or the manufacturing unit. Explosion of all other types are covered under the plan.

Riots and Strikes

If the insured property or any insured asset is damaged due to riots or strikes, the damages sustained and the financial loss incurred is covered under the fire insurance policy. While in case of riots there would be public looting or destruction, in case of strikes, property is damaged by employees of the company itself.

Malicious Damage

Malicious damage occurs when someone, with intent of malice, damages the property or asset. Such malicious damages are also covered in the policy.

Water and Wind related damage

Water and wind related damage is when the insured property or asset is damaged due to water or wind related perils. Such perils include floods, storms, cyclones, inundation, etc.

These are the basic perils which are covered by all fire insurance policies. Besides these, the following perils are also added to the coverage of a fire insurance plan –

Aircraft Damage

If any material is dropped from any airplane or satellites and the material causes damage to the insured property, such damages would be covered.

Bursting or overflowing of a Water Tank

If a water tank bursts and overflows and the water rushes down to destroy the insured property, the damage incurred is covered by the fire policy.

Leakage of Automatic Sprinklers

Sprinklers are meant to protect against fire and prevent fire-related damages. If, however, the sprinklers leak automatically even in the absence of fire and damage the insured property, the damage cause is covered by the fire insurance policy

Bush Fires

Bush fires and the damages they cause are also covered under the fire insurance policy.

Landslide and Subsidence

Damage caused by landslide or subsidence are also covered under the fire insurance policy.

Impact damage by Third Party Vehicles or Animals

Damage caused by outsiders (other than residents and employees) vehicles or animals are also covered under the fire insurance policy.

Missile Testing

Property damaged by missiles undergoing testing are also covered under the fire insurance policy.

These perils are normally covered by a fire insurance policy. Though the coverage is comprehensive, there is a concept of deductible clause in all fire insurance policies. In every claim, there is a deductible of 5% to 15% of the claim amount. The deductible ranges in the minimal range of Rs.10, 000 to Rs.500, 000 depending on the claim made. At each instance of claim, you have to pay the deductible. If the loss exceeds the deductible, the fire insurance policy pays the claim. In case of act of God perils (natural calamities) the deductible is higher than normal perils.

Besides the above-named perils, a fire insurance policy provides other value-added coverage features too. These include the following –

  • Removal of debris – Under this feature, the costs incurred in clearing and removing the debris caused due to any of the covered peril is compensated by the plan. The coverage is allowed up to 1% of the claim amount.
  • Architect’s Fees – The fees payable to architects for reconstructing a damaged property is also covered by the plan. The coverage is available up to 3% of the claim amount.

Add-on Coverage:

There are a number of add-on covers available under a fire policy. The most common being:

Earthquake: This cover should be taken for properties lying in earthquake prone zones of the country.

Terrorism: Loss or damage of property due to Terrorist Acts are excluded under the fire policy. This can be availed as an add-on.

All assets covered under a fire insurance policy can be categorized under the four following heads –

  • Buildings
  • Machinery, plants and equipment
  • Other assets like furniture and fittings, electronic equipment, stationery, air conditioners etc.
  • Stocks which are further divided into raw materials, work in progress and finished goods

So, understand the coverage of a fire insurance policy before you buy one.

For the best advice on your Business Insurance Needs, or any other queries, write to us at mi[email protected]