Vous êtes sur la page 1sur 53












2 11-27
3 28-35
4 36-39






8 49-53







Commercial insurance is insurance for a business. In fact, it is one of the most important
investments a business owner can make. Commercial insurance can be instrumental in protecting
a business from potential loss caused by unforeseen and unfortunate circumstances.
Commercial insurance can provide valuable protection against such things as theft, property
damage, and liability. It can also provide coverage for business interruption and employee
injuries. A business owner who chooses to operate a business without insurance puts his
enterprise at risk of losing money and property in the wake of an unfortunate event. In some
situations, a business owner may even place personal money and property at risk by failing to
secure adequate commercial insurance.

Whether you are contemplating starting a new business, are a new business owner, or have
owned a business for many years, commercial insurance can be one of the most important
ongoing financial investments you make in the life of your company. Operating a business is


extremely challenging without having to worry about suffering significant financial loss due to
unforeseen circumstances. Commercial insurance can protect from some of the most common
losses experienced by business owners such as property damage, business interruption, theft,
liability, and worker injury. Purchasing the appropriate commercial insurance coverage can make
the difference between going out of business after a severe loss or recovering with minimal
business interruption and financial impairment to your company’s operations.
Commercial insurance performs a critical role in the world economy. Without it, the economy
could not function. Insurers essentially protect the economic system from failure by assuming the
risks inherent in the production of goods and services. This transfer of risk frees insured
companies from the potentially paralyzing fear that an accident or mistake could cause large
losses or even financial ruin.

Organizations need to reduce both internal and external risks. They also require to safeguard
their business against unforeseen circumstances/events. Insurance companies are catering to
small, medium and large scale companies to minimize their risk. Good Insurance advice can save
time, money and worry. Insurance companies undertake complex procedure to evaluate and
review the impact of any change in commercial activity or new ventures.

Since the first fire insurance policies were written in the 1700s, it has responded to new types of
risk by creating new coverages to protect its policyholders and carving out niche products to
respond to the needs of specific industries. Recent examples of this are technology errors &
omissions and cyber-risk liability, both of which were developed in the late 1990s to address
risks involved in such businesses as personal information data processing.

The convincing boom of corporate sector in India has given a new definition to commercial
insurance in the country. Proper risk management against any kind of disaster is the mantra of
successful business and other commercial ventures. The function of risk management is to
provide safety against any kind of internal or external hazard. Commercial insurance companies
in India offer products which suit the business and corporate needs and provide the commercial
avenues all kind of safety and security.
The value of premium for providing coverage to commercial ventures and corporate sectors is
determined on the basis of a few factors which include:


i. Nature of the commercial venture

ii. Size of the organization
iii. Type of the industry
iv. Strength of the employees
v. Annual turn over of the business.


1. The act, system, or business of insuring property, etc., against loss or harm arising in specified
contingencies, as fire, accident, or the like, in consideration of a payment proportionate to the
risk involved.


2. Coverage by contract in which one party agrees to indemnify or reimburse another for loss
that occurs under the terms of the contract.
3. The contract itself, set forth in a written or printed agreement or policy.
4. The amount for which anything is insured.
5. An insurance premium.
6. Any means of guaranteeing against loss or harm.

The convincing boom of corporate sector in India has given a new definition to commercial
insurance in the country. Proper risk management against any kind of disaster is the mantra of
successful business and other commercial ventures. The function of risk management is to
provide safety against any kind of internal or external hazard.
Commercial insurance can provide valuable protection against such things as theft, property
damage, and liability. It can also provide coverage for business interruption and employee
injuries. A business owner who chooses to operate a business without insurance puts his
enterprise at risk of losing money and property in the wake of an unfortunate event. In some
situations, a business owner may even place personal money and property at risk by failing to
secure adequate commercial insurance.




The most common types of commercial insurance are property, liability and workers'
compensation. In general, property insurance covers damages to your business property; liability
insurance covers damages to third parties; and workers' compensation insurance covers on-the-
job injuries to your employees. Depending on your business, you may want additional
specialized coverage’s. Listed below are some of the different types of commercial insurance.


Property insurance pays for losses and damages to real or personal property. Property insurance
provides protection against most risks to property, such as fire, theft and some weather damage.
Property is insured in two main ways - open perils and named perils. Open perils cover all the
causes of loss not specifically excluded in the policy. Common exclusions on open peril policies
include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war.
Named perils require the actual cause of loss to be listed in the policy for insurance to be
provided. The more common named perils include such damage-causing events as fire, lightning,
explosion and theft. For example, a property insurance policy would cover fire damage to your
office space.

i. Boiler and Machinery Insurance:

Boiler and machinery insurance sometimes
referred to as "equipment breakdown" or
"mechanical breakdown coverage," provides
coverage for the accidental breakdown of boilers,
machinery, and equipment. This type of coverage
usually will reimburse you for property damage
and business interruption losses. For example,
this coverage would cover fire damage to


ii. Debris Removal Insurance:

Debris removal insurance covers the cost of
removing debris after a fire, flood, windstorm,
etc. For example, a fire burns your building to
the ground. Before you can start rebuilding,
the remains of the old building have to be
removed. Your property insurance will cover
the costs of rebuilding, but not of removing
the debris.

iii. Builder's Risk Insurance:

Builder's risk insurance covers buildings while they are being constructed. For example, a
Builder's risk policy would cover losses if a windstorm takes down your partially
constructed condominium complex.

iv. Glass Insurance:

Glass insurance covers broken store windows and plate glass windows.

v. Inland Marine Insurance:

Inland marine insurance covers
property in transit and other
people's property on your
premises. For example, this
insurance would cover fire-damage
to customers' clothing from a fire
at your dry cleaning business.

vi. Business Interruption Insurance:

Business interruption insurance covers lost income and expenses resulting from property
damage or loss. For example, if a fire forces you to close your doors for two months, this


insurance would reimburse you for salaries, taxes, rents, and net profits that would have
been earned during the two-month period.

vii. Ordinance or Law Insurance:

Ordinance or law insurance covers the costs associated with having to demolish and
rebuild to code when your building has been partially destroyed (usually 50 percent). For
example, your three-story building is 100 years old. A flood destroys the basement and
first two stories. Because more than 50 percent of your building has to be rebuilt, a local
ordinance requires that the building be completely demolished and rebuilt according to
current building codes. Property insurance covers only the replacement value, not the

viii.Tenant's Insurance:

Commercial leases often require tenants to carry a certain amount of insurance. A renter's
commercial policy covers damages to improvements you make to your rental space and
damages to the building caused by the negligence of your employees.

ix. Crime Insurance:

Crime insurance covers theft, burglary, and robbery of money, securities, stock, and
fixtures from employees and outsiders.

x. Fidelity Bonds:
A Bond company covers losses due to a bonded employee's theft of business property
and money.



This commercial insurance provides coverage for injuries caused by a business concern or the
individual business owner to third parties as a result of which the person or another business
concern so affected may sue either the business concern or the individual business owner for
personal injuries or property damages. This kind of a commercial insurance policy makes
payments towards the insurance claimed by the policy holder for the cost of defending and
resolving the law suit brought against him or her.

In contrast, a general commercial liability insurance policy will only provide coverage to the
policy holder for the common risks such as customer injuries on the premises of the business
Liability insurance is a part of the general insurance system of risk financing. With increased
globalization the need for liability insurance is gaining importance. Be it manufacturing unit or a
service industry, every industry segment is exposed to liability claims. With increased awareness
of one’s rights, the number of such claims has increased many folds over the years. With
Globalization such types of claims, has crossed the geographical limits. Apart from the huge
outgo in such types of claims, a huge amount is spent on the litigation process, thereby crippling
the company’s financials. As such it becomes all the more vital to be properly equipped to fight
such unwelcome situations. Liability insurance is designed to offer specific protection against
third party claims, i.e., payment is not typically made to the insured, but rather to someone
suffering loss who is not a party to the insurance contract. In general, damage caused
intentionally and contractual liabilities are not covered under liability insurance policies. When a
claim is made, the insurance carrier has the right to defend the insured. If someone sues for


personal injuries or property damage, the cost of defending and resolving the suit would be
covered by the liability insurance policy. A general liability policy will covers common risks,
including customer injuries on company premises. More specialized varieties of liability
insurance include:

i. Errors and Omissions Insurance:

Errors and omissions ("E & O") insurance covers inadvertent mistakes or failures that cause
injury to a third party. The act must actually be an inadvertent error, and not merely poor
judgment or intentional acts. Legal liability cover for the liability claims by third parties, on
account of the bodily injury or property damage arising out of services offered or which should
have been offered by the Insured as a part of their profession. The policy is ideal for all those
engaged in service industry, including medical practitioners, architects, engineers, software firms
etc. For example, an E & O policy would cover damages arising from an insurance agent failing
to file policy applications, or a notary forgetting to fill out notarizations properly.

ii. Malpractice Insurance:

It generally covers the payments which may arise out of a professionals defense costs and/or any
judgment or settlement in case the concerned insured professional causes injury to a third party
by conducting below par. These kind of professional liability insurances are issued to doctors,
dentists, accountants, real estate agents, architects, and all professionals. Malpractice insurance,
or professional liability insurance, pays for losses resulting from injuries to third parties when a
professional's conduct falls below the profession's standard of care. For example, if a doctor
makes a mistake that other doctors of his specialty would not have made, his patient might sue
him. A malpractice policy will pay his defense costs and
any judgment or settlement. Malpractice insurance is
available for doctors, dentists, accountants, real estate
agents, architects, and other professionals.


iii. Automobile Insurance:

Commercial Automobile Insurance provides insurance coverage for the vehicles used for the
purposes of conducting business and also to make payments towards the persons who may be
injured by the same. Vehicle insurance (also known as auto insurance, car insurance, or
motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use
is to provide protection against losses incurred as a result of traffic accidents and against
liability that could be incurred in an accident. Commercial automobile policies cover the
cars, vans, trucks and trailers used in your business. The coverage will reimburse you if your
vehicles are damaged or stolen or if the driver injures a person or property.

iv. Directors' and Officers' Liability Insurance :

It provides insurance coverage in order to make payments towards the legal cases that may
be filed against the directors and officers belonging to corporations and nonprofit


The Policy covers liabilities falling on the employers for death or injury
sustained by his employees who falls in the category of `workman’ as
defined in the Workmen Compensation Act. The Policy covers statutory
liability as well as liabilities arising under Common Law. The employees
not falling under the definition of `workman’ can be covered under the
Common Law. The Policy primarily includes the liabilities towards the employees, whilst on
work. Medical expenses can also be covered at the Insured’s options. The premium depends on
the annual wages disbursed to the employees and the type of work the employee is engaged in.
Workers' compensation insurance covers you for an employee's on-the-job injuries. Businesses
with employees are required by various state laws to carry some type of workers' compensation
insurance. In most cases, workers' compensation laws prohibit the employee from bringing a
negligence lawsuit against an employer for work-related injuries.Most employers purchase
workers’ compensation insurance plans from insurance companies specifically designed to
provide workers’ compensation insurance benefits. In some countries, these are mandatory, with
the exception of a few jurisdictions that allow larger companies to insure themselves. Smaller


companies, however, such as those with just a handful of employees, need not purchase such

The goal of workers’ compensation insurance is to get the injured employee back on his feet and
working again as quickly as possible without causing the employer unnecessary hardship or loss
of business.


I. Agriculture Insurance:
Agricultural Insurance provides the farmers
insurance coverage and financial help in time of
their needs. India is a land of agriculture and a
vast majority of people depends on this
profession. Agriculture in India is vulnerable to
many kinds of damages which are caused by
natural calamities like flood, excessive rain and
hail-storming, diseases and pests which play
havoc on the crops. Agricultural insurance
schemes provide the farmers financial support in
case they are caught in any undesired situation which proves fatal to their crops.
Agricultural Insurance in India mainly covers the agricultural lands which are spread over rain-
soaked areas. The farmers in India having their lands in the flood and rain affected regions often
bear the brunt of the nature. The agricultural lands are washed away by excessive rain causing
flood which damages crops. Sometimes, crops are attacked by pests or they die of diseases.
These types of sticky situations often prove very fatal for the farmers.
To save the farmers from these kinds of difficult situations, there are several agricultural
insurance companies in India. These companies compensate the losses of the farmers done by
any natural calamity. Besides, Crop Insurance schemes in India also encourage the farmers for
implementing progressive farming techniques through the usage of technologically rich
agricultural apparatus and high value in-puts.
Agricultural Insurance schemes in India are looked after by Agriculture Insurance Company of
India Limited (AIC) which has been formed by the Government of India. The national


corporation of agricultural insurance was set up in the larger interest of the farmers. Agriculture
Insurance Company of India Limited (AIC) promotes 5 other organizations, each of them having
individual percentage of share holdings.
India is an agrarian society with 75% of the population depending on it, for their livelihood.
Agriculture or crop insurance has assumed importance with large scale damage caused due to
pest attacks, crop diseases and vagaries of weather. The objective is to provide insurance
coverage and financial support to the farmers in the event of failure of any of the notified crop as
a result of natural calamities, pests & diseases. The list of crops being covered for insurance
differs from state to state. Generally quite a few Kharif and Rabi season crops are covered. These
crops are insured at the community/block/gram panchayat levels. Agriculture insurance schemes
are of immense help to farmers, providing them with financial security.

Calculation of Agriculture Insurance Amount/Premium:

The amount of premium depends on a number of factors like size of land of the farmer, his
financial standing, number of crops being insured and the sum insured.

Agriculture Insurance Claim Procedure:

Farmers can claim from the banks by submitting a claim form. The claim representative will
analyze the extent of damage caused to the crops. Based on the report of the surveyor, the claim
is given to farmers within a month.

Documents Required for Agriculture Insurance Claim:

1. The farmer must approach the designated branch / PACS and submit the proposal form in the
prescribed format.
2. The farmer must provide documentary evidence in regard to the possession of cultivable land
(copy of the pass book and extract.
3. Land revenue receipt should be enclosed
4. The farmer must furnish area sown confirmation certificate, if required.

List of Some of Insurance Companies Offering Agriculture Insurance:

○ Agriculture Insurance Co. of India - Varsha Bima
○ United India Insurance Co. - Rural Policies


II.Fire Insurance:

Fire Insurance is governed by All India Fire

Tariff effective from 31.3.2001 issued by
Tariff Advisory Committee, a Statutory Body.
It is a commercial policy covering building,
offices, machinery, contents and personal
belongings of the office. It mitigates the risk
of loss of customers arising from fire
breakout. The insured should take all possible
steps to minimize the loss.

What are the risks covered under fire insurance?

Fire insurance business in India is governed by the All India Fire Tariff that lays down the terms
of coverage, the premium rates and the conditions of the Fire Policy. The fire insurance policy
has been renamed as Standard Fire and Special Perils Policy. The risks covered are as follows:
Destruction or damage to the property insured by its own fermentation, natural heating or
spontaneous combustion or its undergoing any heating or drying process cannot be treated as
damage due to fire. For e.g., paints or chemicals in a factory undergoing heat treatment and
consequently damaged by fire is not covered. Further, burning of property insured by order of
any Public Authority is excluded from the scope of cover.
Lightning may result in fire damage or other types of damage, such as a roof broken by a falling
chimney struck by lightning or cracks in a building due to a lightning strike. Both fire and other
types of damages caused by lightning are covered by the policy.
Explosion/ Implosion:
Explosion is defined as a sudden, violent burst with a loud report. An explosion is caused inside
a vessel when the pressure within the vessel exceeds the atmospheric pressure acting externally
on its surface. An explosion may cause fire damage or concussion damage.
Implosion means bursting inward or collapse. This takes place when the external pressure
exceeds the internal pressure. This policy, however, does not cover destruction or damage caused


to the boilers (other than domestic boilers), economizers or other vessels in which steam is
generated and machinery or apparatus subject to centrifugal force by its own explosion/
implosion. These risks can be covered in a Boiler & Pressure Plant Insurance Policy, which is
specially designed to handle these risks.
Bush Fire:
This covers damage caused by burning, whether accidental or otherwise, of bush and jungles and
the clearing of lands by fire, but excluding destruction or damage caused by Forest Fire.

Calculation of Fire Insurance Amount/Premium:

The market value of the property is considered while insuring the sum. The amount of premium
depends on a number of factors and individual policies of different insurers.

Fire Insurance Claim Procedure:

Individuals/corporates must inform insurer as early as possible, in no case later than 24 hours.
Provide relevant information to the surveyor/claim representative appointed by the insurer.
The surveyor then analyzes the extent/ value of loss or damage.
The claim process takes anywhere between one to three weeks.

Documents Required for Fire Insurance Claim:

1. True copy of the policy along with schedule.
2. Report of fire brigade.
3. Claim Form
4. Photographs
5. Past claims experience

List of Some of Insurance Companies Offering Fire Insurance:

○ ICICI Lombard - Fire and Special Perils Policy (Material Damage)
○ United India Insurance Co. - Standard Fire and Special Perils Policy

III.Industrial Insurance:


Industrial insurance
is a comprehensive
policy covering a
gamut of products.
This is a specially
designed policy
covering any kind
of loss or damage
caused to the
products it covers.
This policy is a
Comprehensive Package Policy which covers almost all risks and perils, which a large industry
may face during its operation. This policy covers Buildings, Machinery, Furniture, Fixtures,
Fitting & electrical installations on Reinstatement value, while the stock is covered on market
value basis. Underinsurance on each item of the schedule will be ignored if it does not exceed
15% of sum insured. Policy also covers equipments and machinery sent for repairs outside the
premises for a period of 60 days. Transit risk inside the compound of an industry is also covered.

Covered Risks:
Bursting and overflowing of water tanks, apparatus and pipes, Deterioration of stocks due to
power failure following damage to premises of public power stations and electric service feeders
(for Cold Storages), Forest fire, Leakage and Contamination cover, Spoilage Material Damage
cover, Sprinkler leakage cover, Subterranean fire, Spontaneous and Landslide cover, Burglary
(other than Larceny), Machinery Breakdown/Boiler explosion/Electronic Equipment, Business
Interruption following fire, Business Interruption following Machinery Breakdown.

Major Exclusions:
Damage to the property caused by faulty or defective design materials or workmanship, inherent
vice, wear and tear etc. Interruption of water supply, gas, electricity or fuel systems. Collapse or
cracking of the building. Willful act or gross negligence. War, Invasion, mutiny, rebellion,


revolution etc. Damage direct or indirect by nuclear weapons material and contamination by

Calculation of Industrial Insurance Amount/Premium:

The sum insured is generally equal to the market value of the equipment/machinery being
insured. The insured amount also includes cost of installation, duty, taxes, freight etc. If the
amount insured is less than the market price, then the claims are paid proportionately.

Industrial Insurance Claim Process:

Insured should inform the insurer's office by phone, letter or fax.
Necessary steps should be taken to minimise the loss.
Obtain estimate of repair from repairer of your choice.
The claim process takes anywhere between one to three weeks.
Submit this repair estimate and claim form to the surveyor deputed by the insurance company.
After getting clearance from the surveyor, proceed for repairing machine or ordering for
Submit actual bills of repair/replacement with proof of payment to the surveyor The claim

Documents Required for Industrial Insurance Claim Process:

1. Copy of FIR
2. List of loss/damage of stock/equipment
3. Claim Form

List of Some of Insurance Companies Offering Industrial Insurance:

○ ICICI Lombard - Industrial Plan
○ United India Insurance Co. - Industrial Plant & Machinery Policy
○ The New India Assurance Co. - Industrial Products

IV.Marine Insurance:
Since time immemorial, merchants engaged in
maritime commerce have explored ways to ensure
the security essential for the transportation of their


merchandise. The onslaught of the perils of the sea has always threatened the safe passage of
goods across the seas and frontiers.
Respite from this burden of trade was only possible through mutual aid and assistance. Traders
pooled together a fund that could be utilised in the contingency of their partner. Thus became the
foundation of what today is popularly known as Marine Cargo Insurance.
Marine Insurance is the oldest form of insurance in the world. In the olden days, London as the
centre of the British Empire, had the greatest share of the world's trading and commercial
activities and it was here that marine insurance principally developed.
Marine insurance falls under commercial insurance. The policy is taken to reduce business risks.
It caters to small scale business organizations to large corporates. Policy does not cover loss or
damage due to willful misconduct, ordinary leakage, improper packing, delay, war, strike, riot
and civil commotion.

Different types of Marine Insurance are available:

1. Marine import transit insurance
2. Marine export transit insurance
3. Marine inland transit insurance
4. Marine insurance claim procedure

Calculation of Marine Insurance Amount/Premium:

Amount of premium depends on factors like nature of cargo, scope of cover, packing, mode of
conveyance, distance and past claims experience. Premium can be paid on a
monthly/quarterly/half-yearly/yearly basis.

Marine Insurance Claim Procedure:

In case of loss/damage in transit, a monetary claim should be lodged with the carrier within the
time limit to protect recovery rights
Appointment of surveyor or claim representative in agreement with the insurer to determine the
nature, cause and extent of loss/damage
The surveyor informs the insurer of the approximate value of loss incurred

Documents Required for Marine Insurance Claim:


1. Original Invoice & packing List - if forming part of Invoice

2. Document of declaration of consignment
3. Damage Certificate from the carrier

List of Some of Insurance Companies Offering Marine Insurance:

○ ICICI Lombard - Marine Import Transit Insurance Policy
○ United India Insurance Co. - Marine Cargo
○ The New India Assurance Co. - Marine Cargo Policy.

V.Shop Insurance:
Shop Insurance is specially designed to
meet the needs of small shopkeepers.
For any retailer, the shop is not only an
asset but also is his/her main source of
income. Retailers shudder to think
about anything that could go wrong
with their premises. But calamities do
happen and it is very important for


them to safeguard their premises. The shopkeeper insurance policy is specifically designed to
cover all the risks and contingencies faced by small or medium-sized shop owners. It provides
protection for the property and the interests of the insured (and their partners) in the business
venture. As a shop owner, once you buy a shop insurance policy, the insurer agrees to cover you
for losses incurred in natural and manmade calamities. The sum insured depends on the value of
your shop and the value of the contents of the shop. The value of the shop is calculated on the
basis of the estimated cost of rebuilding it completely. The contents of the shop are assessed
according to their value at the time of purchasing the shop insurance policy. The valuation would
also include electrical and mechanical appliances in the shop.
It is a comprehensive insurance, catering to different insurance needs of shopkeepers. One
policy per shop is generally given by insurers. It covers damage/ loss to shop due to fire,
burglary, riot, strike, loss of money in transit, fraud committed by client's employees etc. The
policy is meant for shops only, hence restaurants and tea /coffee shops cannot be insured under
this insurance policy.

Covered Risks : The coverage provides for damage to the building against fire and its associated
perils due to natural or man-made calamities.
Natural calamities include fire, lightning, earthquake, fire, landslide and rockslide damage,
floods, inundations, storms, tempests, typhoons, hurricanes, tornados, or cyclones.
Man-made calamities include explosion of gas in domestic appliances, bursting and overflowing
tanks or pipes, damage caused by aircrafts, riots, strikes, malicious or terrorist acts, and impact
Exclusions :
Insurance companies are selective about the risk covers they offer in shopkeepers' insurance
policies. For instance, some may charge an additional price for cover against terrorist activities.
Others may enforce deductibles that expect you to pay a portion of the claim amount.
Loss, destruction or damage caused by:
War, invasion, foreign enemy hostilities, war-like operations, civil war, mutiny, civil commotion
Nuclear activity
Pollution or contamination.

Calculation of Shop Insurance Amount/Premium:


The shop is generally insured on a market value basis less the depreciation cost. Articles in the
shop are insured on cost price. Premium amount may vary from insurer to insurer and the
number of sections a person is availing under the policy. Discount in premium is sometimes
given by companies depending upon the number of sections opted for by the insured. Premium
can be paid on a monthly/quarterly/half yearly/ yearly basis.

Shop Insurance Claim Procedure:

Take necessary steps to minimize the loss/damage.
Report the claim to insurer.
A surveyor appointed by the company will analyze the damage /loss incurred.
The claim process takes anywhere between 7-21 days.

Documents Required for Shop Insurance Claim:

1. Copy of FIR in case of theft
2. List of articles loss/damage
3. Proof of ownership of shop
4. Claim form

List of Some of Insurance Companies Offering Shop Insurance:

○ ICICI Lombard - Shop Cover
○ The New India Assurance Co. - Policy Package For Shop
○ United India Insurance Co. - Protection Against Damage of Shop
○ Bajaj Allianz - Shop/ Showroom Insurance





The providers of commercial insurance are extraordinarily diverse. They vary in size,
specialty and role in the industry.
Insurance Companies: Insurance companies can be categorized in many ways. One is by the
size of their policyholder surplus or capital. The larger the policyholder surplus the more risk
they can assume. The smallest companies have less than $1 million in surplus and the largest
more than $2 billion. Most fall into the $250 million and under policyholder surplus category.
Insurers can also be divided according to premiums, which are roughly equivalent to revenues.
The largest have premiums in excess of $10 billion. Most commercial insurers are stock
companies owned by their stockholders, but some are mutual, which are owned by their
policyholders, and a few are reciprocal insurance exchanges. Reciprocals are an old form of
insurance entity where members or subscribers provide insurance to one another; share profits,
losses and expenses; elect a board; and appoint an attorney-in-fact, which may be an individual
or a corporation, to manage the operation.

An insurance company may be a single entity or a holding company with subsidiaries.

Subsidiaries may be organized to operate in a single state, sell different insurance products
from the parent organization or cater to a nonstandard market. Some parent companies are
domiciled outside the United States and some insurers have non-insurance related parents.
Large commercial insurers generally operate in most states and some have global operations.
Smaller or specialized insurers may focus on a specific geographical area or specific states.

With so many different kinds of businesses seeking insurance, it’s not surprising that insurers
tend to specialize. Specialization facilitates the accumulation of expertise. In addition,
insurance works best where an insurer has a large number of policyholders with similar
exposures to loss. The more policyholders of the same type there are, the better the insurer is


able to predict losses for that type and price the coverage accurately, according to a
mathematical premise known as the law of large numbers.
The law of large numbers works best for personal lines insurers with thousands of similar auto
and homeowners policies and in commercial lines for small Main Street type businesses. These
smaller firms tend to be similar in size and loss exposures and are generally covered by a
standard policy known as a Business Owners policy. By contrast, larger firms vary widely in
their exposure to loss. Nevertheless, many commercial insurers concentrate on certain types of
businesses or insurance coverages or both. They may target firms in the energy or
transportation fields, for example, building contractors or financial services institutions. They
may be specialists in directors and officers liability insurance, medical malpractice liability
insurance, surety bonds, crop insurance or workers compensation, sometimes covering other
incidental risks as well. Many personal lines insurance companies offer commercial insurance
but generally only to typically small, low-risk, kinds of businesses and many commercial
insurance companies offer personal lines insurance as well as life insurance and other Financial
services products.
Commercial insurers that have been licensed or “admitted” to do business in a state by the state
insurance department are generally willing to cover most business risks. (The term “risk” in the
insurance industry can mean a peril insured against, such as the risk of fire, and also the entity
However, some risks are hard to place in the standard market because they don’t meet licensed
companies’ underwriting criteria. Among the most difficult to place are: unusual or unique
risks that are hard to price if the insurance industry has no prior experience with them, such as
tattoo and body piercing shops when they first began to appear; risky or substandard risks, such
as fire coverage for a business with a prior history of fires; businesses whose operations are
very complex, such as an offshore oil rig; and exposures that require higher limits than most
companies are willing, or able under regulatory guidelines, to provide. (To safeguard an
insurer’s financial stability in the event of a total loss, insurers cannot devote more than a
certain amount of their underwriting capacity to insure any one risk.) In such cases, part of the
risk may be insured in the standard market and the remainder, or “excess” in the surplus lines


Surplus Lines: The surplus lines market, a group of highly specialized insurers that includes
Lloyd’s of London exists to assume risks that licensed companies decline to insure or will only
insure at a very high price, with many exclusions or with a very high deductible. To be eligible
to seek coverage in the surplus lines market, a diligent effort must have been made to place
insurance with an admitted company, usually defined by a certain number of “declinations” or
rejections by licensed insurers, typically three to five. Many states provide an “export list” of
risks that can be insured in the surplus lines which obviates the diligent search requirement.

The terms applied to the surplus lines market - non-admitted, unlicensed and unauthorized - do
not mean that surplus lines companies are barred from selling insurance in a state or are
unregulated. They are just less regulated. Each state has surplus lines regulations and each
surplus lines company is overseen for solvency by its home state. More than half of the states
maintain a list of eligible surplus lines companies and some a list of those that are not eligible
to do business in that state. In addition, depending on the state, the surplus lines agent or
broker, who must be licensed, is responsible for checking the eligibility of the company.
In a number of states, surplus lines companies are also monitored by surplus lines
organizations, known as “Stamping Offices,” which, among their many functions, assist their
state’s department of insurance in the regulation and oversight of surplus lines insurers. They
also evaluate insurers for eligibility to do business in the state and review insurance policies
obtained by surplus lines agents or brokers for their clients.

The amount of business insured in the surplus lines market has grown over the years but also
tends to fluctuate, depending on the insurance cycle. Not surprisingly, surplus lines companies
thrive in hard markets when certain kinds of coverage those are available in soft markets from
standard insurers, such as nursing home insurance, may be more difficult to obtain. (In the
insurance industry, in a hard market the price of coverage increases and insurers are more
selective about the risks they assume because capital and, hence, underwriting capacity is
limited.) During the most recent hard market, growth in surplus lines premium far exceeded
growth in the property/casualty insurance industry as a whole. In 2003, when the hard market
was reaching its peak, surplus lines premiums represented about 13 percent of the commercial
lines market, according to A.M. Best, a rating agency. Surplus lines represented only about 6
percent of the commercial lines market in 1993 and less than 4 percent in 1983. In 2003 surplus


lines premiums grew 28 percent from the previous year, following an extraordinary 62 percent
jump in 2002. By contrast, growth for the total property/casualty insurance industry was 12
percent and 14 percent in 2003 and 2002, respectively.

The Residual Market: Businesses that cannot obtain insurance in the standard market may
have another choice, depending on the type of insurance they need, where they are located and
why they have been rejected for coverage. If they are looking for property coverage and are
considered high risks because of conditions beyond their control, they may be eligible for
insurance under state-run programs known collectively as the “residual,” “involuntary” or
“shared” market because all property insurers doing business in the state share in the premiums
and losses.

In addition, since auto liability insurance is mandatory in all states, all 51 jurisdictions provide
auto insurance programs for businesses that have difficulty obtaining auto insurance in the
standard market. Most are assigned risk plans, where all auto insurers in the state are assigned
residual market applicants on a rotating basis according to their market share. A few states have
somewhat different arrangements to ensure that nobody has to drive without liability insurance.

Workers compensation insurance is also available from the residual market. The mechanism
used to handle the workers compensation residual market varies from state to state. In the six
states with a monopolistic state workers compensation fund, where the state provides workers
compensation insurance to all employers, all businesses are insured through that fund. In most
states with a competitive state fund (an entity that competes for business with private insurers),
the fund accepts all risks rejected by the voluntary market, thus eliminating the need for
assigned risk plans. In states without a competitive fund, insurers may be assigned applicants
based on their market share and service those employers as they would employers that came to
them through the voluntary market, through a system known as direct assignment. They may
also participate in the residual market through a pooling arrangement in which all participating
workers compensation insurers share the premiums and the losses.



Just as businesses are able to transfer risk to insurers, known as primary insurers in the
insurance community, insurers are able to transfer or “cede” some of the risk they assume in
insuring businesses to other insurance companies, known as reinsurers. By transferring some of
the risk primary insurers reduce their liability for losses, which allows them to write more
insurance. Some insurers are heavily reinsured, others are not.
Reinsurers reimburse primary insurers for losses, according to the terms of the reinsurance
contract, either on a shared or proportional basis, with the primar y insurer and reinsurer
sharing both the losses and the premiums collected from the commercial policyholder, or on an
“excess-of-loss” basis, with the reinsurer assuming losses above a certain level for a fee.
Reinsurers also spread the risk they have assumed as a result of the reinsurance transaction by
selling off slices and layers of risk to other reinsurers all over the world.
Reinsurance is an international business. Six countries were represented among the 10 top
global reinsurers in 2003. The top two are German and Swiss, each with more than twice the
premium volume of the next two, which are U.S. companies.

At the retail level, commercial insurance is distributed by insurance agents and brokers who
work for organizations that are part of the distribution system, insurance agencies and brokers.
Recently, however, the lines between agencies and brokers have become blurred. Traditionally,
agents have represented the insurance company and brokers have represented the client.

Agents and brokers are known as producers. Agents may be captive agents selling policies
written by a single insurer, the agent’s employer, or an independent agent selling policies from
a number of different insurers. Independent insurance agencies have a larger portion of the
commercial lines business than captive agencies -- about two-thirds. For personal lines, the
ratio is reversed.
It is the broker’s responsibility to seek out appropriate insurance coverages for the client and
obtain the best overall price, terms and conditions. Brokers are most often associated with large
or complex commercial lines risks.
Brokers may also become “wholesalers” who act as intermediaries between retail brokers or
agents and insurance company underwriters. To be able to transact business with surplus lines


insurers, wholesale brokers must be licensed as surplus lines brokers in the state where the
policyholder or the risk to be insured is located. Wholesale brokers may also work with other
wholesale brokers in the London Market, or elsewhere to secure coverage.
Wholesale brokers may also be managing general agents, who are given authority by insurers
to underwrite and “bind” insurance -- provide temporary coverage until an insurance policy can
be issued. Managing general agents, who have a close relationship with the insurance
companies they work with, may also handle claims and even help in the placement of
reinsurance contracts.

Managing general agents may also arrange so-called program business which is specialty
insurance for homogeneous groups of policyholders, such as members of a specific industry.
These programs, often offered and endorsed by trade associations, may provide coverage at
lower prices. As insurers seek out niche products, programs are increasingly available to a wide
range of businesses and organizations from bed and breakfast inns to churches. Programs may
also provide specially tailored liability insurance for professionals, such as vocational or
physical rehabilitation specialists who work part or full time out of a home office. To be
successful, a program must generate a sufficient volume of premium and the risks within each
program must be relatively homogeneous.

Insurance company employees, whether they work for standard, surplus lines or reinsurance
companies, are compensated the same way that employees in other industries are compensated,
with bonuses and other incentives in many companies for outstanding contributions to the
Producers and others in the retail and wholesale distribution system are compensated in a
variety of ways. Captive insurance agents are compensated by their insurance company
employers, while independent agents are compensated by the insurers with whom they have
placed business. Independent agent commissions may be calculated based on the business
received, and percentages may differ among insurers and for different types of coverage.
Independent agents may also receive contingent commissions, not unlike incentives provided in
other industries to their sales force, for a high volume of business or business that was
especially profitable.


Brokers may receive compensation from several sources: fees paid by their policyholder
clients; commissions paid by the insurer with whom business is placed, calculated as a
percentage of premium charged; and contingent commissions paid by insurers based on the
profitability and/or volume of the business. Some of the largest commercial lines brokers have
recently discontinued the practice of using contingent commissions as incentives. Since the
broker represents the client not the insurer, the existence of commissions paid by the insurer
must be disclosed to the client. Managing general agents are compensated entirely by the
insurer, often based on the outcome of the business generated.


Risk management deals with loss exposures -- circumstances that exist inside or outside a
company’s operations that have the potential to cause a loss. A major incident such as a fire or
explosion at a manufacturing plant or hurricane force winds that lift the roof off the building
could shut down operations. On the liability side, a lawsuit, if successful, could jeopardize a
company’s financial well-being.

Large companies generally employ risk managers to manage the risk of loss. It is the risk
manager’s responsibility to anticipate, evaluate and minimize the adverse impact of all possible
losses. Strategies for controlling losses include avoidance -- avoiding the activity that could
produce a loss altogether if the activity, product or service can’t be modified; loss control
techniques, such as limiting access to warehouses to reduce the incidence of theft; and
transferring the financial consequences of potential losses to an insurance company.

Once a decision has been made to purchase insurance, the risk manager selects an appropriate
agent or broker to solicit bids. In the process, the risk manager must supply the broker with all
the necessary information about the company that commercial lines underwriters might need to
evaluate the risk. The risk manager is also responsible for all other aspects of implementing the
insurance contract, from handling claims as a representative of the company to dealing with
adjustments to loss sensitive programs, Where the company decides to retain some of the risk
itself rather than buy insurance, the risk manager may hire actuaries to determine appropriate


loss reserves, a claims adjustment service to manage claims and legal experts to deal with
The risk manager generally reports to the company’s chief financial officer. In a large
organization, there is generally a risk management department. In small companies, the risk
management function may be handled by the treasurer or owner of the business.


Rating agencies—private firms that evaluate insurance companies’ financial strength—play an
important part in the insurance marketplace. The ratings issued by these agencies represent
their opinions of an insurer’s' financial condition and its ability to meet its obligations to
policyholders. Rating downgrades are watched closely and can significantly affect an insurer's
ability to attract and retain business.

Among the factors they consider are:

1. Company earnings over a period of years to assess stability and sources of profits and
control over expenses
2. Capital adequacy and operating leverage (Capital is the cushion that allows a company
to keep its commitments even if the value of its assets falls or its liabilities increase.)
3. Investment performance and investment risk management
4. The strength of an insurer’s reinsurance program (an important cushion in the event of a
5. Management’s ability, experience and integrity.





Insurance companies protect businesses from financial loss by assuming billions of dollars in
risks each year. It is the underwriter’s responsibility to evaluate a business’s risk of loss and
decide whether to insure the business and if so, at what price.

Evaluating risks involves considerable research. Information on applications is often

supplemented with reports from loss control consultants, medical reports, information from
data vendors, and actuarial studies. For example a factory’s application may require an
engineering survey, a fire hazard survey or other investigations. The Internet has greatly
enhanced the resources available to underwriters doing research on a business. Based on its
research, the underwriting department may require the applicant to make changes to improve
safety, or decide not to provide coverage.

Technology plays an important role in an underwriter’s job. In addition to using the Internet for
research, underwriters use specialized computer applications to manage risks more efficiently
and accurately. Depending on the nature of the risk and the
complexity of the insurance policy, these systems automatically analyze and rate insurance
applications, recommend acceptance or denial of the risk, and adjust the premium rate in
accordance with the risk. The greater the risk and complexity of an operation, the more likely
that the policy will be specifically tailored to meet the policyholder’s needs. In making all these
decisions, underwriters serve as the main link between the insurance company and the
insurance broker or agent. Underwriters also work closely with claims personnel. For example,
information from claims adjusters, such as a business’s failure to take certain loss control
measures, might affect the underwriter’s decision to offer coverage in the future. Many
insurance companies employ field underwriters and claims specialists who are assigned to
agents in specific localities, giving underwriters first hand knowledge of a company’s business
and geographic environment. These field underwriters often work closely with loss control
specialists who help evaluate a company.

Most property/casualty underwriters specialize in either commercial or personal lines. In cases

where insurance companies provide insurance through a single “package” policy, covering


various types of risks, the underwriter must be familiar with different lines of insurance and
different types of risks.

When an insured business suffers a covered loss, it submits a claim seeking compensation.
Insurance claims departments handle a wide variety of claims for property damage, liability,
and bodily injury. Their main role is to investigate the claims, negotiate settlements, and
authorize payments to claimants. They must determine whether the customer’s insurance policy
covers the loss and how much of the loss should be paid to the claimant, depending on
deductibles or retentions, co-payments and other risking sharing provisions in the policy. .

Insurance company claims adjusters plan and schedule the work required to process a claim
that would follow a loss, for example, an accident at processing plant or damage to a business
property caused by a hurricane. They investigate claims by interviewing the claimant and
witnesses, consulting police and hospital records, and inspecting property damage to determine
the extent of the insurer’s liability. Adjusters may also consult with accountants, architects,
construction workers, engineers, lawyers, physicians and other experts. Most claims are easily
settled. When claims are contested, adjusters will work with attorneys and expert witnesses to
defend the insurer’s position. When adjusters or examiners suspect fraud, they refer the claim
to an investigator specially trained to detect and investigate fraud.

New technology making use of the Internet, digital cameras and sophisticated software have
greatly speeded the claims handling process, and improved the quality of adjusters’ estimates.
High tech advances have also made it easier for policyholders to submit claims. Customers at
many insurers, for example, can submit claims directly to claims professionals via an Internet
reporting tool. Prompt reporting allows the insurer to respond quickly to a claim, ensuring that
appropriate steps, such as medical attention or securing a building, are taken as soon as


Loss control activities aimed at preventing or reducing the size of losses due to accidents and
theft have been integral to the insurance industry as far back as 1752 when Benjamin Franklin,


founder of the first U.S. fire insurance company, launched a fire safety campaign to teach
property owners how to recognize and remove fire hazards.

Insurance companies, agencies and brokerage firms may provide safety inspection and
engineering services as part of the services they offer to industrial and business clients. The
insurer’s safety engineer or loss control expert may also be called on by an underwriter to
perform a safety audit before an insurance policy is written.

Loss control produces widespread benefits. For instance, a loss control professional's
recommendations for controlling fire hazards in a particular factory benefit not only the factory
owners, but also protect the financial security of employees and their families by enhancing
worker safety. In addition, owners and occupants of adjoining buildings are protected from
spreading fires. Businesses, having avoided ruin by fire, continue to contribute taxes and other
benefits to their community.

Some insurance companies have established extensive loss control departments to help their
clients control losses. For example, one large industrial insurer has established a multimillion
dollar research facility to provide its insurance clients and building supply manufacturers with
information about how materials—ranging from power turbine housings to applesauce—burn,
and how to reduce fire losses. Other companies provide an array of online risk management
tools, such as using the Internet to access extensive loss control libraries that can help
customers minimize financial losses. The insurance industry also funds loss control
organizations to promote product safety. One such organization, Underwriter’s Laboratories,
now operates independently.

Calculation of Commercial Insurance Amount/Premium:

Insurance companies keep quite a few factors in mind while calculating the premium amount to
be paid by the client. Nature of business, size of the organization, number of employees, the
type of industry, the organization is a part of, annual turnover of business etc. The premium is
paid on a monthly/quarterly/half yearly/ yearly basis, as the case may be. Companies also
provide with instant commercial insurance quotes for the ease of their customers.
Commercial Insurance Claim Procedure:


The insurer needs to submit all the original documents of the commercial in the case of any
financial or non financial loss. The surveyor calculates the approximate value of the loss so
incurred. Based on the report submitted by the surveyor, insurance companies pay the amount
of loss incurred. The claims are generally cleared from 7-21 days.
Documents Required for Commercial Insurance Claim:
1. Claim Form
2. List of things or items lost or damaged
3. Proof of ownership of business
List of Some of Insurance Companies Offering Commercial Insurance:
○ Bajaj Allianz - Corporate Insurance
○ ICICI Lombard – Commercial Insurance
○ The New India Assurance Co. – Commercial Products
○ United India Insurance Co. - Business Policies




Are There Specific Rules on Commercial Insurance Cancellation and Non-renewal?


Commercial insurance companies must follow the rules set out in the insurance code regarding
commercial insurance cancellation and non-renewal. There are separate insurance code sections
covering cancellation and non-renewal for workers compensation, auto, ocean marine, surplus
line, reinsurance policies, and other commercial insurance lines.

1. These standards apply to all lines of commercial property and casualty insurance.

2. Any policy may be cancelled at any time for fraud, material misrepresentation or non-payment
of premium by mailing a 10-day notice of cancellation to the insured.
Insurers should conduct their initial underwriting during the first 90 days in which a policy is in
force. A new policy may be cancelled for any reason not prohibited under current law by mailing
30days' notice of Cancellation (10 days for fraud, material misrepresentation or non-payment of
premium) to the insured before the policy has been in effect 90 days.

3. After a policy has been in effect more than 90 days, cancellation should be based only on
certain Specified reasons. After a new policy has been in effect for more than 90 days, and at any
time during the period of renewal policy, an insurer will cancel only for the following reasons,
with the indicated amount
of notice:
(a) Non-payment of premium, fraud or material misrepresentation -- 10 days.
(b) Change in the risk which substantially increases any hazard insured against, except to the
extent that the insurer should reasonably have foreseen the change or contemplated the
risk in writing the contract -- 30 days.
(c) Failure of the insured to comply with reasonable safety recommendations -- 20 days.
An insurer may exempt itself from these restrictions on mid-term cancellation by filing a notice
with the Insurance Commissioner that compliance with these restrictions would cause it to suffer
significant financial impairment jeopardizing its solvency.

4. Notice of non-renewal should be mailed at least 45 days in advance.

An insurer may non-renew a policy by mailing to the insured at least 45 days in advance of
expiration a notice of its intent not to renew. In the


case of a continuous policy or a policy for a term of more than one year, an insurer may refuse to
extend the policy by mailing notice to the insured at least 45 days in advance of the anniversary
date of the policy.
5. Renewals should be sent to insured sufficiently in advance of expiration to allow an
opportunity to seek alternative coverage.

(a) Continuous policies and policies written for a term of more than one year.
If an insurer elects to continue a policy past its anniversary date, the insurer shall endeavor to
have the insured receive the extension or a firm quotation for the extension period at least 30
days before the anniversary date of the policy. If the extension or quotation is not received 30
days in advance, the insured will have the option to continue coverage for up to 30 days from the
date of receipt, so long as the insured pays the premium for the extended period of coverage in
advance. The premium for the 30-dayextension will be computed pro-rata based upon the rates,
credits, and debits which applied to the policy during the period prior to the anniversary date.

(b) Annual term policies.

The insurer shall endeavor to provide the insured with a renewal policy or firm quotation at least
30 days prior to expiration. Otherwise, the insured will have the option to continue coverage for
up to 30 days from the date the renewal or quotation is received, so long as the insured pays the
premium for the extended 30-day period of coverage in advance, with the premium being
computed pro-rata based upon the rates, credits and
debits which apply to the expiring policy.

The Commercial Insurance Agent is a professional who assists a business owner in making
one of the most important investments in the form of Commercial Insurance in order to protect
his or her business from the potential losses that may be caused by unexpected and unfortunate
A Commercial Insurance Agent (or a business insurance agent) provides valuable advise to
business owners regarding the most profitable Commercial Insurance policies which not only


protect the businesses against such things as theft, property damage, and liability but also
provide coverage for businesses against all sorts of interruptions and employee injuries.
The business owner should never run his or her business without commercial insurance as that
would subject the specific business to the perils of losing money and property simultaneously
in cases of fateful events which can never be predicted in advance.
It may also happen that a particular business owner commits his or her individual cash and/or
property to unforeseen danger by not securing sufficient commercial insurance. In such cases
the business owners desperately require the advice of a dependable Commercial Insurance
Agent who insists the business owners to subscribe to the most suitable Commercial Insurance
policy available.
Commercial Insurance Agents are reliable insurance agents who specialize in commercial
insurance policies that enable all kind of business concerns to run and progress freely without
constraints. Commercially insured business concerns can operate and grow freely without the
fear of any kind of danger that might hamper its existence.
All business owners are advised to select their personal Commercial Insurance Agent only
after talking with as many as licensed and knowledgeable Commercial Insurance Agents as
possible. The Commercial Insurance Agent that the business owner has decided upon should
be capable of discussing different types of commercial insurance policies with him or her and
thereby assist the business owner in selecting the most suitable Commercial Insurance policy
that fulfills all or most of the individual requirements of the business owner.



7.1 Commercial Property Coverage :

Property Insurance is any type of insurance that indemnifies an insured party who suffers a
financial loss because property has been damaged or destroyed. Property is considered to be any
item that has a value. Property can be classified as real property or personal property. Real
property is land and the attachments to the land, such as buildings. Personal Property is all
property that is not real property. The Building and Personal Property coverage form is the form


used to insure almost all types of commercial property. The insuring agreement in the Building
and Personal Property coverage form promises to pay for direct physical loss or damage to
covered property at the premises described in the policy when caused by or resulting from a
covered cause of loss. The following is a brief outline of coverages and how they are used within
the Commercial Building and Personal Property coverage form.

7.2 Buildings and Business Personal Property:

Coverage for the building includes the building and structures, completed additions to covered
buildings, outdoor fixtures, permanently installed fixtures, machinery and equipment. The
building material used to maintain and service the insured's premises is also insured. Business
Personal Property owned by the insured and used in the insured's business is covered for direct
loss or damage. The coverage includes furniture and fixtures, stock, and several other similar
business property items when not specifically excluded from coverage. The policy is also
designed to protect the insured against loss or damage to the personal property of others while in
the insured's care, custody or control.

7.3 Coverage Extensions and Additional Coverage:

In addition to the limits stated in the Building and Personal Property coverage form, the policy
has a coverage extensions section and an additional coverages section. The coverage extensions
section provides limited coverage for newly acquired or constructed property, property of others,
certain outdoor property, and the cost to research and reconstruct information on destroyed
records. When coverage is placed on the all risk form, two additional extensions are added for
property in transit and coverage for certain repair costs related to damage caused by water. The
two additional extensions are covered by certain perils only. The additional coverage section
provides coverage for indirect losses that result from a direct loss. The coverage applies to
removal of debris, preservation of property, fire department service charges and pollutant
cleanup and removal. The coverage extensions and the additional coverages have limitations and
are subject to certain conditions.
Limit of Insurance
The most the insurer will pay for loss or damage in any one occurrence is the limit of insurance
stated in the policy declarations.


The standard deductible is $250. However, other deductible amounts are available and the
deductible applies only once per loss.
Causes of Loss
The term peril is used when discussing losses. A peril is a cause of loss. Basic property insurance
policies are written to cover the perils of fire, lightning, explosion, windstorm, hail, smoke,
aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage, sinkhole
collapse, and volcanic action. Other property insurance policies, often referred to as the broad
form policy, add coverages for water damage, weight of snow, ice or sleet, breakage of glass and
coverage for falling objects. The broadest coverage is the special form, which is best known as
the all risk form. All risk covers all causes of loss, except those specifically excluded from
coverage. It is possible for a commercial property policy to have more than one cause of loss
Replacement Cost and Actual Cash Value
Property can be valued in several different ways. Insurance companies commonly use two
approaches to determine value, which also determines how a loss will be paid; the replacement
cost method and the actual cash value method. Insurers consider replacement cost of a property
item to be the cost to replace it with new property of like kind. Actual cash value is replacement
cost, minus the accumulated depreciation for age and condition.

7.4 Commercial General Liability Coverage:

The Commercial General Liability Policy provides the insurance protection needed to pay
damages for bodily injury or property damages for which the insured is legally responsible. The
policy provides coverage for liability arising from personal injury and advertising injury.
Coverage for medical expense is also provided. The policy also covers accidents occurring on
the premises or away from the premises. Coverage is provided for injury or damages arising out
of goods or products made or sold by the named insured. The insured is the named insured and
the employees of the named insured. However, several individuals and organizations, other than
the named insured, may be covered, depending upon certain circumstances specified in the
policy. In addition to the limits, the policy provides supplemental payments for attorney fees,
court costs and other expenses associated with a claim or the defense of a liability suit.
There are two commercial general liability coverage forms available, the occurrence form and
the claims-made form. Both forms are somewhat identical in the coverages offered. The main


difference is in the way claims are handled under the two forms. The occurrence form covers
bodily injury or property damage claims that occur during the policy term, regardless of when
the claim is reported. The claims-made policy form only covers claims made against the insured
during the policy term. A claim made after the policy expires is not covered by a claims-made
policy unless the claim is covered by an extended reporting period. The claims-made policy will
only have the extended reporting period. The following terms reflect both forms.
General Aggregate
The General Aggregate Limit is the most money the insurer will pay under certain coverage for
all claims occurring during the policy term.
Coverage is provided for damages arising out of ownership or occupancy of the insured premises
when not maintained in a reasonable manner. This also covers damages arising out of operations
performed by the insured business.
Products/Completed Operations
Products coverage is provided for damages arising out of products manufactured, sold, handled
or distributed by the insured. Completed Operations covers damages occurring after operations
have been completed or abandoned, or after an item is installed or built and released for it's
intended purpose.
Medical Expense Limit
Medical payments coverage pays medical expenses resulting from bodily injury caused by an
accident on premises owned or rented by the insured, or locations next to such property, or when
caused by the insured's operations. These payments are made without regard to the liability of the
Fire Damage Limit
The fire damage limit provides coverage for fire damage caused by negligence on the part of the
insured to premises rented to the named insured. If a fire occurs because of negligence of the
insured and causes damage to property not rented to the insured, coverage would be provided
under the occurrence limit.
Personal Injury
Personal Injury means injury other than bodily injury. Coverage is provided for injury resulting
from offenses such as false arrest, malicious prosecution, detention or imprisonment, the


wrongful entry into, wrongful eviction from and other acts of invasion, or rights of private
occupancy of a room. Coverage for libel and slander is also provided in the policy.
Advertising Injury
This coverage pays for damages done in the course of oral or written advertisement that
disparages, libels or slanders a person's or organization's goods, products or services. Coverage
for these offenses is provided under advertising injury coverage only if they occur during the
course of advertising the named insured's own goods, products or services.

7.5 Commercial Automobile Coverage:

Liability Coverage
The liability coverage of the commercial auto policy provides protection against legal liability
arising out of the ownership, maintenance, or use of any insured automobile. The insuring
agreement agrees to pay damages for bodily injury or property damage for which the insured is
legally responsible because of an automobile accident resulting from the ownership,
maintenance, or use of a covered auto. The insuring agreement also states that in addition to the
payment of damages for which the insured is legally liable for, the insurer also agrees to defend
the insured for all legal defense cost. The defense cost is in addition to the policy limits.
Medical Payments Coverage
The insuring agreement states that the insurer will pay all reasonable and necessary medical and
funeral expenses incurred by an insured because of bodily injury caused by an accident. The
insured is the named insured, the insured's employees and guests, and any other person
occupying a covered auto. These payments are made without regard to fault.
Uninsured/Underinsured Motorist Coverage
Uninsured Motorist:
This insuring agreement pays for bodily injury to an insured who is injured by an uninsured
motorist, a hit-and-run driver, or a driver whose insurer becomes insolvent. These benefits are
paid under the named insured's policy.
Underinsured Motorist:
This coverage is added to supplement the Uninsured Motorist Coverage, the coverage applies
only when the other driver has liability limits at the time of an accident, but the liability limits


carried may be insufficient to pay for damages for which the driver is responsible. This is when
the insured's underinsured motorists coverage would apply and payment for the difference could
be made. The two coverages are mutually exclusive and do not overlap or duplicate each other.

Any Automobile
Coverage is provided for any auto, including autos owned by the insured, autos the named
insured hires or borrows from others, and other non-owned autos used in the insured's business.
Owned Auto
Coverage is provided for all autos owned by the named insured. The owned auto symbol is used
for liability insurance only.
Non-Owned Autos
Coverage is provided only for autos not owned, leased, hired, or borrowed by the named insured.
Coverage includes autos owned by the insured's employees or members of their households, but
only while used in the named insured's business or personal affairs.

Hired Auto
Coverage is provided only for autos leased, hired, rented or borrowed for use in the named
insured's business.

7.6 Physical Damage Coverage:

Collision Coverage:
This coverage provides protection against loss or damage to a covered auto or a non-owned auto
resulting from the impact with another vehicle or object. Collision losses are paid regardless of
Comprehensive Coverage:
Comprehensive coverage provides protection against loss or damage to a covered auto resulting
from loss other than a collision or upset. This coverage also provides for supplemental payments
for transportation expenses in the event of total theft of a covered auto or a non-owned auto.
Coverage begins forty-eight hours after the theft.


Bottom of Form


ICICI Lombard General Insurance Company Limited is a joint venture between ICICI Bank
Limited and the US-based $26 billion Fairfax Financial Holdings Limited. ICICI Bank is
India's second largest bank; while Fairfax Financial Holdings is a diversified financial
corporate engaged in general insurance, reinsurance, insurance claims management and
investment management.
ICICI Lombard General Insurance Company received regulatory approvals to commence
general insurance business in August 2001.

ICICI Lombard figures among top commercial insurance companies of India. The company
covers business products which include:


• Fire Insurance
• Marine Insurance
• Industrial Insurance
• Commercial Vehicles
• Corporate Insurance
• Credit Insurance
• Liability Insurance
• Shop Insurance


Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto
Limited and Allianz AG of Germany. Both enjoy a reputation of expertise, stability and
strength. Incorporated on 19th September 2000 Bajaj Allianz General Insurance Company
received the Insurance Regulatory and Development Authority (IRDA) certificate of
Registration (R3) on May 2nd, 2001 to conduct General Insurance business (including Health
Insurance business) in India. The Company has an authorized and paid up capital of Rs 110

Bajaj Allianz is one of the leading commercial insurance companies in India. It offers various
commercial insurance plans which include areas like:
• Aviation
• Project Insurance
• Marine Hull Insurance
• Sports and Entertainment Insurance
• Employees Insurance


Some of the highlights of the Employees Insurance Scheme of Bajaj Alliance are as follows:
• Group Personal Insurance
• Group Health Guard
• Group critical Illness
• Workmen's Compensation
• Group Travel Insurance


T he New India Assurance Co.

Established by Sir Dorab Tata in 1919, New India is the first fully Indian owned insurance
company in India.

New India was a pioneer among the Indian Companies on various fronts, right from insuring the
first domestic airlines in 1946 to satellite insurance in 1980. The latest addition to the list of firsts
is the insurance of the INSAT-2E.

With a wide range of policies New India has become one of the largest non-life insurance
companies, not only in India, but also in the Afro-Asian region.

Largest number of Offices - In India and Abroad Trained and technically qualified staff 1068
fully computerised offices across India. "A-" (Excellent) rating by A.M.Best & Co (Europe) First
domestic company to be rated by an International Rating Agency Rating based upon following
factors: Superior capital position Strong operating performance Strong market position Only


company to develop significant International operations, long record of successful trading

outside India.

• First company to set up an Aviation Insurance Department in 1946.

• First company to handle the Hull Insurance requirements of the Indian Shipping Fleet.

• First company to establish its own Training School.

• First company to introduce the concept of 'Model Office Training'.

• First company to create department in Engineering insurance.

• Pioneer in Satellite insurance

United India Insurance

United India Insurance Company Limited was incorporated as a Company on 18th February
1938. General Insurance Business in India was nationalized in 1972. 12 Indian Insurance
Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers,
besides General Insurance operations of southern region of Life Insurance Corporation of India
were merged with United India Insurance Company Limited. After nationalization United India
has grown by leaps and bounds and has 18300 work force spread across 1340 offices providing
insurance cover to more than 1 Crore policy holders. The Company has variety of insurance
products to provide insurance cover from bullock carts to satellites.
United India Insurance is one of the leading insurance companies in India. The famous United
India Insurance Company Limited (UIIC) is often called united India Insurance and it is also
regarded as one of the four Public Sector Insurance Companies in India. The main corporate
office of this insurance company is located at Chennai. The workforce of United India Insurance
includes some well-trained and professional managers and engineering professionals. Besides
these, the products offered by United India Insurance are also great and profitable for all.
On 18th February, 1938, the united India Insurance Company Limited was emerged as an
insurance company and gained huge popularity in the General Insurance business sector in India.


This company has 18300 work force including total 1340 offices across the nation providing
insurance policies to the one crore policy holders.

Commercial policies offered by United India Insurance:

• Marine Insurance: It includes Cargo and Hull insurance policies.

• Fire Insurance: It includes S.F.S.P. and L.O.P. insurance policies.
• Industrial Insurance: It includes I.A.R., C.P.M., B.P.P., and M.B. Insurance policies.
• Motor insurance or Vehicle Insurance: It includes Motor - A insurance policy.
• Liability Insurance: It includes Public, Product, Profession and Workmen insurance
List of non-life insurance companies operating in the market as on

Name Shareholding

Bajaj Allianz General Insurance Co. Ltd. Privately Held

Cholamandalam MS General Insurance Co. Ltd. Privately Held

HDFC Chubb General Insurance Co. Ltd. Privately Held

ICICI Lombard General Insurance Co. Ltd. i Privately Held

IFFCO-Tokio General Insurance Co. Ltd. Privately Held

National Insurance Co. Ltd. Public Sector

New India Assurance Co. Ltd. Public Sector

Oriental Insurance Co. Ltd Public Sector

Reliance General Insurance Co. Ltd Privately Held

Royal Sundaram Alliance General Insurance Co. Ltd. Privately Held

Tata AIG General Insurance Co. Ltd. Privately Held

United India Insurance Co. Ltd. Public Sector



The day you start a business is the day we need commercial insurance. There is more to
purchasing commercial insurance than signing an application. By following a few Dos and
Don'ts we can make sure to purchase and maintain the kind of insurance we need and can afford
while minimizing business risks and losses.

9.1 THE DO’s:

DO find an insurance agent who has some experience with your type of business.
DO shop around for the best price and ask for written coverage recommendations from various
agents -- they should be happy to provide you with one for no cost.
DO take notes while you are taking to various agents.
DO check on insurer solvency before purchasing a policy. The following publications rate
insurance companies for financial solvency:
• Best’s Insurance Reports
• Moody's Bank & Financial Manual Duff & Phelps Standard & Poor's.
DO read any proposed policy carefully.


DO buy a policy that will cover the replacement cost of the property. Actual current value
coverage could leave you with a significant lack of funds when you have to replace your
damaged property.
DO consider purchasing "Building Ordinance Coverage" if you do business in an older building.
When rebuilding you will most likely have to upgrade to comply with various building codes and
ordinances that didn't exist when the building was constructed.
DO consider purchasing a renter's commercial policy if you lease your business space, even if
your lease doesn't require it. The owner's policy probably doesn't cover damages resulting from
the negligence of your employees.
If you are renting, DO make sure that there is a mutual waiver-of-subrogation clause in your
lease. This should keep the landlord's insurance company from suing you to recover the money it
has paid to the landlord.
DO confirm that your independent contractors carry their own workers' compensation and
liability insurance for their own employees. If they get injured they may be considered your
employee, and if they injure one of your customers, your policy may not cover it.
DO keep a list of all of your business property both at work and somewhere off the premises;
you will need it for comparison purposes if you suffer a loss.
DO inform your agent of changes to your business, so that your policy always provides adequate

9.2 THE DON’Ts:

DON'T hire an agent who wants to sell you a package and refuses to tailor a policy to your
DON'T hide unusual risks from your agent. The insurer could later claim that you made
misrepresentations and you probably won't get the kind of coverage that you need.
DON'T buy a policy that is significantly lower in cost than all of the others -- the company could
be unstable or you may have received a quote that doesn't include everything that you need.
DON'T accept a policy without making sure that it covers all of the risks of your business.
DON'T underinsure to get a reduced premium. If you do, you could end up covering around 80
percent of your property replacement value because of a co-insurance clause in your policy.


DON'T agree to buy an insurance policy that covers the landlord's liability as well as your own,
if you are renting. This is usually considered unreasonable; try to negotiate out of it.
DON'T depend on your employee's automobile insurance providing coverage for damages
incurred while the employee is using a personal vehicle for your business purposes.
DON'T assume that your theft policy will cover the personal equipment of your employees.
DON'T assume that your homeowner's policy will cover business-related damages, if you run
your business out of your home. There may be exclusions for business-related property and
injuries in your homeowner's policy. DON'T exaggerate the extent of your damages. You could
be accused of engaging in insurance fraud.


Best price after

Types of Insurance Required? (y/n) comparison Annual Cost
1. General Liability Insurance
2. Product Liability Insurance
3. Errors and Omissions Liability
4. Malpractice Liability Insurance
5. Automotive Liability Insurance
6. Fire and Theft Insurance
7. Business Interruption Insurance
8. Overhead Expense Insurance
9. Personal Disability
10. Key-Employee Insurance
11. Shareholders’ or Partners’ Insurance
12. Credit Extension Insurance
13. Term Life Insurance
14. Health Insurance
15. Group Insurance
16. Workers' Compensation Insurance
17. Survivor-Income Life Insurance
18. Care, Custody and Control Insurance
19. Consequential Losses Insurance
20. Boiler and Machinery Insurance
21. Profit Insurance
22. Money and Securities Insurance


23. Glass Insurance

24. Electronic Equipment Insurance
25. Power Interruption
26. Rain Insurance
27. Temperature Damage Insurance
28. Transportation Insurance
29. Fidelity Bonds
30. Title Insurance
31. Water Damage Insurance

Total Annual Cost



Top of Form


Address, , ,
State, Zip

Type of
Selec t -->
from (Date)

Real Estate / Habitational

Year Built
Select -->


Property Ded
Select -->
Select -->
s: Roofing
s: Wiring
Ground Area
NO. Of

and Details




• http://www.surfindia.com/finance/shop-insurance.html

• http://www.icicilombard.com/app/ilom-en/Businessproducts/Fire-Perils.aspx

• http://www.bajajallianz.com/BagicCorp/index.jsp