Page 286 - DMGT303_BANKING_AND_INSURANCE

Unit 13: General Insurance

2. These cover stocks for one amount situated in a more than one specified building situated Notes
(1) within the limits of one city/town/village, (2) more than one city/town/village but
maximum in 50 locations, (3) for more than 50 locations in various cities/towns/villages.
The floating policies are not issued to transport contractors and cleaning and forwarding
agents.
3. Floating policies for risks situated within the limits of one city/town/village may be
issued by charging 25% loading over and above the highest rate applicable to anyone risk.
50% loading over and above the highest rate applicable to any one risk is charged under
policies covering up to 50 locations in more than one city/town/village.

4. The maximum sum insured at any one location should not be more than 10% of the total
sum insured.
5. The insured should essentially have a good internal audit and accounting procedure under
which total amount of risk and location can, if required, be established. The condition of
average is applied to the limit of sum insured at each location, and also to the total sum
insured under the policy.
A policy issued to cover more than 50 locations in various cities/towns/villages in one amount
is subject to the under noted regulations:
1. Total sum insured in respect of all locations should not be less than Rs. 3 crores.
2. The maximum sum insured at any one location should not be more than 10% of the total
sum insured.
3. The address of the locations should be declared to the company, at the inception, and
changes advised as and when they occur. However, when locations can be identified or
change is very frequent, the requirements of specifying address of locations is released,
but the number of unspecified locations should not exceed 105 the total number of locations
or 20 locations whichever is lower.
4. The insured should have a good internal audit and accounting procedure to establish total
amount at risk and locations at a particular time.
5. The pro-rata condition of average is applied to the limit of sum insured at each location
and also to the total sum insured under the policy.

Declaration Policies

Declaration Policies are useful to businesses, which face frequent fluctuations in stock quantity
or value. Insurance companies can issue these policies subject to the following conditions:
1. The minimum sum insured is Rs. 1 crore.
2. Monthly declarations based on the average of the highest value at risk on each day or
highest value on any day of the month are to be submitted by the insured to the insurer.
3. Reduction in sum insured is not allowed under the policy.
4. The insured can't claim refund of premium on adjustment based on the declarations in
excess of 50% of the total premiums.
5. The basis of value for declaration shall be the market value prior to the loss or as otherwise
agreed to between the insurance company and the insured.
Exclusions: Declaration policies can't be issued in respect of insurance required for a short
period stocks undergoing process and stocks at railway sidings.

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