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UPMSP Vocational Insurance study materials
UPMSP Vocational Insurance study resources

UPMSP Vocational Insurance: General Insurance: Fire, Marine and Motor - Hostile Fire, Average Clause and Compulsory Third Party

UPMSP Vocational Insurance · Work through your exam, one topic at a time.

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General Insurance: Fire, Marine and Motor - Hostile Fire, Average Clause and Compulsory Third Party

Domain 3 tests the three large non-life classes: fire and property, marine cargo and hull, and motor. Expect average-clause arithmetic, identification of the governing statute and questions on what each cover excludes.

Fire and property

  • Fire cover needs hostile fire - ignition that is not where it should be. Friendly fire, deliberately lit in a hearth or furnace, is not a claim.
  • The cover runs from fire, lightning, explosion and implosion, with add-ons for earthquake, flood, riot, terrorism and removal of debris.
  • IRDAI's 2021 retail and MSME products - Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha - replaced the old Standard Fire and Special Perils policy for those segments.
  • Average clause: if the sum insured is less than the property value, the claim is reduced in the same proportion.

Marine

  • Governed by the Marine Insurance Act, 1963; cargo and hull are separate covers, and cover usually runs warehouse to warehouse.
  • Institute Cargo Clauses A cover all risks; B and C cover only named perils, and C is the narrowest.
  • General average: a voluntary sacrifice of cargo or ship to save the venture, shared by all parties in proportion to value. Constructive total loss: repair or recovery would cost more than the insured value.

Motor

  • Section 146, Motor Vehicles Act 1988 makes third-party liability compulsory. Liability for third-party death and bodily injury is unlimited; third-party property damage carries only a small statutory limit.
  • Own damage is optional and is settled on the IDV less depreciation and the policy deductible. No-claim bonus climbs to a maximum of 50% after five claim-free years.
  • Section 165 establishes the Motor Accidents Claims Tribunal.

Worked example

Stock worth ₹10,00,000 is insured for ₹8,00,000; a fire destroys stock worth ₹5,00,000. Claim = ₹5,00,000 × (8,00,000 ÷ 10,00,000) = ₹4,00,000, less any deductible. The insured bears ₹1,00,000 for underinsurance.

Traps

  • Describing ICC (C) as the widest cover - it is the narrowest.
  • Claiming for friendly fire.
  • Ignoring the average clause and paying the whole loss.
  • Treating own damage as compulsory.