GENERAL TAKAFUL PRODUCTS

Hatim Abbas Mudawi

Head of Operations & Training
 Takaful Classification

Takaful

General
Family Takaful
Takaful

Fire &
Miscellaneous
Marine Engineering Motor
Concept of General Takaful
 Defining General Takaful

General Takaful or non-life Takaful policies, including

automobile and homeowners policies, provide
payments depending on the loss from a particular
financial event.

General Takaful typically comprises any Takaful that

is not determined to be life Takaful.

It is called property and casualty Takaful in the U.S.

and Non-Life
Takaful in Continental Europe.
Classification
Commercial lines: products are usually designed for
relatively small legal entities. These would include
employers liability, public liability, product liability,
commercial fleet and other general engineering
Takaful products. There are many companies that
supply comprehensive commercial Takaful packages
for a wide range of different industries, including
shops, restaurants and hotels.

Personal lines: products are designed to be sold in

large quantities. This would include autos (private
car), homeowners (household), creditor Takaful and
others.
Principles of Insurance/ Takaful

Utmost Good Faith

Insurable Interest

Principle of Indemnity

Principle of Contribution

Principle of Subrogation

Principle of CAUSA PROXIMA

 Utmost Good Faith
Both the parties i.e. the participant and the operator
should have a good faith towards each other.

The operator must provide the participant

complete ,correct and clear information of subject
matter.

The operator must provide the participant

complete ,correct and clear information regarding
terms and conditions of the contract.

This principle is applicable to all contracts of Takaful

i.e. life, fire and marine Takaful.
 Insurable Interest
The participant must have insurable interest in the subject
matter of Takaful.

In Family Takaful it refers to the life covered.

In marine Takaful it is enough if the insurable interest exits

only at the time of occurrence of the loss

In fire and general Takaful it must be present at the time of

taking policy and also at the time of the occurrence of loss.

The owner of the party is said to have insurable interest as

long as he is the owner of the it.

It is applicable to all contracts of Takaful.

 Principle of Indemnity

Indemnity means a guarantee or assurance to put the

participant in the same position in which he was
immediately prior to the happening of the uncertain
event. The operator undertakes to make good the
loss.

It is applicable to fire ,marine and other general

Takaful.

Under this the operator agrees to compensate the

participant for the actual loss suffered.
 Principle of Contribution

The principle is a corollary of the principle of

indemnity.

It is applicable to all contracts of indemnity.

Under this principle the participant can claim the

compensation only to the extent of actual loss either
from any one operator or all the operators.
 Principle of Subrogation

As per this principle after the participant is

compensated for the loss due to damage to property
participant , then the right of ownership of such
property passes on to the operator.

This principle is corollary of the principle of indemnity

and is applicable to all contracts of indemnity
Principle of Causa Proxima

The loss of covered property can be caused by more

than one cause in succession to another.

The property may be covered against some causes

and not against all causes.

In such an instance, the proximate cause or nearest

cause of loss is to be found out.

If the proximate cause is the one which is participant

against ,the Takaful company is bound to pay the
compensation and vice versa.
 Types of General Takaful

Main types of general Takaful are:

Motor

Fire and Miscellaneous

Engineering

Marine
Motor Takaful
 Motor Takaful

Subject matter of Takaful

Private cars
Commercial vehicles
motorcycles
Types of cover

TPL
Comprehensive
TPL, Fire and Theft only
Motor Takaful : Types of Cover

Third party
Legal liability for death of or bodily injury to any third
parties (excluding passengers)

Limits of :
Bodily Injury :
Property:
Motor Takaful : Types of Cover

Third party, fire and theft

Legal liability for death of or bodily injury to
any third parties (excluding passengers)
Legal liability to third party property loss
Loss/damage to the insured vehicle as a
result of fire or theft
Motor Takaful : Types of Cover

Comprehensive
Third party cover
Loss/damage to insured vehicle and its
accessories and spare parts due to :
Accidental collision
Fire, external explosion, lightning, burglary,
housebreaking, theft
Malicious act
Whilst in transit by road, rail, direct sea route, by
impact damage caused by falling objects
provided no convulsion of nature
 Exclusions
Consequential loss, depreciation, wear and
tear, mechanical breakdowns, failures of
breakages
Damage to tyres unless the vehicle is
damaged at the same time
loss., damage, liability occurring outside the
geographical area
The vehicle is used other than in accordance
with the limitation as to use
Flood, typhoon
Volcanic eruption
Riot, strike
Nuclear risk
Fire & Miscellaneous Takaful
 Fire Takaful

Covers loss of or damage to property

caused by fire and other specified perils
Main types are Standard fire policy,
valued policy, Floating policy,
Declaration policy
Risk and perils covered

RISK COVERED
Loss/damage to buildings, contents
PERILS COVERED
- caused by :
- fire,
- lightning,
- explosion of gas used for
illuminating and domestic
purposes only
Fire policy : The Extensions
Special perils
Riot, strike
Earthquake, volcanic eruption
Explosions
Lalang fire
Storms, tempest
Aircraft damage
Impact damage by road vehicle, horses and
cattles
Bursting or overflowing of water tanks, pipes
Subsidence or landslip
Spontaneous combustion
Flood
Electrical installation
Fire policy : The Extensions

Loss of rent
Other losses
Removal of debris
Architects and surveyors fees
Sprinkler leakage
 Fire policy : The Exclusions

Loss/damage caused by (directly or indirectly):

}
earthquake, volcanic eruption, convulsion nature
Typhoon, hurricane
War risks
Nuclear risk
Loss/damage caused proximately by :
Burning of property by order of public authority
Subterranean fire
Explosion other than explosion of gas used for illuminating; burning of forest, clearing
of land by fire
Loss/damage to the following specified property :
Goods held in trust
Unset precious stone
Curiosity or work of art exceeding RM500
Manuscripts, plans, models, moulds
Securities, business books, computer system records
Coal against loss by its own spontaneous combustion
Explosives
Loss by theft during or after fire
Loss/damage to property caused by own fermentation, natural heating
 Basic
Employers liability for occupational injury
sustained or disease contracted by any of his
employee,

cover legal costs incurred by insured with prior

consent of the operator

Insureds liability to employees of

contractors

Exclusio
Contractual liability
Injury sustained outside geographical
area covered by policy
ns Liability under WC Act
War risk
Nuclear risk

Employers Liability
 Business firms legal liability to pay

Basic compensation for death or injury to third

parties, inclusive of legal costs incurred by
firm with prior consent of operator
Cover Caused by firms/employees negligence,
defects in its premises

Liability insured under WC, ELI, SOCSO

Loss/damage to insureds property or property
under his charge or control
Loss/damage to property associated with steam

Exclusio
boiler, boiler vessel or apparatus
Liability of injury/damage caused by passenger lift
or escalator owned or in possession of insured,

ns mechanically propelled vehicle licensed for road use

Professional liability
Contractual liability
Nuclear risks
War and warlike risks
Sonic boom

Public Liability
 Basic Covers professionals liability arising out of
professional negligence committed by his
predecessors or employees
Cover Legal costs with operators prior consent

Libel or slander
Dishonesty, fraud, criminal or malicious
Exclusio act or omission by the insured or
predecessors or employees
ns Contamination by radioactivity
Any liability entitled to be indemnified
under any other policies

Professional Indemnity
 Manufacturers or sellers liability for
death or bodily injury or damage to
Basic property caused by defects in goods
supplied or sold
Cover Electrical appliances, machinery,
pharmaceutical products, cosmetics,
toys

Injury to employees
Exclusio Contractual liability
Liability arising in respect of wrong
ns formula or specification of products
Loss/damage to products supplied

Products Liability
 Loss/damage to contents in a business

Basic premises, following theft involving entry

and exit by forcible & violent means
Damage to insured building and
Cover contents consequent upon such theft

Loss/damage by fire however caused

Damage to stained or plate glass or
decoration

Exclusio
Loss/damage occasioned by person lawfully
in the premises
Loss/damage to deeds, bonds, bills of
ns exchange, computer system, models or
designs
Riot, war, confiscation
Loss occasioned by forces of nature
Nuclear risks

Burglary Takaful
 Basic Covers valuables such as jewellery,
watches, cameras, paintings

Cover
Covers all risks (fire, theft, accidental
causes)

Loss/damage consequent upon riot,

earthquake
War risks

Exclusio Loss/damage arising from wear & tear,

depreciation, moth, vermin

ns
Scratching and breakage of lenses, glasses,
mechanical or electrical breakdown
Loss/damage arising from confiscation or
detention by customs
Nuclear risks

All Risks Takaful

 Loss of money against all risks whilst in
transit, on the insureds premises, in locked

Basic safe or strongroom, in the private residence,

other specified situations
Limit of any one loss
Cover Money includes cash, bank and currency
notes, cheques, postal & moner orders,
revenue stamps

Loss arising from dishonesty of employee

Confiscation, nationalization, wilful
destruction by order of government
Exclusio Shortages due to error and omissions
Outside the territorial limits

ns Safe or strongroom with the use of key

Nuclear risks
Depreciation in value
Riot, war risks

Money Takaful
 Basic Covers all risks for loss/damage to goods by
fire, accident, theft

Cover
Whilst being loaded on, carried by or
unloaded from motor vehicles

Radioactive contamination
War, riot
Earthquake, subterranean fire

Exclusio

Moth, vermin
Delay, loss of market

ns
Deterioration
Theft involving insureds employee
Goods accompanying commercial travelers
Property not covered explosives, acids,
money, jewellery

Goods in Transit Takaful

Engineering Takaful
Definition :

Engineering Takaful refers to the Takaful that

provides economic safeguard to the risks faced
by the ongoing construction project, installation
project, and machines and equipment in project
operation.
Product categories:
a) Depending on the project,
b) depending on the attribute of the
object
 ERECTION ALL RISKS
(EAR) Takaful
EAR Takaful provides a very wide and
comprehensive Takaful cover to the client in
respect of any sort of contingency from the
moment the material is unloaded at the site
of the project and continues during storage,
physical erection commissioning, testing
and maintenance (if covered). Since the
duration of the cover can be as long as 36
months or even more, care must be taken
while negotiating the proposal as well as
assessing the moral hazard of the client.
 SCOPE OF COVER
This is a comprehensive Takaful cover that is available
to the client in respect of any sort of contingency from
the moment the materials are unloaded on the site of
the project / works and continuous during storage,
physical erection and till the test run is over which
covers all physical losses or damage as under:

Fire, lightning, theft & burglary.

Impact from falling objects, collision, failure of changes or
tackles.
Failure of safety devices, leakage of electricity, insulation
failure, short circuit, explosion.
Carelessness, negligence, fault in erection, strike & riots.
Storm, tempest, flood, landslide, rockslide, earthquake.
 EXTENSION OF COVER

Earthquake peril.
Dismantling cover in case of already erected
second hand plant.
Removal of debris, contractors plant and
equipment, third party liability, if they are to
be included in the sum insured.
 CONTRACTORS ALL RISKS (CAR)
A CAR policy may be taken by the principal or by the contractor
Usual on contract agreement it is obligatory on part of the
contractor
The sum insured under the policy must not be less than the full
value of the contract works at the completion of contract
inclusive:
- all materials,
- wages,
- freight,
- custom duties,
- construction cost and material or items supplied by the
principal.
TYPE OF PROJECTS
The CAR Takaful policies generally issued for all types of Civil
Engineering projects like dwellings, office building, commercial
building, go downs and warehouses, hospitals, schools, silos, steel
structure, roads, water supply lines, construction work, etc.
 Cover

Section I
Section II
Section III
 MACHINERY BREAKDOWN (MB)
Machinery Breakdown Takaful was developed to grant industry
effective Takaful cover for expensive plant, machinery and
mechanical equipment. This Takaful is important for everyone who
operates the machines. This policy should support our property
Takaful and hence this Takaful must not be granted on a stand - alone
basis.
SUBJECT MATTER INSURED
All types of machinery, plant, mechanical equipment and apparatus
may be covered under MBD Takaful, such as for example power
generating units, power distributing plant as well as production
machinery and auxiliary equipment, etc.
SCOPE OF COVER
By its nature, Machinery Breakdown Takaful is an accident Takaful
on machinery. Thus,
It covers unforeseen and sudden physical loss of or damage to the
insured items.
Faulty design faults at workshop or in erection, defects in casting and
material.
Faulty operations, failure of safety system / lubrication system /
control system, lack of skill, negligence.
 CONTRACTORS PLANT &
MACHINERY (CPM)
Whilst it is possible to have the Contractors plant and machinery
covered under an EAR or CAR policy at specific project sites, CPM
policy has been designed to provide a cover on an annual basis to a
contractor who may be using his plant and machinery at different
projects during the course of the year. The cover under a CPM policy
is not limited to a specific project site and is operative at all sites
wherever the plant and machinery is in use and even while the same
is lying at the contractors own premises. We therefore have to ensure
that all the sites where the insured items are being used are
mentioned on the face of the policy.

SCOPE AVAILABLE UNDER CPM POLICY

The Contractor's plant and machinery Takaful comes under the

policies available under the Project Takaful and like the EAR / CAR
Policy offers a comprehensive cover as given below:
Fire, lightning, external explosion, earthquake, flood, inundation,
subsidence, landslide and rockslide.
Storm, tempest, hurricane, typhoon and tornado.
Burglary, theft, riot and strike and malicious damage.
Accidental damage while at work due to faulty man - handling,
dropping or falling, collapse, collision and impact.
 EXCLUSIONS
The operator will not indemnify in respect of loss or damage given below:
Excess as stated in the policy schedule, which has to be borne by the
insured in any one occurrence. If more than one item is lost or damaged in
one the occurrence insured has to bear the highest single excess applicable
to such items.
Loss or damage due to electrical or mechanical breakdown, failure
breakage or derangement freezing of coolant or other fluid, defective
lubrication or lack of oil or coolant, but if as a consequence of such
breakdown or derangement an accident occurs causing external damage,
such consequential damage will be indemnifiable.
Loss of or damage to replaceable parts and attachments such as bits, drills,
knives or other cutting edges, saw blades, dies, moulds, patterns,
pulverizing and crushing surfaces, screens and sieves, ropes, belts, chains,
elevator, and conveyor bands, batteries, tyres, connecting wires and
cables, flexible pipes, joining and packing material.
Loss or damage due to explosion of any boiler or pressure vessel subject to
internal steam or fluid pressure or of any internal combustion engine.
Loss of or damage to vehicles designed and licensed for general road use
unless these vehicles are exclusively used on construction sites.
Loss or damage to the hull and machinery of water borne vessels.
 Loss or damage while in transit from one location to another
location.
Loss or damage due to wear and tear corrosion, rust etc.
Loss occurring while an insured item is undergoing any test.
Loss to any plant or machinery working underground.
Losses arising out of war and war like perils and due to
nuclear radiation or radio active contamination.
Damage due to faults or defects existing at the time of
commencement of the policy with the knowledge of the
insured.
Any willful act or gross negligence of the insured resulting in
a loss.
Loss for which the supplier or the manufacturer is
responsible.
Loss discovered only at the time of taking the inventory or
during routine servicing.
Loss to plant and machinery mounted or operated on a
floating vessel / barge.
 ELECTRONIC EQUIPMENT
Takaful (EEI)
The Electronic Equipments such as computers, Micro -
processors, Word - processors, Tele - communication
equipments. Machine meant for medical use and other
misc. Equipments like films, television studio
equipments can be covered under this policy. This
scope of this policy is ALL RISK.
 GENERAL EXCLUSIONS

Inherent Vice
Wear & tear, loss due to defects known to the insured at the time
of commencement of the policy. Manufacturers responsibility:
The loss / damage for which the suppliers are responsible under
guarantee.
Willful Act
Due to any willful act or willful negligence of the insured or his
representatives.
Cessation
Cessation of work whether total or partial.
Expected Perils
War, invasion and the like, nuclear reaction / radiation, loss or
damage due to interruption caused by the failure of any gas,
water or electricity service or supply.
Functional Failure
Maintenance costs.
Hired Equipments
For the equipment hired for which the owner is responsible.
Marine Takaful
Definition of Marine Takaful

Marine Takaful is a contract whereby the operator

undertakes to indemnify the participant, in manner
and to the extent thereby by agreed, against marine
losses, i.e. the losses incident to marine adventure
Types of Marine Takaful

Hull Takaful

Cargo Takaful
 Hull Takaful

Hull and machinery Takaful is to protect the

ship owners investment in the ship. It is
basically a property Takaful which covers the
ship itself, the machinery and equipment.
Furthermore, the Takaful covers some liabilities,
normally collision liability with another ship and
sometimes also liability for colliding with other
objects than another ship.
 Covers include

Total loss of the ship

Damage to the ship, engines and equipment
Explosions and fire
Groundings damage to the ship, salvage of the ship and
possible contribution in general average
Collisions damage sustained to the ship and sometimes
also liability towards the other ship.
Striking other objects damage inflicted to own ship and
sometimes also liability towards the owners of the other
object.
 Cargo Takaful

Cargo Takaful (also called marine cargo

Takaful) covers physical damage to, or
loss of the goods while in transit by
land, sea and air and offers
considerable opportunities and cost
advantages if managed correctly.
Types of cargo Takaful

Open Cover
This is the most usual type of cargo Takaful,
where a policy is drawn up to cover a number
of consignments. The policy can be either for
a specific value that requires renewal once the
insured amount is exhausted or an
permanently open policy that will be drawn up
for an agreed period, allowing any number of
shipments during this time.

Specific (Voyage) Policy

covers only specific shipment.
 ICC
Institute cargo clauses are attached to a type of marine
Takaful that covers cargo in transit. These clauses are to
specify what items in the cargo are covered should there be
damage or loss to the shipment. Institute cargo clauses can
cover everything from the cargo itself to the container that
holds it to the mode of transportation used to ship it.
There are three basic sets of institute cargo clauses; A, B, C.
Just like you are able to get Takaful on smaller, domestic
packages; bulk freight is insured too.
These clauses were developed by the International
Chamber of Commerce as a means of Takaful for cargo
while it is being shipped from the original location to its final
destination.