Preface:
Excess of loss is effectively a ‘top-up’ limit of indemnity that sits in excess of the existing primary limit, and mirrors the cover provided by the primary wording.
Business are either compelled, or feel it prudent to buy ever higher liability limits – whether it a public or product liability. Court awards for traumatic injury and/or disability continue to grow, as do the costs of re-instating property damaged by the customers. Principals and/or main contractors require ever higher limits of cover before accepting contract tenders and entry point indemnity limits for local authorities continue to rise for even the most innocuous work. All the insurers are now-a-days coming with the innovative covers for these kinds of excess of Loss/Liability & Health Care / Expenses needs – with their specific attitude, creativity & experience of writing the Excess of Loss business throughout the worldwide network. The private players in Indian market have engaged themselves to offer significant levels of capacity on even for offering Excess of Loss capacity on liability / products exposures and health expenses for public. Similarly to cope with the ever increasing health care & hospital expenses the Top-up Health Insurance cover is also a dire need in Indian market in this current era.
EXCESS PRODUCT LIABILITY INSURANCE:
In India market some of the insurance companies have developed the structured underwriting approach that balances the desire to build an account with a need to maintain the underwriting discipline we recognized for. The insurer may accommodate general public liability /products risks and additionally, public liability from the construction sector.
Basically this Excess of Loss Liability Policy provides cover for all sums that the organization become legally liable to pay as damages within the scope of cover as defined in the policy wording. The policy may cover bodily injury to any employees arising out of and in course of their employment or accidental bodily injury to any person and/loss of or damage to property belonging to a third party. The Policy definition of bodily injury may be extended to mean death, injury, illness, or disease, false arrest, false imprisonment, invasion of right of privacy, detention, false eviction, malicious prosecution and nervous shock. This policy provide indemnity up to the limit of indemnity as specifically stated in the policy schedule, and shall be in excess of an underlying policy limit as stated in the schedule (i.e. this policy is issued above & over another policy covering similar liability of the same insured being existed with the other insurer). The limit is a maximum amount payable for each and every occurrence or event that occurs during the policy period either relating to Public/ Product.
This is a “Claims Made” Policy that only covers claims first made against the Insured during the Period of Insurance and notified to the Company as provided in this Policy. The Limit of Indemnity stated in the Schedule shall include costs and expenses including those incurred by the Company for and on behalf of the Insured.
This Policy, the Schedule and any Endorsements thereon shall be considered as one document and any word or expression to which a specific meaning has been attached in any of them shall bear such meaning throughout unless otherwise specifically provided.
The Insured and the Company agree that –
- The Proposal shall be incorporated in and be the basis of the contract
- The Company will subject to the terms of this Policy provide the Insurance described herein
- The following shall be conditions precedent to any liability of the Company:
- Observance of the terms of this Policy relating to anything to be done or complied with by the Insured.
- The truth of the Proposal.
INSURING AGREEMENT:
The Company will indemnify the Insured in excess of the Underlying Insurance as specified in the Schedule. Except as specifically set forth in the terms, conditions and endorsements of this Policy, coverage hereunder shall apply in conformance with the terms, conditions and endorsements of the Underlying Policy. However, this Policy does not cover any liability unless and until the Insurers of the Underlying Insurance shall have paid or have admitted or have been held liable to pay the full amount of their Limit of Indemnity.
UNDERLYING INSURANCE:
A Maintenance of Underlying Insurance
All the Underlying Insurance as specified in the Schedule shall be maintained during the Policy Period in full effect. The Company shall not be liable under this Policy to any greater extent than it would have been if the Insured had complied with this condition.
B Amendment of Underlying Insurance
No amendment to any Underlying Insurance during the Policy Period shall be effective in extending the coverage or Limit of Indemnity afforded by this Policy unless the Company so agrees in writing.
The Limit Of Indemnity
The limit of indemnity provided for Product Liability is a total amount (aggregate) payable under the policy irrespective of number of claims arising.
DEFINITIONS UNDER THE POLICY:
- COSTS AND EXPENSES mean costs and expenses incurred in the defense or settlement of any claim including costs and expenses incurred in engaging Senior Counsel.
- INSURED means any person or entity insured under the Underlying Policy.
- POLICY PERIOD means the period from the inception date to the expiry date as specified in the Schedule, or if the policy is terminated at an earlier date, then such earlier date of termination.
- UNDERLYING INSURANCE means all policies specified as such in the Schedule and any policy or policies replacing them.
LIMIT OF INDEMNITY:
The amount stated as Limit of Indemnity in the Schedule is the maximum amount payable by the Company under this Policy for all claims notified to the Company during the Policy Period. Provided that where the Company is liable to indemnify more than one Insured under this Policy, the total amount payable by the Company shall not exceed the Limit of Indemnity.
The Limit of Indemnity available under this Policy shall be reduced and/or exhausted by the payment of claim(s) and/or costs and expenses.
Exclusions:
The Insurance Company shall not be liable in respect of –
- Any claim arising prior to the Retroactive Date specified in the Schedule;
- Any claim or circumstance notified under any insurance policy which was in force prior to the inception of this Policy;
- Any claim of which the Insured was aware of prior to the inception of this Policy;
- Any circumstance which the Insured was aware of prior to the inception of this Policy which the Insured believed could give rise to a claim against them;
POLICY Conditions:
Notice of Claim
The Insured shall as soon as reasonably possible and practicable, give to the Company notice in writing of the following:
- Any claim made against the Insured;
- The receipt of notice from any person of an intention to make a claim against the Insured;
- Any circumstance of which the Insured shall become aware during the Policy Period which is likely to give rise to a claim against the Insured
– Irrespective of the Insured’s views as to the validity of the claim.
Any subsequent claim or claims arising out of the circumstances first notified to the Company (whether such circumstances are notified as part of an actual claim made against the Insured or any intimation thereof or otherwise) during the Policy Period shall be deemed to have been made during the same Policy Period in which such notice was given irrespective as to whether such subsequent claim or claims are made after the expiry of this Policy.
Settlement:
The Insured shall not admit liability for or settle any claim for any amount that would involve the coverage afforded by this Policy without the Company’s prior written consent. The Company may, at its sole discretion, elect to participate in the investigation, settlement and/or defence of any claim against the Insured even if the Underlying Insurance has not been exhausted. The Company shall be entitled at any time to take over and conduct in the name of the Insured the defence or settlement of any claim.
Nevertheless, the Insured shall not be required to contest any legal proceedings unless a Counsel or Senior Counsel (to be mutually agreed upon by the Insured and the Company) shall advise that such proceedings should be contested.
Subrogation and Recoveries:
- In the event of any payment under this Policy, the Company shall be subrogated to all the Insured’s rights of recovery against any person or entity, and the Insured shall execute and deliver all instruments and papers and do whatever else is necessary to secure such rights.
- Any amount recovered or received after payment of a claim under this Insurance shall be treated as if received prior to settlement of the claim which shall then be adjusted between the Company, the insurers of the Underlying Insurance and the Insured.
- If any claim be in any respect fraudulent or if any fraudulent means or devices be used by the Insured or anyone acting on the Insured’s behalf to obtain benefit under this policy all benefit hereunder shall be forfeited
- If after acceptance of this insurance by the Company there be any change in the circumstances of the risk the Insured shall forthwith give notice thereof to the Company.
Notices:
If the insurance was arranged through a Broker, the Insured shall send all communication required by this Policy to the Insurance Broker in writing for onward transmission to the Company and receipt of such communication by the Insurance Broker shall be deemed to be good and sufficient receipt by the Company.
ARBITRATION:
If any dispute or difference shall arise as to the quantum to be paid under the policy (liability being otherwise admitted) such difference shall independently of all other questions be referred to the decision of a sole arbitrator to be appointed in writing by the parties to or if they cannot agree upon a single arbitrator within 30 days of any party invoking arbitration the same shall be referred to a panel of three arbitrators, comprising of two arbitrators, one to be appointed by each of the parties to the dispute/ difference and the third arbitrator to be appointed by such two arbitrators and arbitration shall be conducted under and in accordance with the provisions of The Arbitration and Conciliation Act, 1996.
It is clearly agreed and understood that no difference or dispute shall be referable to arbitrations as herein before provided, if the Company has disputed or not accepted liability under or in respect of this policy.
It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that award by such arbitrator/ arbitrators of the amount of the loss or damage shall be first obtained.
The due observance and fulfillment of the terms, provisions, conditions and endorsements of this Policy in so far as they relate to anything to be done or complied with by the Insured shall be conditions precedent to any liability of the Company to make payment under this Policy.
Policy Disputes Clause
Any dispute concerning the interpretation of the terms, conditions, limitations and/or exclusions contained herein is understood and agreed to by both the insured and the company to be subject to Indian law. Each party agrees to submit to the jurisdiction of any court of competent jurisdiction within India and to comply with all requirements necessary to give such court of jurisdiction. All matters arising hereunder shall be determined in accordance with the law and practice of such court.
Cancellation Clause:
The company may cancel this Policy by giving 30 days’ notice in writing of such cancellation to the insured’s last known address and in such an event the Company will return a pro-rata portion of the premium (subject to a minimum retention of 25% of the annual premium) for the un-expired part of the Insurance.
SPECIAL ENDORSEMENT:
TERRORISM EXCLUSION ENDORSEMENT-
Notwithstanding any provision to the contrary within this Policy or any endorsement thereto it is agreed that this Policy excludes all claims directly or indirectly caused by, resulting from or in connection with any act of terrorism regardless of any other cause or event contributing concurrently or in any other sequence to the loss.
For the purpose of this endorsement an act of terrorism means an act, including but not limited to the use of force or violence and/or the threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organization(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government and/or to put the public, or any section of the public, in fear.
This endorsement also excludes loss, damage, cost or expense of whatsoever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to any act of terrorism.
In the event any portion of this endorsement is found to be invalid or unenforceable, the remainder shall remain in full force and effect.
SCHEDULE OF THE POLICY:
EXCESS PRODUCT LIABILITY INSURANCE
- Policy No :
- Company :
- Agent/Broker :
- Insured :
- Address :
- Business :
- Period of Insurance :
- Premium :
- Limit of Indemnity :
- Underlying Insurance:
- Excess Layer Policy:
- Limits of liability :
- Retroactive Date :
- Territory :
- Jurisdiction :
- Insurance Coverage :
- The policy wordings subject to the following clauses:
_____________________________
Authorized Signatory of the Insurer
Date of Issue:
Top-up HEALTH INSURANCE or high deductible insurance plans:
Here this top-up health insurance cover is also known as a high deductible policy. Most people in almost in the international markets buy top-up covers in addition to high co-pay policies or uncovered diseases or treatment. However in India, the key reason for introduction of top-up cover initially seems to be lack of high sum insured products, though the same is no longer remains the case. The maximum amount of cover under a health policy remained at Rs 5, 00,000 for a considerable long time. Anyone wanting a higher cover was forced to buy two policies paying double the premium. This led to the development of the Top-Up policies by insurers, which offers cover for high sum insured over and above a specified amount (called the threshold limit or deductible).
This policy works along with a basic health cover having a low sum insured and comes at a comparatively reasonable premium. For example, individuals covered by their employers can also opt for a top-up cover for additional protection (keeping the sum insured of the first basic policy as the threshold). This can be for self and family, which comes in handy in the unfortunate event of high cost treatment. To be eligible to receive a claim under the top-up policy, the medical costs must be greater than the deductible (or threshold) level chosen under the plan and the reimbursement under the high deductible plan would be the amount of expense incurred i.e. greater than the deductible.
A case in point:
If the cost of a single hospitalization is Rs. 5 lacs, the basic policy would cover up to Rs. three lacs only. With the top-up cover, the balance sum of Rs. two lacs would be paid out by the top-up policy. Top-up policies come cheap and the cost of a single Rs. 10 lacs policy would be far higher than the top-up policy of Rs. 10 lacs in excess of Rs. three lacs. An individual is covered for a sum insured of Rs. 3 lacs by his employer. He could opt for a top-up policy of Rs. 10 lacs in excess of Rs. 3 lacs.
CHARACTERISTICS OF TOP-UP HEALTH INSURANCE POLICY:
These covers are available on individual basis and family basis. Individual sum insured for each family member covered or a single sum insured as floating over the family as offered in the market today. In case the top-up plan requires the deductible amount to be crossed at every single event of hospitalization, the plan is known as a Catastrophe based high deductible plan. This means that is to be payable, in the example given above, each and every claim must cross the threshold limit of Rs. 3 lacs. However top-up plans that allow the deductible to be crossed post a series of hospitalizations during the policy period are known as Aggregate based high deductible plans or super top-up cover as known in the Indian bazaar. This means that, in the example given above, each and every claim is added and when this crosses threshold of Rs. 3 lacs, the Top-up cover would start paying claims.
Most of the standard terms, conditions and exclusions of a hospital indemnity policy apply to these products. In some markets, where basic health cover is provided by the Government, insurers mostly deal only with conceding the Top-Up covers with the individual entity that cares for the exorbitant increase in medical expenses.
REFERENCE: Different contemporary discussions & information as collected & collated from various text materials available on-line & in hard copies.
Author
Anabil Bhattacharya
Published : The Insurance Times, September 2018
