The document provides guidelines for general insurance policies, including important points to consider when taking out a policy or making changes. Key guidelines include ensuring all business locations are specified accurately in the policy, sums insured reflect the true value of assets, and clauses are included to ensure coverage of items not explicitly named. It also recommends reviewing policies annually and consulting an insurance advisor for specialized risks or large policies.

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Important Guidelines for your
general Insurance Policies
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S&A Knowledge Series
Prepared by Ashim Kr Srivastava Partner (Insurance and Risk)
www.sethspro.com info@sethspro.com New Delhi | Lucknow | Coimbatore

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Below are some key pointers which should be taken care of while taking an insurance
policy or actions in the current situation.
1. LOCATION OF BUSINESS
a. Name and address of the firm / company should be printed on the face of the
policy. In the normal circumstances, address mentioned in the policy is place of
working/stocking but many times it has been seen that place of working, stocking
are separate locations, thus all those locations need to be included in the policy to
have coverage under the policy for all business places. In case there are 3 or 4
shops in a row then all the shops should be included in the policy with complex
name, road- street name etc. If there is any change in the location of risk due to
shifting or having new place kindly ask the Insurance company to suitably amend
and there should a proper endorsement.
b. Location of risks column should be seen minutely in the policy and if location of
stock / business place is missing, same needs to be included in the policy.
Basement (if any) to be specifically included in policy (underwriter normally puts
word “Basement warranty” meaning thereby no claim is payable for basement
stock loss).
2. SUM INSURED
a. Stock to be valued and insured at cost or market value whichever is less (inclusive
of GST). If someone has stock of more than Rs. 2 crores and there is regular
fluctuation of stock in that case it is advisable to take full cover.
b. In case there is regular fluctuation in stock levels on a month to month basis then
declaration policy should be taken to save the premium. (One has to declare the
stock on monthly basis and premium will be adjusted at the end of the policy

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period, insured will be refunded extra premium paid subject to minimum
retention of 50%).
c. For business like Laundry, repairing shop, Job work or contract manufacturer,
kindly mention the word “stock / goods held in trust” in the policy to cover such
stock. This can be done in the other business also where there is possibility of
having customer’s good in the premises for which insured is responsible. (Like
mobile & computer shops).
d. With regard to Insurance of building, factory & plant and machinery there are two
ways.
i. (Value) first market value which is present day market value (say after
depreciation)
ii. RIV (Re Instatement value) means old verses new. Under this formula one
has to insure the risk at higher value in order to get higher/ latest value
claim. RIV clause needs to be there in policy, this is normally issued to
large/ high risk insurance with proper pre inspection by risk analyst.
e. For trading business stock, sometime specific name of covered items is given. It is
better to avoid this because many a times items not named in the policy are not
covered. Better to include words like “Stock pertaining to insured trade including
packing material”.
f. For manufacturing units, it is desired to have words like “All types of raw material,
consumables, inputs, semi-finished/stock under process, finished stock, by
product and packing material” as part of stock coverage.
3. OTHER IMPORTANT POINTS
a. Insured should include a specific clause “Designation of property clause” this will
ensure that in case of loss, description/ classification of items stated in the books
of accounts will be read and not what is written in the policy. For example, there
is always a confusion for items like plant & machinery, office equipment, electrical
fittings, computer, hardware. Insurance company normally do not allow claim if
the specific items are not covered. In case if the insured includes “Designation of
property clause” then classification of assets as per books of accounts shall be read
and claim will be dealt accordingly.
b. For building/ civil work word “Plinth and foundation” to be included in the clauses
with earthquake coverage (Normally Insurance company issue policy for super
structure only thus avoiding loss in case of earthquake.)

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c. Ensure your security items like alarm, firefighting equipment, CCTV and other
security measured as stated in the policy or in proposal form are in operating
condition. During claim processing surveyor look at such things.
d. Occupancy of premises : This is very important due to Corona-virus issue
where shops / factory/ godown / place of working / office ( other essential
commodities/ services ) will remain shut for more than 30 days and
Insurance company does not cover loses which remains non occupied
premises, thus there is urgent need to write/ intimate to the Insurance
Company that you want to cover the risk during lock down period and if any
extra premium required to be paid then you should be ready to pay for this
extended cover.
e. Professional Indemnity policy for Doctors and Hospitals, CA, Advocate, Product
liability risk, Event management risk, Jewellers block policy, LPG Distributors,
Petrol pump, Hotel & Restaurants, Money Insurance, Fidelity Insurance etc to be
taken after consulting risk advisor / Consultant.
f. For large risk & new setup it is better to take policy in consultation of risk advisor
to have full coverage of risk with lesser premium burden. Try to avoid Bank
imposed policy since they are unaware of Insurance risk which later on may
create problem / or engage Risk Consultant to have dialogue with Banker
before taking any policy.
g. If the firm / Company is insured through their Banker, do ask for the policy copy
and review the entire policy in the light of above submission. Take Insurance
advisors help wherever necessary to avoid any claim related issue later on.
h. Prepare a dairy for Insurance risk including your Factory, Office, Godown, Shop,
Stock, Home, Car/Vehicle, Transit insurance, Medical Insurance etc for regular
renewal and also see the above-mentioned point to have proper and adequate
coverage.
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The information herein contained is of a general nature and is not intended to address
the circumstances of any particular individual or entity. Although we endevour to
provide accurate and timely information, there can be no gurantee that such
information is very accurate and considers the latest amendment in laws which are
very frequent. The above is purely for academic reading and general awareness of the
law. No one should act on this information without appropriate professional guidance
which requires a thorough exemation of a particular situation.
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New Delhi | Lucknow | Coimbatore