Directors’ and Officers’ Liability insurance provides cover for
1. Personal liability arising out of a wrongful act
2. The entity for reimbursement of those Directors and Officers
3. The entity for liability arising out of securities related lawsuits
Policies are underwritten on a worldwide jurisdiction basis to clients
domiciled around the world.
We advise organizations in diverse industry segments and offer tailored
solutions to suit individual clients’ needs.
As a member of the board or an executive officer of a company, you may
be personally held liable for any actual or alleged breach of duty, trust, breach warranty,
authority, neglect, errors, misstatement, or omissions by anyone
in company and can be sued for transactions alleging in financial losses. Exposure varies
from shareholders, creditors, business partners, competitors, regulators and employees.
The policy reimburses the company to the extent it has been insured with
respect of such claims, under its Articles of Association or any other contract that effects
its Directors and Officers.
- An outside or non-executive or independent director in a company is also covered.
- The policy can additionally be endorsed to cover the directors and officers of its
subsidiaries, including those acquired or created during the policy period.
- Specific coverage can be afforded to directorships held in outside boards/ nominee
directorships held at the request of the company.
- Defence costs shall be payable under alleged criminal cases, if the directors and
officers are finally acquitted of the wrongful act.
- The wrongful act is that are discovered after the director leaves the company.
- Incase of a director’s death, the insurer will defend the director and prevent
spillover liabilities from affecting their heirs, estates and legal representatives.
Employee practices liability insurance is of utmost importance for any
business. This type of policy provides coverage to a business in relation to its employees
in relation to age, sex, harassment, disability, breach of contract,
wrongful termination or race.
Large businesses often have multiple EPLI policies to equip them in
handling lawsuits filed against their favour. EPLI helps a business in decreasing its
chances of being targeted in a lawsuit. Unfortunately, small businesses overlook
the importance such policies.
Insurance providers during any proposal, thoroughly review a company’s
employment practice and makes sure necessary amendments are implemented prior to the
contract.
- Sexual harassment
- Discrimination
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mis-management of employee benefit plans
This policy protects your business from financial losses, includes
legal costs and compensations arising from property damage or bodily injury caused to any
third party due to –
- The services rendered
- In-course of business operations
- Negligence of any employee
- Includes, non-professional neligent acts: Up to the precribed limits fore-mentioned
by the policy
- While visiting your business, a customer trips on loose flooring and is injured.
- An employee in your painting or construction business accidentally leaves water
running, causing substantial damage to a customer’s home.
- A class action lawsuit is filed against your business, alleging advertisements
constituted misleading information.
This cover provides protection against losses from the legal liability
for bodily injury or property damage to others arising out of non-professional negligent
acts or for liability arising out of their premises or business operations.
Mental injuries and emotional distress can be considered bodily injuries, even in the
absence of physical bodily harm.
Personal and advertising injury protects an insured against liability
arising out of offences, such as:
- Libel
- Slander
- False arrest
- Infringing on another’s copyright
- Malicious prosecution
- Use of another’s advertising idea
- Wrongful eviction, entry or invasion of privacy
Medical payments includes limited coverage for injuries sustained by a
non-employee caused due to an accident that takes place on the insured’s premises or when
exposed to the insured’s business operations. CGL pays for all necessary
and reasonable medical, surgical, ambulance, hospital, professional nursing and funeral
expenses for a person injured or killed in an accident taking place at the insured’s
premises or arising from business operations.
" A ‘Claims Made Policy’ is where the claim would occur and has to be
lodged within the policy period. This is usually given in conventional CGL policy & would
only become relevant when the policy is not renewed subsequently. "
" Occurrence Based Policy is relevant to CGL Policy where the claims,
which have taken place during the currency of the policy, can be lodged even after the
expiry of the policy period, even if the policy is not renewed "
Product Recall insurance covers expenses associated with recalling a
product from the market that would be responsible for possible bodily injury or property
damage from its continued use or existence. Standard product liability
insurance does not cover this exposure. This cover is typically purchased by manufacturers
such as food and beverage, toy and electronics, automobiles and automobile components,
aviation parts etc. to cover costs such as customer
notification, shipping costs and disposal costs.
- Recall expenses, such as disposal, replacement, advertising and transport
- Pre-recall expenses
- Third party recall expenses
- Government recalls
- Business interruption
- Loss of gross profits/revenue
- Accidental contamination
- Product rehabilitation
- Increased cost of working after a recall
- Extortion demands related to malicious tampering
- Terrorism cover
- Terrorism cover
- Consultancy costs
Product Recall insurance covers expenses associated with recalling a
product from the market that would be responsible for possible bodily injury or property
damage from its continued use or existence. Standard product liability
insurance does not cover this exposure. This cover is typically purchased by manufacturers
such as food and beverage, toy and electronics, automobiles and automobile components,
aviation parts etc. to cover costs such as customer
notification, shipping costs and disposal costs.
- Recall expenses, such as disposal, replacement, advertising and transport
- Pre-recall expenses
- Third party recall expenses
- Government recalls
- Business interruption
- Loss of gross profits/revenue
- Accidental contamination
- Product rehabilitation
- Increased cost of working after a recall
- Extortion demands related to malicious tampering
- Terrorism cover
- Terrorism cover
- Consultancy costs
Technology companies face unique risks and require specific insurance
coverages to protect their business from financial loss. Technology professional indemnity
insurance is a key element of risk management for a technology company
in today’s world.
E&O insurance covers your legal liability arising from professional
services in the event of a third party claim stemming from professional negligence.
Professionals may owe a duty of care to anybody who might reasonably rely upon
the service or advice they have provided. In today’s commercial world, clients expect high
standards of service and are more inclined to resort to litigation when such standards have
not been met.
- Programming error
- Poor customer communication
- Problems with large integration/installation projects
- Development problems
- Problems with combining or integrating software or hardware components
- Customer changing project scope (often referred to as “project creep”)
- Turnover of key personnel
- Short cuts during testing
- Poor accounts receivable controls that require the tech company to sue their
customer for fees owed and this results in a countersuit for negligence in the
performance of the tech services/products
- Shortfall in externally furnished products or externally performed tasks
- The Policy: provides indemnity for losses arising from civil liability (including
liability for claimant’s costs and expenses incurred) arising in connection with
your professional services including:
- Breach of professional duty
- Infringement of copyright or intellectual property rights
- Breach of confidentiality
- Defamation – and other types of civil liability.
- Insured Person: cover extends to include you, partners (or members of limited
liability partnerships), directors, employees and their personal representatives in
the event of death, incapacity, insolvency or bankruptcy.
- Fraud and Dishonesty Cover: liability of your business to any third party resulting
from fraudulent or dishonest conduct.
- Lost Documents Cover: costs of replacing or restoring documents lost or damaged ‘in
transit’ or in your custody.
- Specialist Consultants Cover: claims resulting from any wrongful act of your
specialist consultants, designers or subcontractors engaged in the performance of
your professional services.
It covers the cost of mistakes made when providing professional
services.
In today’s busy business world, anyone is at risk of making a
mistake no matter how professional or diligent they may be. Some mistakes are minor with
little or no financial cost or consequence, but others can be far more serious
and not having adequate insurance cover can financially destroy a company, its directors
or partners.
It covers negligence, errors & omissions, breach of duty and civil
liability. It also covers business interruption and significant legal costs incurred on
being sued. Extensions like defamation, loss of documents, dishonest
conduct of employees, unintentional breach of confidence, potential infringement of
intellectual property rights that arises.
Companies that perform professional services for others can make
mistakes overlook a critical piece of information, misstate a fact, be misunderstood,
forget to do something, misplace something, etc. and be sued by their clients
over allegations such as:
- Error, omission, or misrepresentation in providing a service.
- Failure to provide a service in a timely fashion, or at all.
- Failure to keep client information confidential.
- Solicitors
- Medical Practitioners
- Architects, Engineers, Interior designers, Property and Construction Consultants
etc.
- Financial Advisors
- Financial Institutions
- Charted Accountants
- Real Estate and Letting Agents
Cyber Insurance is designed to protect commercial businesses against a
wide range of first and third-party liability occurring out of cyber exposures associated
with e-business, internet, networks and information assets. Companies
with access to private & confidential information about their customers have a
responsibility to keep it secure. Equally, companies who have a web presence or a dependency
on technology have emerging content and transactional
exposures. Cyber risk is steadily increasing concerns around data security affecting
hundreds of millions of records a year and reporting of breaches continue to rise at a
dramatic rate. The introduction of viruses and unauthorized
access are well known examples.
- E-Theft is a loss incurred in the process of transferring funds or property or any
given value, due to the fraudulent input of data into a computer system or through a
network into a computer system.
- E-communication is a loss caused due to a customer having transferred funds or
property or given any value, on the faith[1] of any fraudulent communication for
which loss you are held legally liable.
- E-Threat exemplifies loss including the cost of a professional negotiator and any
payment made or any fund or property surrender intended as an extortion payment.
- E-Vandalism covers losses even when the vandalism is caused by an employee.
- E-Business interruption including extra expenses
- Privacy Notification Expenses including the cost of credit monitoring services or
similar services for affected customers. (Subject to a sub limit)[2]
- Crisis Expenses including the cost of public relations consultants. (Subject to a
sub limit) .
- Crisis Expenses including the cost of public relations consultants. (Subject to a
sub limit) .
- Disclosure Liability including customer claims due to system security failures
resulting in unauthorized access to or dissemination of private information on the
Internet.
- Content Liability including claims for intellectual property, trademark and
copyright infringement.
- Reputational Liability includes claims alleging disparagement of products or
services, libel, slander, defamation and invasion of privacy.
- Conduit Liability including claims arising from system security failures that result
in harm to third-party systems.
- Impaired Access Liability includes claims due to system security failure resulting
in systems being unavailable to customers.
- Defense Costs cover any cost incurred in defending any claim brought by a government
agency or licensing or regulatory organization.
- Defence Costs in advance of the final disposition of any cyber liability claim and
within 30 days of receipt of invoice for such costs.
- Claims definition includes Extradition proceedings.
- Prior Notice Exclusion: Excludes prior notice of a fact or circumstance that has
been accepted by the previous insurer rather than notice given.
- Full Severability of Exclusions : Knowledge of one Insured Person is not imputed to
another and only knowledge possessed by the Chief Executive Officer, Chief Financial
Officer or the Chief Operating Officer of the Organization
will be imputed to the Organization.
A commercial crime policy typically provides several different types
of crime coverage including employee dishonesty, forgery or alteration, computer fraud,
funds transfer fraud, money & securities and money orders and counterfeit
money.
Every company is susceptible to white collar crime. Initially offences
may seem inconsequential, over time however, they multiply and cause significant losses to
an organization.
- Theft by employees or management includes direct theft of cash or business assets,
falsification of claim expenses or payroll fraud.
- Collusion between employee and a third party receiving bribes or commissions from a
supplier for awarding of a contract, failure of an employee to disclose financial
interest in a transaction.
- Computer fraud such as diverting funds from bank accounts, stealing intellectual
property, posing as a legitimate business on the Internet and obtaining payment for
goods or services.
- Employee Theft Coverage: Loss of money, securities or other property by theft or
forgery by an identifiable employee of the Insured.
- Premises Coverage: Losses from destruction, disappearance or wrongful abstraction or
computer theft of money or securities from the Insured premises by third parties.
- Transit Coverage: Losses sustained due to the destruction, disappearance or
abstraction of money and securities outside the Insured’s premises by a third party,
while being conveyed by the Insured, an armoured motor vehicle
company or any person authorised by the Insured.
- Depositors Forgery Coverage: Losses from instruments such as cheques fraudulently
drawn on Insured’s accounts by a third party.
- Computer Fraud Coverage: An extension to cover losses sustained and expenses
incurred by an insured due to a computer fraud or violation by a third party.
This indemnity policy typically covers for perils like kidnap,
extortion, wrongful detention, hijacking, insuring loss incurred. The policy do not pay
ransoms on the behalf of the insured. Typically, the insured first pays the
ransom, and seek reimbursement for the losses incurred, and then seek reimbursement under
the policy.
- Ransom monies – Money paid or loss incurred due to kidnapping
- Transit/delivery – Loss due to destruction, disappearance, confiscation, or wrongful
appropriation of ransom monies being delivered to a covered kidnapping or extortion
- Accidental death or dismemberment – Death or permanent physical disablement
occurring during a kidnapping
- Judgements and legal liability – Cost resulting from any claim or suit brought by
any insured person against the insured.
- Additional expenses – Medical care, severe disruption of operations, potential
damage to company brand, PR counsel, wage and salary replacement, relocation and job
retraining, and other expenses related to a kidnapping
incident.
The policies also typically covers fees and expenses of crisis
management consultants. These consultants provide advice to the insured on how to best
respond to the incident. Even the most basic training for people traveling to
dangerous places is not easily provided nor is obtained by small to mid-sized companies.
Companies recognize the need to be a part of the global marketplace, and
corporate employees conducting business outside their own countries expect to encounter
language barriers, exotic customs, and diverse negotiating styles.
What they cannot predict is political upheaval and the increasing danger of abduction and
extortion. The goal of our entire program is the safe return of the hostage or the
satisfactory resolution of a crisis—a goal from which
we do not deviate. Professional assistance before, during, and after a kidnapping or
extortion threat is a vital element of corporate risk management.
- Kidnap/Ransom Coverage responds whether a person is actually abducted or someone
paid a ransom.
- Extortion Coverage includes protection for threats such as:
- Damage to any premises or tangible property located on the insured’s
premises.
- Contamination of raw materials or products of the client.
- Disseminate, divulge, or utilize proprietary information of the insured.
- A computer virus against an insured.
- Delivery coverage: Insures money or other conveyed property used to pay a ransom or
extortion demand.
- The Policy extends coverage for additional expenses and legal costs accrued to gain
the release of a hostage. Those expenses may include fees of independent
negotiators, interest costs on loans taken for extortion or ransom
payment, salary continuation, consequential personal financial loss, and reasonable
medical expenses.
- Political Threat coverage: Covers expenses incurred when a person is wrongfully
detained by anyone acting for a government or with the government’s approval.
- Optional Threat Response expense coverage: Provides for expenses incurred when the
insured utilizes the additional services to investigate extortion threats when no
monetary ransom demand has been made.
Many dream of taking their company public. Talent and passion
transform the dream into reality. But the reality is fraught with risk. Investors who helped
to achieve the dream can turn it into a testing reality. Directors of newly
floated companies run the ever-increasing risk of being sued or investigated if investor
expectations are not met.
The road to a public offering is hazardous. Investors and their advisers
must be presented with detailed information based on which the financial position and
prospects of the company being floated, is analysed. Directors and others
face a difficult task in ensuring that all relevant information and material facts regarding
the company are presented accurately.
Is it ever possible to be fully confident of total accuracy?
Investors experiencing loss in the value of their shares will seize upon
any mistake or misrepresentation made during such presentations, and make claim relating to
defects in information, that encouraged them to invest in the
company.
Given the hype of a pre-IPO with most companies, there is increased
scrutiny and accountability post-raising of capital.
- IPO’s are a marketing event for the issuer
- Can they live up to the hype ?
- Is the management up to the challenge? Disappoint and the stock price will plunge!
- Are the directors qualified to run a public listed company?
- Can it beat analyst expectations? What are the analysts saying anyway?
- Can they fulfill Regulatory reporting laws? – stock exchange and / or securities
commissions.
- Failure to report accurately, late reporting or just telling plain lies?
- What are they using the money raised for?
- Overcompensated or over matched management?
- Failure to disclose
- Forward looking statements
- Profile and accuracy of resumes of directors and management
- False promises!
- Quality of investment bank/adviser to the IPO.
- Investors may bring an action against for an alleged misrepresentation, error, or
omission in the prospectus on which they had relied to make their investment.
- Regulatory bodies have authority to initiate proceedings against the parties to an
offering, for allegations of wrongdoing or breach of the listing rules.
- POSI gives companies the opportunity to ring-fence the significant and long-term
exposure presented by security
- POSI, being a transaction specific product ensures suitable coverage to the insureds
and protects the existing D&O contract.
- Accounting rules may allow the premium of a POSI to be capitalized against the offer
proceeds, without being considered as a bottom line deduction of the company’s
financials .
Public offering of securities insurance is a specialist product which
is tailored to indemnify Insured against claims arising due to errors, omissions,
misrepresentation, or non-disclosure in documents issued to potential investors
and cover costs involved in defending such allegations.
The policy can provide the directors, the selling shareholders and the
company with a number of separate and distinct benefits including:
- Protection against some of the potential statutory exposures.
- The option of a stand-alone policy, specifically tailored to ‘ring-fence’ the
exposures from the transaction, which does not dilute or erode existing directors
and officer’s liability insurance arrangements.
- Coverage is typically negotiated to include protection against the liabilities
arising from the issue of the path finder or ‘red-herring’ prospectus, the roadshow
presentation, and any press releases.
- Policy coverage cannot be cancelled by insurers without the insureds’ consent, and
is typically arranged for 3-6 years’ duration, with a one-off premium levied for the
full period of the policy.
- The policy can be designed to cover exposures arising from other jurisdictions.
Costs Covered: The insurance covers legal costs incurred in defending
civil and criminal proceedings relating to prospectus liability as well as any judgements or
settlements entered into.
Period of Cover: It is purchased for a period of three to six years for
a single premium payment. However, other lengths of time can be considered by Underwriters.
Who should buy a POSI policy?
POSI is designed for any company that is raising capital through the
publication of a prospectus. It can provide cover for introductory offerings (IPO),
secondary offerings and can also cover private placements. The POSI policy
covers the company and its directors, officers and employees for securities claims raised
against them with regard the offering.
Whilst a D&O policy may cover some of the claims that might arise they
are not designed to address all the risks arising from a prospectus and listing process.
Typically they do not cover claims against the company. Even if the
policy is suitably worded, these policies are renewable annually for a new premium. Claims
relating to a prospectus most often arise in the period 12 to 24 months after the prospectus
was issued. In an annual D&O policy, premium
may be increased or cover withheld on renewal if there is a potential prospectus claim.
Clinical Trials in research are vital in finding new, better and more
effective medication. Whenever any new medicine/therapy is to be launched, it must first be
tested in lab on animal or human cell. There are commercial advantages
to the firm that produce the first approved drug for a disease. That being the position,
there is dramatic increase of clinical trials. India has now become a favorable destination
for clinical trials because of availability
of expertise infrastructure, availability of a research subject and low costs. In today’s
litigant society, parties are sued regardless of who or what caused injury or death.
With such realities, insurance must form part of any risk management
philosophy of the company interested in clinical trial. As a part of any clinical trial
monitoring, an insurance cover is essential. Even then in spite of all
precautions being there, liability will arise because of the human element and other factor
and hence need insurance.
The Clinical Trials Insurance policy covers legal liability arising out
of:
- Lack of care, negligence, resulting in bodily Injury or death of a Research Subject
(person participating in the Trial)
- All reasonable Legal Costs & expenses including Defense cost as per the compensation
guidelines
- Broad definition of Insured under the policy
- Cover provided to the research subject in case of death/injury. Research subject
means dependents, heirs, executors, administrators and legal representatives.
- Provision to pay compensation as per guidelines of the policy
- Manslaughter Defense Costs (Ethics Committee)
- Cover can be extended to cover full medical expenses
Pays all sums for which the insured shall become legally liable as
compensation for physical loss or destruction of or damage to goods or merchandise, while in
transit, including during loading or unloading and while temporarily
housed on or off vehicles in the ordinary course of transit.
- Damage to cargo directly caused by fire, explosion or accident to the carrying
vehicle
- Carrier’s liability for cargo
- Cargo salvage, transhipment, emergency storage costs
- Financial loss due to the lost freight in respect of the damaged part of the cargo
- Legal and other costs, incurred in the litigation against the claimants
- Costs of average adjusters
- Breakage due to improper handling
- Flood or water damage or damage by other cargo
It is a compensation payable under a scheme set out in the workmen
Compensation Act of India, monitored by the Ministry of Labor. The policy covers statutory
liability of an employer for the death of or bodily injuries or occupational
diseases sustained by workmen in the insured’s immediate service and during the course of
employment. Costs or expenses incurred by the insured employer, with the consent of the
company, to defend any claims are paid in addition
to the above.
The policy covers legal liability of an employer under
- Workmen Compensation Act 1923 and subsequent amendments of the said Act prior to the
date of issue of the policy
- Indian Fatal Accidents Act 1855, and subsequent amendments of the said Act prior to
the date of issue of the policy
- Common Law
- Any employer, whether as principal or contractor, engaging “workmen” as defined in
the workmen compensation Act
- Any Employer of employees who do not qualify as “workmen” but share an
employee-employer relationship
- Death
- Permanent Total Disability
- Permanent Partial Disability
- Legal cost and Expenses incurred with the companies’ consent
The amount of compensation payable is calculated as per the WC Act using
factors like age of the individual, the nature of disability and the last drawn salary.
Premium rates are based on the nature of duties performed and on the
basis of annual estimated wages disbursed to the workmen,
This insurance does not cover any interest and/or penalty which may be
imposed on account of failure to comply with the statutory requirements laid out.
Title insurance is a cover that protects a potential owner of a
property against loss from defects in title.
Title insurance protects real estate owners and lenders against any
property loss or damage they might experience because of liens, encumbrances or defects in
the title to the property.
A title insurance policy insures against events that occurred in the past and the people who
owned it, for a one-time premium paid at the closure of the escrow.
Title insurance protects against claims from defects. Defects are things
such as another person claiming an ownership interest, improperly recorded documents, fraud,
forgery, liens, encroachments, easements and other items that
are specified in the insurance policy.
- Initially insures the promoter/builder acquiring ownership of the property
- Eventually benefits the transferee at the event of a sale agreementbetween the
buyer(s) or allottee(s) of the said property.
- The Policy protects the rights of an owner, of the property, thereon against a range
of risks that may affect the ownership of the land/building
- Covers any legal or defense costs against insured risks in the event of a claim.
After the escrow officer or lender opens the title order, the title
agent or attorney begins a title search. A Preliminary Report is issued to the customer for
review and approval. All closing documents are recorded upon escrow’s
instruction. After recordings has been confirmed, demands are paid, funds are disbursed, and
the actual title insurance policy is created.
Owner policy : Escrow refers to the process in which
the funds of a transaction (such as the sale of a house) are held by a third party, often
the title company or an attorney in the case of real estate, pending
the fulfillment of the transaction.
During the purchase of a property, you receive a document most often
called a deed, which shows the seller transferred their legal ownership, or “title” to their
property, to the buyer. Title insurance provide protection against
law suits and claim against the property covered and purchased. Common claims come from a
previous owner’s failure to pay taxes or from contractors not being paid for their services
and labour on the property before you purchased
it.
Lender’s policy: Most lenders require and insist the
mortgagees to purchase a lender’s title insurance policy, which protects the amount they
lend to pay for its legal defense costs and reimburse any mortgage payments
mortgagee can’t make because he/she has lost the house to someone else’s claim on it.
Lenders might alternatively want to buy an owner’s title insurance policy, which can help
protect their financial investment in the property
covering their legal fees and other losses, as yet another step toward protecting the
lender’s collateral.
Construction Loan policy In many situations, separate
policies exist for construction loans. Title insurance for construction loans requires a
Date Down endorsement that recognizes that the insured amount for the
property has increased due to construction funds that have been vested into the property.
- Regulatory Risks
- Revocation of clearances given by authorities like the State Revenue Dept,
Municipality, Environment Dept., etc. cleared by them as per existing rules
- Ownership Risks
- Challenges to the Ownership of the property arising from Title dispute,
Partition dispute, Illegal Possession, Landlord-Tenant dispute, Succession
dispute, Contractual disputes, Developer-Landlord dispute, Mortgage-Loan
dispute, etc.
- Error & Omission Risks
- Errors and Omissions committed at the time of conducting Title Search by the
Conveyance Practitioner or in conferring appropriate permits or sanctions by
the relevant authority provided by law
At the most extreme, the seller may knowingly sell you a property he or
she doesn’t own.
Typically, Title Insurance pays for the loss incurred due to title
defects up to the sum insured, which generally is the value of the property or legal
expenses to defend the case. However, additional coverage could be structured
based on client requirements.
Sum Insured will include
- The Market Value of the Land
- Completed Cost of Construction
- Can be taken on Full Value or Loss Limit basis
- Provision for Escalation
- Property Type (whether Residential or Commercial)
- Location of the risk
- Purchase Price of the Property
- Loan amount involved
- Amount of coverage Opted
- Transaction Type and Title Service Fees
- Violation of any existing Law(s) or bye-law(s), or future action by the government
concerning
- Land use
- Structures built on the Land
- Environmental protection
- Conservation
- This exclusion does not apply to violations or the enforcement of those matters
which appear in the Public Records at the Policy Date and does not limit the
coverage provided in the policy
- Risks that are created, allowed, or agreed to by Insured
- Structures which have not been built in accordance with applicable building
codes and standards, or the infestation or dilapidation of those structures.
- Pecuniary loss from dispute / revocation of Title including Market Value of the Lost
Property
- Legal costs to defend proceedings
- Disclosure of all material facts and documentation in respect of the Title to the
property true to the best of their knowledge that would affect the acceptance of the
risk by the insurer or enhance them.
- Any failure may compel the Insurer to reduce its liability under the Policy in
respect of a claim, or may cancel the contract of insurance.
Inherent Defects Insurance provides protection to building owners, occupiers and others with
an interest in building against damage or the threat of collapse due to a defect in the
structure of the building including the external walls and roofs, irrespective
of whether these last two items are “structural” or not. The defect must be undiscovered at
the date of practical completion of the building and occur during the period of 5 to 10
years after that date which is the usual policy
period. The cover is available for commercial and industrial buildings and large residential
blocks.
Resultant damage to other elements of the insured building including the
cost of assessing the defect and reinstating such elements are included within the
indemnifiable repair costs. Further, where the building requires some remedial
work or strengthening to relieve the continuing effects of the inherent defect then these
costs are also met under the policy.
Also covered are the cost of debris removal, professional fees and
changes in the method of repair required to satisfy Local Authorities or similar regulatory
requirements.
Extensions to the cover are available to include weatherproofing defects
in external walls and roofs and waterproofing/seepage defects in basements. These additional
levels of cover do no come into force until after an initial
12 month period from practical completion.
Building projects should be proposed for insurance as early as possible and preferably
before any work commences on the site. This enables sufficient time for the risk to be
assessed and for the insurers’ technical advisors to have a full and effective
role. Proposals for insurance after the commencement of construction may be considered but
the increased risk to insurers may be reflected in the scope of cover available and the cost
of the insurance and, in some cases, regrettably
no cover will be available at all.
The benefit of the policy is for building developers, owners, their funders and subsequent
owners, tenants and other users or occupiers of the building. Generally the policy is not
for the benefit of the professional team and contracting parties against
whom insurers retain the rights of recourse. Requests to include the interest of such
parties within the policy or for insurers to otherwise waive rights of recourse are
considered on a case by case basis. Where rights are
waived the involvements of the insurers’ technical advisors may be increased coupled with a
consequent increase in the insurance terms.
The sum insured should represent the total rebuilding costs of the building at the date of
inception of the policy including if required an item in respect of debris removal and
professional fees. The estimated contract value is adopted at proposal stage
for the purpose of calculating the deposit premium. A limit of indemnity may be sought and
depending upon the level chosen a suitable reduction in premium level may be available.
Whatever sum insured is selected it may be index
linked throughout the period of insurance either fully or for the purpose of the application
of the policy average condition. Full details of indexation are available.
Where the new building works involve retained facades and the like these
may be incorporated within the policy for resultant damage to them arising out of an
inherent defect.
Loss of rental income and removal/relocation expense may be insured following a claim under
the 10 years material damage policy. Loss of rental income insurance is generally arranged
on an annually renewable basis with an appropriate sum insured, indemnity
period and time exclusion.