DRAFT ONLY – WORK IN PROGRESS
REVIEW GUIDE FOR CLIENTS
CLIENT SERVICE DELIVERY AIDE MEMOIRE
NAME OF CLIENT: ..................................................................................
DATE OF COMPLETION: ..................................................................................
COMPLETED BY: ..................................................................................
CONTENTS
SUBJECT SECTION
FOREWORD -
ACTION KEY -
GENERAL 1
Strategic Risk Management Issues 1.1
The Client 1.2
Risk Financing 1.3
Servicing Guidelines 1.4
PROPERTY
Assets/Material Damage 2
Goods in Transit 3
Riot, Strike, Public Disorder 4
Fidelity (Commercial Crime) 5
Forged Transfer 6
Money 7
Theft 8
Third Party Computer Crime 9
BUSINESS INTERRUPTION 10
LEGAL LIABILITIES 11
PEOPLE
Group Personal Accident/Sickness 12
COID 13
MOTOR 14
RAF 15
Motor Trade 16
BONDS & GUARANTEES 17
SUSPENSIVE/INSTALMENT SALE 18
MISCELLANEOUS (CONTINGENCY) RISKS 19
SPECIALIST SECTIONS :
MACHINERY BREAKDOWN 20
PLANT ALL RISKS
Owned Plant 21
Hired Plant 22
CONTRACT WORKS 23
Erection All Risks 24
Projects 25
MARINE
Hulls 26
Cargo/Transit/Stock Throughput 27
Liabilities 28
CREDIT/POLITICAL RISKS
Domestic 29
Export 30
CEND 31
AVIATION 32
eCOMMERCE/eRISKS 33
UNINSURABLE RISKS 34
FOREWORD
This is the latest edition of a tried and trusted aide memoire developed over many years.
The team responsible for the project have sought to meet the following criteria :
1. A full perspective on risk issues which will enable contact and broking staff to review client’s needs thoroughly.
2. This document is principally a contact tool (and therefore items perceived as purely technical points have been omitted) and it should be used to prepare input for :
• Agenda for - Strategy Meetings } As used by Account Executives
- Cover Reviews } in both specialist and non-specialist
- Renewal Presentations } roles
• Manuals/Summaries
• Uninsured/Uninsurable Risks Reviews
There are three concerns of which we need you to be continually aware.
Firstly security. This document must not fall into our competitors’ hands. It will reduce our competitive advantage if it is freely available to competitors.
Secondly we must not become superficial. This is not a checklist and it must not be allowed to inhibit original thought. Think about your client’s needs.
Thirdly use the specialist resources of the company to provide your client with the best possible advice. Do not attempt to “do your own thing” in areas which require specialist input.
ACTION KEY
To ensure uniform usage of the document, the following symbols are recommended :
ACTIONED, COMPLETED - (
AGENDA – FOR DISCUSSION WITH CLIENT - A
COVER IN FORCE - OK
NOT APPLICABLE - N/A
RENEWAL QUESTIONNAIRE - RQ
RENEWAL DECLARATIONS - RD
NOT TAKEN UP - NTU
OUTSTANDING - O/S
COVER REQUIRED IMMEDIATELY - C
QUOTATION REQUIRED FOR CURRENT PERIOD - Q
QUOTATION REQUIRED FOR RENEWAL PURPOSES - R
RISK MANAGEMENT MANUAL - M
UNINSURED RISKS SCHEDULE - U
STRATEGIC DEVELOPMENT PLAN - SDP
|NO. |ITEM |EXPLANATION |ACTION |
|1. |GENERAL |
|1.1 |Strategic Risk Management Issues |
|1.1.1 |Risk management philosophy |Does client have a current formal philosophy statement recognised by all sectors of the business and issued by the Chief Executive? | |
|1.1.2 |Strategic development plan |Is our development plan for this client complete and up to date? | |
| | |Are all action points in hand? | |
|1.1.3 |Client reviews |Have all key decision makers been interviewed and the results recorded in the client review database? | |
| | |Have all concerns arising been resolved? | |
| | |Has feedback been given to the client? | |
|1.1.4 |International links |Are service providers involved in other countries? | |
| | |If so, is this addressed in the strategic development plan? | |
|1.1.5 |Communications/Strategy/IT links |Have we considered closer links with this client, e.g. our personnel on site or access to our computer systems? | |
|1.1.6 |Risk evaluation |Does the client perform any systematic evaluation of : | |
| | |Financial Risk, e.g. currency and interest rate fluctuations | |
| | |Event Risk, e.g. fire, storm, product liability | |
| | |Operational Risk, e.g. product recall | |
| | |Is there any systematic process for identification, quantification and mitigation of risk? | |
|1.1.7 |Risk retention |Has a proper risk retention review been carried out? | |
|1.1.8 |Business risk |Has a proper business risk analysis/risk assessment review been completed to prioritise all the risk exposures of the business? | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.1.9 |Futures, options, swaps |Does the client utilise any of these instruments to manage exposures? Are there any “insurance” products that would enhance the | |
| | |process | |
|1.1.10 |Balance sheet provisions |Have you checked the balance sheet and accounts for provisions that can be more efficiently handled via an insurance arrangement | |
|1.1.11 |Cost of risk |Is there a programme to measure the cost of risk on an ongoing basis? | |
|1.1.12 |Loss history review |Analyse the client’s claims and loss data, and produce a statistical loss analysis. Put forward recommendations on the optimum level| |
| | |of deductible and/or self-insurance retentions. | |
|1.1.13 |Group services ????? |Does your client utilise the services of : Yes No | |
| | |Risk Engineering? ( ( | |
| | |Risk Finance? ( ( | |
| | |Forbes Reinsurance? ( ( | |
| | |Transportation Risk Management Services? ( ( | |
| | |Financial Services? ( ( | |
| | |Guardrisk? ( ( | |
| | |Credit and Political Risks? ( ( | |
| | |Allied Products & Services? (Auto Factors/PPP) ( ( | |
| | |Coidlink? ( ( | |
| | |Aura? ( ( | |
| | |Underwriting Solutions? ( ( | |
| | |Personal Lines/Volume Business? ( ( | |
| | |AF Wholesale Broking Division? ( ( | |
| | | | |
| | |If the answer to any of these is in the negative, is there a plan to change the situation? | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.2 |The Client |
|1.2.1 |Title of insured |Obtain organisational chart, annual report, brochures, in-house newsletters, branch addresses, product line up etc. | |
| | |Consider SASRIA/NASRIA one insured definition with particular regard to joint ventures and associates. | |
| | |Have you distributed a copy of client’s annual report to all interested parties, e.g. Insurer, Service Team? | |
|1.2.2 |Description of business |It is essential that every present, dormant or sold business activity of the client be disclosed, especially for Liability and | |
| | |Fidelity coverages. | |
| | |Obtain supply, production and distribution flow charts. | |
| | |Draft a business description that adequately describes all activities. Separately describe sold or dormant activities. | |
|1.2.3 |Subsidiary and Controlled Companies/Overseas |Check if any are to be specifically excluded. Can we acquire any more of the business not currently held? | |
| |Parent/ Associates/Joint Ventures/ Dormant | | |
|1.2.4 |Disclosure of material facts |Key principle of insurance; failure to comply may result in repudiation of a claim. | |
|1.2.5 |Long term agreements |Premium saving; payback. Informal discounts. Is there an agreement signed? | |
|1.2.6 |Matters outstanding (claims, documentation, |Be fully informed and discuss. | |
| |adjustments, returns, quotations and queries)|Are outstanding issues properly recorded in all files? | |
|1.2.7 |Client budget preparation/ |Useful for client to know deposit premiums and subsequent declaration/adjustments; cash flow planning. Also remind re prompt | |
| |timing/declarations/ adjustments |submission of declarations, particularly Sasria BI within 45 days. | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.2.8 |Premium payments |Agree with client that premium must be paid to us no later than 30 days after renewal date. Consider premium payment financing | |
| | |prior to renewal. | |
| | |If any foreign currency premiums are involved ensure that client understands what is required of him and that applications are | |
| | |completed timeously. | |
|1.2.9 |Developments, expansion, new products, |Regent involvement at planning stage essential, e.g. : | |
| |processes, take-overs, mergers |New Projects | |
| | |Project Delay | |
| | |Sale/Purchase of Companies & Management Buy-Outs | |
| | |These are not exhaustive. (Consult client technical staff where necessary). | |
|1.2.10 |Client’s major competitors |Sensitivities of client to Regent or perhaps same staff handling competitor’s business. While we can use industry expertise for | |
| | |client benefit, we respect security of client information. Use discretion. | |
|1.2.11 |Benchmarking |Against who does the client benchmark itself when comparing financial or other results? | |
|1.2.12 |Legislation creating special exposures for |Identify legislation or by-laws which change exposures e.g. Public Authorities, etc. | |
| |clients and requiring specific risk |Be aware of global trends when dealing with global clients. | |
| |management arrangements | | |
|1.2.13 |Board resolutions, e.g. Fidelity or Liability|Confirm with the client’s MD/FD extent of authority. Does he need to refer to his Board or can he make decisions regarding adequacy| |
| |limits, GPA benefits |of Sums Insured, Limits of Indemnity, Indemnity periods, deductibles, etc. It may be appropriate to recommend that his Board should| |
| | |ratify the more important aspects of risk financing structures. We should help to prepare board papers. | |
|1.3 |Risk Financing |
|1.3.1 |Franchises, deductibles, aggregates |Ensure precise application is understood by client especially where multiple deductibles can apply, e.g. a loss payable partly under| |
| | |a Motor policy and partly under a Goods in Transit policy which will incur a deductible under both. | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.3.2 |Choice of insurers, reinsurers, captive |Consider : | |
| |managers, wholesale brokers, reinsurance |Long standing relationships | |
| |brokers |Specialist capability | |
| | |Financial strength | |
| | |Uniform provision of cover | |
| | |Check financial security | |
|1.3.3 |International insurer selection criteria |The critical success factors are: | |
| | |Claims service (some overseas non-registered markets can take up to 90 days after agreement of the loss) | |
| | |Financial security | |
| | |Global network | |
| | |Underwriting flexibility | |
| | |Ability to deal with captives | |
| | |Risk control expertise | |
| | |US and Australian markets should be a last resort. | |
|1.3.4 |Market presentation |Consider a presentation to the market, which would include risk control performance. Involve client as appropriate. | |
|1.3.5 |Placements outside RSA |MP1 forms must be used for all placements via captives or directly into an offshore facility which is not locally registered. RV7 | |
| | |forms for business placed with non-registered Insurers via Lloyds Broker. | |
|1.3.6 |State of market |Give an overview of historical and projected insurance market conditions. Use media extracts to support your presentation. Keep | |
| | |your client up to date. | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.4 |Servicing Guidelines |
|1.4.1 |Change of broker |Issues to watch out for when taking over an account from another broker: | |
| | |Check the basis of wording, retroactive cover dates, and run-off cover provided by the expiring policy | |
| | |Obtain a declaration of “no known incidents” reported at the date of changeover | |
| | |Check for any joint venture insurance requirements | |
| | |Obtain the previous policy wordings and cover notes to verify cover arrangements | |
| | |Check on construction projects that may go beyond the renewal date | |
| | |Check for any peripheral policies arranged by subsidiaries | |
| | |Obtain information on sold and dormant business operations that were covered on a Claims Made liability wording | |
| | |Check the location of business operations for territorial limits of coverage | |
| | |Is there a need for DIC/DIL coverage? | |
| | |Verify the current underwriting information, declarations and review information with the client. | |
| | |Obtain detailed claim by claim experience last three years. | |
| | |Check on current and outstanding claims – and responsibility for running off. | |
|1.4.2 |Claims reporting |Review the system for reporting claims and emphasise the policy conditions and prescription requirements for reporting. Check | |
| | |whether any problems have been experienced. | |
| | |Do you have a claims handling agreement with Insurers? | |
|1.4.3 |Effective date of amendments |It is imperative that if changes are required arising from a discussion or meeting with the client, the effective date of the change| |
| | |is agreed. | |
| | |Do not confirm cover until it is fully placed and then ensure that all material conditions are clearly understood by the client – | |
| | |and put in writing. | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.4.4 |Other service providers/joint appointments |Loss adjusters, valuators, third party recovery agents, attorneys; service and wholesale brokers and other Regent Service providers.| |
| | |Review scope of work with the service providers and their effectiveness | |
| | |Ensure that there is a clear division of responsibility which is understood by all | |
| | |Agree how fees are to be prepared/submitted and agreed. | |
|1.4.5 |Renewal date |Consider moving the renewal date away from the client’s year-end and peak periods. Remember to deal with the SASRIA/NASRIA | |
| | |complications if the renewal dates are changed. Consider also tax legislation dealing with prepayments. | |
|1.4.6 |Safe retention of policy documents | | |
|1.4.7 |Summary and Manual |Agree the format, distribution and deadline. Prior to renewal confirm to the client : | |
| | |Scope of cover | |
| | |Market used for placement | |
| | |Limits of indemnity per occurrence and in the aggregate | |
| | |Levels of deductibles per occurrence and in the aggregate | |
| | |Self-insurance stop loss limits and aggregates | |
| | |Basis on which premiums are adjustable | |
| | |Claims handling arrangements and Loss Adjuster panel | |
|NO. |ITEM |EXPLANATION |ACTION |
|1.4.8 |Basis of our remuneration |Have you agreed a service programme in terms of the standard fee negotiation process? | |
| | |If possible agree that additional income can be earned for non-core services (i.e. activities not envisaged at inception when | |
| | |agreeing our fee). | |
| | |Construction projects | |
| | |Acquisitions, disposals, mergers | |
| | |Due diligence | |
| | |Claims servicing for major losses and where the aggregate is burnt | |
| | |Major extensions to cover | |
| | |Ensure that fee proposal is signed off by Stratcom MD before submission to client | |
|NO. |ITEM |EXPLANATION |ACTION |
|2. |ASSETS MATERIAL DAMAGE |
|2.1 |Basis of Valuation |Emphasise the penalties from under-insurance and the availability of professional valuations. Don’t forget exchange rate fluctuations, duties and surcharges. |
| | |Agree the basis of valuation first with Insured and Insurers and delete average if applicable. Recommended basis is VAT exclusive sum insured with VAT inclusive |
| | |claim settlements but there can be circumstances where this is not possible. Check it out. |
|2.1.1 |Reinstatement Value |Consider for Buildings and Plant. Values at date of completion of reinstatement unless ‘Day 1’ basis used. (Remember all | |
| | |extensions) | |
| | |(Not necessarily new for old e.g. suitable second hand) | |
|2.1.2 |Alternative Replacement |With rapid development of plant and equipment, most equipment becomes obsolete fairly quickly. Insurers will not normally pay for | |
| |(Output capacity) |more advanced equipment, even if the Sum Insured is adequate. Negotiate Alternative Replacement on plant/equipment with measurable | |
| | |capacity or output or investigate specialist markets. | |
|2.1.3 |Day One/365 |Establish VAT incl. or VAT excl. | |
|2.1.4 |Assets Declaration |Establish basis of declaration in line with above. Explain benefits and possible premium implications. | |
|2.1.5 |Agreed Value |May be necessary basis of value for selected property e.g. works of art, obsolete stock, churches. | |
|2.1.6 |Indemnity |Reinstatement value less depreciation | |
|2.1.7 |Market Value |Selling price for property other than stock. For stock, replacement cost at time of loss. | |
|2.1.8 |First Loss |Agreed loss limit which is significantly less than total value at risk. Useful in achieving premium savings and/or where capacity | |
| | |is a problem. Delete average. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.2 |Important Considerations |Buildings, Plant and Computers/Electronic Equipment | |
|2.2.1 |Sidings, Roads, Fences, Bridges, Dams, |Exclude values if this property is excluded from definition of property insured or add values as needed. Do not assume. Discuss | |
| |Reservoirs, Gardens, Landscaping, Land |with client. | |
|2.2.2 |Public Authorities’/ Planning |Sum Insured must be appropriate where there is a potential exposure. Investigate cover for undamaged property. | |
| |requirements | | |
|2.2.3 |National Monuments Act |Identify and check where there is a potential exposure. Indemnity provided must be adequate to ensure compliance in terms of this | |
| | |Act e.g. match original building material in event of partial damage. | |
|2.2.4 |Sprinklers |Value of sprinklers must be included in Sums Insured and allowance made for improvements e.g. upgrading from 9th to 10th Edition | |
| | |ASIB rules. If in doubt speak to ASIB. | |
|2.2.5 |Professional Fees |Either include an allowance in the Sum Insured or treat as a first loss item. | |
|2.2.6 |Special Foundations |Identify and check if included in Sum Insured. | |
|2.2.7 |Manufacturers Warranty |Negotiate to include everything necessary to preserve all benefit under any guarantee or warranty. | |
|2.2.8 |Fear of Loss/Latent Damage |Negotiate to include cover for goods where a possible breach of integrity of ‘undamaged’ assets may have occurred following an | |
| | |insured event e.g. steel girders warping following fire. | |
|2.2.9 |Obsolescence |With rapid development, most equipment becomes obsolete fairly quickly. Negotiate cover for undamaged property e.g. spare parts, | |
| | |tooling which becomes unusable for its intended purpose following an insured event to other insured property. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.2.10 |Additional Parts |Negotiate to include cover for additional parts that must be purchased which are associated with the replacement item that was the | |
| | |subject of a claim e.g. new spares for new equipment. | |
|2.2.11 |Vehicle Accumulation Limit (RVC) |Catastrophe exposure especially overnight in depots. Need to insure difference between indemnity per motor policy and reinstatement| |
| | |value. NB: SASRIA will permit RVC on vehicles but check Riot manual for specific conditions. | |
|2.2.12 |Documents, Films, Drawings, Computer |Discuss requirements with client. Establish exposure and determine level of indemnity required. First loss cover available for | |
| |Records Paintings, Works of Art |documents. | |
|2.2.13 |Computer Bureau Risks, Outsourcing |Obtain copy of contract to assess responsibilities and exposures. Frequently onerous. | |
|2.2.14 |Outside Shippers' Stores |Check responsibility to insure. Note that subrogation rights per storage conditions may invalidate cover. Discuss insured and | |
| |Consignment/Agents' Stocks |insurer waiver of rights of recovery e.g. as an alternative esp. building contracts. | |
|2.2.15 |Stock Declarations |The Sum Insured can be agreed on a day one replacement cost non-adjustable – agreed with insured and insurer if of benefit to | |
| |(monthly/quarterly/annual) |insured. | |
|2.2.16 |Debris Removal |Blanket/first loss. This is e.g. for stock which, when damaged, is difficult/expensive to remove e.g. solidification, matting and | |
| | |clogging. Other extensions also relevant e.g. removal of silt. | |
|2.2.17 |Property of Others |If client accepts responsibility to insure. Check that the correct basis of valuation is used. | |
| | |NB : SASRIA/NASRIA requirement for separate coupon. Not part of "one insured". | |
|2.2.18 |Equipment Leased/Residual Cover |This relates to responsibility under leases or agreements. Responsibility may not be defined contractually e.g. customers' tooling.| |
| | |If leased – may only need DIC/DIL - but check lease and maintenance agreements. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.2.19 |Contracts |Review contracts and implications with client. This includes maintenance agreements. | |
|2.2.20 |Value of Exhibition Stands, Furniture, |Check contractual responsibility. | |
| |Equipment. |NB: Exhibition organisers need special treatment e.g. pluvius, non-appearance, key man cover etc. (Refer Miscellaneous Risks | |
| | |section). | |
|2.2.21 |Situation Limit per Occurrence/ per |Does it include Business Interruption? Has an EML/MPL calculation been done? This can particularly affect capacity and price as | |
| |situation and/or per building |well as assisting in determining limits. Are the EML/MPL figures agreed by the market? | |
|2.2.22 |Sales Duty, Tax, Excise/Customs Duty, |Consider implications of legislation and responsibility for payment after loss. Specific industries such as liquor, tobacco need | |
| |Import Surcharges/ Statutory Duties |particular attention. | |
| | |Consider first loss items e.g. import surcharge. | |
|2.2.23 |All Other Contents Clause |Determine realistic limits according to client needs. | |
|2.2.24 |Capital Additions Clause |Emphasise the benefits of this automatic cover for 10% or 15% increase with the obligation to declare quarterly. (Don’t duplicate | |
| | |Day 1 plus adjustment for escalation) | |
|2.2.25 |Sprinkler Certificates/ASIB |Emphasise the need to maintain sprinklers and to comply with ASIB recommendations. Check that ASIB Certificate is current. | |
| |Recommendations | | |
|2.2.26 |Demolition Costs/Clearance Costs |Such costs may vary according to industry/locality. Consider first loss cover. Also extend to include dismantling/demolition of | |
| | |undamaged property where necessary to effect repair/reinstatement. | |
|2.2.27 |Sealing and reopening of Mine Shafts |These costs which can be significant can be incurred in the process of e.g. fighting a fire which itself may be uninsured. Can also| |
| | |apply to proto team and rescue costs. | |
|2.2.28 |Express Delivery, Overtime |Extension or to be included in BI. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.2.29 |Increased Costs, Data and Software |Extension or to be included in BI. | |
| |Reproduction Costs | | |
|2.2.30 |Viruses |Viruses generally uninsured/uninsurable. Also check deliberate damage to computer systems – MD and BI exposures. | |
|2.2.31 |Tenants' Improvements |Check responsibility to insure. | |
|2.2.32 |Bonded/Leased Premises |Check agreements re responsibility to insure. If client responsible remember SASRIA implications. | |
|2.3. |Cover |
|2.3.1 |Full Explosion/Implosion |Implosion is insurable. | |
|2.3.2 |Storm, Flood, Aircraft, etc. | | |
|2.3.3 |Goods in the Open |Note that there is no storm cover on goods in the open which are not designed to exist in the open. Check exposure. Disclose and | |
| | |negotiate as relevant. | |
|2.3.4 |Malicious Damage & MD (Theft) |If no theft cover in force, damage to property during course of theft must be arranged by endorsement. | |
|2.3.5 |Earthquake (Fire or Full) |Mining property excluded. | |
|2.3.6 |Earth Tremor (Mining) |Property underground generally excluded. | |
|2.3.7 |Leakage/Discharge (fire extinguishing |Insured’s stocks etc. on insured premises or elsewhere may also be damaged. | |
| |systems) | | |
|2.3.8 |Molten Metal/Material Breakout, Holing |Related to furnaces/refractory linings. Not covered by conventional wording and requires specific negotiation. N.B. BI | |
| |Through, Solidification |implications. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.3.9 |Spontaneous Combustion, Charring |Check that not excluded. (Don’t restrict discussion to these items only e.g. fermentation) | |
|2.3.10 |Subsidence and Landslip |Different ground/soil conditions e.g. dolomite, clay and also proximity/exposure to other property, dams etc. (If so, disclosure of| |
| | |material facts necessary). First loss basis available or consider high deductible, selective sites. (N.B. cover for property on | |
| | |sloping areas) | |
|2.3.11 |Accidental Damage/All Risks |Check adequacy of limit and check exclusions. Negotiate non-accidental wording if possible. Ideally should be material damage only| |
| | |with full consequential loss in BI cover/sum insured. | |
|2.3.12 |Damage due to Temperature fluctuations |Consider deleting exclusion for property undergoing a heating/drying process. | |
|2.3.13 |Deterioration of Stock |Consider full deterioration of stock cover for appropriate risks e.g. cold stores and the like. (Property under temperature | |
| | |controlled conditions) Often refers only to increase in temperature spoiling goods but some goods affected by change in temperature | |
| | |etc. so check wording. | |
|2.3.14 |Stock Spoilage |Consider DOS for unprocessed or in process stock/raw materials following indemnifiable event to other property insured. | |
|2.3.15 |Sloughing |Related to e.g. open cast mining risks where a dragline slides into the pit without suffering damage. Cost of recovery can be | |
| | |significant. | |
|2.3.16 |Destruction of Salvage |There are different wordings. Include brands/labels and trademarks. | |
|2.3.17 |Smoke Damage (without Fire), |There are cases where smoke damage will be covered e.g. where the originating cause is fire or even if fire in the vicinity and | |
| |Contamination |smoke carried by wind. | |
| | |Consider under accidental damage cover – smoke, dust, foodstuffs, liquids, fumes, inadvertent mixing of goods, etc. | |
|NO. |ITEM |EXPLANATION |ACTION |
|2.3.18 |Bulk storage (Leakage, Collapse) |This could apply to any type of bulk commodity. Consider under Accidental Damage Section. Cover is for contents but do not | |
| | |overlook structure/surrounding property nor consequential loss. | |
|2.3.19 |Collapse (of Racking, Shelving, Stocks, |Insurable under Accidental Damage section. | |
| |etc.) | | |
|2.3.20 |Claims Preparation Costs |Client’s costs and expenses reasonably incurred in substantiating the amount of the claim. All sections of policy. | |
|2.3.21 |Balancing Charges |Cover available for tax payable by client on recoupment, via insurance claim, of earlier depreciation allowed by Receiver. | |
|2.3.22 |Rent Payable/ Receivable/Rental Value |Wider cover available under Business Interruption Section. | |
|2.3.23 |Difference in Conditions/Limits (DIC/DIL)|Cover might be necessary on new acquisitions/joint ventures where extent of existing cover is in doubt or inferior or for offshore | |
| | |subsidiaries. | |
|NO. |ITEM |EXPLANATION |ACTION |
|3. |GOODS IN TRANSIT - NON-MARINE |
|3.1.1 |Insured Property |Consider other goods as well as those pertaining to the business and amend schedule accordingly. | |
| | | | |
| | |N.B.: If cover for containers is required, include specifically, as most wordings do not cater for this, only the contents. | |
|3.1.2 |Mode of Conveyance |Select correct description. "Road, rail or air" is preferable. | |
|3.1.3 |Basis of Valuation |Generally market value or "selling price". | |
|3.2 |Limit of Indemnity |
|3.2.1 |Any One Load or Conveyance |Include containers, ropes, tarpaulins, packing etc. - consider large rail consignment. | |
|3.2.2 |Any One Location (Accumulation) |Possibility of more than one vehicle at overnight stop or premises awaiting unloading. | |
|3.3 |Cover |
|3.3.1 |Scope of Cover |If FCO cover elected, ensure that client understands restriction. Include derailment if goods sent by rail, or extend to cover | |
| | |impact of load with bridges etc. for bulky/large loads. Include theft from vehicle left unattended following FCO. | |
|3.4 |Extensions |
|3.4.1 |Deterioration (Full/Breakdown) |Full - resulting from variation in temperature however arising. Breakdown of either vehicle or refrigerating machinery usually with| |
| | |a time exclusion. | |
|3.4.2 |Debris removal |Nature of goods (heavy materials, noxious substances, raw materials which can solidify or polymerise etc.) may need higher limit | |
| | |than under Multimark. Ensure this is payable in addition to the general limit. | |
|3.4.3 |Express Replacement, Overtime |Include if specific need identified. | |
|NO. |ITEM |EXPLANATION |ACTION |
|3.4.4 |Destruction of Salvage |There are different wordings. Include brands and trade marks. | |
|3.4.5 |Terms of Carriage |Ensure these (client's and/or their carriers') are understood - cover arranged follows terms of carriage. | |
|4. |RIOT, STRIKE, PUBLIC DISORDER |
|4.1 |Riot, Strike, etc. (ex RSA and Namibia) |All Riot is excluded by SAIA exceptions and whilst SASRIA/NASRIA add back cover in RSA/Namibia, the policy must be extended to cover| |
| | |riot risks in other territories. Check territorial limits. Refer Riot Manual for detailed procedures. Be especially alert to | |
| | |client taking vehicles to territories north of RSA or with goods in transit to those territories. | |
|4.2 |SASRIA/NASRIA Coupon Policies - All |Underlying policies/sections must be in force for all asset covers except Motor and vice versa. Reciprocal arrangement between | |
| |Classes |SASRIA and NASRIA automatically provides cover for moveable property going into the other’s territory. This cover ceases when goods| |
| | |arrive at final destination. | |
| | |Also check need for SASRIA cover on | |
| | |Standing Charges | |
| | |Money | |
| | |Transit | |
| | |Marine | |
| | |Contractors’ All Risks | |
| | |Plant All Risks | |
| | |Motor | |
|4.3 |Institute War and Strikes Clauses (Hulls) |Covers hulls and small craft (whilst waterborne) against most but not all the SASRIA perils. Therefore SASRIA / NASRIA cover needed| |
| | |when laid-up / or slipway or in transit on land and to cover the gap between the Institute clauses and SASRIA / NASRIA when in South| |
| | |African / Namibian territorial waters. | |
|4.4 |Institute Strikes Clauses (Cargo / Air) |Water / air / land covered. This insurance does not extend to cover loss or damage caused by any terrorist or person acting from a | |
| | |political motive. | |
|NO. |ITEM |EXPLANATION |ACTION |
|4.5 |DIC/DIL, Full BI, Suppliers/Customers, |For Namibia/RSA Risks (non-SASRIA or non-NASRIA aspects) or for ex Namibia/RSA Risks (MD/BI | |
| |etc |To proviso requiring SASRIA add “or deemed to be in force” | |
| | |Where Insured satisfied with SASRIA standing charges cover check for cover for extensions e.g. customers, suppliers. | |
| | |Check need for Motor DIL at depots etc. | |
|4.6 |Other Markets |Refer to other local market facilities. | |
|4.7 |Strikes Expenses (non-damage) |Interruption following riot/strike where no Property Damage. | |
|4.8 |Global Policies |Establish where Insured has assets. Check for scope of cover and legality. | |
| | |Establish definition of Riot/Strike and legislation regarding insurance in foreign territories. | |
| | |Ensure add-back of £100k per head of cover for Terrorism in U.K. | |
|4.9 |Sums Insured |As for underlying policies except Motor (market value), BI (no profit). | |
| |(SASRIA/NASRIA) |Where underlying policies are VAT exclusive add VAT for SASRIA | |
|4.10 |One Insured |SASRIA limit R300m any one calendar year for any insured or holding company and its subsidiaries as contemplated in the Companies | |
| | |Act. Dispensation can however be obtained from SASRIA to place the Business Interruption risks elsewhere. | |
|4.11 |NASRIA First Loss Limit |The first N$25m of cover has to be purchased from NASRIA. Cover for a further N$75m can also be purchased from NASRIA or | |
| | |dispensation obtained to place cover in excess of the first N$25m elsewhere. | |
|4.12 |Property of Others/ Joint Ventures/ |Check "One Insured" definition. Separate coupons usually required. | |
| |Associate Companies |Coupons in joint names required for leaseback property or hired property where Insured is responsible for insurance. Owner’s | |
| |(SASRIA/NASRIA) |magnitude discount to be used. | |
| | |Negotiate with SASRIA separate identity for joint venture | |
|NO. |ITEM |EXPLANATION |ACTION |
|4.13 |Self-Insurance |Investigate desirability of deductibles. Refer Riot manual for discounts | |
|4.14 |War on Land |Establish need and availability for this cover. Limited availability through selected Lloyd’s brokers facilities. Cover usually | |
| | |excludes property whilst within the policy holder’s country of principal place of business. | |
|5. |FIDELITY (COMMERCIAL CRIME) |
|5.1 |Operative Clause - Limitations |Does the cover apply to theft of property and money only or does it cover loss due to fraudulent transactions also? | |
| | |The SA Market Wording gives no automatic retroactive cover but allows a period after expiry for discovery of losses. Overseas | |
| | |markets give full or partial retro cover but allow no period after expiry for discovery. Ensure awareness of the basis used. | |
| | |Ensure that both the expiring and the replacement policies do not attach in excess of one another (Other Insurances Clause) | |
| | |Insert clause to the effect that any extension of the discovery period expires when substituting insurance attaches. | |
| | |Explain application of Dishonest Personal Gain requirement to client | |
|5.2 |Sums Insured Review |Explain non-aggregation of Sum Insured over renewal periods. Sum Insured to be approved by client's Board (D&O Liability angle). | |
| | |See Circular for examples of large losses. Consider cheque signing authority and stock or other valuable property e.g. Plans, | |
| | |Computer Programmes, Works of Art etc. | |
|5.3 |Proposal Form Signatory (Rand Bank v |Check that cover is not invalidated if an official signing the Fidelity Proposal (or giving renewal instructions) is engaged in | |
| |Santam Case) |committing fraud himself. Not excluded from Multimark or similar wordings. Check need for dual signatories | |
|5.4 |Warranty re Other Policies |Details of other policies (covering Fidelity Risks) must be notified to Insurers if deductible is based on total Sum Insured under | |
| | |all policies arranged. (Multimark-type wordings only). | |
|5.5 |"Blanket" basis |"Blanket" Basis preferable. Premium savings available, but usually small, if "Name and/or Position" basis used. Not worth while on | |
| | |large risks. | |
|NO. |ITEM |EXPLANATION |ACTION |
|5.6 |Claims Preparation Costs, Auditors' Fees |Cost of proving loss can be extremely high (Particularly in case of computer fraud) so a realistic limit is very important. | |
|5.7 |Recoveries in Priority to Insured |If the loss exceeds the Sum Insured the Insured is entitled to all recoveries, less costs thereof, until his uninsured portion is | |
| | |reimbursed whereafter any remaining recoveries will be credited to insurers. | |
|5.8 |Cost of Recovery, Uninsured Amount |Intention is to cover the cost of unsuccessful attempts at recovering that part of a loss that exceeds the policy limit. | |
|5.9 |Directors, Councillors, Office Bearers, |Cover limited to employees (including directors/members who are also employees). | |
| |Partners, Close Corporation Members | | |
| | |Policy must specifically include additional persons who are not employees e.g. partners, non-executive directors, etc. | |
|5.10 |Pension, Provident and Medical Aid, Fund |A special market wording (embracing consequential loss/negligence and covering "officers" of the fund), with its own rating | |
| |Trustees, Disability Funds |structure is available. | |
|5.11 |Holiday and Other Employee Funds |These are usually separate legal entities from the Insured and the fund managers/trustees must be included as an additional Insured.| |
|5.12 |Dishonesty of Sub-Dealers, Agents, |Same comments as Directors above but full Theft cover may provide cover subject to limit and deductible. | |
| |Outside Security Staff, Contractors | | |
|5.13 |Temporary or Casual Staff |Confirm that they are regarded as employees in terms of the policy. | |
|5.14 |Extended Reporting Period |Required only if no Discovery period beyond expiry date | |
| | |Ensure wording of clause does not nullify cover granted by extended Discovery Period. | |
|5.15 |Material changes to Control Systems – |It is a condition of the standard Fidelity policy that all control systems, as advised to insurers, must be maintained and can only | |
| |Auditors' Approval |be altered if approved beforehand in writing by the Insured's auditors. | |
|NO. |ITEM |EXPLANATION |ACTION |
|5.16 |New Staff – Application Form Reference |The Insured is required to make reasonable checks on all new staff. If the Insured becomes aware of previous dishonesty of staff, | |
| |Checks, Authorised Signatories, Previous |this must be advised to insurers and cover arranged, failing which no cover exists for that staff member (past dishonesty not known | |
| |Theft |to Insured will not prejudice the policy). | |
|5.17 |Retroactive Cover, Losses Discovered |Losses committed prior to the inception date of cover. | |
| |Basis | | |
| | |If sum insured increased or cover improved DIC or XOL cover should be considered on a retroactive basis. | |
|5.18 |Loss prior to Retroactive Date |This is excluded. Ensure, however, that the portion of the loss subsequent to the retrodate due to a series of acts which the | |
| | |portion of the commenced prior to the retrodate is not excluded. | |
|5.19 |Superseded Insurance |- Cover is limited (in scope and Sum Insured) to the lesser of the current policy and the superseded policy. | |
| | |- where the loss occurs over both the current and superseded policy the current policy Sum Insured will apply. | |
| | |- the SA market wording restricts losses to 2 years prior to discovery, unless an auditor's report is submitted. | |
|5.20 |Indirect Pecuniary/ Financial Loss (Loss |These consequential type losses are not covered by the standard Fidelity policy (refer Pension Fund Trustees). Specialist markets | |
| |of Interest) |may be available e.g. Lloyd's. | |
|5.21 |Sum Insured Reduction (Reinstatement |Reinstatement of cover may not be automatic and premium may have to be paid before cover is reinstated. | |
| |Premiums) | | |
|5.22 |Mid-term Acquisitions |Any company or other legal entity acquired during the period of insurance is excluded unless specifically negotiated and endorsed | |
| | |onto the policy. | |
|5.23 |Theft of money by employees |Theft discovered within 14 days should be covered by the Money insurance section/policy as there is usually a lower deductible | |
|NO. |ITEM |EXPLANATION |ACTION |
|5.24 |Theft for benefit of others |Watch for and negotiate removal of restriction of cover to loss for the benefit of the guilty employee. | |
|5.25 |Is Cover Afforded Under a PI Policy? |Ensure non-contribution clause in either PI or Fidelity policy so that one can act as XOL of the other. Watch differing levels of | |
| | |deductible. | |
|5.26 |Continuing Fraud |Further losses attributable to a dishonest employee will not be paid by insurers if they are allowed to continue after discovery of | |
| | |a fraud. | |
|6. |FORGED TRANSFER |
|6.1 |Sum Insured |Review adequacy. | |
|6.2 |Legal Costs, Claims Costs |Payable within/in addition to Liability limit. | |
|6.3 |Retroactive Cover |Where no previous cover or where liability limit increased. | |
|6.4 |Replacement Insurance |Watch for overlap of Discovery Period. Other Insurances Clause could result in neither policy responding. | |
|6.5 |Indemnity to Bankers |If given, insurers must be informed and cover specifically included. | |
|6.6 |Professional Indemnity |As the cover includes an element of P.I. insurance on a claims made basis, the policy must have all the claims made discovery and | |
| | |reporting options. | |
| | |(See the Liability Section) | |
|6.7 |Transfer Secretaries |Ensure wording included but, if not required, rating may be negotiable. | |
|NO. |ITEM |EXPLANATION |ACTION |
|7. |MONEY |
|7.1 |Review Definition of Money |Does client have unusual or specialised negotiable instruments e.g. milk tokens, tickets, petrol slips/cards, foreign currency etc | |
| | |not covered by Policy Definition? If so endorse policy. | |
|7.2 |Valuable coins e.g. Kruger Rands |Kruger Rands are best covered for agreed (not face) value under All Risks policy. | |
|7.3 |Damage to Safes, Strongrooms, Cash |Check separate limits for receptacles. Don't forget specialised equipment containing Dye Applicators, alarm systems or tracking | |
| |Registers, Cash Boxes, Franking Machines |devices. | |
| | | | |
| | |N.B. Covered either here or under Theft Policy. | |
|7.4 |Limits |Major, minor, seasonal, crossed cheques, overseas, collectors, executives, salesmen, petrol pump attendants. | |
| | | | |
| | |Minor limits may include out of safe outside business hours, private residences, travel worldwide, etc. | |
| | | | |
| | |Any other loss (Major Limit) should represent maximum value of Money (and cheques) at risk at any one premises, or if applicable, an| |
| | |EML at any one premises. Remember Seasonal/December limits. | |
| | | | |
| | |Consider also EFT and crossed cheques limits (if separate). | |
|7.5 |Claims Preparation Costs |This should be considered as the Insured's costs of preparation of the claim may be high. | |
|7.6 |P A Assault |When selecting benefits, bear in mind Employee Benefits Programme compensation. | |
|7.7 |Company Credit Cards, Cellphones/Sim |If not covered by bank/service provider, consider extension to cover unauthorised use following loss/theft. | |
| |Cards | | |
|NO. |ITEM |EXPLANATION |ACTION |
|7.8 |Customers', Employees' property |Check client's responsibility for these items. | |
|7.9 |Security Guards, Contract Conditions, |Check. Are they used and what risk do they accept? | |
| |Other Precautions | | |
|7.10 |Riot, Strike, Public Disorder |Refer specific section. Separate SASRIA Coupon necessary for Money cover. For single premises risk First Loss limit in order but, | |
| | |for multi-premises risks, limit should be sufficient to cover loss at all situations. | |
|7.11 |Counterfeit Money |Not covered - this is a "trade" risk but refer "Theft by false pretences" under Theft Section. | |
|7.12 |Fidelity Risks |Must be discovered within 14 days. Must be excluded if also covered under Fidelity Policy. If the Money section has a lower | |
| | |deductible, keep in that area. | |
|8. |THEFT |
|8.1 |Limits |First loss basis related to EML. Consider the catastrophe exposure e.g. thieves have access to the Insured's premises for an entire| |
| | |weekend. High value items. | |
|8.2 |Basis of Indemnity |Market value basis unless otherwise arranged. | |
|8.3 |Violent, Forcible Entry, Exit, Goods in |Policy limitation must be deleted if client requires full Theft cover. | |
| |the Open | | |
|8.4 |Theft by False Pretences |Examples are "Refer to Drawer" cheques, counterfeit money, confidence tricks, etc. These losses are not normally insurable other | |
| | |than in certain specialised areas e.g. Bankers Blanket Bonds placed at Lloyd's. | |
|8.5 |Malicious Damage - If no cover under Fire|Ensure separate Sum Insured is adequate to cover damage to buildings/contents. Alternatively, ensure Malicious Damage extension in | |
| |Policy |Fire section does not exclude damage by thieves. | |
|8.6 |Maintenance of Protection, Alarms, |The standard Theft policy contains a Burglary Alarm Warranty the various conditions of which must be brought to the Insured's | |
| |Warranties |attention. | |
|8.7 |Property of Others |Check client's responsibility for these items. | |
|8.8 |Damage by Security Staff |Not standard cover and therefore needs to be specifically negotiated. Policy would cover damage caused by security staff in | |
| | |apprehending suspect. | |
|8.9 |Cost of Temporary Security Services, |Usually standard cover but check limit. | |
| |Watchmen | | |
|9. |THIRD PARTY COMPUTER CRIME |
|9.1 |Operative Clause |Loss due to fraud by an outsider (e.g. hackers or bureau staff) accessing their computer can be arranged as an extension to a | |
| | |Fidelity policy but more usually by separate Third party Computer Crime policy or section. | |
|9.2 |Legal Costs, Claims Costs |Payable within/in addition to Liability limit. | |
|9.3 |Retroactive Cover |Establish need for / cost where no previous cover or where liability limit increased. | |
|9.4 |Replacement Insurance |Watch for overlap of Discovery Period. Other Insurances Clause could result in neither policy responding. | |
|9.5 |Extended Reporting Period |Carefully consider desirability to include as this “extension”. It may nullify cover granted for extension of Discovery Period in | |
| | |operative clause. | |
|9.6 |Computer Fraud |Sometimes available as extension on full revenue or ICOW | |
| |Business Interruption | | |
|10. |BUSINESS INTERRUPTION |
|10.1 |General |
| |Copy of Latest Extract (Difference Basis |Does the policy embrace all operating companies / activities of the Insured? | |
| |Preferred) | | |
| | |Check latest extract for rate of gross profit to be applied in projections. The rate of gross profit as calculated from the latest | |
| | |extract is necessary for reviewing the Sum Insured. Has there been or will there be a major change in business that alters Rate of | |
| | |GP? | |
| | | | |
| | |Are earnings in hard currencies a factor which needs to be considered? | |
| | |Will different extracts be required for the different territories the client conducts business in? Ensure correct understanding of | |
| | |terminology in other territories | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Deposit Premium Basis provides latitude in determining Sums Insured. Be aware of additional/refund premium implications. | |
| | | | |
| | |Do sums insured provide for VAT? What are the terms of the policy vis-à-vis VAT? Recommended that sums insured are exclusive. | |
| | | | |
| | |Bear in mind that the Damage may occur at the very end of the period of insurance so if the Indemnity Period is 2 years, the | |
| | |financials to be used for determining Gross Profit or Revenue should be projections for years 2 and 3, not years 1 and 2. | |
| | | | |
| | |Beware arbitrarily determined SI for AD and Riot which are normally combined limits for MD and BI. Follow the limits for fire | |
| | |perils wherever possible | |
| | | | |
| | |AICoW limit also warrants careful investigation rather than relying on the historical limit. The minimum should be 5% of GP sum | |
| | |insured | |
| | | | |
| | |Don't forget application to Engineering, Accidental Damage and Riot. | |
|10.1.1 |Deductibles |Insurers will often try to impose time Excesses. This should be avoided wherever possible but if unavoidable, ensure your client | |
| | |understands the monetary implications of such an excess. | |
|10.1.2 |Review Uninsured Costs |Check that policy list agrees with current extract. Endeavour not to have uninsured costs listed. Review uninsured costs of new | |
| | |operations within the insured company. | |
|10.1.3 |Provisional Sum Insured Adjustment |Use pending availability of trading accounts: provisional increase in Sums Insured may be necessary. Obtain latest accounts as | |
| | |soon as possible. | |
|10.1.4 |Review Basis of Cover |Most common forms are: | |
| | |- Revenue | |
| | |- Rent | |
| | |- Gross Profit | |
| | |- Wages | |
| | |Increased Cost of Working only | |
| | | | |
| | |Does the client understand the alternative bases of cover available? | |
|10.1.5 |Turnover/Wages |Obtain budgeted Turnover and/or Wages or other reasonable estimates for financial years which correspond with forthcoming insurance | |
| | |period and subsequent periods to cater for the maximum indemnity period. Ensure that the policy definitions of eg wages, uninsured | |
| | |costs accord with those of the Insured. | |
|10.1.6 |Trigger Covers |Review the material damage covers that the B.I. should follow, eg Property Damage Section (also Accidental Damage if separate), | |
| | |Machinery Section, Marine, any other MD policy. Review the Extended Premises requirements. | |
|10.1.7 |Basis of Application of Average |Ensure that the terms of this clause on the policy correspond with the basis upon which the sum insured has been calculated. There | |
| | |is a very real danger of underinsurance if the declared BI figure is based on historical Rate of Gross Profit / Turnover / Revenue | |
| | |and during the period of insurance these change radically eg dramatic increase in gold/platinum price. | |
|10.2. |Indemnity Period |
|10.2.1 |Obtain Supply , Production, Distribution |Discuss need to establish / change IP. | |
| |Flow Charts | | |
| |Lead Times to Replace |Consider Catastrophe Recovery e.g. Earthquake. Total rebuilding and recovery of market share could be longer than that required for| |
| | |other perils. Consider longer Indemnity Period for earthquake or other catastrophes. | |
| | |e.g. maturation periods in Liquor Industry | |
| | |- Own premises | |
| | |- Suppliers' Premises | |
| | |- Customers' Premises | |
| | |- Plant (overseas) | |
| | |- Raw Materials | |
| | |Strategic industries/ premises | |
| | |- Recover Markets | |
| | |- Special Circumstances | |
|NO. |ITEM |EXPLANATION |ACTION |
| |Accumulated (Buffer) Stocks |Discuss level and effect they will have on BI claims. | |
| | |Determine whether a longer indemnity period is required to replace accumulated stocks. Check insurers interpretation of this clause.| |
| | |Amend the clause to provide for extension of the I.P. on this account | |
|10.2.2 |Research and Development Expenses |Always insure as a separate item (First Loss) for the increased costs of re-establishing the research and loss of profit, without IP| |
| | |limitation. | |
|10.3. |Cover |
|10.3.1 |Basis of Wages Cover - (Full, Dual, First|Discuss alternative methods of insuring /Wages and advantages/disadvantages of each. | |
| |Loss, Payroll) |Refer to local legislation to determine whether this will affect the basis of insuring wage e.g. may not always be possible to | |
| | |retrench staff. | |
|10.3.2 |Additional Increased Cost of Working |Always essential to have an item for this. May be extended - refer Circular 620.403. | |
| | |A longer indemnity period may be required for this item. Check limit by discussing Disaster Plan with the Client. | |
|10.3.3 |Claims Preparation Costs |Client's costs and expenses reasonably incurred in substantiating the amount of the claim. | |
|10.3.4 |Riot |Check regulations in the territory regarding any specific insurance schemes. | |
| | |Locally, standing charges cover is available through SASRIA, but consider riot wrap around cover. If standing charges cover is not | |
| | |taken via SASRIA, dispensation must be obtained to insure in another market. Dispensation is automatic where the MD sum insured | |
| | |exceeds the One Insured Limit. | |
|10.3.5 |"Away Risks" (Customers, Suppliers, |Review all customer / supplier dependencies | |
| |Services) |Public Utilities Extension can be amended to include communication facilities/supply line (Post Office/Computer dependency). NB | |
| | |Suppliers of Suppliers etc. | |
| | |If the nature of the client’s business is such (eg food processors), establish whether insurers will provide suppliers’ cover on | |
| | |growing crops (eg Mocambique flooding of sugarcane fields). | |
| | |Discuss perils to be covered for these extensions | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Check territorial limits required. | |
| | |Check worldwide dependencies e.g. earthquake in Japan. There may be a shortage of capacity for key worldwide suppliers. Discuss | |
| | |interdependencies between subsidiaries. Also note whether a number of subsidiaries are dependent on one customer/supplier, as this | |
| | |can cause an “accumulation of dependencies” which could affect insurers retentions. | |
|10.3.6 |Fines, Penalties, Cancellation Charges |Check if client could be held contractually liable to pay any of these charges in consequence of Damage; separate first loss item | |
| | |may be needed. | |
|10.3.7 |Maximum Demand Charges |Failure of power factor correction equipment could result in client having to pay excessive Maximum Demand Charges. Cover can be | |
| | |arranged in the Engineering insurance market. These are neither standing charges nor purely working expenses and should be insured| |
| | |as a separate first loss item. | |
|10.3.8 |Telephone and other Communications, |All Risks basis (normally subject to an excess of 24 hours) needed for mechanical or electrical breakdown. | |
| |Power, Water, Gas Failure (Perils, or All| | |
| |Risks) |Monetary deductible preferable. Check cover for Public vs Private utilities. | |
|10.3.9 |Dead Freight, Demurrage |Dead Freight is an expense for failure to use cargo space booked. | |
| | | | |
| | |Demurrage expenses are levied because the carrier has been delayed beyond agreed period. Cover can be arranged as separate item or | |
| | |by extending the Fines and Penalties item. | |
|10.3.10 |Stock Spoilage, Deterioration of |Deterioration in consequence of Damage e.g. fruit awaiting processing. | |
| |undamaged stock | | |
|10.3.11 |Diminution, Depreciation, Obsolescence of|Cover for decrease in value of undamaged stock e.g. fashion goods that miss "the season" as a result of damage. This could have a | |
| |Stock or other property |major impact on the I.P. of even a very small enterprise. | |
|10.3.12 |Prevention of Access (Damage, No Damage, |Costs following loss or damage to roads, bridges or railway lines in the vicinity of the premises. | |
| |In the Vicinity, Anywhere), Increased |Discuss implications of Port blockage e.g. ships colliding. Cover can be negotiated with some insurers. Clients utilising Richards| |
| |Delivery Costs |Bay Coal terminal may be at risk. | |
|NO. |ITEM |EXPLANATION |ACTION |
|10.3.13 |Other non-fire perils. On/Off site. |Effect on business e.g. theft/fraud/motor/ transit. | |
|10.3.14 |Non Damage : Murder, Suicide, Oil |Especially re tourist industry. | |
| |Pollution, Terrorist Activities, Shark | | |
| |Attack, Contagious Diseases | | |
|10.3.15 |Possibility of Discontinuing Business |If, following major loss, client would wind-up business, get prior agreement from insurers on basis of settlement. | |
|10.3.16 |Department of Planning Requirements |Possible increase in Indemnity Period following need to improve/re-locate. | |
|10.3.17 |LIFO Benefit |The potential loss of the LIFO reserve following damage must be discussed with clients who may still enjoy this benefit. | |
|10.3.18 |Direct Interruption (No Damage Necessary)|Examples are loss by accidental failure of electricity supply or by noxious fumes in a mineshaft. It might be possible to obtain a | |
| |(Perils Only, All Risks) |wider extension to cover the business against interruption from any cause whatsoever other than those which are specifically | |
| | |excluded. | |
|10.3.19 |Project Delay |The implementation of a new project or the expansion of the Insured's existing operations will require specialised insurance | |
| | |treatment especially if marine/construction risks are involved. Refer the contract works and marine sections of this guide. | |
|10.3.20 |Strikes and Labour Disputes (Non-Damage) |Cover may be available at Lloyd's but only for Suppliers/Customers. Otherwise consider self-funding. | |
|10.3.21 |Marine Imports |The loss of a shipload of imported components could cause production to stop at the client's premises, e.g. the loss of CKDs en | |
| | |route to an auto manufacturer. The necessary business interruption cover can be investigated in the Marine Market. | |
|10.3.22 |Exporters Allowance |The Income Tax Act allows certain exporters an allowance that has a beneficial effect on the client's after-tax profit. A separate | |
| | |item is necessary to avoid loss of tax benefit following damage. Special provision may need to made for taxation of mines | |
|10.3.23 |Offshore Earnings |Income from outside RSA may indicate need to cover operations not otherwise disclosed. | |
|NO. |ITEM |EXPLANATION |ACTION |
|10.3.24 |Non-damage exposures from surrounding |E.g. escape of noxious gases from a chemical factory causing evacuation of client’s premises. Cover may not be available from | |
| |property |conventional markets. Consider alternative risk financing options. | |
|10.3.25 |Alternative Products Available |E.g. Balance sheet protection and alternative risk financing products | |
|10.3.26 |First Loss |Consider if appropriate to client's circumstances. | |
|10.3.27 |Riot, Strike, Public Disorder |Refer separate section. Full cover not available from SASRIA (use Lloyd's Contracts and certain local insurers. | |
|10.4 |Machinery Breakdown/Business Interruption |
|10.4.1 |Sums Insured |Same considerations as per Fire - Business Interruption. | |
| | |Annual Gross profit with appropriate adjustment for periods in excess of 12 months. | |
|10.4.2 |Indemnity Periods |Refer Fire - Business Interruption comments. Remember lead times on imported Plant and Machinery. Indemnity periods to include the| |
| | |replenishment of undamaged stock. | |
|10.4.3 |Time Exclusion |Time exclusion for minimum 72 hrs (electrical reticulation 24 hrs) is standard but may be longer depending on underwriting | |
| | |considerations. It is strongly recommended that wherever possible we should rather opt for a monetary excess. | |
|10.4.4 |Increased Cost of Working |If no gross profits/revenue covered, then consider I.C.O.W. cover only, on a first loss limit. | |
|10.4.5 |Additional Increase in Cost of Working |Refer Fire - Business Interruption. Any deductible must be monetary and not time related. | |
|10.4.6 |Fines and Penalties |Invariably excluded by Engineering Insurers. Needs negotiation to obtain cover. Check Insured’s supply contracts to set limits to | |
| | |be covered for fines and penalties. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11. |LEGAL LIABILITIES |
|11.1 |General |
|11.1.1 |Tool of Trade |Vehicles that can be used as plant need to have motor third party cover as well as general liability cover. The motor policy is | |
| | |operative whilst the vehicle is being driven on a road but the general liability policy responds when the vehicle is being used as | |
| | |plant. | |
|11.1.2 |Policy Wordings |These are written either on a Claims Made or Losses Occurring basis. | |
| | |Claims Made : | |
| | | | |
| | |This wording responds to claims first made against the Insured during the currency of the policy for incidents that have happened | |
| | |after the retroactive date. When a Claims Made policy replaces an Occurrence policy, the retro date should always be the last day | |
| | |of any previous occurrence policy. In other situations the longest period that can be economically purchased should be requested. | |
| | |Critical issues to watch out for are :- | |
| | |Non renewal by Underwriters requires an extended reporting option. | |
| | |Any known occurrence that could give rise to a claim in the future must be reported to Underwriters as soon as it is discovered. | |
| | |Declarations of known occurrences must be from the Insured and not Alexander Forbes staff. | |
| | |An approved format for such a declaration may be had from Global Risk Services. | |
| | |Occurrence Basis : | |
| | | | |
| | |The Injury or Damage that could give rise to liability must occur during the policy period. If you change from a Claims Made to an | |
| | |Occurrence wording retro cover must be arranged for the period of the Claims Made wording. Occurrence based policy files can never | |
| | |be destroyed. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.1.3 |Definitions of Injury and Damage |Some Insurer policies have very restricted definitions. These should be compared to the widest form such as contained in the Global| |
| | |poldra and any shortfall should be treated as appropriate | |
|11.1.4 |Accident/Non-Accident |Most Insurers insist on the policy referring to "Accidental Injury or Damage". A wider form of cover, however omits reference to the| |
| | |word Accidental, but there would still be no cover for deliberate acts. | |
|11.1.5 |Contractual Liability |Many liability policies exclude liability assumed by agreement (Contractual Liability) | |
| | |Remind clients to let us have a copy of all contracts entered into where the Insured accepts liabilities wider than the common law. | |
| | |These contracts must be submitted to Insurers for their agreement so that cover can be extended. Some Insureds may be exposed to a | |
| | |strict liability that must be disclosed to Insurers, e.g. Forestry Act, Electricity Act, Explosives Act. | |
|11.1.6 |Title of Insured |All legal entities of the Insured must be catered for. Although past operations are not listed you must cater for products made | |
| | |that have not yet been sold from a past entity. Ensure that the Indemnity to Others clause caters for all parties not named in the | |
| | |title but which should also be covered. | |
|11.1.7 |Title and Occupation of Insured - Claims |This must cater for past as well as present legal entities of the Insured as well as past activities of the Insured. | |
| |Made Basis | | |
|11.1.8 |Territorial Limits |Ensure these meet the scope required by the Insured, if not world-wide | |
|11.1.9 |Fines, Penalties and Punitive Damages |These are excluded from most liability policies. A form of punitive or exemplary damages may now be imposed in terms of the Labour | |
| | |Relations Act but may not be included in terms of the policy. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.1.10 |Jurisdiction Clause |The jurisdiction clause is not to be confused with the territorial limits of the policy. A jurisdiction clause restricts the cover | |
| | |to only respond to claims first brought in a South African court but does not restrict the territories in which an Insured can do | |
| | |business. If an Insured has operations in foreign territories then it is imperative that we do not have an S A Jurisdiction | |
| | |restriction on the policy. | |
|11.1.11 |Member to Member |Cover for sports or recreational clubs should be extended to include liabilities of members to fellow members arising out of the | |
| | |activities of the club. | |
|11.1.12 |Joint Ventures |A joint venture is a partnership and as such is not ruled by company law but by the laws of partnerships. In terms of this each | |
| | |partner can be held jointly and severally liable for the actions of each other. When insuring a true joint venture as opposed to a | |
| | |company with a shared shareholding we must watch out for the following :- | |
| | |The names of both partners are on the title of the Insured. | |
| | |We disclose the loss history of both partners. | |
| | |Run off cover must be arranged upon the dissolution of the partnership. | |
| | |Who pays for any self-insurance or deductible on the policy? | |
| | |Make sure underwriters fully understand that they are covering both partners individual Liability. | |
| | |If each partner arranges their own cover make sure that the scope of cover is not materially different and that each policy will | |
| | |respond to claims as a result of the actions of the other partner. | |
|11.2 |Cover |
|11.2.1 |General Liability |Check limits are adequate as defence costs generally form part of the limit also deductibles that generally also apply to costs and | |
| | |expenses. | |
|11.2.2 |Advertisers Liability |Liability for claims arising out of the Insured’s advertising activities. Usually claims for defamation, breach of copyright etc. | |
| | |Issues to check with your client :- | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Do they do any in-house publications for distribution to the public? | |
| | |Do they place their own advertisements or use an agency. | |
| | |Any waiver of subrogation against an outside agency. | |
|11.2.3 |Aircraft Liabilities | Aviation must be involved. | |
|11.2.4 |Airport Owners and Operators |If purely a Property Owners risk with no refueling or defuelling or air traffic control operations it may be placed as part of | |
| | |General Liability programme. If risk is anything more than a Property Owners risk then Aviation to be involved. | |
|11.2.5 |Aviation Products Liability |Insurers of Products Liability will generally exclude cover for products that power or control an aircraft. Specialist markets must| |
| | |be found for clients that make aviation products. | |
|11.2.6 |Bulk Delivery/Discharge |Clients who supply bulk raw materials to third parties for processing are most at risk. In order to adequately protect clients we | |
| | |should arrange :- | |
| | |Cover for injury and damage | |
| | |Cover for Pure Economic Loss (Standard PEL insurance excludes Products related losses) | |
| | |Accidental Pollution | |
| | |Be aware of Gradual Pollution | |
|11.2.7 |Care Custody and Control |Most policies exclude cover for goods in an Insured's care, custody and control. Insurers will generally provide cover for office | |
| | |premises where the Insured is a tenant. Any CCC cover other than Tenants Liability must be separately negotiated. When checking an| |
| | |Insured's requirements the following should be remembered :- | |
| | |Check for contractual liabilities or strict liabilities eg Hotels. | |
| | |Does the Insured act as a warehouseman | |
| | |Material damage cover can be arranged as part of an Assets policy which avoids a third party having to bring a legal action before | |
| | |cover operates | |
| | |Liability insurers will delete the exclusion but cover will only operate when an Insured is negligent. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
|11.2.8 |Container Liability / Charterers’ |This encompasses risks relating to container operators, charterers, shipowners , freight forwarders, stevedores, shiprepairers, port| |
| |Liability / Transport Operator’s |and terminal operators and cargo handlers liabilities | |
| |Liability |It is possible to get the cover in terms of a General Liability Policy but if the risk involves shipping or airfreight it is better | |
| | |to have a Marine liability policy. Assets based risks can often be insured by marine liability underwriters as an add-on to the | |
| | |marine liability risks, in the same way that non-marine underwriters add on marine liability risks. This is particularly the case | |
| | |in respect of clients such as port authorities. It makes sense that both the marine liability and the non-marine liability broker | |
| | |consult each other in such cases in order to obtain the best deal for the client. | |
|11.2.9 |Cyber Liability |There are widely differing views as to the extent that the standard liability policy will respond to cyber liabilities. In essence,| |
| | |the type of liability which can be incurred remains much the same as before, the fundamental difference being the medium through | |
| | |which it is incurred. Clearly, the extent to which the Insured makes use of the WWW for marketing and communication should be | |
| | |established and conveyed to underwriters. If the policy is limited to Damage to Tangible Property it may be necessary to expand the| |
| | |definition to include (if possible) “Unauthorised access to and dissemination of confidential information” and “Inadvertent | |
| | |transmission of computer viruses” to name only two. Alternatively purchase Pure Economic Loss cover which provides for these | |
| | |eventualities. It goes without saying that defamation and piracy /plagiarism / breach of copyright or whatever term may be used | |
| | |should be included as either Injury or Damage. | |
| | | | |
| | |There are a few products which have been specifically designed to cater for cyber liabilities. These should be investigated if the | |
| | |Insured operates in this field. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.2.10 |Defamation (Libel/Slander) |A defamation is perpetrated by the publication of a statement whether oral or written, which could impair the reputation of a third | |
| | |party. Cover is provided by certain extensions being :- | |
| | |Wrongful Arrest/Defamation | |
| | |Advertisers Liability | |
| | |Separate extension (remember if you have an Injury or Damage operative clause any extension will need to amend the operative clause)| |
| | |Extend the definition of Injury to include defamation. | |
|11.2.11 |Defective Workmanship |This cover is essential for any client that is manufacturing or repairing a product or in construction. It covers the consequences | |
| | |of any defective workmanship that causes Injury or Damage to third parties. The cover always excludes cover for the cost of | |
| | |replacing the defective work itself. | |
| | |Cover is available under Products Guarantee policy for replacing the defective part itself for products manufactured under factory | |
| | |conditions. | |
|11.2.12 |Directors' and Officers' Liability |This covers the negligence of directors and officers of a business in carrying out their Fiduciary Duties of the company. Claims | |
| | |can come from shareholders, staff or third parties (such as creditors) that suffer financial loss as a result of the actions of a | |
| | |director or officer. | |
| | | | |
| | |As far possible, this cover should be arranged on a stand-alone basis with a recognised expert D&O underwriter. D&O extensions to | |
| | |general liability policies have a number of potential pitfalls. The cover is always on a claims made basis – See notes on claims | |
| | |made wordings. | |
| | |When arranging cover the following should be considered. | |
| | |Extend the Definition of Directors' and Officers' to include all managerial and supervisory staff. | |
| | |Cover any employee joined in an action against a director | |
| | |Include Employment Practices Liability (but not for the Entity) only if separate cover (which is the recommended alternative) is not| |
| | |purchased. See below. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
| | |Remove major shareholding exclusion. | |
| | |Include Insured vs Insured for dismissed Directors. | |
| | |Include a realistic automatic limit for acquisitions. | |
| | |Obligation on the Insurer to advance defence costs. | |
| | |Non-cancelable policy, not merely the omission of a cancellation condition. | |
| | |Nil deductibles for any loss which the director or officer is obliged to bear. Include trustees of Employee Benefits Funds (but | |
| | |watch aggregate limits). | |
| | |Include shareholder claims for pollution losses. | |
| | |Include Defence Costs for Third Party Pollution actions. | |
| | |Include "Subsidiaries" where Shareholding down to 20% if applicable. | |
| | |If the Insured has equities traded in the USA include Breach of SEC Regulations for Entity and Directors and Officers. If trading | |
| | |in ADR’s (American depository Receipts) occurs, the level should be established and Underwriters agreement to cover obtained. | |
| | |Exemplary Damages for libel / slander should not be excluded. | |
| | |Include punitive damages for SEC claims where permissible in terms of law. | |
| | |Offer client option to purchase punitive damages cover for non SEC issues. | |
| | |Include past/retired Directors and Officers. | |
| | |Extended reporting period for Non-renewal by both Underwriters and Insured at predetermined additional premium. | |
| | |Try For 100% allocation (indemnification) of Defence Costs for part covered/ part uncovered issues. | |
|11.2.13 |Directors Private Work |These activities are outside the Business description and an extension is needed to cater for these situations. Examples of these | |
| | |risks are :- | |
| | |Maintenance work at director's home | |
| | |Shopping for directors | |
| | |Delivery of personal messages | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.2.14 |Employers Liability |Cover for liability due to injury of employees whilst at work. This risk is largely removed by COID Regulations. If the cover is | |
| | |on a Claims Made basis there is a tail exposure for injuries that happened prior to COID legislation being introduced. Extensions | |
| | |to include are :- | |
| | |Employee to Employee liability | |
| | |Contractual Obligations (Currently being withdrawn by some markets) | |
| | |Industrial Diseases are generally excluded but the exclusion is very varied in its form ranging from only diseases of the lung or | |
| | |even asbestosis only to the full exclusion of any diseases contracted at work. | |
| | |If Claims Made wording negotiate an Extended Reporting Option on Non-Renewal by Underwriters. | |
|11.2.15 |Environmental Impairment/Pollution |There is generally only cover for sudden and accidental pollution and Insurers will exclude gradual pollution. Cover for gradual | |
| | |pollution is available from specialist markets e.g. Swiss Re, R J Wallace Syndicate in Lloyd's. Due to the nature of gradual | |
| | |pollution it is recommended that Alexander Forbes Risk Engineering be involved in risk management controls. | |
|11.2.16 |Farmers/Plantation Spread of Fire |In terms of the Veld and Forestry Act there is a reverse onus of proof on an Insured who owns a farm or plantation that is in a | |
| | |designated Fire Protected Area. It will be necessary to extend most liability policies to cover this if the Insured has an | |
| | |exposure. | |
|11.2.17 |Financial Loss |This relates to liability to a third party where no physical damage or bodily injury occurs, e.g. fumes from an Insureds factory | |
| | |forces evacuation of the neighboring factories who suffer lost sales. Be aware of the difference between the local market that | |
| | |excludes any Product related claims and the Lloyd's market that will include Product related losses for the Consequences of | |
| | |Inefficacy. | |
|11.2.18 |Employment Practices Liability |This covers loss or damages arising from employment related discrimination, sexual harassment at the work place and inappropriate | |
| | |employment conduct which can be attributed to the Insured. Cover pays for damages and defence costs. Cover includes employees in | |
| | |the course of their employment. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.2.19 |Intellectual Property/ Infringement of |The term "damage" in most liability policies is restricted to damage to tangible property and as such does not include any | |
| |Patents |intellectual property. | |
| | |There are various policies that provide cover in different forms :- | |
| | |Advertisers Liability covers breach of copyright. | |
| | |Infringement of Patent cover provides for the accidental infringement of a patent. | |
| | |Some policies will cover advertising liability whether as excess of loss cover or primary. | |
| | |Full Intellectual Property Rights cover which includes :- | |
| | |Legal expenses for pursuing infringement of an Insured's intellectual property rights. | |
| | |Legal expenses for defence of allegations of inadvertent infringement of a third party’s intellectual property rights. | |
| | |Legal expenses for pursuing breach of the terms of any agreement e.g. confidentiality. | |
| | |IV. Damages awarded against an Insured for inadvertent breach of another’s intellectual property rights. | |
|11.2.20 |Innkeepers Liability |The Liquor Act provides for strict Liability on the licence for customers/guests goods whilst on the premises. To provide this | |
| |(Liquor Act) |cover the Care, Custody and Control Exclusion on the policy must be amended. | |
|11.2.21 |Lateral Support |This cover is excluded by general liability policies and is arranged as part of a contract works policy. See Engineering Section of| |
| | |the Review Guide. | |
| | | | |
| | |In the London market this cover will sometimes be given as part of a general liability policy where the Insured is in the | |
| | |contracting business. | |
|11.2.22 |Legal Defence Costs |As a cost saving ploy, policies are sometimes issued with Indemnity Limits inclusive of Defence Costs. This may be acceptable if | |
| | |there is an Umbrella with a very large limit. Subject to cost, the best option is to have defence costs without limit in addition | |
| | |to the Indemnity Limit. The worst option is to have a small separate limit for defence costs. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.2.23 |Locomotives/Rolling Stock |The use of these by an Insured needs to be disclosed and cover provided by ensuring the exclusion relating to vehicles does not | |
| | |exclude locomotives. | |
|11.2.24 |Medical Malpractice |Cover can either be by way of a Professional Indemnity Policy covering the Medical Practitioner or by Contingent cover in favour of | |
| | |the company that is hiring the Practitioner. Contingent cover is to protect the company for any joint action brought against the | |
| | |Medical person and the company as the person's Employer. | |
| | | | |
| | |Insureds should, whenever possible, ensure that medical staff in their employ are paid up members of the relevant medical | |
| | |professional body. | |
|11.2.25 |Nuclear Risks |Many clients make use of radioactive isotopes. Determine whether this applies and inform underwriters even though it is widely held| |
| | |that liability from this source is not excluded by the Nuclear Exclusion. | |
|11.2.26 |Plant Hire Liability |Plant hire conditions normally make the hirer responsible for any loss or damage to the hired equipment. A Plant Hire Liability | |
| | |policy covers equipment whilst hired by the Insured and is in effect a material damage policy. Being a material damage cover the | |
| | |SASRIA exclusions apply and a separate SASRIA cover needs to be arranged. Cover will also exclude breakdown losses. | |
|11.3 |Products |
|11.3.1 |Extortion |Product Extortion is the threat to an Insured or the production of publicity that the Insured’s product will be or has been | |
| | |contaminated by a person who demands a ransom for not carrying out the threat or before divulging information about the contaminated| |
| | |product of the Insured. The cover provides for :- | |
| | |Payment of the ransom. | |
| | |Loss in transit of ransom money. | |
| | |Additional expenses incurred by the Insured for the duration of an event. | |
| | |Legal liability incurred by the Insured as a result of the extortion. | |
| | |Costs of Control Risks Group or other negotiating party nominated by the Insurer. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.3.2 |Design Risks |Most policies have an exclusion for Liability as a result of defective design, plan, formula or specification under the Products | |
| | |Liability Section. Lloyd's policies generally provide cover for the consequences of defective design provided there is bodily | |
| | |injury or property damage. Full cover for this risk needs to be arranged under a Professional Indemnity policy. | |
| | | | |
| | |Alternatively, a Product Guarantee policy will cover replacement costs and third party consequential losses where faulty design has | |
| | |caused product failure after hand over. | |
|11.3.3 |Guarantee |This cover provides for the reworking and/or replacement of a Product which has failed to perform as intended after being supplied | |
| | |by an Insured to a third party. Cover only applies once the Product has left the Insured's premises and normally the deductible is | |
| | |set at the historical average failure rate of the product. Insurers will generally not give cover for a product that is newly | |
| | |developed without it having been extensively tried and tested. | |
| | | | |
| | |Error in design, consultancy, advice, instruction-for–use, labeling or packaging provided with the supply of a tangible product can | |
| | |all trigger a Product Guarantee claim, provided that the product has been accepted in the first instance by the immediate customer. | |
|11.3.4 |Inefficacy |This cover provides for a financial loss incurred by a third party as a result of the failure of a product supplied by the Insured | |
| | |to perform the function it is intended to perform. | |
|11.3.5 |Product Liability |Product Liability is an extension to a general liability policy and covers liability for Injury or Damage to third parties as a | |
| | |result of a faulty product, sold, supplied, repaired or handled by the Insured. In its broadest form cover should also extend to | |
| | |include incorrect labeling and incorrect delivery of a product. When a product is intended for export it is important that there | |
| | |should be worldwide jurisdiction on the policy. It is also important to include cover for the EEC strict liability. If the client | |
| | |is a global concern with manufacturing plants in foreign countries we should either arrange cover in the territory or have the | |
| | |service broker advise us of the peculiarities of the law of any country e.g. Decennial Liability in terms of French law. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.3.6 |Recall |This provides for the cost of withdrawal and (but not always – watch policy wording) rectification of a defective or suspected | |
| | |defective product manufactured by the Insured. Where the product is a semi processed product or a component product that is to form| |
| | |part of a third parties product cover must be extended to include Third Party Product Recall Costs as well as recall of the | |
| | |Insured’s own Product. The policy will respond to suspected as well as actual problems. | |
| | | | |
| | |Policies (particularly for food and pharmaceutical clients) can be extended to include the deliberate contamination trigger. | |
| | | | |
| | |Recall policies are intended to prevent a legal liability situation occurring for a product failure that could cause third party | |
| | |property damage or bodily injury. | |
|11.4 |Professional Liability |
|11.4.1 |General Professional Indemnity |A “Professional” is generally described as someone who charges a fee for specialist advice or is seen to have specialised knowledge | |
| | |on a given topic. This can range from a recognised profession such as lawyers through to the consultant who is advising you on | |
| | |redecorating your home. | |
| | |The wording is always on a Claims Made basis and covers negligence, errors or omissions in the conduct of the Professional duties of| |
| | |the Insured. Some extensions that are available are : | |
| | |Preventive Consultation Costs following a known occurrence | |
| | |Defamation | |
| | |Loss of Documents | |
| | |Dishonesty of an Employee of the Professional | |
| | |Loss Prior to Handover (for contractors doing design work) | |
| | | | |
| | | | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.4.2 |Project Professional Indemnity |This cover is becoming more popular with principals of a contract as it enables the principal to ensure that all professionals | |
| | |and/or contractors involved with the contract have adequate insurance in the event of the principal suffering a loss due to an error| |
| | |or omission in the project. Important issued to watch out for are :- | |
| | |Cover can be for consultants only or consultants and contractors if it is a Design and Construct contract | |
| | |Cover should be for the period of the contract plus three years (or even longer) as most losses are only discovered after the | |
| | |project is completed. | |
| | |Conflict of interest on behalf of the broker who is acting on behalf of the principal in arranging the cover. When a claim is | |
| | |lodged by the principal against an insured consultant are we acting for the principal or the insured consultant who is indemnified | |
| | |by the policy? Remember the principal has no call on the policy directly, and must bring an action against the consultant before | |
| | |the policy can operate. | |
| | |Cover for more than three-year period may have a Break and Review clause, which gives Underwriters the option to review the terms | |
| | |mid-term, although this is no longer always a standard condition. | |
| | | | |
| | |The Retroactive date should be the date of award of the first contract | |
|11.5 |Miscellaneous Liabilities |
|11.5.1 |Property Owners |Include in the description of the business of Insured if the Insured owns buildings. Beware of some material damage covers i.e. | |
| | |Houseowners, Buildings Combined that already provide cover and may duplicate cover. Buildings in territories governed by French law| |
| | |have a Decinaal liability exposure. | |
|11.5.2 |Prospecting/Mining |Exposures to cater for are blasting, storage of explosives, diversion of water courses intentionally altered, vibration, weakening | |
| | |of support and spread of fire. | |
|11.5.3 |Ship Repairers/Builders |These exposures need to be catered for in the Marine market but be aware that the Marine market does not provide cover for General | |
| | |Liability, Products Liability and Employers Liability and covers in the Marine and Non-Marine Markets must compliment each other. | |
|NO. |ITEM |EXPLANATION |ACTION |
|11.5.4 |Statutory Defence Costs |Covers costs incurred in defending a potential criminal action in terms of various statutes but does not cover any fines or | |
| | |penalties imposed by the court. Cover is generally restricted to named statutes e.g. OHSACT, COID etc, but can be arranged on a | |
| | |blanket basis. Check that we have realistic limits as senior council costs can be expensive and that all acts applicable to the | |
| | |Insured are addressed if not on a blanket basis. | |
|11.5.5 |Stevedores |The risk is due to the custom of lending employees to other firms and problems are created due to the difficulty of determining who | |
| | |was exercising control over the employee at the time of any occurrence. | |
|11.5.6 |Warehouseman’s Liability |An Insured who charges for the storage of a third parties property is deemed to be a Warehouseman and as such has a strict liability| |
| | |for the care of the goods whilst in his custody. As most Insureds wish to avoid getting into a legal suit with their clients, a | |
| | |material damage policy is arranged to cover loss of the goods in their custody but as the policy is subject to defined perils and | |
| | |conditions it is best to have a liability policy as well that includes Care, Custody and Control risks as a backup. | |
|11.6 |Umbrella Liability |
|11.6.1 |Umbrella Policy Excess of Scheduled |This cover is arranged, primarily, on an Excess of Loss basis and stands above a schedule of various primary covers e.g. General | |
| |Underlying Primary Policies |Liability, Contract Works Liability, Motor Third Party Liability etc. The cover is on a follow form basis of the primary policy but| |
| | |also provides a wider form of cover. Where the cover is wider than the primary cover it steps down to become the primary policy but | |
| | |usually subject to a step down deductible. Occasionally the primary policy may be wider than the umbrella in some respects, try for | |
| | |a Broad as Primary clause. | |
|11.6.2 |Umbrella Policy excess of “So Deemed” |When the Placing Broker of an umbrella policy does not know the extent of all the primary policies, (usually when it is a global | |
| |Policy |client and the extent of the primary cover in various territories is not known,) then the Underwriter will deem that certain primary| |
| | |covers to be force so that he knows the attachment point of the Umbrella cover that he is providing. It is essential that a So | |
| | |Deemed wording be agreed by Underwriters in order to settle umbrella liability claims. If there is no primary policy in force for | |
| | |the So Deemed cover then the Insured becomes his own Insurer for the limit of the So Deemed cover. | |
| |PEOPLE |
|12. |Group Personal Accident/Sickness : |
|12.1 |Review benefits |Check EB Programme Benefits, Medical Aid Programmes, Travel Assist etc, . Check no gaps or overlaps in cover. | |
| | | | |
| | |All benefits should be reviewed in the light of inflation and any changes should be advised to the Insured Persons. | |
| | | | |
| | |Benefits are generally expressed on a VAT exclusive basis but insurers need to indemnify vendor insured’s over and above such | |
| | |amounts for their VAT obligation in respect of the claims payment | |
|12.2 |Rating considerations |COID pays (in accordance with its tariff) medical expenses incurred and disablement or death benefits in connection with | |
| | |occupational accidents. | |
| | |Most policies pay medical and TTD benefits net of COID benefits but rating differentials are possible if death and PD benefits are | |
| | |also paid net of any COID lump sum payments. | |
| | |Premium discounts are also available if following an indemnifiable event, the Insured’s medical aid programme is claimed against | |
| | |before lodging a claim against the GPA Programme – check first with Medical Aid administrators. In general it is recommended that | |
| | |these claims are lodged against the GPA Programme and not against the medical Aid. This avoids any reduction in the amount of cover| |
| | |available under the medical aid for future claims. | |
|12.3 |Persons Insured |Contracts of employment, categories of employees (including consultants, trustees, non-Executive Directors, temporary or casual | |
| | |staff etc.) will dictate which employees are to be covered. Amend categories of Persons Insured/ Employees to apply to specific | |
| | |client situation. | |
|12.4 |Visitors |Cover can be made available for visitors on a 24 hr basis. Ensure that the appropriate declarations are made. | |
|NO. |ITEM |EXPLANATION |ACTION |
|12.5 |24 Hour/Occupational Cover |Refer contracts of employment, Trade Union requirements before restricting cover. Remember that occupational cover does not | |
| | |normally include travel to and from work. Ensure that the client is fully aware of what scenarios are/ are not covered. | |
|12.6 |Earnings Definition, Capital Sum |Agree with client and record specifically, which allowances or other considerations are to be taken into account. Advise insurers | |
| | |and declare to them on the same basis. | |
|12.7 |Franchise, deductible, Aggregate (Time or|Insurers usually require a time franchise, of at least one-week, for TTD claims. A Premium Discount is often available if this | |
| |Monetary) |period is extended. Monetary deductibles can be applied in respect of medical expenses, to cut out the small claims and reduce | |
| | |premium. Some larger cases may be suitable for an annual aggregate deductible. TTD should be restricted to total weeks required | |
| | |before Employee Benefit Fund’s benefits kick in. | |
|12.8 |Age Limit, Physical Condition |Usually 15-70. Exceptions need to be specifically arranged. There are normally exclusions relating to pre-existing infirmities. If| |
| | |cover is required for such infirmities, this needs to be negotiated separately. | |
|12.9 |Accumulation, Individual Limit |Ensure that the individual and accumulation limits are in line with the client’s maximum exposures taking inflation into account. | |
| | |Then check policy and ensure individual limit is per occurrence while the accumulation limit is applicable to conveyance risks and | |
| | |not per occurrence. | |
|12.10 |Territorial Limits, Dangerous Territories|PA cover usually has no territorial limits but if war cover is included it usually excludes war between major powers. | |
|12.11 |Beneficiary - Board Resolution |The proceeds of the policy should be payable to the client. Disposal of proceeds depends on contract of employment or Board | |
| | |Resolution. Consider tax implications. | |
|12.12 |Police Reservists, |Police reserve duty is not usually excluded but may need to be disclosed. | |
| | | | |
| | |If war cover is given, duty with any military or police force is excluded, unless special arrangements are made with insurers. | |
|NO. |ITEM |EXPLANATION |ACTION |
|12.13 |Hazardous Activities |Most policies exclude certain hazardous activities e.g. sky diving, mountaineering with ropes, etc. If cover is required needs | |
| | |specific arrangement. | |
|12.14 |Flying Cover |Aircrew and persons engaging in a technical operation e.g. aerial photography are excluded and separate cover needs to be arranged | |
| | |where required. | |
|12.15 |Motor Cycling |Most policies exclude motor cycling except on business. If cover required, it needs specific arrangement. | |
|12.16 |Riot |Participation in riot and civil commotion is excluded. Cover for members of a works security force in respect of potential | |
| | |involvement in quelling riots should be specifically arranged. | |
|12.17 |War, Military Service |War risks are generally excluded, but cover is usually negotiable. Recommend to clients that war risks cover be effected. If war | |
| | |cover is given, duty with any military or police force is excluded, unless special arrangements are made with insurers. “Active War”| |
| | |covers available under Contract 725. | |
| | | | |
| | |N.B.: Disclosure necessary in respect of persons visiting known war zones / areas of hostilities. | |
|12.18 |Serious Illness, Dread Disease |Provides cover for payment of a lump sum in the event of the Insured Person contracting certain specified serious illnesses e.g. | |
| | |heart attack, cancer etc. Age limit is usually 55 or 60. | |
|12.19 |Sickness |Cover is available but is very expensive. Permanent Health Insurance should be considered as an alternative | |
|NO. |ITEM |EXPLANATION |ACTION |
|12.20 |Travel Insurance |PA cover is worldwide but additional cover may be arranged for employees travelling on business. The greatest need is for medical | |
| |(Medical Expenses, Accident, Sickness, |expense cover, including sickness, when travelling outside South Africa. Comprehensive package may include Curtailment, | |
| |Repatriation etc.) |Cancellation, Baggage, Personal Effects and Money cover. | |
| | | | |
| | |Annual cover should be arranged for all employees travelling on business, especially as the premiums are very reasonable. | |
| | | | |
| | |“Free” credit card cover is not normally sufficient. | |
|12.21 |Key Man |To provide a benefit for the employer to replace a valuable employee and to reimburse employer with any lost earnings arising from | |
| | |the insured event. Benefits are taxable in the hands of the employer. Refer AFFS if the cover required is to be on a full life | |
| | |insurance basis. | |
|12.22 |Disfigurement, Cosmetic Surgery |Ensure that there are permanent disability benefits for disfigurement. This cover is often included however, Multimark III provides| |
| | |limited burns disfigurement only. | |
| | | | |
| | |Medical Expenses Benefit will cover necessary plastic or cosmetic surgery. | |
|12.23 |Nuclear Risks |These are not usually excluded by PA policies but where there is a known exposure e.g. work with nuclear equipment it must be | |
| | |disclosed to insurers. | |
|12.24 |AIDS/HIV |Cover is available to provide payment of a lump sum if the Insured Person is diagnosed as being HIV positive. A preventative | |
| | |treatment extension is available with the occupational insured event wording. A preventative treatment extension is available with | |
| | |the occupational insured event wording. | |
|NO. |ITEM |EXPLANATION |ACTION |
|12.25 |Additional Extensions available (some may|Mobility | |
| |involve a rating consideration) |Repatriation | |
| | |Relocation | |
| | |Trauma counselling following act of violence or traumatic accident | |
| | |Driver assistance | |
| | |Child minders | |
| | |Family/ servants medical expenses | |
| | |Temporary partial disablement | |
| | |Emergency transportation / search and rescue | |
| | |Life support equipment | |
| | |Rehabilitation | |
| | |Claim preparation costs | |
| | |Hijacking, abduction or kidnapping | |
| | |Detention | |
|13. |(COID) COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT : |
|13.1 |Compensation Commissioner, Federated, |Employers are required to pay assessments to the Compensation Commissioner. However, Federated are permitted to have Workmen’s | |
| |Rand Mutual |Compensation policies in respect of employees engaged in the building industry. Similarly Rand Mutual provide cover for mining | |
| | |risks. | |
|13.2 |Transportation of Employees |Commissioner will provide cover for employees whilst being transported to and from work if; by means of a vehicle specially | |
| | |provided by the employer, driven by a company employee and if same is provided free of charge. | |
|NO. |ITEM |EXPLANATION |ACTION |
|13.3 |Outside RSA |There is provision in the Act to cover employees working temporarily outside RSA (for up to 12 months unless specifically agreed by | |
| | |the Commissioner). Neighbouring states also have their own Acts. Where employees are working outside RSA, clients should be urged | |
| | |to check the position in the territory in which they are working and, where necessary, arrange insurance for any gaps via the | |
| | |appropriate Afrinet company. | |
|13.4 |Compensation not subject to Income Tax |Employers paying their employees salaries when they are absent from work due to an occupational injury or disease should note that | |
| | |compensation payable in terms of COID is not subject to income tax. | |
|13.5 |Late Submission return of earnings |An employer who does not submit a return of earnings before the 31 July annually, will be liable for a fine of 10% of such declared | |
| | |earnings. | |
|13.6 |Increased Compensation |If an employee meets with an accident or contracts an occupational disease which is due to the negligence of his employer, he or she| |
| | |can apply for increased compensation. (Non compliance with the OHSACT could be construed as negligence on the part of the | |
| | |employer). The Commissioner may then assess the employer for a higher rate in contributions for a specific period. | |
|13.7 |Late Notification Fine |An employer who fails to report an accident involving a workman in the prescribed manner and within 7 days of the accident is liable| |
| | |to pay a fine. | |
| | |Should an injured employee fail to lodge his claim for confirmation within 12 months of the date of the accident such claim will | |
| | |prescribe. | |
|13.8 |Contractor’s Employees |Should a contractor not be registered in terms of this Act, his employees would be deemed to be the employees of the employer to | |
| | |whom the contractor is contracted. (It is recommended that all contractors should be required to provide a letter of good standing | |
| | |from the Compensation Commissioner). | |
|13.9 |Maximum Benefits |The maximum amount on which benefits and assessments are calculated is R123 396. This limit was set with effect from 1 March 2000 | |
| | |but is subject to amendment from time to time. Be aware of the latest development. | |
|13.10 |COID-LINK |Claims assistance and expert advice and services on any COID related matter - Required? | |
|NO. |ITEM |EXPLANATION |ACTION |
|14. |MOTOR |
|14.1 |Policy Wording |Preference should be given to policy choice | |
|14.2 |General |
|14.2.1 |Declaration of Vehicles |Ensure schedule of insured vehicles correct or if Blanket/Fleet basis, number of vehicles in each category correct. Ensure maximum | |
| | |indemnity for each class of vehicle is adequate, including provision for VAT, accessories | |
|14.2.2 |Vehicle Maintenance, Roadworthiness |Unroadworthy vehicles may invalidate cover in terms of the due care condition. | |
|14.2.3 |Fleet Loss Control Programme |For a large client, implementation of a loss control programme will be beneficial – refer Risk Engineering or as a minimum consider.| |
| | |Drivers Licences Tachographs fitted and read | |
| | |Advanced Driving Restricted driving hours | |
| | |Drivers contribute to excess Daily vehicle inspections | |
| | |Qualified fleet manager No passengers allowed | |
| | |Bonus for claims free driving Suspension of driving rights | |
| | |Disabled/Damaged vehicle recovery plan procedures | |
| | |Anti Theft devices | |
|14.2.4 |Driver’s Licence Check |The Insured is not covered if they were aware that the driver was unlicensed. If unaware, cover exists but insurers may exercise | |
| | |recourse against driver. All drivers’ licences should be checked at least once a year. All endorsements/convictions must be | |
| | |notified to insurer immediately. | |
|NO. |ITEM |EXPLANATION |ACTION |
|14.2.5 |Vehicles Owned, Leased, Hired, Borrowed, |If on a Fleet/Blanket Basis this description of vehicles should be used. | |
| |Subsidised | | |
|14.2.6 |“Do’s and Don’ts” |“Do’s and Don’ts” envelopes on which accident procedures are printed in four languages and which contain a Motor Accident Report form| |
| | |should be made available. Timeous reporting and witness statements are vital to successful recoveries. Client Education will pay | |
| | |dividends in reduced claims admin. | |
|14.2.7 |Employees’ Subsidised Vehicles |If employees’ own/subsidised vehicles are insured in terms of Employer’s Motor Policy, name of Insured should be suitably amended and| |
| | |special memorandum applied for insurable interest (Check Motor Poldra, Title of Insured Circular). Client should be aware that | |
| | |adverse experience from employees’ vehicles might affect client’s terms. | |
| | | | |
| | |NB: SASRIA/NASRIA requirement for separate coupons distinct from fleet coupon. | |
|14.2.8 |Unspecified/Specified Basis |Suggest basis most suited e.g. Unspecified (ease of administration including automatic cover for fleet changes) or Schedule | |
| | |(preservation of individual NCB’s e.g. if employees’/subsidised vehicles involved). | |
|14.2.9 |Description of Use |Disclosure required. Policy normally excludes or cover must be negotiated for: | |
| | |Overloading of vehicles | |
| | |Motor Trade risks | |
| | |Rallies, Reliability Trials, Racing etc. | |
| | |Fare paying passengers | |
| | |Carriage of Explosives, Dangerous Loads (see also Fire Brigade Charges, Debris Removal) | |
| | |Driving Instruction for Reward | |
| | |Hire or Reward | |
|NO. |ITEM |EXPLANATION |ACTION |
|14.2.10 |Motor Vehicles outside the Republic of South |Must comply (therefore investigate) with local territory requirements and recommend to client that | |
| |Africa |vehicles be insured in the local territory (see also 19.4) | |
|14.2.11 |Territorial Limits |Ensure adequate for client needs. | |
|14.2.12 |Deposit Premium Basis |Purchase adjustable policy based on claims experience and volatility of fleet size. | |
|14.3 |Cover |
|14.3.1 |Restricted Cover (Balance of Third Party, Fire, |Consider as method to reduce premiums or to encourage client to carry risk especially for low value | |
| |Theft). |vehicles. Catastrophe exposures dealt with in Fire section of Review Guide. | |
|14.3.2 |Self Insurance (Own Damage) |Consider aggregate deductible, burning cost etc. Always agree procedures (claims handling fee, | |
| | |recoveries etc.) in advance. Try to obtain pro-rata cancellation in respect of aggregate. | |
|14.4 |Limits |
|14.4.1 |Own Damage |Market Value (or Retail Value if applicable) of highest valued vehicles including VAT (refer also to| |
| | |Finance Agreement Indemnity and Recovery Costs). Don’t forget non standard extras e.g. Mag Wheels, | |
| | |Canopies, etc. | |
| | |Some insurers will also indemnify cost of extended warranty/ Maintenance Cover purchased with the | |
| | |vehicle. | |
| | | | |
| | |Contents of caravans, trailers, ambulances, fire engines, excluded. Consider All Risks/Specified | |
| | |Perils cover for moveable contents. If certain contents more appropriately described as “fixtures”| |
| | |in the vehicle, endorse policy to eliminate doubt. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Where Insurer is a foreign insurer (e.g. Lloyd’s/Non-RSA captive/other non-RSA insurance markets), | |
| | |sums insured for vehicles other than private type motor vehicles owned by non Vendors should be VAT | |
| | |exclusive. | |
| | |“Plant” which forms part of a vehicle (eg fire engines) should be insured in terms of the Motor | |
| | |Policy and on a difference in conditions and difference in limits basis under a Plant All Risks | |
| | |policy. Cover should be dovetailed between the two policies. This may not be the best option under| |
| | |all circumstances. | |
|14.4.2 |Credit Agreement Shortfall vs. Market Value |Relates to the difference between the outstanding amount in terms of an Instalment Sale/Lease | |
| | |Agreement and the actual market value of the vehicle should the vehicle be a total loss. Watch | |
| | |maximum indemnity. | |
|14.4.3 |Reinstatement Value/Agreed Value (New for Old) |May be available at additional cost. Usually limited period or kilometres. Refer also Vehicle | |
| | |Accumulation Limit under Fire section. | |
|14.4.4 |Liabilities |Watch individual insurer limitations, general limits, not just Fire/Explosion. Relate to client | |
| | |philosophy re liability limit generally. Consideration should be given to using Aura or pick up | |
| | |via client’s umbrella liability programme. | |
|14.4.5 |Riot and Strike |Refer Section 4. For cover outside RSA/Namibia negotiate under Motor Policy. Note that a standard| |
| | |extension is available for inclusion under MultiMark | |
|NO. |ITEM |EXPLANATION |ACTION |
|14.4.6 |Own Loss of Use, Car Hire |Cover may be available for own vehicle. Liability to third parties covered under Section II. | |
|14.4.7 |Imported Vehicles/Parts Express Delivery Costs |Include if applicable. | |
|14.4.8 |Recovery Costs |Certain costs e.g. towing and delivery of damaged vehicles covered but only within maximum vehicle | |
| | |indemnity. May be special needs for write-offs or recovery of vehicle/salvage from remote or | |
| | |inaccessible situations. Check cover for import duty if vehicle cannot be returned from | |
| | |neighbouring country e.g. if stolen or written-off. NB. Impact on sum insured. Should negotiate| |
| | |based on requirements with a maximum limit of indemnity (possible maximum should be 5 x Own Damage | |
| | |Settlement figure). | |
|14.4.9 |NCB Protection |Consider inclusion for specified vehicles, if available, subject to cost. | |
| | |Windscreens (Lower Deductible, No Loss of NCB). Discuss need vs. cost saving. | |
|14.4.10 |Radio, Mobile Telephones, Tape Deck and Tapes, |Usually included subject to deductible/loss of NCB/specific vehicle limit. As an option could be | |
| |CD’s and Players |insured separately on all risks basis at additional cost (with lower deductible). Multimark | |
| | |requires specification if not supplied by manufacturer with vehicle when new. Cellular Phones | |
| | |should be insured (if required) in terms of an “All Risks” policy. Consideration should be given | |
| | |to self insuring cellular phones – and use of cell phones whilst driving could invalidate cover (due| |
| | |care). | |
|14.4.11 |Medical Limits – Cars |Limits low but other sources of cover (Medical Aid, GPA and COID). | |
|NO. |ITEM |EXPLANATION |ACTION |
|14.4.12 |PA for Passengers |Include or arrange separate cover, if required. | |
|14.4.13 |Fire Brigade Charges, Removal of Debris |May be necessary to consider cover for carriers of Hazardous Goods. | |
| | |If risk warrants special extension e.g. major environmental pollution, check adequacy of indemnity | |
| | |limits/endorse policy specifically. | |
|14.4.14 |Transnet Trailers |Check covered under Motor or PL Policy. | |
|14.4.15 |Overloading |Description of Use excludes for goods and passengers. Cover may be available where overloading is | |
| | |contrary to Insured’s instructions. | |
|14.4.16 |Special Types, Hired Plant (In/Out) |Check contractual arrangement to see if DIC cover required. | |
|14.4.17 |Machinery Breakdown |Excluded but refer Engineering Section re Special Types. See also extended warranties. | |
|14.4.18 |Loss of Revenue |Excluded. Fire etc. perils covered by Business Interruption policies. All Risks needs special | |
| | |arrangement by specific endorsement. | |
|14.4.19 |Extended Warranties |Although officially classified as motor insurance business by Registrar, this cover relates to an | |
| | |insurance-backed extension of a manufacturer’s warranty. | |
|14.4.20 |Search and Recovery Expenses |Include or arrange separate cover if required. | |
|NO. |ITEM |EXPLANATION |ACTION |
|14.5 |Legal Liabilities |
|14.5.1 |Vehicles that are primarily used on private |Liability covers necessary even on private roads/property. Injuries covered under RAF. | |
| |property (Agricultural vehicles, dedicated fire | | |
| |engines, etc.) | | |
|14.5.2 |Contingent Liability Extension |Third party liability extension in respect of vehicles not owned by the Insured whilst being used by| |
| | |employees on the business of the Insured. N.B. Does not cover damage to the vehicle itself. | |
|14.5.3 |Indemnity to Employers |Extension required to employee’s motor policy where he is utilising own vehicle on the business of | |
| | |his employers. | |
|14.5.4 |Driving Other Vehicles |Covered under Section II. However where employees own vehicles are covered under Fleet Policy e.g.| |
| | |subsidised vehicles, employee may have no third party cover if driving an uninsured borrowed | |
| | |vehicle. Check policy wording. | |
|14.5.5 |Passenger Liability/ Authorised/ Unauthorised |Passenger Liability cover is provided for Private type cars in terms of a standard Motor policy. | |
| | | | |
| | |For other vehicles extensions are optional: | |
| | |a) Authorised | |
| | | Covers liability to all passengers (except household/employees) whether authorised or not. Check | |
| | |adequacy of limit. Usually excludes passengers carried on trailers, open flat beds, special types,| |
| | |motor cycles. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |b) Unauthorised : (Lower Premium) | |
| | | Covers liability to all passengers, on any type of vehicle, being carried in contravention of | |
| | |Insured’s instruction to drivers not to carry passengers. Usually unlimited (up to general motor | |
| | |liability limit) and does not exclude trailers/flatbeds etc. | |
|14.5.6 |Motorcycle Learners |Normally cover is restricted to Section 1 only. | |
|14.5.7 |Motorcycle Pillion Riding |Many policies exclude cover altogether where motorcycle being ridden with pillion passenger. Cover| |
| | |is available at extra premium. Other insurers will not provide cover for liability to pillion | |
| | |passenger or, where cover is given, the indemnity limit is very low. | |
|15. |ROAD ACCIDENT FUND (RAF) : |
|15.1 |Insured Vehicles |All vehicles designed or adapted for use on a road and powered by fuel, gas or electricity including| |
| | |trailers attached thereto in the Republic of South Africa, are automatically covered by way of a | |
| | |fuel levy. | |
|15.2 |Right of Recourse |Fund/agents may exercise right of recourse against driver/employer/owner in respect of: | |
| | |unlicensed driver; | |
| | |driver under the influence; | |
| | |failure to notify an accident timeously or at all or provision of false information. | |
|15.3 |Adjoining States |Botswana, Lesotho, Namibia, Swaziland have reciprocal agreements in force. Some countries require | |
| | |arrangements at border or through AA in RSA (if travelling in personal capacity (must be a member) | |
| | |or contact South African Chambers of Commerce (SACOB) for commercial risks. | |
|NO. |ITEM |EXPLANATION |ACTION |
|15.4 |Liability |For a claim to succeed under the Fund, negligence/fault on the part of the driver of the vehicle | |
| | |must be established. Claims must be lodged via an attorney. | |
|16. |ADDITIONAL POINTS FOR DISCUSSION WITH CLIENTS IN THE MOTOR TRADE |
|16.1 |Reference |Preferable to avoid use of standard Motor Trade Policies and or Multimark III wording. | |
| | |Internal Risks Section 1 covers accidental damage to Insured’s own vehicles. | |
| | |Internal Risks Section 2 covers damage to customer’s vehicles and third party vehicles. | |
| | | | |
| | |External Risks Section 1 covers own and customer’s vehicles while Internal Risk Section 2 covers | |
| | |third party damage. | |
|16.2 |Internal Risks |
|16.2.1 |Perils Excluded |Theft, Fire, etc. weather conditions – insurable under Material Damage policies. | |
|16.2.2 |Premises |Refer definition in policy. Ensure description extends to parking areas (including “in the open”) | |
| | |used by the Insured as well as other premises where he may be working temporarily. | |
|16.2.3 |Description of Vehicles |Check Policy Definition to ensure clients needs covered especially in relation to stock or “Trade’ | |
| | |vehicles. | |
|16.2.4 |Amount of Wages, Area |Could be required for rating purposes. Check minimum declaration for directors/principals. | |
|16.2.5 |Disclaimers (Fire, Storm, Theft) |Of limited value only and may discourage claims but if Insured is legally liable, policy must | |
| | |respond except for excluded cover which can be provided by Material Damage policy. | |
|NO. |ITEM |EXPLANATION |ACTION |
|16.3 |External Risks |
|16.3.1 |Exclude Demonstration Risks, Own Vehicles, Special|Methods of reducing cover and hence premium. | |
| |Types | | |
|16.3.2 |Wages, Plates, Named Driver Basis |Check which basis best for client needs – description of use clause differs for each. | |
|16.3.3 |Expenses for outsourced work |Ensure cover extends to other garages/outside premises e.g. work which is sub-contracted out e.g. to| |
| | |an auto electrician, or “work away”. | |
|16.3.4 |Social, Domestic and Pleasure Use (Including While|Where the Insured relies on this policy (rather than a Motor policy) to insure own vehicles, this | |
| |on Loan) |extension necessary. Ensure vehicles belonging to Insured which are loaned to customers are | |
| | |covered for SD&P and business use (of the customer) if required. | |
|16.3.5 |Unauthorised Use |Especially important if on a Named Driver Basis. Ensures policy extends no matter which basis | |
| | |cover arranged. | |
|16.3.6 |Vehicles on Loan, Business Use |Extension necessary if cover on Named Driver or Plates basis. | |
|16.3.7 |Transit, Delivery, Convoying |Extension necessary if casual or non-employee drivers are used. | |
|16.3.8 |Unaccompanied Use – Motor Cycles |Ensure no restriction regarding Motor Cycles. Normal to exclude unaccompanied demonstration risks | |
| | |for vehicles other than motor cycles. Note that cover is available. | |
|16.3.9 |Loss of Use – Customer’s Vehicles |Provided Insured legally liable, Section II should cover consequential loss to customer arising out | |
| | |of the loss of use of his vehicle following loss or damage whilst in the care or custody or control | |
| | |of the Insured. | |
|NO. |ITEM |EXPLANATION |ACTION |
|16.4 |Liabilities (Motor Traders) |
|16.4.1 |Loss of Use – Customer’s Vehicle |May be automatically covered as a liability under Internal Risks policy, but External Risks policy | |
| | |must be extended to cover. | |
|16.4.2 |Liability of Passengers |Not automatically included – check for exposure and include as necessary. | |
|16.4.3 |Unauthorised Use by Employees |Not usually included if on Named Driver Basis – policy to be extended as required. | |
|17. |BONDS & GUARANTEES |
| | | | |
|17.1 |NB |These are effected in the insurance market rather than through Insured’s bank to ease cash flow | |
| | |and/or overdraft commitments. You will need client’s balance sheet. | |
| | | | |
| | |(b) Clients are usually called upon to provide counter-indemnities. | |
|18. |SUSPENSIVE/INSTALMENT SALE (FORMERLY HIRE PURCHASE) |
| | | | |
|18.1 |Breach of Conditions |Protects the interest of seller/finance company in the event of breach of a policy condition e.g. | |
| | |drunken driving. | |
| | | | |
|18.2 |Abscondence |Protects seller, finance company in the event of buyer absconding with the goods. | |
| | | | |
|18.3 |Insolvency |Protects seller/finance company in the event of insolvency of buyer. | |
| | | | |
|18.4 |Life Cover |Cover on the life of the purchaser – decreasing term cover with or without disability/conversion | |
| | |options (introduce Financial Services). | |
| | | | |
|18.5 |Failure by Purchaser to Insure |Protects seller, finance company in the event that purchaser fails to insure or renew insurance | |
| | |contrary to seller’s instruction. | |
|NO. |ITEM |EXPLANATION |ACTION |
|18.6 |Legal Expenses |Ensure included in respect of above items. | |
| | | | |
|18.7 |Retention of Premiums (Breach of Insurance Act) |Discuss legality of self-insurance/risk retention fund | |
| | | | |
|18.8 |2/3 Year Policies |Advantage to be gained in pegging premiums over longer period/period of lease – premium part of sale | |
| | |agreement. Difficult to obtain. | |
| | | | |
|18.9 |Residual Value |The estimated market value of the goods at the end of the agreement period. Consider | |
| | |insurance/self-insurance to cover shortfall between residual and actual market value | |
|19. |MISCELLANEOUS (CONTINGENCY) RISKS |
| | | | |
| |NB |The markets for these risks will be specialist and limited and in some cases there may be no readily| |
| | |available market. Refer Virtual Team or Library for assistance. | |
| | | | |
|19.1 |Abandonment of Events |Covers costs incurred and not recoverable as the result of cancellation of public performances due | |
| | |to natural and other causes, e.g. political or weather. See also Non-Appearance. | |
| | | | |
|19.2 |Confiscation, Nationalisation of Foreign Assets |Assets permanently or temporarily in a foreign country. Refer AF Credit. | |
| | | | |
|19.3 |Contract Penalties-Delay, Non-Performance |Penalties incurred in terms of specific contract conditions due to delays in completion and other | |
| | |non-performance situations. (Refer also Bonds and Guarantees). Can be covered if due to insured | |
| | |event. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
|19.4 |Customers’ Protection |For Financial Agreement transactions – protection of assets and of repayment by purchaser. Se also | |
| | |Suspensive/Instalment Sale. | |
| | | | |
|19.5 |Decennial/inherent or latent defects |Applicable usually in terms of the Napoleonic Code to developers who give a 10 year guarantee in | |
| | |connection with building projects. | |
| | | | |
|19.6 |Hostile Takeover |Cost incurred in resisting unwelcome takeover bids. | |
| | | | |
|19.7 |Industrial Espionage |Theft or unauthorised use of ideas, formulae processes etc by a third party. | |
| | | | |
|19.8 |Industrial Relations, Wrongful Dismissal and “Unfair |e.g. Compensation claimed by a dismissed employee. | |
| |Labour Practices” | | |
| | | | |
|19.9 |Invalidation of Manufacturers Warranties |Loss of manufacturers warranty following damage. | |
| | | | |
|19.10 |Joint Ventures |Cover against one or other party in a joint venture pulling out or failing to perform in terms of | |
| | |the agreement. There can be life assurance angles to this. | |
| | | | |
|19.11 |Judicial Delay |Pays losses incurred as a result of delays in judicial procedure e.g. death of a judge. | |
| | | | |
|19.12 |Kidnapping, Hostage Holding and Ransom. Detention |Specialist companies handle all necessary negotiations. Enquiries for this cover must be handled in| |
| | |strictest confidence. | |
| | | | |
| | |Detention cover is available from Lloyd’s It provides for the payment of an employee’s salary, as | |
| | |well as costs involved in trying to obtain his release, in the event of authorities/other detaining | |
| | |him. | |
|NO. |ITEM |EXPLANATION |ACTION |
|19.13 |Mergers and Acquisitions |Various aspects require consideration e.g. Due Diligence, Liabilities etc. | |
| | | | |
|19.14 |Non-Appearance (Entertainers) |Covers non-recoverable costs incurred due to the non-appearance of an entertainer. | |
| | | | |
|19.15 |Over-Redemption |Where special offers exceed budgeted amount by a certain percentage, thus costing the sponsor an | |
| | |amount greater than expectations e.g. Gilbeys attach a sticker to every bottle or case advising that| |
| | |a free bottle or other reward will be given to all who return the sticker. The budget is based on | |
| | |marketing advice/statistics but a particular promotion could considerably overrun. | |
| | | | |
|19.16 |Prize Indemnity |Insurance against a sponsor having to pay for a hole-in-one, a tagged fish being caught etc. | |
| | |Specialist markets in the contingency area both local and at Lloyd’s. | |
| | | | |
|19.17 |Products Extortion, Tampering |Costs incurred in paying extortion or withdrawing/destroying products and advertising item recall | |
| | |where threats or evidence of tampering with them becomes known. | |
| | | | |
|19.18 |Purchase and Sale of Companies |Losses incurred when the purchase/sale of company falls through during negotiations. | |
| | | | |
|19.19 |Redundancy |Payments necessary to staff (usually key men) when an unforeseen redundancy situation occurs. | |
| | | | |
|19.20 |Residual Value – employees Interest |e.g. “Perks Protector” where an employee has the right to purchase his company car at the end of a | |
| | |cycle for a nominal value. | |
| | | | |
|19.21 |Strikes – No Damage |There are markets but SA conditions may make cover prohibitively costly. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
|19.22 |Weather (Agricultural) |Damage to crops and land by nature (catastrophic) phenomenon e.g. hail, frost, drought. Specialist | |
| | |market (e.g. Sentrasure) but some risks uninsurable/markets unavailable. | |
| | | | |
|19.23 |Weather (Performance etc) |Losses incurred due to cancellation/curtailment of performances, fund raising events, etc because of | |
| | |unsuitable weather e.g. heavy rain. See also Abandonment. | |
|20. |MACHINERY BREAKDOWN |
|20.1 |Property to be insured |Identify if blanket or specified cover required by identifying (including regular reviews) items of | |
| | |Plant and Machinery which are critical to production (subject to high workload) of a unique nature, | |
| | |expensive to repair or require parts to be imported. Check availability of Standby Plant and spare | |
| | |parts kept on site and the need for cover. | |
|20.2 |Excluded Property |Draw attention of Insured to any exclusion of short-life items. Discuss other specific relevant | |
| | |exclusions. | |
|20.3 |Sum Insured |Sum Insured to be on NRV basis with allowances made for labour costs, custom dues, transportation, | |
| | |currency fluctuation, inflation. Also include refrigerants, insulating and transformer oils, etc. | |
| | |Some Insurers will agree to Replacement Capacity Conditions. Establish from Insured whether less | |
| | |expensive equivalent capacity machinery is available then negotiate with Insurers. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Regular reviews of values must be made in respect of imported machinery and the devaluation of local | |
| | |currency. Cover can be obtained on a first loss basis if required. | |
|20.4 |Capital Additions |Applicable to blanket policy - will only apply after installation of the Plant is complete and operated for a| |
| | |minimum period of 7 days under normal working conditions. Special attention to be paid to B/I considerations| |
|20.5 |Special Foundations |If special foundations form an integral part of the insured Plant and Machinery, the values to replace | |
| | |foundations must be specifically included in Sum Insured. | |
| | |Must also include any special masonry work and refractory lining all of which form an integral part of the | |
| | |property insured. | |
| | | | |
|20.6 |Deterioration of Stock/Raw Material in Process |Raw materials/Stock may deteriorate/putrefy or be damaged if the production cycle is interrupted. | |
| | |Fire/Assets policy if not already covered may need similar extensions. | |
| | |Normally on a first loss sum insured basis. | |
| | |Also check for packing materials that can be spoilt. | |
| | |Cover must include losses due to rise or fall in temperature. | |
|20.7 |Contamination of Stock |Refrigerants could contaminate stock due to toxicity of refrigerants (e.g. ammonia etc). | |
|20.8 |Disposal and destruction of salvage or removal of brands and|This should be insured in respect of the damage to stock. There are different wordings in respect of brands | |
| |labels |and trademarks | |
| 20.9 |Outside Storage and Transit of Stock |Check the exposure to loss at premises other than at Insured's premises or whilst in transit e.g. for repairs| |
| | |or storage. | |
|NO. |ITEM |EXPLANATION |ACTION |
| 20.10 |Failure of Supply |Deterioration of stock due to failure of supply can be covered - check that not duplicated under Fire/Assets | |
| | |policy. In all cases cover must be on an All Risks basis, not specified perils only. | |
| 20.11 |Loss of contents in tanks/vessels |Extend cover to include contents of tanks and vessels lost due to bursting, splitting, rupture, collapse or | |
| | |impact including failure of valves if not covered elsewhere in the insurance package. | |
| 20.12 |Cost of Gaining Access |In order to repair or replace a machine it may be necessary to remove a section of the roof or even to break | |
| | |down part of a wall of the building containing the machine. | |
| 20.13 |Express Delivery and Overtime Costs |Include with appropriate limits as a matter of course. | |
| 20.14 |Claims Preparation Costs |Include with appropriate limits as a matter of course. | |
| 20.15 |Redundant Spares |Should damage be so expensive that a machine is written off, the value of spares held for the old machine | |
| | |should be recoverable. | |
| 20.16 |Loco’s, Tracks Points etc |If the Assets/Fire policy does not provide for loss of or accidental damage to railway rolling stock and | |
| | |ancillary equipment, this policy may need to be expanded. | |
| 20.17 |Molten Metal Breakout, Holing Through, Solidification |If not covered under Fire/Assets policy, extend MB to include. | |
|NO. |ITEM |EXPLANATION |ACTION |
|21. |PLANT ALL RISKS (OWNED PLANT) |
|21.1 |Owned Plant Cover |Covers both mobile and non-mobile plant not normally covered in terms of motor or assets covers. | |
| | |Watch out for need for road risks material damage and liability cover as well as for | |
| | |mechanical/electrical breakdown which is usually excluded. | |
|21.2 |Sums Insured for Premium Calculations and Claims |Either on new replacement value, market value or agreed formula relating to NRV/MV/Book Value, etc. | |
| |Settlement |Watch out for average and a clear understanding of basis of loss settlement. | |
|21.3 |Substitute Hire Fees |Ensure adequate limits allowed to hire-in replacement plant and that the indemnity period is | |
| | |sufficient to allow for the repair/replacement period especially in respect of sophisticated plant | |
| | |requiring importation. | |
|21.4 |Tandem Lifting with Cranes |Normally excluded from covers. Ascertain if cranes could be involved in tandem or multiple lifts. | |
|21.5 |Plant Owner as Hirer |If the plant owner hires-out plant, ascertain if Hire Conditions are as per CPHA Standard document, | |
| | |alternatively obtain copy of Hire Conditions to apply. | |
|21.6 |Loss of Revenue |Ascertain the need for loss of revenue following damage to plant. | |
|21.7 |Accumulation Limit |If written on first loss basis check the accumulation of plant at any one situation. | |
|NO. |ITEM |EXPLANATION |ACTION |
|21.8 |Safe Load Indicators |In terms of Occupational Health and Safety act, cranes over a rated capacity of 5 tons to be fitted | |
| | |with safe load indicators. Some plant hirers received dispensation but plant covers could still | |
| | |exclude losses on plant without these devices. | |
|22. |PLANT ALL RISKS (HIRED-IN PLANT) |
|22.1 |Hired-In Plant cover |Covers all Plant which is hired-in in terms of a hire agreement entered into by the Insured. Note | |
| | |that the Liability Policy should extend to provide cover in respect of any Contractual Liability | |
| | |imposed by CPHA or similar hire conditions. Need for mechanical/electrical breakdown cover to be | |
| | |reviewed. | |
|22.2 |Estimated Hire Fees |Obtain the estimated Hire Fees payable to plant owners for the various categories of hired-in plant | |
| | |as required for rating purposes. | |
|22.3 |Limit and Basis of Indemnity |Discuss the maximum value of any one item of plant to be hired in, the basis of valuation and the | |
| | |maximum exposure on any one site. Also take into account the need for tandem and multiple lifting | |
| | |involving cranes when discussing any one loss limit of indemnity. | |
|22.4 |Continuing Hire Charges |Ensure adequate limits are allowed to provide continuing hire charges payable to the hired-in plant | |
| | |owner in terms of the hire conditions. | |
|22.5 |Hire Conditions |Obtain copies of hire conditions usually used to hire-in plant if standard CPHA conditions are not | |
| | |used. | |
|NO. |ITEM |EXPLANATION |ACTION |
|22.6 |Tandem Lifting with Cranes |Normally excluded from covers. Ascertain if hired cranes could be involved in tandem or multiple | |
| | |lifts. | |
|23. |CONTRACT WORKS/ERECTION ALL RISKS |
|23.1 |Contracts to be Insured |Determine if cover is for : | |
| | |work as contractor | |
| | |employer or principal controlled insurance | |
| | |specific contracts only | |
| | |all contracts within a predetermined range | |
| | |in-house maintenance/refurbishment, etc | |
|23.2 |Insured Parties |Consider implications of including Employer, Contractors, Sub-Contractors, Joint Ventures, | |
| | |Manufacturers, Suppliers, Consultants, etc as Joint Insureds (with full title to the policy) or for | |
| | |cover to only include their activities or interests. | |
|23.3 |Joint Ventures |Contracts involving Joint Ventures require special consideration | |
|23.4 |Contract Type |Obtain information on types of contract to be insured i.e. civil, building, earthworks, work | |
| | |involving water courses, road contracts, mining, tunnelling etc. | |
|NO. |ITEM |EXPLANATION |ACTION |
|23.5 |General Conditions of Contract |Ascertain which General Conditions of Contract (GCC) are being used (note edition date and | |
| | |amendments) to determine who insures the Works and who is at risk for the Care of the Works and for | |
| | |third party liabilities. | |
| | |Refer Library or Technical Services for copies of GCC. | |
| | |Remember that Special Conditions of Contract could override the GCC insurance and other clauses. | |
| | |Ensure that any Site Rules do not conflict with conditions of contract. | |
|23.6 |Contracts where Principal effects insurances |Ensure that Contract documents correctly amend GCC to allow for Principal to insure. Advisable that| |
| |(Principal Controlled Insurances (PCI) |reasonable detail of Principals cover and claims procedure be provided to contractors. | |
|23.7 |Property Insured - Temporary Works |Temporary Works such as form work, special shuttering, launching girders, site accommodation can be | |
| | |included in cover if full value of such equipment is included. Alternative is to insure with | |
| | |construction plant. | |
|23.8 |Sum Insured |The estimated final contract value must include any “free issue material” i.e. material supplied | |
| | |free to the Contractor by the employer, the full value of materials and equipment to be incorporated| |
| | |into the Works and the value of any Temporary Works. Preferable that all values/limits/sums insured| |
| | |be on a VAT exclusive basis. | |
|NO. |ITEM |EXPLANATION |ACTION |
|23.9 |Contract Escalation and Post Loss Escalation |Contract Value Escalation and Post Loss Escalation requirements must be catered for. | |
|23.10 |Period of Insurance |An adequate period for completion of contract should be allowed for followed by the contractual | |
| | |maintenance or defect liability period as required in the GCC. | |
| | |Is there a need for extended maintenance periods beyond 12 months. Clients needs relative to | |
| | |beneficial occupation/progressive handover. | |
|23.11 |Claims Preparation Costs |Determine appropriate limit to include as a matter of course. | |
|23.12 |Territorial Limits |Territorial Limits to cater for contracts where off site storage and off site manufacturing takes | |
| | |place as well as inland transit from outside of territory where contract is being undertaken. | |
|23.13 |Riot and Strike outside RSA/Namibia |Determine need for wider Riot and Strike cover for works outside RSA/Namibia. | |
|23.14 |Defective Workmanship/ Design |Various alternative exclusions relating to design/workmanship to be considered to suit client's | |
| | |requirements. Technical assistance may be appropriate. | |
|NO. |ITEM |EXPLANATION |ACTION |
|23.15 |Deductibles |Contractor generally responsible for deductible except in respect of employers risks. Principals to| |
| | |ensure that PCI clauses show correct deductibles. Consider impact of high or aggregate deductibles | |
| | |on low value or affirmative action contracts. | |
|23.16 |Removal of Debris |Adequate limits and need for extended “debris removal no damage” cover to be reviewed. | |
|23.17 |Principal’s Existing Property (Own Surrounding |Consider need for cover in respect of Principal’s property being worked on (e.g. maintenance/repair | |
| |Property Damage) |contracts, extensions to existing works etc) or which is in the care custody and control of the | |
| | |Contractor. Adequate (generally first loss) limits must be provided to cater for such risks which | |
| | |may be excluded from relevant liability insurances. | |
|23.18 |Testing and Commissioning |Review adequate commissioning and testing periods in respect of all electrical and mechanical | |
| | |equipment. Where used plant/equipment is involved, client needs and insurer limitations to be | |
| | |considered. | |
|23.19 |Cessation or Abandonment of Contract |Cover will cease after 90 consecutive days of cessation or abandonment. | |
|NO. |ITEM |EXPLANATION |ACTION |
|23.20 |Contractors Public Liability Cover |Where Insured is a Contractor the General Public Liability cover can be extended to include | |
| | |contracting liabilities – this is preferable rather than as an extension to the CW cover. | |
| | |Where the Contract Works cover is arranged by the Principal and where the Principal does not wish to| |
| | |rely on liability cover provided by the Contractor, the Contract Works cover can be extended to | |
| | |include the Contractors liabilities arising from performance of the insured contract. | |
|23.21 |Removal of Support |Check if contract involves the interference or removal of any lateral support to any type of | |
| | |structure. | |
| | |Removal of support risks are generally not adequately insured in terms of conventional liability | |
| | |insurances. | |
| | |Cover can be obtained as an extension to Public Liability cover provided this is not restricted to | |
| | |“accidental” loss or damage. Where there is a potential “absolute (or strict) liability” exposure | |
| | |it is preferable that specific Removal of Support cover be arranged. Adequate limits of indemnity | |
| | |must be provided. Normally a crack survey of surrounding third party property will be required. | |
|23.22 |Project Delay |Check the need for Principal to cover Project Delay/Advanced profits in respect of works being | |
| | |undertaken. Cover to be considered to include A.I.C.O.W., Standing Charges, Loss of Advances | |
| | |Profits, Loss of Future Revenue, Loss of Future Rental Income, Cost of Financing of Project. | |
|23.23 |Risk Management |Consider site inspection reports for safety on sites and general risk management recommendations. | |
|NO. |ITEM |EXPLANATION |ACTION |
|26. |MARINE HULL |
|26.1 |The Insured |
|26.1.1 |Full Title |All parties with an interest in the vessel must be noted indicating their interest | |
|26.1.2 |Shareholders |Not necessary to show in title but useful as information and material fact | |
|26.1.3 |Financial Interest/Mortgagees/ Cessions |Need to be noted in title. Also a reminder re Mortgagees Interest, etc. | |
|26.1.4 |Innocent Bond Holder/Owner |Consider arranging cover to protect them. | |
|26.1.5 |Managers/Charterers |To be noted as material fact and also to gauge whether they need cover/protection | |
|26.1.6 |Nationality |Relevant as to material fact and compliance with legislation | |
|26.1.7 |Previous History/Experience |Required for disclosure to Insurers and to gauge trends | |
|26.2 |Vessel(s) |
|26.2.1 |Name |Needs to be identified on policy | |
|26.2.2 |Registration Number |Not for policy but for identification | |
|26.2.3 |Year of Build |Material to the placing of the risk and for statistics purposes | |
|26.2.4 |Steel/Wood/Glassfibre/Other |Material to the placing of the risk and for statistics purposes | |
|26.2.5 |Type e.g. Pelagic Trawler (Fishing), Diamond |For disclosure as well as to gauge specific requirements | |
| |Recovery, Cargo, Tug/Salvage | | |
|26.2.6 |Gross Registered Tonnage (GRT)/Gross Tonnage (GT) |Material to the risk particularly on P&I | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.2.7 |Length Overall (LOA) |Material to the risk and for statistics | |
|26.2.8 |Breadth |As above | |
|26.2.9 |Make and Type of Engine |As above and particularly relevant when machinery breakdown cover required | |
|26.2.10 |Age and Power of Engine |Same comments as above | |
|26.2.11 |In Class? – If so, which Society |Material facts and relevant to rating levels/cover | |
|26.2.12 |Flag |Required for compliance purposes and material to the risk | |
|26.2.13 |Home Port |Material to the risk | |
|26.2.14 |Survey – in addition to annual SA Marine Safety |Often required for broking risk and to provide more details of the vessel | |
| |Association (SAMSA) type survey | | |
|26.3 |Sum Insured |
|26.3.1 |Review Philosophy |Get the overall philosophy re risk management, levels of self-insurance, type/areas of operation | |
|26.3.2 |New Replacement |This option is available, if required | |
|26.3.3 |Secondhand Replacement |This option is available, if required | |
|26.3.4 |Hard Currency |Cover can be arranged on this basis subject to premium being paid in the same currency | |
|26.3.5 |Original Cost |Another measurement of indemnity | |
|26.3.6 |Book Value |Another measurement of indemnity | |
|26.3.7 |Split Value |Consider splitting the value between Hull and Machinery and Disbursements | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.3.8 |Nets, Traps, Gear (Fishing) |Consider a separate policy at wider cover and lower rate | |
|26.3.9 |Fuel |Consider a separate policy at wider cover and lower rate | |
|26.3.10 |Electronics |Consider a separate policy at wider cover and lower rate | |
|26.3.11 |Leased/Hired Equipment |Ensure this is covered and noted including Lessor’s name | |
|26.3.12 |Catch |Can be separately insured on various bases, e.g. total loss only, all risks incl deterioration | |
|26.4 |Cover |
|26.4.1 |Total Loss, Salvage Charges, Sue and Labour |This is the basic cover at the lowest premium | |
|26.4.2 |Institute Fishing Vessel Clauses (IFVC)/Institute |“All Risks” including as per 26.4.1 but excluding Machinery Breakdown | |
| |Time Clauses (ITC) Excluding Machinery Damage | | |
|26.4.3 |IFVC/ITC |“All Risks” cover including an element of Machinery Breakdown | |
|26.4.4 |IFVC/ITC. Plus Additional Perils |As above with a wider form of Machinery Breakdown | |
|26.4.5 |Port Risks |Relevant to vessels whilst laid up, under repair or not under repair | |
|26.4.6 |War and Strikes |Should be offered/included at a nominal price. Note applicable to international waters and | |
| | |territorial waters. As gap between WSRCC and Sasria/Nasria is not clearly defined, recommend | |
| | |purchase of both | |
|26.4.7 |SASRIA/NASRIA |Available for RSA territorial waters up to 12 miles from the coast | |
|26.4.8 |Separate Nets/Equipment Cover |Can be offered depending upon type/value | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.4.9 |Separate Catch Cover |As above | |
|26.4.10 |Loss of Use |Not covered by policy. Available but not too readily | |
|26.4.11 |Liabilities |Either cover in Hull Policy or P&I Club | |
|26.5 |Deductibles |
|26.5.1 |1%/3%/6% of Hull and Machinery Value |This is a formula normally imposed by Underwriters | |
|26.5.2 |Per Witherbys e.g. Cl. 12 and 13 and variations |Clause 12 relates to the non-breakdown deductible and Clause 13 to machinery breakdown. They can be| |
| | |applied either separately or cumulative | |
|26.5.3 |Agreed Sums All Claims |This can be negotiated with Underwriters | |
|26.5.4 |Applicable to all claims excluding Total Loss |Deductible normally applies to all claims other than Total Loss | |
|26.5.5 |Lower Deductible in Club Cover |A lower deductible than normally applied under the Hull Policy is benefit of P&I Club cover | |
|26.5.6 |Annual Aggregate Deductible |This should be borne in mind when looking at Fleets | |
|26.6 |Use |
|26.6.1 |Diamond Recovery |Full description of operation to be obtained and disclosed to Insurers | |
|26.6.2 |Cargo |Full description of operation to be obtained and disclosed to Insurers | |
|26.6.3 |Harbour Craft |Full description of operation to be obtained and disclosed to Insurers | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.6.4 |Fishing e.g. |Different types of fishing require differing requirements. Full details of operations should be | |
| |Freezer Trawler |obtained | |
| |Wet Fish Trawler | | |
| |Pelagic | | |
| |Lobster | | |
| |Linefish | | |
| |Other e.g. deep sea | | |
|26.6.5 |Laid Up Periods : |To be ascertained for cover/rating purposes | |
| |Laying Up Returns |Vs Cancelling Returns Only – to be gauged depending upon laid up periods | |
| |Cancelling Returns Only |Vs Laying-Up Returns – to be gauged depending upon laid up periods | |
|26.7 |Navigation Limits |
|26.7.1 |South African/Namibian Waters up to 200 miles from|Usually allowed by Underwriters. Extensions usually attract additional premium/deductible | |
| |the coast | | |
|26.7.2 |International Waters |To be specifically negotiated | |
|26.7.3 |Limited Navigation |Usually for laid up/harbour craft | |
|26.7.4 |Laid Up |For vessels pending sale or laid up out of season or due to lack of work | |
|26.7.5 |Delivery Voyages |To be negotiated as and when | |
|26.7.6 |Allowed by relevant authority e.g. SAMSA |Any agreed navigation limits are on the assumption that the local authority permits such limits | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.8 |Protection and Indemnity (P&I) |
|26.8.1 |Cover in Hull Policy |Not recommended but may be appropriate for smaller specific vessels/operations | |
|26.8.2 |Club Entry |Recommended to cover all liabilities | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.8.3 |Limitations in Hull Cover |Club cover is generally wider and more appropriate, e.g. | |
| |Limited to Hull & Machinery Cover |P&I Club is specifically geared to cover liabilities | |
| |No Oil Pollution | | |
| |Limited Crew Cover |Club cover provides full oil pollution | |
| |Higher Deductible |The crew liability cover is more appropriate in the Club | |
| |Club Unlimited except Oil Pollution |Club deductibles are usually a lot lower than under the Hull Policy | |
| |Information similar to Hull |Apart from oil pollution the Club cover is unlimited apart from by statute | |
| |Particular reference to Crew |Similar underwriting information is required as for Hull | |
| |Particular reference to Contractual Liabilities | | |
|26.9 |Premium |
|26.9.1 |Annually |Used mainly for relatively small premiums | |
|26.9.2 |Quarterly |Available mainly for Fleets | |
|26.9.3 |Monthly per PPP |To be used where appropriate | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.9.4 |20 Bis |Usually applicable but be aware of specific payment warranties | |
|26.9.5 |Self Funding |Can be used for appropriate Fleets | |
|26.10 |Important Considerations |
|26.10.1 |Merchant Shipping Act Warranty |All aspects of this warranty are to be complied with e.g. vessel’s Safety Certificate, correctly | |
| | |crewed. | |
|26.10.2 |Skipper Warranty |Specific warranty relating to skipper’s experience, etc., to be complied with where relevant | |
|26.10.3 |Use Warranty e.g. Fishing Only |Warranted for one use only | |
|26.10.4 |Towage : | | |
| |Contractual |Where contractual, Hull and P&I Insurers to be informed | |
| |In Distress |Covered under Club and Hull covers but prompt notice to be given | |
|26.10.5 |Transfer/Sale of Vessel/Change of Management e.g. |No automatic cover following transfer, sale, etc. New cover to be taken out | |
| |Bareboat Charter | | |
|26.10.6 |Contractual Liabilities |To be assessed and disclosed to Underwriters | |
|26.10.7 |Own Repairs |Clauses to be amended to cover | |
|26.10.8 |Notice of Claim : |Prompt notice to be given to Insurers | |
| |Surveyors |Appointed on behalf of Insurers | |
| |Average Adjusters |Appointed on behalf of Owners | |
|26.11 |Markets |
|26.11.1 |Limited South African Market |Limited lead and follow market | |
|NO. |ITEM |EXPLANATION |ACTION |
|26.11.2 |Lloyds |Interested but cyclical and usually selective | |
|26.11.3 |International Companies |Sometimes interested but authority required | |
|26.11.4 |P&I Clubs |London based. US Dollar premium payment. Club used dependant on type of vessel/trade/use | |
|27. |MARINE CARGO/TRANSIT/STOCK THROUGHPUT |
|27.1 |Schedule | |
|27.1.1 |Subject-Matter Insured |Although we include all goods appertaining to the business, it is recommended that we obtain a full list, if not of specific products, an | |
| | |adequate description e.g. bulk liquids (hazardous). | |
|27.1.2 |Bases of Valuation |The general rule for imports is to cater for all costs up to destination plus a percentage mark-up, anticipated profit, currency | |
| | |fluctuations and re-ordering costs. | |
| | |Exports are in accordance with Letters of Credit or contractual obligations. | |
| | |For Stock Throughput consider Replacement Cost or at least Delivered Cost plus expenses for Stock Throughput storage risks plus percentage | |
| | |mark-up. | |
|27.1.3 |Policy Limits |The Bottom (Vessel) or Conveyance Limits should be based on the highest anticipated shipment value calculated on the agreed Basis of | |
| | |Valuation. | |
| | |The Location Limit (Temporary storage during the course of the insured voyage) is customarily 200% of the Bottom Limit to cater for | |
| | |unexpected accumulations, particularly at Port of Discharge. | |
| | |Stock Throughput will include Bottom, Location and Storage Limits – each calculated on the Basis of Valuation. | |
|27.1.4 |Voyages |Although most of the marine policies are to and from “Anywhere in the world”, sometimes with a few exclusions, it is important from a | |
| | |disclosure point of view to ascertain the volume of business with certain countries in conflict or with poor reputations. | |
|NO. |ITEM |EXPLANATION |ACTION |
|27.1.5 |Conveyances |There is a standard wording, which includes water, air and land. It is important however that the client understands the application of the | |
| | |Classification Clause, which deals with overage and non-complying vessels. | |
|27.2 |Conditions |
|27.2.1 |Institute Clauses (excluding War & |The policy will be subject to Institute Clauses. These are clauses dealing with general cargo, airfreight and special trades. The clauses are all in| |
| |Strikes) |the same format. | |
| | |The main differences relate to: | |
| | |Risks Covered | |
| | |Exclusions | |
| | |Duration of risk | |
| | |Except in special instances e.g. nature of the cargo or adverse claims experience, the client should be given the choice between (A) Clauses (All | |
| | |Risks) or (B) & (C) Clauses (Nominated Perils) for seafreight. Airfreight will be All Risks unless agreed. Economics or confidence will dictate the | |
| | |client’s choice. | |
|27.2.2 |Exclusions |The following are the main exclusions in the Institute Clauses: | |
| | |Wilful Misconduct of the Assured. | |
| | |Ordinary leakage or loss in weight. | |
| | |Insufficiency of packing or stowage in a container. | |
| | |Inherent vice or nature of the subject matter insured. | |
| | |Delay. | |
| | |Insolvency or Financial Default of Shipowners, Managers, Charterers or Operators of the vessel. | |
| | |Deliberate damage by any person (Nominated Perils Clause). | |
| | |Atomic weapons, nuclear fission/fusion or radioactive force or matter. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Unseaworthiness or unfitness of vessel, craft, conveyances or container where the Assured to their servants are privy to the above. | |
| | |War and Strikes. | |
|27.2.3 |Duration of Insurance |The Institute Clauses determine where the insurance commences and terminates. Some of the specialist clauses e.g. Frozen Food/Meat, Timber Trade | |
| | |and Bulk Oil incorporate the requirements of those trades. | |
| | |Basically the general clauses attach when the goods leave the warehouse or storage at places named and terminate | |
| | |On delivery to destination named or, | |
| | |On delivery to any other warehouse or place of storage (not in the ordinary course of transit e.g. Customs warehouse) or for | |
| | |Allocation or Distribution or | |
| | |On expiry of 60 days of discharge from carrying vessel (30 days airfreight). | |
| | |Stock Throughput policies should attach when the clients acquire their interest or at the point where the interest becomes at their risk and | |
| | |continues during all voyages and transits, whilst in storage and terminates at final destination or where the clients interest and risk cease. | |
|27.2.4 |Institute War and Strikes Clauses |These clauses buy back most of the war and strikes risks which are excluded in the Cargo | |
| | |Clauses. They are constructed in the same format as the Cargo Clauses and are specifically | |
| | |designed for the various trades. | |
| | | | |
| | |The exclusions are similar to the Cargo Clauses except that claims based on frustration of the | |
| | |voyage or adventure is specifically excluded in the War Clauses. | |
| | | | |
| | |The Strikes Clauses duration is the same as the applicable Cargo Clauses but the War Clauses | |
| | |only cover the subject matter whilst waterborne or on the conveying aircraft. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |The S.A.I.A. Exceptions do not apply to transit risks insured by the Institute Strikes Clauses | |
| | |within the Duration Clause i.e. imports, exports and transit written on a marine policy with | |
| | |Strikes cover is exempt from the S.A.I.A. Exceptions whilst in the ordinary course of transit. | |
| | | | |
| | |Deliberate Storage Risks e.g. in Stock Throughput policies are subject to the S.A.I.A. | |
| | |Exceptions. | |
| | | | |
| | |For further information on Institute Strikes Clauses Vs SASRIA | |
|27.2.5 |Institute Classification Clause |This clause stipulates the construction, use and maximum age requirements of vessels. Additional premium will be charged for vessels not| |
| | |complying with the provisions if the Classification Clause is included. | |
|27.3 |Some Important Extensions |
|27.3.1 |Airfreight Replacement |Urgent replacements for recoverable claims may be airfreighted even if the original import/export was by sea. | |
|27.3.2 |Allocation and Distribution |This Clause overrides the Duration Clause of the applicable Institute Cargo Clauses to allow for temporary storage after discharge from | |
| | |the carrying vessel/aircraft, for the purpose of allocation and distribution to various destinations. The final transit is still insured| |
| | |under the marine policy. | |
|27.3.3 |Apportionment of Recoveries |The Insurer is entitled to the proceeds of any recovery from third parties up to the amount of the claim paid. The extension allows for | |
| | |apportionment according to the amount of the claim borne by the Client and Insurer. The client is normally involved as a result of an | |
| | |excess or under-insurance. | |
|27.3.4 |Brand Name/Trade Marks |Brands or Trade Marks can be removed and cargo repacked at the Insurers expense. Salvage value, if applicable, will be determined after | |
| | |removal of Brands or Trademarks. | |
|27.3.5 |CIF/CIP Shipments Clause (Imports) |If the shipment is bought CIF/CIP (cost, insurance, freight/carriage and insurance paid) the client’s own policy, with this extension, | |
| |(Difference in Conditions) |will pay any shortfall in conditions, voyage or sum insured between the two insurances. | |
|NO. |ITEM |EXPLANATION |ACTION |
|27.3.6 |Concealed Damage (imports only) |The predominant effect of this extension is to ensure that the client is not prejudiced by late notification to the responsible | |
| | |carriers. Provided there is no external sign of damage to the packaging on arrival, delayed unpacking is permitted and the loss or | |
| | |damage is deemed to have arisen during transit. | |
| | |There is seldom a time limit for reporting claims to Insurers although obviously proof must be supplied that the loss or damage occurred| |
| | |during the insured transit if the Concealed Damage Extension is not included. | |
|27.3.7 |Debris Removal |The market wording is restrictive and Insurers impose conservative limits. A wider version is available if Insurers agree. | |
|27.3.8 |Destruction of Salvage |At the option of client the salvage may either be retained or destroyed. The value must be agreed. | |
|27.3.9 |Ex Works (Imports) |Notwithstanding the fact that in terms of the contract of sale, the risk only passes to the client at a later point e.g. “Free on | |
| | |Board”, this extension agrees that the policy will respond to claims arising at any time after the subject matter leaves the factory or | |
| | |export warehouse. | |
|27.3.10 |Heating, Sweating and Condensation |The (A) Clauses (All Risks) cover these perils if from an external cause. The extension is designed to cover such damage even if caused | |
| | |by inherent vice beyond the control of the client. | |
| | |The extension is not freely available. | |
|27.3.11 |Hijacking Clause |A policy issued on (A) Clauses, which also includes the War Clauses, should cover hijacking. | |
|27.3.12 |Labels Clause |If labels, capsules or wrappers are damaged, the cost of new labels, capsules or wrappers plus re-labelling and reconditioning is | |
| | |covered. | |
|27.3.13 |Re-forwarded Goods |If subject matter sent to an insured destination is diverted due to consignee’s refusal to accept the consignment, the additional | |
| | |transit will be covered subject to advice to Insurers. | |
|NO. |ITEM |EXPLANATION |ACTION |
|27.3.14 |Repairers Clause |The client has the option of nominating repairers to preserve guarantees. | |
|27.3.15 |Sellers Interest (Exports) |This extension ensures that, although in terms of the sales contract the buyer must insure, insurance in the name of the seller can be | |
| | |agreed from inception of the export journey if the buyer refuses to accept the consignment. | |
| | |N.B. This extension insures the goods against physical loss or damage throughout the journey whereas Credit Insurance covers the | |
| | |non-payment of the selling price. | |
|28. |MARINE LIABILITIES |
|28.1 |Freight Forwarders |
|28.1.1 |Full Title |All parties with an interest or for whom insurance is required to be noted. | |
|28.1.2 |Number of Years Experience |Material to risk and rating factor. | |
|28.1.3 |Contractual Capacity of Insured |The contractual capacity of insured affects/determines potential liability exposures. | |
| | |Does Insured act as Agent, Principal NVOCC (Non-Vessel Owning Common Carrier) or | |
| | |Both | |
|28.1.4 |Documents/Conditions/ Conventions |Cover applies in respect of liability arising out of approved contract conditions (eg SAAFF or FIATA) or under internationally binding | |
| | |conventions (eg Hague – Visby or Warsaw). | |
| | |Obtain copies of STC’s (Standard Trading Conditions), Bill(s) of Lading, Airway Bill(s) and, where possible, identify International | |
| | |Convention(s) applicable | |
|28.1.5 |Volume and Distribution |Identifies potential liability exposures and is a premium/rating factor. | |
| | |Obtain estimated GFR (Gross Freight Receipts) or other volume measurement used by client by : | |
| | |Sea | |
| | |Land | |
| | |Rail | |
| | |Air | |
| | |Warehousing (if applicable, please supply warehouse details and whether owned by Insured or Third Party) | |
|NO. |ITEM |EXPLANATION |ACTION |
|28.1.6 |Description of Standard Cargo Commodities |Certain cargoes excluded and alternative material damage cover may be required (eg bullion, cash and precious stones). Certain cargoes | |
| | |restricted and sub-limits to be negotiated (eg cigarettes, spirits, mobile telephones and computer components). | |
|28.1.7 |Past Claims/Loss History (3-5 years as |Disclosure and rating factor. | |
| |available) | | |
|28.2 |Ships Agents |
|28.2.1 |Full Title |All parties with an interest or for whom insurance is required to be noted. | |
|28.2.2 |Number of Years Experience |Material to risk and rating factor. | |
|28.2.3 |Description of Agents activities |The activity of Insured affects/determines potential liability exposure. eg Liner Agent, Chartering Broker, Purchase & Sale Broker, | |
| | |Ship Manager | |
|28.2.4 |Name of Principal(s) for whom Insured |Material to risk and thus required for disclosure and as rating factor. | |
| |regularly acts | | |
|28.2.5 |Gross Annual Income (Fee and Commission) |Determines extent of potential exposure – rating factor and disclosure. | |
| |derived from Agency activities with split | | |
| |into different activities | | |
|28.2.6 |Documents/Conditions/ Conventions |Cover applies in respect of liability arising out of approved contracts submitted to Insurers or under internationally binding | |
| | |conventions. Obtain copies of STC’s (Standard Trading Conditions) or other contractual terms applicable to each Principal and, where | |
| | |possible, identify International Convention(s) applicable | |
|28.2.7 |Past Claims/Loss History (3-5 years as |Disclosure and rating factor. | |
| |available) | | |
|28.3 |Charterers |
|28.3.1 |Full Title |All parties with an interest or for whom insurance is required to be noted. | |
|28.3.2 |Number of Years Chartering Experience |Material to risk and rating factor. | |
|NO. |ITEM |EXPLANATION |ACTION |
|28.3.3 |Normal Trading Patterns |Cover in certain areas may be restricted or excluded – material to risk and rating factor. Liner (advise routes and details), Tramping | |
| | |(advise areas and details) | |
|28.3.4 |Regular/frequent ports of loading and |Cover in certain areas may be restricted or excluded – material to risk and rating factor. Liner (advise routes and details), Tramping | |
| |discharge |(advise areas and details) | |
|28.3.5 |Description of usual cargo commodities with |Certain cargoes excluded unless prior agreement obtained (eg bullion). Own cargo generally to be insured under Marine Cargo policy as | |
| |estimated percentage split into : |no legal liability can arise in respect of Insured’s own property. | |
| |Third Party cargoes | | |
| |Own cargoes | | |
|28.3.6 |Average number of vessels chartered per annum|Indicates annual exposure and maximum potential liability charterer may incur in respect of chartered vessels. | |
| |with average GRT (Gross Registered Tonnage) | | |
| |and average duration of charter | | |
|28.3.7 |Documentation/Conditions |Obtain copies of Standard Charter Party Contract, Bill(s) of Lading. These documents will determine potential liability exposure of | |
| | |charterer in respect of vessel and cargo. Only port to port bills of lading covered and through/combined bills of lading may require | |
| | |additional alternative cover. | |
|CREDIT/POLITICAL RISKS |
|29. |DOMESTIC CREDIT |
|29.1. |Cover |Domestic post-delivery cover: | |
| | |Protects the policyholder against non-receipt of payment from debtors resulting from commercial factors. | |
| | |Domestic pre-delivery cover: | |
| | |Protects the insured for the pre-delivery period, starting from contract signature date and ending on delivery date. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | |Domestic instalment credit cover: | |
| | |Covers leasing and hire purchase transactions on goods purchased for use in the working environment. | |
| | |Shipping and confirming house: | |
| | |Insures against a loss arising from a contract, confirmation, adopting transaction or trade bill discounting. | |
| | |Credicap: | |
| | |Designed to eliminate small losses and keep administration costs simple. | |
| | |Tenant default cover: | |
| | |Designed to cover property owners in the commercial and industrial sector against damages arising from loss of rental. | |
|29.2 |Neighbouring States |Cover can be extended to include Rand monetary areas – Botswana, Lesotho, Swaziland and Namibia. | |
|29.3 |Market |Credit Underwriting Agency (Mutual & Federal), Credit Guarantee and Lombard (Holandia). | |
|29.4 |Deductibles |Annual Aggregate deductibles can be built in to reduce premium cost. | |
|29.5 |Disputes |Not covered until a court judgement has been secured in the insured’s favour. | |
|29.6 |Other Insureds |Associated / subsidiary companies can be included as co-insureds. | |
|29.7 |Proposal forms |Needed for all types of cover. | |
|29.8 |Insured Percentage |Normally 80% but can go up to 90% and be as low as 70% depending on the risk profile. | |
|NO. |ITEM |EXPLANATION |ACTION |
|CREDIT/POLITICAL RISKS |
|30. |EXPORT CREDIT |
|30.1 |Cover |Export post-shipment cover: | |
| | |Protects the policyholder against non-payment of an insured debt, resulting from either political or commercial factors. | |
| | |Export consignment stock cover: | |
| | |Designed to provide for losses incurred as a result of political factors. | |
| | |Export finance guarantee: | |
| | |Protects the policyholder (who acts as a lending bank) against non-receipt of repayments on loans made to approved exporters. | |
| | |Export pre-shipment cover: | |
| | |Protects the policyholder against non-receipt of payment of the contract price in South African currency due to shipment being prevented | |
| | |due to political or commercial factors. | |
|30.2 |Market |Credit Underwriting Agency (Mutual & Federal), Credit Guarantee, Lombard (Holandia) and A.I.G. | |
|30.3 |Deductibles |Annual Aggregate deductibles can be built in to reduce premium cost. | |
|30.4 |Disputes |Not covered until a court judgement has been secured in the insured’s favour. | |
|30.5 |Other Insureds |Associated / subsidiary companies can be included as co-insureds. | |
|30.6 |Proposal forms |Needed for all types of cover. | |
|NO. |ITEM |EXPLANATION |ACTION |
|30.7 |Currency |Cover can be arranged in any hard currency. | |
|30.8 |Insured percentage |Normally 80% but can go up to 90% and be as low as 70% depending upon the risk profile. | |
|NO. |ITEM |EXPLANATION |ACTION |
|CREDIT/POLITICAL RISKS |
|31. |POLITICAL RISKS |
|31.1 |Cover |Uncertainties resulting from unexpected government action and other foreign events may result in | |
| | |substantial loss of earnings for businesses investing outside South Africa. | |
|31.2 |Confiscation Insurance |Can be insured against: | |
| |Bankers/ lenders, equity investors and mobile and |Confiscation | |
| |fixed assets |Expropriation | |
| | |Nationalisation | |
| | |Deprivation | |
| | |Forced Abandonment | |
| | |Wilful Destruction | |
| | |Terrorism and Sabotage | |
| | |War | |
| | |Civil War | |
| | |Currency Inconvertibility | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
| |Contract Frustration |Unilateral contract repudiation by government buyer | |
| |Exporters – Pre Shipment Risk |Export/Import embargo and licence cancellation | |
| | |Material default by a government buyer to such as failure to open a letter of credit | |
| | |Termination of the contract under force majeure | |
| |Exporters – Post Shipment Risks |Non payment by government buyers | |
| | |Non payment of letter of credit issued by stated owned banks | |
| | |Non honouring of guarantees give by state owned or controlled institutions | |
| | |Exchange transfer restrictions | |
| | |Frustration of contract due to war | |
| | |Arbitration award default | |
|31.3 |Currency |Cover can be arranged in any hard currency | |
|31.4 |Deductibles |Large annual deductibles will normally apply | |
|31.5 |Insured percentage |Between 90% and 100% | |
|31.6 |Market |U.K., Europe and U.S.A. | |
|31.7 |Waiting period |Between 180 and 360 days | |
|NO. |ITEM |EXPLANATION |ACTION |
|32. |AVIATION |
| | | | |
|32.1 |Cover |Aviation Insurance encompasses all aspects of flying and should be referred to the Aviation | |
| | |Specialists. Types of Risks for which cover may be sought are as follows : | |
| | | | |
| | |- Flying Machine – Rotor, Fixed, Hot Air, Microlight | |
| | |- Aircrew | |
| | |- Passengers | |
| | |- Cargo | |
| | |- Airport Operators | |
| | |- Aviation Liabilities | |
| | |- Aviation Product Liabilities | |
| | |- Ground Handling Exposures | |
| | |- Engine Breakdown | |
| | |- Loss of Use | |
| | |- Air Traffic Control | |
| | |- Loss of Licence | |
| | |- Charters Liability | |
| | | | |
|32.2 |Aircraft Hull |Cover is usually provided on an All Risks basis with separate cover for War exposures. | |
| | | | |
| | |Values are normally on an Agreed Value Basis. | |
| | | | |
|32.3 |Currency |It is recommended that cover is arranged in US Dollars particularly Liabilities for Passengers which| |
| | |are governed by way of : | |
| | | | |
| | |- Warsaw Convention | |
| | |- Hague Protocol | |
| | |- Washington Protocol | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
|32.4 |Market |South Africa Market is limited. Lloyds and European Markets play major role. | |
| | | | |
|32.5 |Deductible |Normally apply for Partial Losses only and can be bought down by purchase of a separate policy. | |
| | | | |
|32.6 |Uses |It is important to ascertain fully the Uses of the aircraft, particularly its area of operation and | |
| | |hazardous activities. | |
| | | | |
|32.7 |Pilots |Qualification and experience on Type are important for rating and are a warranty on the policy. | |
| | | | |
|32.8 |Tickets |Condition of Carriage per ticket are important to ensure cover mirrors Liabilities. | |
| | | | |
| | |It is vital that tickets are correctly issued to all passengers. | |
| | | | |
|32.9 |Airway Bill |Cargo Carriers have Airway Bills which limit Liabilities and Liability cover must be designed to | |
| | |respond. | |
| | | | |
|32.10 |Aircraft Leasing |Aircraft are leased to other parties by way of either a Dry Lease or Wet Lease. | |
| | | | |
| | |Dry Lease : | |
| | | | |
| | |The Lessee leases the aircraft from the Lessor and becomes fully responsible for operating including| |
| | |: | |
| | | | |
| | |- Crew | |
| | |- Fuel | |
| | |- Maintenance | |
| | |- Insurance | |
| | | | |
| | |Wet Lease : | |
| | | | |
| | |The Lessor operates the aircraft on behalf of the Lessee and is responsible for all aspects. | |
| | | | |
|32.11 |Other Insureds |Other Insured are permitted and include the following : | |
| | | | |
| | |- Lessees | |
| | |- Lessors | |
| | |- Lienholders (Finance Houses) | |
| | |- Manufacturers | |
| | |- Joint Operators | |
| | |- Maintenance Providers | |
| | |- Etc | |
| | | | |
|32.12 |Flying Crew |Specialist Personal Accident cover is required due to Aviation Exclusions of normal accident cover. | |
| | | | |
| | |Loss of Licence cover is available for Flight Crews whose livelihood depends on flying. | |
| | | | |
|32.13 |Residual Value Insurance |Limited market possible use of Guardrisk. | |
| | | | |
|32.14 |Air Traffic Control |Specialist risk with very high exposures. | |
| | | | |
|32.15 |Airport Operators |From landing strips to International Airports Operators incur onerous Liabilities. | |
| | | | |
|32.16 |War Risks |Detailed information required particularly operating or flying to or from “Hot Spots”. | |
|NO. |ITEM |EXPLANATION |ACTION |
| | | | |
|32.17 |Proposal Forms |Normally required for all covers. Annual updates required particularly on aircrew experience. | |
| | | | |
|32.18 |Breach of Warranty |Available for Lienholders. | |
|NO. |ITEM |EXPLANATION |ACTION |
|33. |eCOMMERCE/eRISKS |
|33.1 |Errors or omissions by |Denial of service | |
| |Systems analysts |Accidental data erasure | |
| |Programmers |Negligent or accidental virus transmission | |
| |Operators |Incorrect prices published | |
| |General workforce |Sales affected due to : | |
| | |Offers out of date | |
| | |Product lines sold out | |
| | |Litigation costs and damages for inappropriate employee e-mail and internet use resulting in sexual | |
| | |or racial harassment, defamation and slander | |
| | |Failure to deliver on the claims of products and services advertised | |
| | |Inadvertent assumption of contracts in unsuitable territories | |
| | |Assumption of employee benefit obligations when employees transfer | |
|33.2 |Gradual impairment injuries |Computer screen reflections (eyes) | |
| | |Neck, wrist, hand | |
|NO. |ITEM |EXPLANATION |ACTION |
|33.3 |Vandalism by disgruntled employees |Data theft, erasure or destruction by viruses etc | |
|33.4 |Infidelity |Computer-assisted fraud by employee(s) involving theft by electronic fund transfer; credit card | |
| | |fraud | |
|33.5 |Death, injury or resignation |Of key IT personnel; Financial loss implications | |
|33.6 |Extortion, ransom or cyber-terrorism/cyber-attack,|System interference, viruses | |
| |vandalism |Data theft, alteration, erasure or destruction | |
| | |Computer espionage/intrusion | |
|33.7 |Fraudulent use of e-signatures |Fraud losses | |
|33.8 |Damage or destruction affecting property including|Corrosion, fire, lightning, power surge, water, earthquake, changes in temperature and humidity, | |
| |data : |static electricity. Data erasure | |
| |Data processing support systems |MD & BI Exposures | |
| |Building housing computer centre | | |
| |Computer centre | | |
| |Computer bureau – outsourced IT services | | |
|NO. |ITEM |EXPLANATION |ACTION |
|33.9 |Business interruption (lost productivity and |Activities of : | |
| |revenues) and additional expenditure (lost data |Hackers | |
| |recompilation, public relations assistance, hacker|Cyber-thieves | |
| |investigation services) |Internal saboteurs | |
| | |As a result of insured perils, viruses, system (web-site or network) shutdowns, malicious damage, | |
| | |sabotage to own equipment, to suppliers’ and critical partners’ equipment | |
|33.10 |Financial loss (no damage) |Currency fluctuations between the cost of sourcing goods and the selling price published on the web | |
| | |Computer down-time | |
| | |Lack of speed to links (search engines) | |
| | |Loss of goods/property in B2B transactions | |
|33.11 |Damage or destruction affecting : |BI Exposures | |
| |Suppliers – Internet Service Provider | | |
| |World wide web | | |
| |Telecommunications provider (Telkom) | | |
| |Satellites | | |
|33.12 |Failure of suppliers to supply and/or deliver |Financial loss to customers | |
| |products sold on the web | | |
|NO. |ITEM |EXPLANATION |ACTION |
|33.13 |Damage or destruction affecting customers |Use of meta tags or keywords to drive user traffic to a site | |
| | |Loss/damage to reputation | |
|33.14 |Competitors |Legal expenses and damages for web-related copyright, intellectual property and trademark | |
| | |infringement; piracy and plagiarism (deliberate or inadvertent) of products and brands | |
|33.15 |Mechanical and electrical breakdown |Loss of power | |
| | |Short circuit | |
|33.16 |Web-related copyright, intellectual property and |Legal expenses and damages | |
| |trademark infringement |Damage to reputation | |
|33.17 |Vicarious liability for the actions of employees |Failure to guide/control the actions of staff, staff procedures and use conditions, conditions of | |
| | |employment and confidentiality, security of systems and information | |
| | |Mismanagement | |
| | |Violation of security laws | |
|33.18 |Breach of confidence or misuse of data/invasion of|Collection and use of general information about anonymous consumers and the sale of specific | |
| |privacy/ integrity; defamation, libel or slander |information about customers (customer profiles, credit worthiness and banking details), unwanted | |
| | |e-mails/’spams’. | |
| | |Defamation, libel or slander | |
|33.19 |Authenticity |Assurance that parties to a web site are authentic | |
|NO. |ITEM |EXPLANATION |ACTION |
|34. |UNINSURABLE RISKS |
| | | | |
|34.1 |Cost of Investigations where losses are not |Self explanatory. | |
| |covered by Insurance or amounts which fall within | | |
| |Policy Deductibles | | |
| | | | |
|34.2 |Exchange Control/Currency Fluctuation |Government/Authorities imposing/lifting restrictions regarding movement of exchange or currency. | |
| | |Forward cover can be purchased from banks and currency Risk Management services are available. | |
| | | | |
|34.3 |Inherent Vice |Loss resulting solely from the nature of the product itself e.g. Hygroscopic nature of salt. | |
| | | | |
|34.4 |Loss of Market (Unless resulting from Insurable |e.g. Turnover loss following re-routing of road to bypass place of business. | |
| |Risk) | | |
| | | | |
|34.5 |Normal Wear and Tear Gradual Corrosion or |Wearing away of a cutting edge, ullages on a bottling line. | |
| |Deterioration | | |
| | | | |
|34.6 |Nuclear Risks (Not excluded for PA Benefits) |In most instances Government responsibility. Special pools formed to accommodate certain risks e.g.| |
| | |SA Nuclear Pool. | |
| | | | |
| | |NB Nuclear risks include ionising radiation or contamination by radio activity from any nuclear fuel| |
| | |or from any nuclear waste, from the combustion of any nuclear fuel or nuclear weapons material. | |
| | | | |
|34.7 |Political Decisions |Censorship resulting in drop in sales of newspapers and magazines. Government/Trade embargoes, | |
| | |requisitioning or confiscation/ commandeering. | |
|NO. |ITEM |EXPLANATION |ACTION |
|34.8 |Public Opinion |Drop in sales following adverse publicity. | |
|34.9 |Risks Against the Public Interest |Insurance in respect of illegal activities, e.g. tax evasion, or of criminal penalties e.g. traffic | |
| | |fines. | |
|34.10 |Stock Shortages or Unaccountable Losses |Shrinkage e.g. at supermarket/retail trade. Losses discovered at stocktaking. | |
|34.11 |Trade Risk Losses |Competitive price cutting, change in fashion. | |
|34.12 |Unaccountable Assets |You cannot insure “hidden” stock or profit not declared or recorded in books of account/financial | |
| | |statements. | |
|34.13 |War Risks or Threat thereof including Rebellion, |Declaration of status by de facto Government. | |
| |Civil War, Act of Foreign Enemy/Invasion in |Complete breakdown of Government – refer Sasria exclusions. | |
| |respect of Assets on Land | | |
| | |but insurable for water and air-borne risks and PA benefits and cover is available for assets in a | |
| | |foreign country. | |
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