Insurance Book.pdf

8/14/2019 Insurance Book.pdf

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Ram opal Verma 101, Swastik Bhawan,B.Com. (Hons.) A.I.C.W.A., F.C.A. Ranjit Nagar Commercial Complex

CHARTERED ACCOUNTANT New Delhi 110 008Ph. : Off. 25706379Fax : 25708963Res. : 25790142Cell : 98 114 13816E-mail : [email protected]

ABOUT THE AUTHOR

The author of the book Ram Gopal Verma is a Chartered Accountant cum InsuranceSurveyor for over 23 years in practice. Though people some times mistake him for producer director Ram Gopal Varma. Have you seen his movies? I am also his fan. Mr.Ram Gopal Verma was born in a place called Jalpaiguri in West Bengal. Originally hisfore fathers came from Rajasthan to Bengal in search of water and livelihood. Even nowhe dreams in Bengali having taken his early education in Bengali medium. He nowknows German and French as well. He qualified his C.A. From Kolkata and decided tosettle in Delhi where in his opinion your constitutional rights are safe. He miserablyfailed in his C.A. Practice in a new city but got success with insurance companies wherehe found people not prejudiced since every one was from some other city. He has handledvarieties of insurance claims in his life as insurance surveyor with various insurancecompanies. When even Supreme Court failed to convince itself over the definition of burglary and theft as interpreted by insurance companies, prompted the surveyor to writethis book. Even I.R.D.A. admitted that the insurance policy terms and conditions arewritten in the most ambiguous manner prompted to write this book in simple language.He believes that spread of insurance knowledge would benefit rich and poor both. So farIndians are having very little knowledge of general insurance.


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IndexMatter Page No

1. Conclusion as Preface 7

Chapter- 1

1. Introduction 10

Chapter -2 Burglary Claim

2. Papers required in case of burglary 15Claim related to stock

2.1. Exclusions to burglary policy 232.2. Money not covered in case of burglary 232.3. Burglary from open stock yard 232.4. Loss has to be discovered within

14 days of incident 232.5. Value of insurance for computers on

depreciated value or market value 242.6. Theft without forcible entry or exit is not

covered in the policy 252.7. Roof of several building connected to each other 252.8. burglary season 252.9. Grill cut to enter in house/factory 262.10. Security of empty office/showroom/factories

at night 262.11. Proper coverage of stock 262.12. Coverage of stock with transporters or C & F agents 272.13. Theft v/s burglary as per Supreme Court. 322.14. Only letter to police is not F.I.R. 332.15. Call at no. 100 of P.C.R. 342.16. Daily diary (DD) register/Roj Naamcha 352.17 Police hierarchy 352.18. Investigating Officer 362.19. The S.H.O. 362.20. Crime team 372.21. Crime branch of the State 372.22. F.I.R is mandatory as per insurance company 382.23. What to do if F.I.R. is not registered by local police 392.24. Hierarchy of magistrate and courts 392.25. Intimation of loss to police 402.26. Non cognizable offence report (NCO) 412.27. Loss due to Dacoity / volumetric exercise 412.28. Burglary and volumetric analysis 422.29. Section 457 in final report 42


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2.30. Regarding final report by police. 432.31. Challan / charge sheet by police 442.32. Vernacular translation of F.I.R. 452.33. Recovery / Superdari 462.34. Disadvantages of taking property on Superdari

recovered 472.35. Mere F.I.R. not enough after thought 482.36. No mention of stolen stock in F.I.R. / subrogation 482.37. Police status report 48

Chapter 3 Fire Claim

3. Papers required in case of fire claim 493.1. Re. fire loss to machines 533.2. Re. fire loss to stock 553.3. Re. fire loss to building 603.4. what if records and books of accounts burnt in fire 603.5. Damaged stock should not be removed before

arrival of surveyor 613.6. Cause of fire 613.7. Loss due to water is also covered in fire policy 613.8. Fire / water loss in paper industry 623.9. Loss due to smoke or soot in plastic or

garments or fabric 623.10. Moral of insured and financial soundness 633.11. in case of doubtful fire 633.12. Technical report from another specialist 633.13. Assess loss even if claim not admissible 633.14. Collapse of roof in fire 643.15. Certain allowable exclusions for self insurance 643.16. Minimum deductible and voluntary deductible 643.17. Mid-term change in sum insured 643.18. add on covers 653.19. Loss assessment can never be exact 663.20. Fire policy by transporters 663.21. Fire season, high voltage and its after effects 673.22. Valuation for insurance on depreciated value

or reinstatement value of machines 683.23. Ask for terms and conditions a the time of renewal 693.24 Fate of rejected claim after 12 months. 70


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Chapter 4 Flood Loss Claim

4. Requirement of papers in case of claim of lossdue to flood 71

4.1. Loss due to flood/ inundation 724.2. Flood / inundation due to blockage of drain 73

Chapter 5 Shop Keepers Claim

5. All risk shop keepers policy 745.1. Precautions by shop keepers/ factories 745.2. Loss in electronic shop 755.3. Loss of stock from shop under section i 755.4. Loss of stock from shop under section ii 755.5. Loss of cash from premises in shop keepers policy 75

Chapter 6 C.IT. Claim

6. Requirement of papers in case of cash in transitloss claims 76

6.1. Cash in transit / money Insurance Justification 776.2. Money should be in custody only 776.3. Cash in transit / money insurance policy 786.4. cash carrying staff 786.5. How cash to be carried how and by whom 786.6. Proper coverage of office/ residence/ bank and

vice versa 786.7. Route of cash carrying should be approximately 78

straight6.8. Keep enough balance for year round cash in transit 786.9. Heavy cash break the trip to spread cash risk 796.10. Over night cash in safe is also covered in cit policy 796.11. Infidelity of cash carrying employee 796.12. New branch not added in policy 796.13. Loss from unattended vehicle 806.14. Risk of cash in transit 80

Chapter 7 Jewellers Block Claim

7. Jewellers block policy 817.1. Only cost is compensated 817.2. After loss settlement recovery goes to insurers 817.3. Safe of standard make 817.4. Storage of stock in safe as per proposal form 82


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7.5. Stock kept out side safe at night 827.6. Proposal form is basis of insurance 827.7. Safety features of camera for jewellers 837.8. Discount for safety and security 837.9. Stock inside grill but not in safe 837.10. Safe is unsafe without latest feature 847.11. Safe should be fixed in the wall 847.12. Safe is safer if there is no protruded side 847.13. Safe number lock not working, then its not safe. 847.14. Motion detector at night 857.15. Guard to protect factory at night time 857.16. Storage of stock in almirah 857.17. New safe bought 857.18. Stealing by operation of key 867.19. Loss due to infidelity of employee 867.20. Stock to other cities for sale or return 867.21. Stock in another safe not in strong room 867.22. Stock left in unattended vehicle 867.23. Basis of valuation 867.24. Important exclusions in jewellers block (JB) policy 877.25. Same policy for diamond manufacturers

as well as jeweller showrooms. 887.26. Common tricks 907.26.1. Dirty material on your clothes 907.26.2. Left side tyre puncture indication 907.26.3. forced accidents to stop you 907.26.4 Brief case on rear seat 917.26.5 Throw cash on road to cheat you 927.26.6 Not safe in car parking also 897.26.7. Tea with sleeping chemicals 897.26.8 Bus closed after getting down to deceive you 907.26.9. Criminals spot some one with valuables and

cheat him 907.26.10. Force you to have sleep using chloroform 917.26.11 Hypnotise you to cheat 92

Chapter 8 House Hold Claim 93

8. All risk house hold insurance policy8.1. Rate of gold jewellery 948.2. All risk cover for jewellery in house hold policy. 958.3. Valuation report 968.4. Papers required in case of claim related to

house hold policy 988.5. Regarding gold jewellery and silver items 988.6. Regarding loss of crockery and garments 99


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8.7. Small electronic safe in houses 99

Chapter 9 Misc. Policies claims 100

9. Other important insurance policies9.1. Loss due to LPG cylinder explosion 1009.2. Separate building policy for

Earth quake long term 1009.3. Loan linked insurance policy for borrowers

from bank 1019.4. Personal accident (P.A.) policy 1029.5. Mediclaim Policy 1039.6. Name difference in medical policy 1049.7. Age in case of mediclaim policies 1059.8. Name difference in medical policy 1059.9. Age in case of mediclaim policies 1069.10. Approval of limit by TPA in case of hospitalisation 106

Chapter 10 Car Claims

10. Car insurance claims 10910.1. Car theft cases 11010.2. Insured declared value (I.D.V.) 11110.3. Very little car protection from theft 11210.4. Additional car cover 11210.5. Regarding car insurance and sale of car 11310.6. Depreciation in car claims 11410.7. Car policy exclusions 11410.8. Status of learners licence for claims 11410.9. Bargain for better coverage of car insurance

and not bargain for less premium 11510.10. Third party claim for car accidents/ mediclaim. 11610.11 better to take cash less car insurance policy

than ordinary car insurance policy. 117

Chapter 11 Policy Related General Matters

11. General knowledge about insurance claimrelated matters 117

11.1. Proposal Form 11711.2. Letter of intension to insure 11711.3. Insurance policy taken for formality rendering

it futile. 118


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11.4. Condition of reasonable care clause applicableto almost all policies 118

11.5. Coverage of items in the insurance policy 11911.6. Change of business or items 12011.7. Changes not made in insurance policy 12011.8. Contract of insurance policy 12011.9. Address of insured 12011.10. Change of ownership of insured 12211.11. Period of policy. 12311.12. Policy only signed by insurance company 12411.13. Terms and conditions not given by insurance company 12511.14. Bank stock statement 12611.15. Sum insured 12611.16. Dishonour of insurance premium cheque 12711.17. First loss basis coverage 12811.18. Short period excess stock 12811.19 last minute insurance 12911.20 close proximity claim 13011.21 Inspection by insurance companies 13011.22 loss minimisation 13011.23. Self risk coverage and exclusions 13111.24. Burglary / fire once in a life time experience 13411.25. Insurance advisor of industries 13511.26. Development officers v/s claim department 13511.27. New regime of brokers 13611.28. Insurance policy taken by banks on behalf of 137

borrowers11.29. Bank assurance 13911.30. Further benefits of bank assurance 14011.31. Insurance premium pool 14011.32. Insurable interest for own stock and held in trust 14111.33. Stock given in trust to others 14211.34. Temporary godown 14211.35. Excess clause 14211.36. Substandard 14311.37. Automatic insurance with banks for stolen

cheques/ theft from bank lockers 14411.38. Preliminary report v/s main surveyor appointment 14611.39. Role of investigator in insurance claims 14711.40. Avoid smaller claims 14911.41. Follow one company for insurance 15011.42. Renewal of insurance with same company. 15111.43. Claim settlement process 15211.44. Ad hoc payment against a claim 15311.45. Consent letter 15311.46. Letter to police to hand over future


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recovery to bank. 15411.47 Whether to contest full and final claim payment 15511.48. Business of insurance company re-insurance 15611.49. Cancellation of insurance policy 15611.50. Not having R.O.in cities. 156

Chapter 12 claim settling authority

12. Hierarchy of insurance companies 15712.1. Financial authority for misc. claim settlement 15912.2. Financial authority for fire claim settlement 160

Chapter 13 Grievances Authorities

13. What if claim not settled 16113.1. Consumer courts 16113.2. Insurance ombudsman 16313.3. Claim settlement week and grievance

department at Regional Office /Head Office 16413.4. Arbitration 16513.5. Right to information act ( R.T.I.) 16513.6. Insurance regulatory and development authority 16613.7. Rights of policy holders to obtain a copy of survey

report under IRDA rules 16713.8. Ministry of public grievances 16713.9. Ministry of finance 16713.10. Civil courts 167

Chapter 14Preface as conclusion 168


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1. Conclusion As Preface

I now know after reading this book how to obtain proper insurance policy and providerelevant papers in support of the claim, should a claim arise. I realise that insurancecompany is my best friend in my worst time of crisis like fire / burglary / flood / earthquake / sickness / accident / or even after death, is friend of my family. Now theinsurance company knows my new address even before I shifted to the new premises.How can you miss a friend in need and deed. Information about my new address to otherfriends and relatives can wait but not to insurance company. I now buy a new piece of jewellery or buy a new factory or office, but first information is given to insurancecompany to obtain endorsement on the existing insurance policy. The new mobile phoneor lap top or car comes home along with a new insurance policy only. I now know my best friend in worst time is insurance company who charges so less for covering such ahuge risk.

No one knows your business better than you. You can become your own insurancesurveyor. Make your own insurance claim file. Being a C.A. Or Doctor or Engineer orM.B.A. You can make your claim file better than the surveyor. The mystery and veil ofsecrecy around claim assessment by surveyor and insurance companies is hereby liftedand made transparent for the benefit of policy holders and claimants.

This book is all about practical aspect of general insurance claims like that of Fire/ Misc/Motor / Medical etc. and not about Life Insurance. There are many states in India where people are business-minded and are financially sound. They also have high education. InGujarat people have money but they do not understand insurance and far less when itcomes to insurance matters. There were not many claimants of earth quake insuranceclaims after the earth quake in Ahmedabad. In Kerala or Mizoram or West Bengal where people are highly educated but they also have little knowledge of insurance relatedmatters. Then there are I.T. related skilful people but they do not have time for properinsurance policy and much less when it comes to claims.

This book is dedicated to enrich knowledge of insurance related practical matters for allour countrymen irrespective of where they are living, whether in villages or towns orcities. The book is also for the unborn child who may become a c.a. Or engineer or business man and wants to take an insurance policy or he may have to take an insuranceclaim.

I have spent major portion of my professional life as insurance surveyor and would loveto give back to the society what I have learnt from them in terms of insurance knowledge.Let me make an attempt to enrich the future generation by providing them practical sideof general insurance knowledge.

Feelings of return back to the insurance industry and the society for what they have doneto me has made me to write this book. In 1985 when I took insurance surveyor license, Idid not have any knowledge at all about insurance claims related matters. In last more


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than 20 years I have learnt a lot but I feel the society at large is still at the same placewhere I was in 1985 in terms of insurance related matters knowledge. So I thought whynot share the fruits of my knowledge with the society and thus repay to some extent whatI have received in terms of insurance knowledge. I was inspired by many starting fromBill Clinton to Donald J. Trump or Robert T. Kiyosaki or Alan Greenspan who wrote books to enrich the society with their experience in their respective field. By reading their books many became much bigger than them and thus the torch was carried fromgeneration to generation. Now their books are translated in various Indian languages tofind place in A.H. Wheelers book stand on small railway stations as well. I am making asmall contribution by way of this book to the insurance world knowing very well that myknowledge is very limited comparing to the vast knowledge store House With The TopExecutives Serving With The Insurance companies as well as some of the past and present surveyors in the insurance industry handling claims of hundreds of crores. I wishsome day Indians are insurance minded and there is plenty of reading material available.There are so many books in the market about theory side of insurance but the marketlacks practical insurance books. The insurance knowledge is locked in the four walls ofinsurance companies and surveyors and that is exactly the reason insurance has notreached to one and all.

India is a vast country and everyone may not have access to decisions ofSC/HC/Consumer Courts related to insurance matters. They may be knowing very littleenglish and may be knowing much less about insurance. But there lies all the more needof insurance due to burglary or fire or flood problems in their small town or village.Hence practical knowledge of insurance is very important to them.


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Chapter 1

IntroductionBy way of writing this book, effort is being made so that proper policy is obtained frominsurance companies as per requirement of policy holder who if guided, can saveenormous amount of time/money and avoid court cases.

Purpose of insurance policy is to transfer some amount of risk to the insurance company by taking insurance policy after payment of insurance premium being cost of risktransfer.

The potential policy holder can save his time if he can study the policy terms and

conditions in advance even before it is issued. The prime purpose of taking insurance policy is to see whether the policy can give him the necessary coverage sought for. Effortshould always be made to take all risk policy as far as possible. The policy documentwould clearly state what perils/ risks are covered.

Secondly focus can be made on the exceptions mentioned in the policy terms andconditions. This is of utmost importance should a claim arise. Without terms andconditions, its like a tenant without rent agreement or a partnership made without a partnership deed, a company formed without memorandum of article of association. Theinsurance policy covers the risk subject to the terms and conditions. The terms andconditions are normally very exhaustive and written in very small letters but they dogovern the policy coverage.

It is very important to find mention of exclusions to the policy under which the risk is notcovered inspite of issuing the policy and premium having been received by the insurancecompany. The exclusions are many and should be clearly under stood and kept in mind.E.g burglary from unattended vehicle is not covered in the policy. Burglary from housenot occupied by any one for over 7 days is not covered in the policy. Theft withoutforcible entry or exit is not covered in the burglary policy. In burglary policy loss due toinfidelity of employee is not covered. In case of personal accident policy death due todangerous games like paragliding/bungee jumping/parachute jumping are not covered.

Once you know what is covered and what is not covered then you know almost whole ofthe policy. Your duties are explained in the book in case of a claim. What are your rightsshould your claim be rejected by the insurance company also finds place in the book.

Even after policy is issued, policy holder can study it and can get it amended by obtaining proper endorsement from the policy issuing office for required changes. Thus futuredisagreement or disputes can be avoided.

In between the policy period, if any circumstances of the insured changes, then he can getthe policy amended to suit his changed circumstances e.g., change in his business,address, value of stock is increased beyond sum insured, temporary change in place


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where he keeps stock. These can be amended in the policy and suitable endorsement can be called for, from the policy issuing office.

Once a policy has been issued it will not necessarily serve the purpose through out the policy period. Time wise changes can be sought in the policy to suit changedcircumstances.

In case fire, engineering, marine, factory installation claims there are lesser problemsinvolving corporations/companies who are in the organised sector. They obtain proper policy as per their requirement and are organised to meet papers formalities of insurancecompanies. The claims arise in the normal course of business and routine papers are provided to substantiate a claim. The large policy holders like industries, businessmenhave scores of advisors/consultants/employees to advice them and to look after theirinterest. The large policy holders may even have insurance department in their ownoffices to supervise their insurance policies throughout the year. The insurancecompanies also take special care of these big industries/businesses that pays them hugeinsurance premium.

However the individual and retail policy holders in the unorganised sector are scatteredover the country and are even spread in small towns/districts where necessary guidancemay not come forth easily by way of advisors. But the rules of insurance are same for all.The policy holder may be illiterate even then he may take insurance policy. Even in bigcities the common man is unaware of the policy intricacies and its terms and conditions.They also fail to understand the policy terms and conditions in spite of the fact, the policyholder may be ca/ engineer/ businessmen/ lawyer/ government employee etc.

It is target of this book to educate these masses, so that they can understand the policy, itsterms and conditions, the rules governing the policy, grievances scope, their duties during policy period, and their rights on the happening of a loss.

In this way the insurance companies would also be gainer, since an educated policyholder would contribute more of premium and thus total premium received by insurancecompanies would also increase. The retail customer being an average person will alsoseek coverage of risk by paying small amount of premium.

The common man would be gainer since he can understand the policy issued to him andits intricacies by reading this book. He can plan his risk coverage in a better way. Evensitting in a small city or town or even sitting in a remote corner of the country he canunder stand his insurance policy, thus better coverage of his risk. He need not visitinsurance offices to find out his rights/ duties/ scope of coverage. In India many peopleare educated, even un-educated businessmen can ask their staff or educated familymembers to read relevant portion of the book and obtain suitable insurance policy.

As of now insurance policy holders are spread in big cities, big towns and policies aretaken by industries, banks, companies, etc. The other segment of people not falling under


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this group are afraid of taking insurance policies and if at all they take insurance policy,they fail to look after their own interest during policy period, neither they are in a positionto protect their interest in case of a claim.

The head office of the insurance companies are located in metro cities like Kolkata,Delhi, Mumbai, Pune and Chennai. The regional offices are in state capitals or in bigcities only the smaller towns have only divisional offices or branch offices. So theexpertise of insurance is limited to big cities only the people in small towns are more prone to Theft/ Burglary/ Flood/Fire etc. but they rarely take insurance coverage in theabsence of insurance related knowledge.

The government offices like insurance ombudsman/ consumer courts are mostly in bigtowns again the smaller town people do not have easy access to these offices the commoneducated man is very quick to understand the policy if an effort is made let them plan forthemselves their hard earned money can be safe guarded by paying small amount asinsurance premium.

endless amount of time/money is spend after a claim is processed and finally rejected byinsurance companies in defending their stand that the claim is not covered in the policy.The energy of the policy holder is also wasted in making efforts to ensure claim paymentalong with interest. It has to be under stood that in our country taking claims through thecourt or other legal routes is quite time consuming and spread over years of visit tolawyers and courts. The purpose of this book is to make an effort to avoid these wastages.

The insurance companies also want to settle a genuine claim falling under four corners ofthe policy wordings. Rejection of a claim is not their purpose but a claim which is outsidethe ambit of the policy cannot be entertained since they are also subject to C&AGAudit/Statutory Audit/Vigilance etc.

There are many grievances redressal forums available to the policy holders who have toclearly understand their implications in terms of involvement of time and money,following and understanding terms and conditions of policy can help the policy holders toa large extent.

A new surveyor and Loss Assessor/C.A./Engineer can refer the book for practical steps toconduct survey and assessment of loss keeping in view the policy terms and conditionsand proposal form.

Let a new student of commerce of class XI or XII or Graduation or P.G. Course refer the book as a base reference for easy understanding of insurance matters and make use of theknowledge for the benefit Society/Business/Industry.

I went all over India for survey and assessment of claims but I found one thing incommon that people wanted to insure and pay premiums but they had no one to guide


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them to a properly drafted insurance policy to cover their risk. People suffered hugelosses and finally resulting rejection of their claims due to bad policy taken by them.People at large are not aware of intricacies of insurance related matters even byC.A./M.B.A./Engineers.

This book is summary of my more than 20 years of experience and association withinsurance companies as a surveyor and loss assessor and me being a CharteredAccountant. I found complete imbalance of information to people who takes insurance policies and those who issues insurance policies.


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Chapter 2

2. Papers required in case of burglary claim related to stock.

The first thing the surveyor would do is stock taking of saved items lying with the insuredafter the burglary. List of saved items must be made.

The surveyor may take copies of relevant documents and initial on the following:-

1. Cash book (initial on last page of cash in hand)2. Sale bills (initial on last few sale bills)3. Purchase bills initial on relevant purchase bills.

4.

Physical or computer generated stock register (initial on pages where stock has been stolen).

Re: policy

Copy of insurance policy.

Copy of insurance policy is required so that one can check sum insured under the policy,what items are covered under the policy, what is the policy period, whether the risk iscovered under the policy or not, whether address where loss took place is covered in the policy or not etc. Policy number is generated in system after the insurance policy isissued. The policy number contains branch code, nature of insurance, year of insuranceand policy number.

Intimation letter to insurance company.

Letter given to insurance company about the loss covers some of the basic facts about theloss as revealed by the insured. What is the approximate amount of loss? How the losstook place etc. Immediately on sending intimation letter about a claim, claim number isgenerated by the insurance company in their system. Reference to this claim number ismade till the claim is settled. One can ask for claim number from the insurance companyafter lodging insurance claim. Intimation letter should also contain policy number underwhich claim has been lodged.


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1. Claim form with details of items lost.

Claim form is issued by the insurance company. Once the claim on the basis of intimationletter is registered, claim form is needed for details of loss, quantity, what is amount ofloss etc. Claim form duly filled up may be given to the insurance company or to thesurveyor during survey.

2. Proposal form.

Proposal form is required to see the intention of the insured for coverage of items, whatare the items stated in the proposal form. Insurance policy is issued on the basis of proposal form.

Re: Police

1. Copy of F.I.R. duly translated in english if not in english. F.I.R. is taken in order tocheck whether the loss is registered with the police or not. Under which section ofIndian Penal Code F.I.R. is registered by the police. Information given in the F.I.R. Istaken as authenticate information and the items given in the F.I.R. is claimed to be thefinal list of stolen or damaged items. During assessment of loss, list of items stolengiven in the F.I.R. is considered for assessment of loss.

2. Details of loss / subsequent letters given to police

Detail of loss given by the insured to the police by way of subsequent letters may becollected.

3. Charge sheet / Arrest / Superdari for recovery/final police report u/s 173 of I.P.C.duly attested.

Final police report is taken to check whether any arrest or recovery is made by the policeor not. If arrest or recovery is not made, then police closes the file and issues untracereport to the applicant. If any arrest or recovery is made related to the case then policesubmits challan/charge sheet under section 173 of I.P.C.

4. Details of recovery and arrest made by the police.

Recovered stolen items are deducted from the claimed loss.


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Re: Items Lost

1. Stock Register.

Stock register is taken to check whether the items lost appeared in it and in what quantity.

Small traders below Rs. 60.00 lakhs sales are not required to get their books of accountsaudited if they show minimum amount of profit as per income tax act. So the insurancecompanies cannot invoke presentation of audited of books of accounts condition. In suchcases books of accounts, purchase bills / sales bills / bank statements / vat return may be procured and analysed for assessment of claim.

Volume of the stolen stock verses saved stock may be considered.

Provisional trading account as on the date of loss (before loss) duly attested by c.a. May be obtained to find out stock at the time of loss to arrive at under insurance if any.

2. Details of stolen stock / item / rate / quantity / bills / payment / weight / packing /where kept.

Detail of items lost is taken from the insured e.g. When purchased, how much paymentwas made, from whom purchased, rate of the stolen items, total value of the stolen itemsetc.

3. Detailed statement of owner and concerned staff as to how the loss took place.It helps the surveyor to know about the exact detail as to how the loss took place. Whathappened when insured came in the morning. How he came to know about the loss, whatsteps he had taken after knowing that the loss had taken place. When did he inform the police and the insurance company about the loss?.

4. Purchase bills of lost items.

Purchase bills of stolen items are taken in order to check the genuinity of the claimedloss. When the stolen items were purchased/how old was the stock etc.?

Re: Bank

1. Bank statement of the last few months transactions

Whether most of the payments of purchases are made by cheque or not. Cash purchasesare not very reliable and can be easily manipulated to exaggerate the claim. Some timesheavy purchases are found made just before the loss and payments for such purchases arealso not made. Such purchases needs deep scrutiny to find out whether they were


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intended to manipulate the claim or were genuinely purchases duly supported by challan,transport receipt, if purchased in the normal course of business to meet sales orders

2. Is there any credit limit with the bank? If yes, copy of stock statement submitted to bank for last few months duly verified by bank.

If insured had taken loan against stock, then he has to give monthly stock statement to the bank. It also helps the surveyor to check the stock position of the insured as per stockstatement. Is there any difference between book stock and stock as per bank stockstatement, if yes, the same may be investigated. Normally year end stock as per balancesheet and stock statement is same and tallied to each other to avoid income tax problemand scrutiny by banks.

Problem arises during the year when at the time burglary, stock as per stock register doesnot tally to stock as per monthly stock statement given to bank. Such cases need to beinvestigated in detail. Problem may get further complicated if it is a case of underinsurance . As such it is advised that in case of bank limit against stock, stock statementshould be submitted correctly as per stock records.

3. Copy of sanction letter of limit.

Sanction limit shows how much limit is sanctioned to insured against stock by bank.

Re: Saved Stock

1. Detail of saved stock in shop Item/ Qty. / Wt. / Rate/ Value.

First thing any surveyor or preliminary surveyor would do is stock taking of saved stockand then tally with stock records and purchase bills.

Re: Books of Accounts

1. Up to date books of accounts for verification, purchase ledger, sale ledger &cash book, sale bills, receipt memo and issue memo.

2. Income tax returns, balance sheet and trading account of last 3 years.3. Copies of transfer memo of stock sent to others for processing and thus saved.4. Copy of sales tax return and vat return of last three years.

Most of the insurance policies issued to Company / Firms / Commercial organisationshave a condition that they will maintain proper books of accounts as required by law.This will help substantiate the insurance claim so far as its ownership / quantity / rate /value is concerned. Books of accounts play a vital role in assessment of loss.


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5. Copy of purchase bill of stolen items, volumetric analysis, year of purchase, proof of payment made, ledger of supplier duly verified by them in support of purchase bills of stolen stock.

Purchase bill is of prime importance in support of goods having been stolen. Various purchase bills may be verified from the suppliers in case loss cannot be attributed tospecific bill. Average rate may be allowed for the stolen quantity.

The surveyor may also consider sale less gross profit percentage to arrive at cost of salesand apply this to arrive at cost of stolen items.

Average cost of purchase in the last one year may be considered if it is found that onlyrecent stock of last one year has been stolen.

Proof of payment has to be established to prove ownership and insurable interest. Merechallan is not enough.

Production of purchase bills/ books of account in support of ownership of stock

One has to provide relevant documents including purchase bills to the satisfaction of theinsurance surveyor deputed by insurance company. Claim not substantiated by theinsured may be rejected by the insurance company. If the purchase bill is very old andcannot be produced or verified, in such cases the insured should convince the insurancecompany about presence of stock before loss. If stock is stolen and the insured does nothave purchase bill, in that case he has to procure duplicate purchase bill from the supplieror produce challan in support of stock. Proof of transportation of stock to the insured may be provided. Past dealings in the books of accounts may be shown for verification byinsurance company.

6. Stock register showing stock presence before loss.Quantity of items has to be established through stock register. If stock register is notmaintained then suitable proof has to be given for quantity bought / quantity sold.

Trading account showing stock at risk at the time of loss certified by c.a. As on the dateof loss before burglary may be given as follows:-

Provisional trading account (before loss)

Amounts(Rs. P.)

Amounts(Rs. P.)

Opening stock SalesPurchases Closing stockDirect expensesGross profit


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The C.A. may have to be convinced to certify the provisional trading account before theloss and need not be audited but compiled on the basis of books of accounts.Provisional trading account as on the date of loss shows exact amount of stock that waswith the insured at the time of loss to arrive at stock at risk. This will help assessadequacy of insurance to apply under insurance, if any.

7. Volumetric analysis of the stock.

Stolen stock could have easily been accommodated in the room/godown or not? Howstock was probably carried by thieves / time taken to load / number of personsrequired to load / vehicle required to carry.Volumetric analysis helps in determining the genuinity of claimed stock in quantity.

Re: Misc.

1. Profile of the company/ nature of business/ sister concern/directors. Is the factoryon rent or self owned?

Profile of the company gives a brief idea about the company and its working. It helps inknowing business of the insured.

2. Copy of newspaper cuttings about the loss duly translated in english.

Newspaper cutting gives some idea about the loss/damage / incidence as well as arrest orrecovery.

3. Is there any security arrangement in the factory after the business hours? If yescopy of security bill may be taken.

4. Map of the site of loss.

Map of the site of loss helps in getting full knowledge about the premises as well as entryand exit route of the burglars.

5. Proof of forcible entry or exit.

One must check for proof of forcible entry or exit. Whether kundi was broken or lock wascut or door was broken or window was broken. Could the stolen item have been easilytaken through the gap made? This is important in case of burglary policy to collect proofof force applied to commit the burglary, other wise the loss is not covered in the policy.


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2.1. Exclusions to burglary policyThe insured premises should not be left uninhabited for more than 7 days, e.g. M/sKapoor industries left his Meerut factory during lock out for a period of one month.During this period burglary took place at his factory. The insurance claim was finallyrejected on the ground of leaving his factory uninhabited for more than 7 days.

Policy does not cover precious articles like gold, jewellery, cash unless specificallycovered in the policy. Theft or loss by insureds staff or any other person like guard,watch man, sweeper who is law fully in the premises is not covered in burglary policy ifinfidelity of staff is excluded. Any major alteration that may increase chances of loss,done in the insured premises may also result into rejection of claim.

2.2. Money not covered in case of burglaryIn case of burglary policy, money and valuables are not covered in the policy unlessspecifically declared to the insurance company.

2.3. Burglary from open stock yard Normally loss from open stock yard is not covered under the burglary policy. Stock hasto be kept under lock and key covered by walls and roof. Mere keeping stock in thefactory in the yard secured by boundary wall is not enough. At the time of takinginsurance policy one should make it very clear whether the plant is in the open or secured by plant room duly locked. If the trade requires keeping the stock in the open because oftheir nature of business or if the stock is very heavy or impractical to store in closedgodown, in that case suitable policy should be taken covering such stock and risk in openyard.

2.4. Loss has to be discovered within 14 days of incidentBurglary from godown or factory has to be discovered within 14 days of loss andintimated to the insurance company as per claim procedure. Loss may take place by breaking grill from one corner of godown or factory not visited by any one. The brokengrill might have been covered by stock and as such no one noticed the broken grill. Thethieves might have committed burglary at regular intervals without being noticed by anyone. Forcible entry is very clear in such cases but the insurance company may notentertain the claim taking the plea that the loss took place before commencement of the policy or it may be case of theft of stock by staff and not covered in the policy. The lossmay be due to pilferage and discovered during stock taking. In every factory some suchlosses are reported every year during stock taking and these losses are not covered underthe policy.

2.5. Value of insurance for computers on depreciated value or market valueIn case computers the situation is very so far as its value for insurance is concerned. InJan 2008 say 160 GB hard disk, Pentium double processor, Ram 1 GB, 17 inch monitorTft are available for Rs. 30,000.00 and you insure correctly now. Next year the value ofsimilar configuration computer is available for Rs. 15,000.00 and as per income tax youhave proved 60 % depreciation in your fixed assets schedule showing the value as Rs.12,000.00. As on Jan 2009 new computer for Rs. 30,000.00 far different in configuration


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than what you had purchased, it has say 640 GB hard disk, Ram is 4 GB and processor isvery fast than what you had purchased.

Thus decide what value you want to insure your computer next year. At 12,000.00 beingdepreciated value you can insure your computer. You can insure the same at Rs.15,000.00 after obtaining valuation report. You cannot insure it at Rs. 30,000.00 sinceyou do have these configurations in your computer. Even if you delete the up gradationfrom the new computer on account of the new hard disk, ram or processor, you will arriveat the same Rs. 20,000.00. In the third year, value in your books is just Rs. 4,800.00 after60% depreciation on Rs. 12,000.00 and in the market the same computer is available forRs. 7,000.00 while new computer has far better configuration costing Rs. 30,000.00.Should there be loss you cannot demand from the insurance company Rs. 30,000.00inspite of best of your maintenance. Same is true for other electronic items like T.V. or printer.

2.6. Theft without forcible entry or exit is not covered in the policy

It has been decided by the supreme court in the case UIIC Vs M/s Harichand RaiChandan Lal ( SC dated 24-9-2004 C.A no. 8277 of 2004) that if any theft is committed,it should necessarily precede with violence i.e. entry into the premises for committedtheft should involve force or violence or threat to insured or his employees or to themember of his family. Therefore the element of force and violence is a condition precedent for burglary and house breaking. In the absence of violence or force the insuredcannot claim indemnification against the insurance company.

2.7. Roof of several building connected to each other

In cities and crowded places, the roofs of several buildings are connected to each otherfrom the top. One climbs the roof of any of the buildings and reaches the roof of the building in which he wants to commit burglary. The top floor may have collapsible gateor door which can easily be broken. Thus the thief enters the building from top to reachthe ground floor and exit in the same way after committing burglary. Even if there waresecurity guards outside the building, they cannot discover the theft till the showroom isopened in the morning. The main showroom gate on the ground floor is not affected atall.

2.8. Burglary season

Normally it is seen that lot of burglary takes place around 26 th January, 15 th august,Diwali, Dushera, 31 December, etc. During this period the local police are busy throughout the night and day of 25 th January to 26th January. 26 th January night is the night of burglary since most of the police are tired and taking rest after 36 hours of duty. Thesame applies on other days including 15 th august, Diwali and Dushera. Burglary takes place in working days with gap of one gazetted holiday or Sunday or weekly off for themarket or holiday after Sunday, when burglars get 36 hours or more to plan and commit


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burglary e.g. Shop last opened on 12 th April while 13 th is Sunday and 14th is holiday forAmbedkar Jayanti. One should be over cautious on these days against burglary.2.9. Grill cut to enter in House/Factory

It has been seen that entry in the office/house/factory is made from the window havinggrill. The iron grill is fixed with the help of screws which are cut to make way for entry inthe premises.

As a matter of safety screws in the grill should always wielded so that one cannot breakthe window grill easily.

2.10. Security of empty office/showroom/factories at night

Dogs should be left for security of empty office/ showroom/ factories at night. The dogsare better mode of security at night. They get up even at the slightest sound or smell.

2.11. Proper coverage of stock

In case of insurance of stock in a factory, one should not simply mention that stock of saymade ups and garments are sought to be covered in the policy. In that case if fabric isstolen from the factory, in that case fabric being neither made up nor garments will notcover in the policy. The coverage should be wide enough to cover raw materials, work in process, finished goods and all other goods related to insureds business. One should notrestrict himself only to stock of finished goods or made ups or garments. The insured maydecide to deal in leather goods or handicrafts which are easily covered if the mention ininsurance policy that coverage is for all other goods related to insureds business.Mention of other goods may also cover packing items.

2.12. Coverage of stock with Transporters or C & F Agents

Lot of companies have Transporters or C & F agents to store their stock. From the officeof the insured challan is made for issue of stock from the godown of transporters or c & fagents. In such cases though policy is taken by the company who owns the stock butcoverage should be taken for all godowns of transporters or C & F agents where stock ofinsured is kept. Either address of the transporters or C & F agents should be informed tothe insurance company or coverage should be taken of all godowns of the transporters orc & f agents as per company records.Many a times it is possible that the transporters or c & f agents may take a new godownor they decide to keep excess stock at some other premises. In such a case having takeninsurance policy covering all godowns of insured without exact address would benefit theinsurance policy holder should there be loss.


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A. About police

Format of F.I.R.

First information report

U/s 154 of CR. P.C.

Police station area

Time of loss U/s of I.P.C.

Intimation of loss

Date

Complaint by

Matter of loss

Signed by sub inspector

After a burglary has taken place, the local police is to be informed and first informationreport (F.I.R.) Has to be lodged with the concerned police station. F.I.R. Is issued u/s 154of cr.p.c. Detail of stolen stock and modus operandi of the burglary has to be informed tothe police. In case of recovery of stock from the criminals tally has to be made with thedetails of stolen stock. The local police may write in their own hand writing oralstatement of the complainant in the F.I.R. In the alternative the local police may takeletter from the insured and copy language of the letter on the F.I.R. At the end of theF.I.R. Sheet reference may be given about the investigation officer who is deputed to lookafter the case or about visit of the I.O. At the site of crime or incident. Brief of the F.I.R.Is mentioned in the daily diary register. One must ensure that the local police write in theF.I.R. That force was applied e.g. braking of lock or door in committing the burglary.

F.I.R. Is normally lodged under following sections of I.P.C.:

Section 379 F.I.R is lodged for day time theft.Section 380 F.I.R is lodged for night time theft.Section 391 F.I.R is lodged for dacoity/robbery by five or more

persons.Section 395 F.I.R. Is lodged for dacoity/robbery.


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Section 397 F.I.R is lodged for robbery or dacoity withAttempt to cause death

Section 406 for loss due to infidelity of staff.Section 457 is applied for forcible entry.

Several crimes at one place

In case of series of offences in one area, at about one time, committed by one person organg, in such cases one combined F.I.R. May be registered by police. It is not necessaryto register separate F.I.R. The name of all the victims may be mentioned in the F.I.R. Orstatement may be taken u/s 161 of cr. P.c. And add them in the F.I.R. Stamped copy ofF.I.R. Along with copy statement u/s 161 may be enough as proof of loss having taken place. .

Section 379:

Punishment for theft - whoever commits theft shall be punished with imprisonment ofeither description for a term which may extend to three years, or with fine, or with both.

Section 380 : theft in a dwelling house, etc. Whoever commits theft in any building tent orvessel, which building, tent or vessel is used as a human dwelling, or used for the custodyof property, shall be punished with imprisonment of either description for a term whichmay extend to seven years, and shall also be liable to fine.

Section 391 : dacoity when five or more persons conjointly commit or attempt tocommit a robbery, or where the whole number of persons conjointly committing orattempting to commit a robbery, and persons present and aiding such commission orattempt, amount to five or more, every person so committing, attempting or aiding, issaid to commit dacoity.

Section 395: punishment for dacoity whoever commits dacoity shall be punished with(imprisonment for life), or with rigorous imprisonment for a term which may extend toten years, and shall also be liable to fine.

Section 397 : robbery or dacoity, with attempt to cause death or grievous hurt if, at thetime of committing robbery or dacoity, the offender used any deadly weapon, or causesgrievous hurt to any person, or attempts to cause death or grievous hurt to any person, theimprisonment with which such offender shall be punished shall not be less than sevenyears.

Section 406 : punishment for criminal breach of trust whoever commits criminal breachof trust shall be punished with imprisonment of either description for a term which mayextend to three years, or with fine, or with both.


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Section 457 : lurking house trespass or house breaking by night order to commit offence punishable with imprisonment whoever commits lurking house trespass by night, inorder to the committing of any offence punishable with imprisonment of eitherdescription for a term which may extend to five years, and shall also be liable to fine; andif the offence intended to be committed is theft, the term of the imprison may be extendedto fourteen years.

Case no. I - A Case Of Theft Without Forcible Entry / Exit

Only section 379 or 380 of I.P.C. Is applied by police without invoking section 457, thenit is said to be a case of theft without forcible entry or exit i.e. Someone has say operatedkey and stolen the stock or theft of stock from open yard or door was open and theft took place or jumped wall and theft took place without breaking any lock. If there is noforcible entry i.e. No locks broken or no doors broken then it is not a case of forcibleentry. The insurance company does not cover such cases of loss due to theft withoutforcible entry or exit in case of burglary policy. How ever such losses without applicationof force being theft losses are covered in all risk policy.

Case no. II - Loss Due To Infidelity Of Staff/Employee.

Burglary by forcible entry by staff is a case of loss by infidelity. The staff has legal rightto be inside the insured premises but loss due to his involvement is not covered by theinsurance company under burglary insurance policy. A separate policy for infidelity ofstaff has to be taken by the policy holder to cover such eventuality.

Case no. III - Key Operation.

Loss due to theft by operation of key is not covered in the policy. In such cases normallythere is no evidence of use of force to commit the theft. The door or lock has not been broken to commit the theft. From the circumstances of the case it is clear that the lock has been opened by using the key. The burden of proof is on the policy holder as to how theloss took place.

If the key has been procured by using force or threat to life then such a case of loss iscovered in the burglary policy. The key may have been procured by using a gun or knifeor threat to kill. In such cases breaking of lock or door is not necessary.

Case no. Iv- Burglary by Using Force

Only burglary by breaking lock or door or window then it is a case of burglary by usingforce. Such cases are covered in the burglary policy.


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2.13. Theft v/s burglary as per Supreme Court.

Under the burglary policy the insurance companies do not cover a case of theft withoutusing force. In the I.P.C. There is no difference between theft and burglary but theinsurance companies do make a difference whether loss has taken place by using force ornot. In case of loss having taken place without using force then such a case of loss is notcovered in the burglary policy. Even the Supreme Court has failed to understand whyinsurance companies have tried to define burglary with force and without force whereasno such definitions exist in I.P.C. But insurance contract is a contract which if followeddoes mean that loss without use of force is not covered in the burglary policy.

There is another variant case where police does not invoke forcible entry section 457 ofI.P.C. In F.I.R. Or in final report but circumstances of the case clearly shows that it is acase of theft using force e.g. Locks found broken or door found broken or window grillsfound cut or almirah found broken. The circumstantial evidences may be enough to proveuse of force. In such cases even if section 457 of I.P.C. has not been invoked by policeeven then the insurance company may settle the claim under burglary policy.

2.14. Only letter to Police is not F.I.R.

Normally letter is given to the local police and the letter duly acknowledged by the policeis considered to be F.I.R. In local parlance by general public. The general public does nothave any idea about F.I.R. Since they visit a police station only once in a while orlifetime to have unique police experience. The local police tries to keep crime graph low by not lodging proper F.I.R. It may be noted that F.I.R. Is a legal document and isacceptable in the eyes of law in court, insurance company etc. The crime as mentioned inthe F.I.R. Has to be reported to the higher ups in the police and then finally finds its wayto government records. One copy of F.I.R. Is sent by the police to the D.C.P. / Magistrate,second copy to the records. Only a photocopy is given to the complainant by the sub-inspector who has registered the F.I.R.

It is written outside every police station that lodging of F.I.R. And obtaining copy of thesame is right of every citizen. How ever, the local police in criminal cases like theft, burglary, infidelity, financial claims involving banks, companies does make good effortsto avoid lodging of F.I.R. Till they find no other way but to lodge proper F.I.R. U/s 154of cr.p.c.

2.15. Call at no. 100 of P.C.R.

It is always suggested that in case of any loss due to theft, burglary etc. One should avoidvisiting the local police station immediately but they should ring no. 100 of police controlroom so that immediate notice of crime is taken by police.


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The 100 call is answered by the police head quarter and immediately noting is made inthe call register. The call is immediately referred to the Gypsy or Qualis PCR and also thedistrict control room through wireless set. The PCR notes down in the register andimmediately visits the site of loss. The PCR is the first to visit the site. They may alsoadvise the complainant not to disturb the site till arrival of local police. The PCR as wellas district control room then refers the matter to the concerned police station throughwireless. The local police notes the message of PCR and district control room in theregister and then visits the site of crime.

In this way police cannot white-wash a crime. On arrival of the police team at the site ofcrime, necessary letter about the crime may be given to the police. In such cases throughcall at no. 100, the local police does register the case properly and issue proper F.I.R.After completion of initial formalities report about lodging of F.I.R. Is sent to police headquarter.

In case of serious crime like robbery, review visit is made by senior police personnel likeS.H.O. Or A.C.P.

In case of cognisable offence F.I.R is registered.

In case of non cognisable offence entry is made in separate register of rojnamcha or dailydiary (D.D.) Register if investigation is not required.

Original F.I.R. Is retained in the recordsFirst copy of F.I.R. Is sent to concerned magistrateSecond copy of F.I.R. Is sent to complainantThird copy of F.I.R. Is sent to investigation officerFourth copy of F.I.R. Is sent to A.C.P. Or D.C.P./A.S.P. Or D.S.P.

Now a day more and more police stations are issuing computerised F.I.R. Copy.

2.16. Daily diary (DD) register/Roj Naamcha

The local police notes in brief about the crime in the daily diary register serially; aninvestigation officer is earmarked for investigation, I.P.C. Section invoked is alsomentioned. This register is saved and kept in record. Courts can also call for DD registerfor verification. This register has all details like I.P.C. Or cr.P.C. Invoked, summery ofthe F.I.R., who was investigating officer, action taken, recovery or arrest details etc?

2.17 Police Hierarchy

Home guard

Constable

Head constable ( H.C.)


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He is the lowest ranking officer to investigate a case.He must be minimum 10 pass and Now a days even highly qualified are joining this rank.He has no star on his shouldeRs.

Assistant sub inspector ( A.S.I.)He has a star on his shouldersHe investigates grave cases.

Sub inspector ( S.I.)He has two stars on his shouldersSerious cases including cheating are marked to him forinvestigation.He can be chowki in charge also.

Inspector / Station House Officer ( S.H.O.)He has three stars on his shouldersSerious crimes including murder are marked to him forinvestigation.

Asst. Commissioner of police / asst. Superintendent of policeHe may be in charge of 2-3 police stations.He can supervise cases and can handle cyber crimes. .

Addl. ACP/ Addl ASP

Dy. Cp / Dy. Superintendent of PoliceHe can be district chief of police.

Addl. Dcp / addl. Superintendent of police

Jt. Dy. Cp / jt. Dy. Superintendent of police

Special commissioner of police / sp. Superintendent of police

Commissioner of police / superintendent of police

2.18. Investigating officer

Investigating officer is earmarked for investigation of the crime. He is responsible forvisiting the place of crime, conducting investigation, collecting necessary details of thecrime, and deal with the file / case for all purpose till finalisation. He presents the case tothe local magistrate and to the concerned court.


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2.19. The S.H.O.

The S.H.O. Of the police station or station house officer is the head of the police station.He does not involve directly with the complainant except in major cases. He makesnecessarily planning related to delegation of work, making strategy to catch culprits,stopping crime in his area, increasing patrol, communication with higher-ups like A.C.P./A.S.P., D.C.P. / D.S.P., C.P./ S.P., Magistrate etc.

2.20. Crime team

Crime team is there in every district. Some have dog squad as well. In case of seriouscrimes, help of crime team of the district is taken for photographer, fingerprints from thescene of crime, dog squad is also called for. Involvement of these departments is made incase of serious crimes and it is advised not to touch any thing till arrival of police orcrime team for taking finger prints.

2.21. Crime branch of the state

There are two DCP in the crime branch. One heads the traditional crime section and thesecond DCP may head the serious crime section.

In case of traditional crime, the DCP may be responsible for crimes like Robbery,Burglary, Dacoity, inter state crime, homicide, anti kidnapping etc. Each unit is headed by one A.C.P./ A.S.P. Entire state may be his jurisdiction. He can directly register F.I.R.Also. Cases may be referred by police stations also. Cases can also be taken up where noaction has been taken by local police.

In cases of serious economic offences, political cases, cheating cases above Rs. 1.oo croreetc. Economic offence wing of crime branch of state may be involved. Some of thedepartments of E.O.W. May be: -

1. Land and building,2. Cyber crime3. Fraud and cheating4. Anti forgery5. Intellectual property right6. Criminal breach of trust like siphoning of funds or over invoicing etc.

Now a days separate police stations are made at these crime branches of state and one canregister F.I.R with them directly in place visiting local police station.


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2.22. F.I.R is mandatory as per Insurance Company

It is mandatory in case of insurance claim to lodge proper F.I.R., otherwise insurancecompany would take no time to reject the insurance claim. In such cases of loss without proper F.I.R., the insurance company does not get subrogation rights in case of recoveryof stolen stock. As per law the local police are the only authority to take cognisance ofthe crime having been taken place. In case as per local police no such crime has taken place then the insurance company is also not in a position to take cognisance of the crimeand thus rejects the claim.

As such, mere letter to police detailing the loss is not enough unless proper F.I.R. U/s 154of cr.p.c. Is registered by the local police. The police will apply sections of I.P.C. Underwhich crime has been committed. If F.I.R. Is not registered by the local police inspite ofintimation to them, it may be presumed that local police is not convinced about the crimeand as such they have not registered F.I.R. In the absence of F.I.R insurance companiesdo not accept such claims. It is a pre conditioned of insurance claim that F.I.R. has to beregistered by the local police.

If the insured is not satisfied with the action taken by the local police, he may approachthe magistrate or court to direct the police to lodge F.I.R. Order of the court is enough proof for the insurance company to admit a claim, whether the local police does any thingor not after court order unless the police has proved that no such crime took place at all.

2.23. What to do if F.I.R. Is not registered by local police

1. One can again call number 100 and inform them that it is a double call case. Thesecalls may be referred to vigilance department of police who can make sure that the local police register F.I.R.

2. One can also meet A.C.P. Of the district if F.I.R. Is not registered.

3. One can also meet the magistrate of the district who can order the local police to lodgeF.I.R u/s section 156(3) of cr. P.c.

Every 2-3 months the district magistrate is updated about progress of F.I.R in all casesinvolving the 2-3 police stations under him.

2.24. Hierarchy of Magistrate and Courts

Judiciary -- MagistrateThey have 2-3 police stations under him.

Metropolitan Magistrate (M.M.)

Addl chief Metropolitan Magistrate ( A.C.M.M.)


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Addl. Session Judge ( A.S.J.)

Chief Metropolitan MagistrateAt district courts

Session Judge

High court at state level

Supreme court

2.25. Intimation of loss to police

Normally the person who first rings P.C.R. No. 100 does find mention of his name in theF.I.R.

The loss may have taken place in say m/s x & company but F.I.R. Can be lodged by thedirector, partner, owner or employee of the insured company saying that loss has taken place in m/s x & company due to burglary on dated at time by breaking locks of theshop / godown / factory door. As such it is not necessary that only the insured companyhas to lodge F.I.R. Mention of name of insured or his address is enough to cover the lossin the eyes of insurance company.

It should be ensured that correct address of the site of loss is mentioned in the F.I.R. Andthe same should tally to the address mentioned in the insurance policy.

Letter to the police can be given detailing the incidence of loss, estimated amountinvolved, brief detail of the loss in quantity / rate / value / time / date or even can be saidthat they will inform the local police after checking records. In such cases it is veryimportant that later on detailed information must be given to the police about the loss.Mostly people forget after lodging F.I.R and no one reads that in the middle of F.I.R. It iswritten that detailed information would be given to the police later on. Not providingdetailed information to the police may affect the insurance claim.

All letters including intimation letter, detailed letter of loss must be duly acknowledge bythe police by putting a sign, date and rubber stamp.


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2.26. Non Cognizable Offence Report (NCO)

In case of certain type of losses the local police does not register F.I.R. It is discretion ofthe police whether to convert the complaint to F.I.R. Or into daily diary. It is notnecessary to register F.I.R. For all cases.

Jewellery/Purse/Cash/Mobile Phone/Foreign Currency has been lost or stolen in aCinema Hall/Marriage/Market/Bus/Car/ Temple/while travelling and the same could not be traced. There is no doubt on any one.

Separate daily diary register is maintained by the police for such cases.

For such cases the local police can register non cognizable offence report and the samecan be sufficient for insurance claims. In such cases final report is not issued by local police.

However after some time the local police can close the case by writing on the noncognizable offence report itself that there is no arrest or recovery.

2.27. Loss due to Dacoity / Volumetric Exercise

Burglary involving 5 or more person is a case of dacoity u/s 391 of I.P.C. And the local police may make all efforts to make sure that there is no mention of 5 or more persons inF.I.R. Or in intimation letter to keep crime graph low. This may later on create trouble toinsured. He may have to prove how such a big burglary of stock could take place in sucha short time not involving say 10 persons. In case of volumetric / time / weight analysis prove that the weight of the stolen stock was say 3 tonnes and only a Tata 407 truck couldhave only transported it requiring about 10 persons. Each carrying say 20 k.g. At a timein three minutes could make 20 trips in one hour or 20 x 20 = 400 k.g. And involving 6 persons could have carried 400 k.g. X 6 persons = 2400 k.g. Keeping in view 100 metersdistance from the place of stock to truck. 1.5 minutes to carry, 1.5 minutes to return thusnot more then 2.4 tonnes or approx. 3 tonnes could be carried in the given time / personsinvolved / vehicle in a claim of loss of 3 tonnes. The volume of a Tata 407 truck isapproximate 1.5 feet height x 5 feet width x 9 feet length = 67.5 cubic feet. This volumehas to be enough to store the stolen stock.

2.28. Burglary and volumetric analysis

In the case of a burglary involving 50 cloth bales weighing about 40 k.g. Each cannot bestolen by two thieves manually. In such a case involvement of a vehicle to carry the stockis very important to justify the burglary. The security guard may state that he had seentwo thieves running with two bales and on being chased they left two cotton bales and ranaway. The owner may inform the police that 50 bales had been stolen and the police mayalso register F.I.R. And issue final untraced report later on. But the claim may not be


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justified on the ground that 50 bales weighing about 2000 k.g. Cannot be carried by two persons and as such mere lodging of F.I.R. Cannot be a reason to admit the claim.

Thus mention of time period of burglary, number of persons involved, mode oftransportation possibility is very important. Else it can land the insured into difficultcorner. One must mention the actual information to the police so that truth can easily fallinto place related to the burglary.

2.29. Section 457 in final report

Even if initially section 457 of I.P.C. For forcible entry has not been applied but later on police applies section 457 in final police report, then the loss may be said to be coveredunder the burglary policy. The police during investigation may find that it was really caseof burglary by using force as such initially in the F.I.R. They may book the case u/s 380of I.P.C. And may not initially apply section 457 but later on in final report they mayinsert section 457 of I.P.C. On being satisfied that loss has taken place by using forceonly. Even if police does not invoke section 457 of I.P.C. But mention breaking ofdoor/window etc. In the complain letter to police or similar mention in the F.I.R. May beenough to cover the claim under burglary policy.

2.30. Regarding Final Report By Police.

Usual final police report of untraced is issued by police when there is no arrest orrecovery. Normally untraced report is issued after 90 days of F.I.R.

In case of union territory like Delhi where police commissionarate are in force as per law,in these places police has judicial powers to issue final police report after 90 days ofF.I.R. Acceptance of final report by magistrate or court is not necessary.

Specimen of untraced report

F.I.R. No. .. Dated.. U/s . Lodged at police station . Is reported sent asuntraced in the absence of any arrest or recovery in spite of investigation. The casewould be reopened again if any fresh clue received.

Signed S.H.O / S.I. Date

This untraced report is enough for the insurance company to settle the claim. Normally,claims are not settled by the insurance company till final untraced report is received bythem. Though in the insurance policy there is nothing to suggest that final report isnecessary for settlement of a claim. It has only become customary to await final report.But in other states final report duly singed is filed by police with the magistrate andadmitted by court is necessary. It may take more then 6-9 months to issue such final


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report in other states. It contains full matter of F.I.R., section of I.P.C. Applied, stepstaken by police for investigation, final conclusion by police. The same is forwarded byconcerned police station to D.S.P. Office to the magistrate / court for acceptance of finalreport. The court can ask the complainant if he is satisfied about the outcome of policeenquiry and then only orders closure of the case. The whole process can take substantialamount of time of even more than a year.

The court accepted final report u/s 173 of cr. P.c. Is required by insurance company forsettlement of claim. An application, after paying required court fees, can be made to courtfor providing copy of final report.

Simply police attested final report is not acceptable to insurance companies, since policedoes not have judicial powers in other states to issue final report.

2.31. Challan / charge sheet by police

In cases where arrest has been made by police concerning the crime, local police submitscharge sheet / challan u/s 173 of cr. P.c. Against the criminals in the court of law. In suchcases final police report is not issued. The charge sheet / challan copy can be given to theinsurance company for settlement of claim. Though court case can go on for years forinsurance companies can settle the claim on the basis of charge sheet / challan withoutawaiting final verdict of court.

The charge sheet contains as follows:-

First columnComplainant

Second columnPersons not sent for trial or proclaimed offender

Third column Name and address of accused

(A) In custody, arrested to recover and can continue crime.(B) On bail or recognised, not arrested, charges sheeted, trial accused.

Fourth columnMiscellaneous other facts of the case.

If the crime section invoked requires maximum possible punishment less than 3 yearsas per I.P.C. Invoked, then its non cognisable offence and it is cognisable offence if


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requires maximum punishment is more than 3 years. Charge sheet has to be filedwithin 60 days of arrest if maximum possible punishment is more than 7 years.Charge sheet has to be filed within 90 days of arrest if maximum possible punishmentis more than 10 years.

2.32. Vernacular translation of F.I.R.

Matter of F.I.R. / final report / challan / charge sheet in local language is required to betranslated in English. Moreover police language itself is antiquated and cannot beunderstood in writing or even the wordings which are mix of English era/ king time / oldrulers time language. Oriental insurance H.O. Being in north cannot understand south /west / eastern languages. United India H.O. cannot understand northern local dialectsmixed of Urdu / Hindi. If a claim has to be settle at H.O. level, then translation is verynecessary in English.

2.33. Recovery / Superdari

In case part of stolen property is recovered from the criminals, the same is kept in the police custody / maalkhana for identification by the owner. Once the owner has identifiedthe stolen property, the custody may be handed over to the owner on the basis ofsuperdari by the court on application. Superdari means that owner has to safeguard it for production in the court till the case is finalised and crime is established against thecriminal. The owner cannot sell it or pass it on to others, the property received insuperdari.

The insurance company deducts from claim payable, the recovered property and only the balance claim is settled by them.

At the time of identification of stolen property or custody under superdari, properinformation must be given to insurance company / surveyor about deterioration of value /quantity resulting claim.

Should any deterioration in quality takes place in the recovered property, the loss of valuemay be considered in the claim by surveyor/insurance company.

2.34. Disadvantages Of Taking Property On Superdari Recovered

If the property has been recovered in some other city in that case insured has to go to thatcity court and city police station to obtain possession of the recovered goods at his owncost.

E.g. Car owner is in Delhi but his stolen car has been recovered in Jalpaiguri in WestBengal. Now insured has to go to Jalpaiguri police station and Jalpaiguri court at his owncost along with police to take possession of the car. He has to bring it back to Delhi in


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transport spending another say Rs. 8,000.00. Travelling cost including transportation costfrom some other city is not reimbursable under the insurance policy.

Now the insured has to visit the police station and court to take delivery of recovered property on bond. Having taken delivery does not mean that he can sell it or use it in themanner he wants. He has to safe guard it and produces it in the court as and when asked by the court.Property cannot be sold till case is finalised in the court.

The insured has to be present in the court as and when asked till finalisation of the case inthe court on every date. What if one is working in a company and cannot attend the courtdates regularly. Court warrant is issued to call such owners in the court.

Same is the case if in place of car, stock is recovered from by the police. The insured hasto say bear rent to store the property on superdari and still not being able to sell.Simultaneously pay interest to bank on the loan. The recovered stock may becomeuseless after lapse of considerable time and not saleable any more.

2.35. Mere F.I.R. Not enough after thought

The role of police is to catch culprits but not to prove quantum of loss. Sometimes it isseen that policy holder lodges F.I.R. Saying that e.g., jewellery has been stolen but lateron he finds that cash is insured under the policy. So later on he gives another letter to police that huge amount of cash has also been stolen. Had cash been stolen, then it wouldhave found strong mention in the initial F.I.R. Moreover, the source of cash if not proved.The insured never had huge amount of cash at home. The cause of keeping cash at homeis also not proved. Financial standing also does not substantiate the claim of loss of cash.In such cases mere lodging of F.I.R. And subsequent letter to police may not result intosettlement of cash claim being a case of after thought. Though police may not quash theF.I.R., they may end up issuing final police report but that does mean that the claim has to be settled by the insurance company. In such cases police F.I.R. cannot be sole reason / basis for settlement of claim.

2.36. No mention of stolen stock in F.I.R. / subrogation

Sometimes it is found that police has lodged F.I.R. For genuine case of burglary of saycash but later on insured says that he has lost stock also in burglary. He proves in booksof account that stock had also been stolen but there is no mention in F.I.R. / final policereport that stock has also been stolen. Insured mentions in F.I.R. That he will give detailsof other stolen items later on after checking books of account but he never gives details tothe police. If the stock is recovered later on, then the insurance company cannot getsubrogation rights to recover the stolen goods from the police since there is no mention ofstocks having been stolen in F.I.R. or in final report. As such insurance company may not


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settle such claims pertaining to stock loss unless found mentioned in the F.I.R. Or final police report. The insurance company cannot get proper subrogation rights from theinsured.

2.37. Police status report

Status report about recovery or arrest or investigation may be obtained from police beforesettlement of a claim. If final report cannot be issued even after 90 days has past after theloss.

Chapter 3 fire claimFire insurance coverage is given for:-

1. Building,2. Machinery and accessories,3. Stock and stock in process4. Furniture, fixtures and fittings.

Insurance of valued policy

In case of insurance of items like work of art, old machinery, manuscript valuationcertificate as acceptable to insurance companies should be provided for insurance ofvalued policy.

Source of fire excludedLoss to electrical machines, fixture or fittings arising from over heating, excessive pressure, short circuiting, leakage of electricity to machines, fixtures, apparatus directlyaffected shall be excluded from the loss. How ever consequential or subsequent to othermachines, apparatus, and fixtures shall not be excluded. In other words the place fromwhere fire started is excluded for the purpose of fire loss. If say fire stated from mainelectrical switch then loss to main electrical switch is excluded and cannot becompensated to the insured. How ever as a result of fire, other machines and buildingincluding fixtures were also affected and damaged, they would be indemnified under thefire policy claim.

Papers required in case of fire claim

The surveyor has to understand the business of insured first and then only proceed withsurvey and assessment of claim. Nobody knows your company better than you.

1 Profile of the company/ nature of business/ sister concern/directoRs. Is the factoryon rent or self owned?


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Profile of the company gives a brief idea about the company and its working. It helps inknowing business of the insured.

2. Copy of fire insurance policy.

Copy of fire insurance policy is required so that one can check sum insured under the policy, what items are covered under the policy, what is the policy period, whether therisk is covered under the policy or not, whether address where loss took lace is covered inthe policy or not etc. Policy number is generated in system after the insurance policy isissued. The policy number contains branch code, nature of insurance, year of insuranceand policy number.

3. Intimation letter to insurance company.

Letter given to insurance company about the loss covers some of the basic facts about theloss as revealed by the insured. What is the proximate amount of loss? How the loss took place etc. Immediately on sending intimation letter about a claim, claim number isgenerated by the insurance company in their system. Reference to this claim number ismade till the claim is settled. One can ask for claim number from the insurance companyafter lodging insurance claim. Intimation letter should also contain policy number underwhich claim has been lodged.

4 Claim form with details of items lost.Claim form is issued by the insurance company. Once the claim on the basis of intimationletter is registered. Claim form is needed for details of loss, quantity, what is amount ofloss etc. Claim form duly filled up may be given to the insurance company or to thesurveyor during survey.

4. Proposal form.Proposal form is required to see the intention of the insured for coverage of items, whatare the items stated in the proposal form. Insurance policy is issued on the basis of proposal form.

A. Re: police/fire brigade

1. Letter to police/police report.In case of fire, letter is given to the police mentioning about the fire. Copy of letter to police is taken in order to check whether the fire loss information was given to police ornot. Any information given to police for the first time is taken as the correct information.

2. Fire brigade report.Fire brigade report reveals cause of fire. In the report of fire brigade it is clearly writtenfrom where fire started/cause of fire/how many water tank were used/what is the exact


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time of arrival of fire brigade vehicle/list of damaged items. Fire brigade reports playsvital role.

3. Letter to police

The local police also gets involved to make sure that the fire has not taken place due tomischief or if it is intentional or genuine.

4 Newspapers cutting about fire. Newspaper cutting gives good evidence/proof about the fire.

5 Detailed write up of the incident of fire, how it was discovered etc.What is the starting point of fire/ who had first seen the fire/ when information was sentto police and fire brigade.It helps the surveyor to know about the exact detail as to how fire took place. Whathappened when insured came. How he came to know about the fire, what steps he hadtaken after knowing that fire had taken place. When did he inform the fire brigade andthe insurance company about the loss?

Copies of balance sheet of last three years obtained from c.a. / banks. This would revealdepreciated value of building, stock and machines over the last three years.Copies of sales tax / vat returns.Weight of debris to original (to some extent).

Fire brigade report. This report would contain details of damage to building, machines,and stock. Cause of fire would be explained.Police report. Information to police is must in case of fire. They in turn inform fire brigade. The local police ensure that it is not a case of intentional fire.Statement of owner / staff / witness about business and fire.Copy of newspaper cuttings about the fire loss

Newspaper cutting gives some idea about the loss/damage / incidence.

Map of the place detailing near by location and location of machines and store godown.Bank liabilities. Sanction letter from bank and liabilities on account of building, machines

and stock may be verified.Manufacturing process. Flow chart of production process and showing use of machinestill final production may be made.Market report of insured about credit worthiness. Whether the insured heavily indebted inthe market. Did have bad financial repute and not being able to sell his stock. Could hehave interest in the fire? Not being able to run a factory, one can take interest in the fire.Such cases need detail investigation. Was the business going on smoothly till date ofloss?


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3.1. Re. Fire loss to machines

Cost of machines as per bills and proof of payment duly supported by bank statement,machine suppliers ledger, machine purchase ledger and verification from the supplier.The use of the machine has to be explained in the production process. Present value ofmachines duly supported by quotation has to be produced from few suppliers of similartype of machines to verify if prices have gone up or down. Repairing option may also beworked out to find if it would be cheaper to allow repair or depreciated value less ofsalvage.

For salvage value advertisement may be given in news paper or offer may be taken fromfew salvage dealeRs. Salvage value may be deducted from the assessed loss of machines.

For the purpose of adequacy of insurance, total value of depreciated machines at the timeof fire may be compared with the sum insured. In case of under insurance suitablededuction may be made from the assessed loss.

In case of fire heat may raise causing damage to sensitive parts of the machine. Metal parts may expand and contract due to pouring of water by fire brigad

Documents

Insurance Book.pdf