Page 18 - Insurance Times May 2020

discussions have finally culminated in the London market in view the current scenario, steps to be taken
issuing an exclusion for loss or damage arising directly or immediately to ensure continuity of cover during this
indirectly out of " Communicable Diseases" with the definition period of cessation. In our erstwhile tariff as well in
of such disease been mentioned . Indian market has followed International market ( Refer to Zurich clause ), there
suit with all policies now been endorsed with the are endorsements for " Work stoppage extension " ,
"Communicable disease exclusion ". mainly worded to provide a solution to the above
exclusion . The present condition will certainly need a
But even if the exclusion did not exist a look at various relook by the underwriters and provide a solution
wording of property policies in India as well as overseas through this extension.
would throw the following interpretations:
a. The operative clauses of the Property damage policies Major impact of COVID19 will be felt under the Health
(Material damage section) would invariably mention insurance policies, irrespective of whether it is taken as an
the words "loss or damage arising out of accidental and individual or group. The regulator has instructed that the
physical means ". There is no doubt that even if we hospitalisation benefits under health insurance will cover the
consider the outbreak of COVID 19 as " accidental " , expenses incurred towards treatment of COVID19.
certainly it will NOT cause any physical damage to the
assets of the client . Yet another policy which might have an impact would be
b. The above is a pointer to the fact that there would be the "Employee compensation policy ". It is possible that an
no admissible loss or damage under the Material employee who contacted the disease at workplace might
damage section, due to outbreak of COVID 19. like to lodge a claim with the WC commissioner. The onus
of proof that the disease was contacted "within the working
c. Since there will not be any admissible damages under
premises" and "during the course of business" certainly will
the material damage section/ policy , there will
be on the employee, but the likelihood of the Commissioner
certainly be no TRIGGERS for a claim under BUSINESS taking a lenient view of the same is high. The policy
INTERRUPTION POLICIES coverage needs a thorough scrutiny as " Occupational
diseases " listed out under the WC ACT( Now Employee
It is not that non-damage BI covers are not available. Denial
compensation act ) , Schedule 3 , are often excluded from
of access to premises following outbreak of infectious the EC act policy . It is debatable whether COVID 19 will be
diseases within specified radius, is available in various treated as an occupational disease and whether the claims
markets. But this is not a cover which is extremely popular will stand the court of the Commissioner, will certainly be a
and this time all insurers have refused granting this
test of time.
extension. Even this extension will be subject to its own
conditions and exclusions.
Hoping that the situations will ease out soon and all the
exposures mentioned above with the possible solutions,
There are certain important steps required during this stage remain on paper. But till that time it is relevant that insured,
of lockdown following outbreak of COVID 19, which has a
intermediary or insurer, we all need to take the right foot
direct impact on the risks insured under property policies:
forward, in real earnest
1. Condition 3 b of the SFSP / IAR policies as well as Mega
policies( condition number could differ ) , better known
as " Non occupancy condition " states : Policy will cease Stay safe, stay indoor, stay healthy
to operate if the building insured or containing the Disclaimer:
insured property becomes unoccupied and so remains
The facts elucidated above are the individual views of the
for a period of more than 30 days.
author and need not represent that of the organisation to
Since the current lockdown situation might last for which he belongs to.
more than 30 days, it is very important for every
concerned to request insurers for the continuity of cover The above facts are based on the practices and
during this period of non- occupancy. understanding, in the Indian and International market.
2. Similarly the project insurance policies (CAR and EAR) However the final decision of the underwriters would be
will carry the following: General Exclusion (d), i.e. binding on all, depending on their filing of the products,
"Cessation of work whether total or partial". Keeping internal guidelines and interpretation of the wording. T

18 The Insurance Times, May 2020