Page 367 - IC38 GENERAL INSURANCE

c) Application of some clauses that will reduce the claim/loss amounts

Example

Marine cargo: Small damage to parts may cause costly machinery to be a
constructive total loss. Such machinery are subject to the Replacement Clause,
which limits underwriter‟s liability only to the cost of replacing, forwarding and
refitting any broken part.

Cast pipes, hard board sometimes get damaged only at the edges. Marine
policies on cast pipes, hardboard etc, are subject to the cutting clause
warranting that the damaged portion should be cut off and the balance utilised.

Many a time marine insurance for inland transit is demanded on goods imported
from abroad. It‟s quite possible that loss or damage on such goods may have
already occurred during the ocean voyage but may not be apparent on external
examination.

Such risks are accepted subject to an inspection of the goods on landing in port.
Policy is subject to survey before acceptance.

d) Imposition of Excess / Deductibles

When the loss amount exceeds the deductible/excess mentioned the
balance is paid under 'excess' clause. Loss below the limit is not payable.

The object of these clauses is to eliminate small claims. As the insured is
made to pay part of a loss, he is encouraged to exercise more care and to
practice loss prevention.

e) Restriction of cover

Example

i. Motor: A proposal for an old motor vehicle will not be accepted on
comprehensive terms but insurers will offer a restricted cover i.e. against
third party risks only.

ii. Personal accident: A personal accident proposer who has crossed the
maximum acceptance age limit may be covered for death risk only instead
of on comprehensive terms i.e. including disablement benefits.

iii. Health: At times the insurer may impose a restriction of cover for certain
surgical procedures or conditions and the cover would be to a limited extent
only. E.g. cataract or eye lens procedures.

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