Fundamental Principles In Every Insurance Cover
- Utmost Good Faith – The Contract of Insurance requires not only from the Insurer but also from the Insured the observance of Utmost Good Faith or Uberrimae Fidae. Both parties must disclose conditions affecting the risk and other material facts, as such shall be the basis of the agreements of the contracting parties. Failure of either party to declare in utmost good faith may avoid the contract.
- Insurable Interest – It is the relationship of the Insured to the thing that is subject of insurance, where the former would suffer loss, pecuniary or otherwise, in case of loss.
- Indemnity – The obligation of the Insurer to make good any loss or damage which the Insured has incurred, provided the cause of loss or damage and the thing are covered in the contract of insurance, within a given period of coverage.
- Subrogation – It is the substitution of the Insurer to the rights of the Insured after the former has paid or settled, in whole or in part, the supposed obligation of the latter to a third person.
- Premium – It is the consideration being required by the Insurer for undertaking to indemnify the Insured against loss, damage or liability arising from unforeseen, unknown or contingent event.
- Proximate Cause – It is the Responsible Cause of an event or happening. That cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result event or result would not have occurred.
What is Liability Insurance
A specialty insurance cover designed to mitigate “costly” risks involved generally in construction and other engineering related projects, protecting either or both the Contractors (Obligor) and its Clients (Obligee), depending on the provisions of the policy taken.
Basic Types of Engineering Insurance
Contractors All Risk and Erectors All Risk Policy
- Material Damage Section
a. Contract works
b. Existing structures (first loss)
c. Contractor’s constructional plant
d. Removal of debris e. Consultant’s fee
f. Marine transit (any one conveyance)
2. Third Party Liability
a. Bodily injury, death, illness
b. Property Damage
1. Contractors All Risk Insurance (CAR)
Covers primarily civil works and related undertakings – Material Damage Section and Third Party Liability Section
Scope of Cover
All Risk including but not limited to:
a. Fire, lightning, explosion, crashing aircraft, extinguishing water or other fire fighting measures.
b. Flood, inundation, rain, snow, avalanche, tsunami
c. Windstorm of any kind
d. Earthquake, subsidence, landslide, rockslide
e. Theft, Burglary
f. Bad workmanship, lack of skill, negligence, malicious acts or human error
Exclusions Under CAR
1. Loss or damage due to war or warlike operations
2. Loss or damage due to willful act or willful negligence of the insured or his representatives.
3. Loss or damage due to mechanical and/or electrical breakdown or derangement
4. Loss or damage due to faulty design
5. The cost of replacement, repair or rectification of any deficiencies in the contract works.
2. Erection All Risk Insurance (EAR)
Covers primarily electro-mechanical works – Material Damage Section and Third Party Liability
Scope of Cover
All Risk (Same as CAR)
Plus: 1. Negligence
2. Faults in erection
3. Excess pressure or vacuum, tearing apart on account of centrifugal force
4. Any other unforeseen events
and Other Engineering Insurance (Machinery Breakdown Coverage, Electronic Equipment Insurance, among others), Standard or Specially Designed for your requirement.