FACTORY INSURANCE

Industrial clients often have the need to protect themselves from material damage to their premises, machines, stocks, etc. Apart from this they would also be interested to get compensation from insurance companies in the event that there is an interruption of their business where their turnover will be drastically reduced. Often, there is also the risk of liabilities that they have to insure against including liability arising from the usage of the goods they produce or the property damage that their businesses cause to third parties.


TYPES OF POLICIES


FIRE INSURANCE

RFT stipulates that by paying the basic rate, a property can be covered against fire, lightning and domestic gas explosion. If additional premium is paid, additional perils such as riot, strike, and malicious damage, impact damage, storm, tempest, earthquake, volcanic eruption, bursting and overflowing of water tanks, apparatus and pipes and flood can also be covered.

Again, as mentioned above, from 2016 the market will move away from the requirements of the RFT as the market attempts to liberalizes.

Whilst the RFT allows discount for good fire fighting features, we expect this to continue in a detariffed environment.

FIRE CONSEQUENTIAL LOSS (FCL) INSURANCE

The business interruption aspect following a fire (loss of profit or increase in cost of working) can be covered by a FCL policy. The rationale for a claim is that, following a fire, there is down time or reduction in a business’s turnover. This loss can be covered under such a policy.

Apart from the loss of profit, the increased in overhead expenses, cost of working and wages can also be covered.

If you are thinking of this cover we would advise you to ponder on the indemnity period which is the maximum length of down time your turnover will suffer before your plant or factory is repaired and put into a running condition again.

INDUSTRIAL ALL RISKS (IAR)

Industrial All Risks (IAR) covers accidental loss or damage to insured property at the location specified in the policy. The cover provided is against all perils other than those specifically listed under Excluded Perils. This is a single policy which covers loss or damage to property (Section 1) or Loss of income or profits caused by interruption in consequence of an indemnifiable material damage loss (Section 2).

Under Section 1, all personal and real property can be covered, such as, Buildings, renovation and improvements, Furniture, Fixtures and Fittings, Office Equipment, plant and machinery, Stock in Trade etc. The normal IAR Policy covers Fire, Perils such as Burglary, Riot, Strike and Malicious Damage, Earthquake and Volcanic Eruption, Cyclone, Flood and Accidental damage.

Certain Properties such as Money, Securities, Jewelleries, work of art, road vehicles, Property in transit, stock in process etc are not covered under IAR Policy. The Policy also excludes cover for losses due to faulty design, larceny, fraud or dishonesty, willful negligence, war and terrorism, Nuclear and radioactive contamination and a few other perils.

Under Section 2, the loss of profit, loss of revenue or loss of rental income can be covered. Cover can also be available for standing charges and Additional Cost of Working incurred in consequence of the material damage loss. Insufficient capital, restrictions imposed by Public Authorities, Loss due to Lack of Orders etc is also not covered under the policy.

However, to qualify for this the combined Material Damage and Business Interruption at one location must exceed RM50 million.

BURGLARY INSURANCE

This covers against theft to property and stock. Normally the item must be contained in the premises. Some policies require you to prove the act of forcible entry, someone hiding in the premises, forcible exit, armed robbery or attempt to rob.

You can often choose to insure on full value or maximum value per loss basis.

First Loss Basis – we let you determine an amount out of the full value, most likely to be stolen or damaged at any one time, should there be a theft or attempted thereof This option allows you to save by paying a cheaper premium for adequate coverage.

Full Value Basis - the sum insured represents the full value of the property insured against. For this, stock record keeping is required.

MACHINERY AND EQUIPMENT (M&E) INSURANCE

On such valuable and expensive equipment, we provide all risk cover for physical loss of or damage to your computer and electronic equipment. With the increased use of technology in offices, we will also cover you for the additional expenditure and for the use of substitute equipment, in the event of loss.

In addition to any unforeseen and sudden physical loss or accidental damage of equipment, coverage is also offered in respect of loss of data, external data media, equipment breakdown (including negligence breakdown), and increased cost of working with an optional extension of cover for loss or damage due to riot and strike and civil commotion.

The M&E policy can also be used to cover immobile industrial or commercial equipment from fire, lightning, theft and external or accidental damage.

MOBILE PLANT AND EQUIPMENT INSURANCE

The intention of this policy is to cover mobile equipment that is not licensed for road use. For examples vehicles such as forklifts, excavators, mobile cranes, tractors.

The loss or damage to equipment are covered from perils such as accidental collision, overturning, or collision consequent upon mechanical derangement , fire , external explosion, lightning, burglary, housebreaking or theft.

BOILER AND PRESSURE VESSEL INSURANCE

Explosions of boilers can cause severe property damage and injury but these events can be covered by a boiler and pressure vessel insurance. Explosions of boilers can cause severe property damage and injury but these events can be covered by a boiler and pressure vessel insurance.

MACHINERY BREAKDOWN (MB) INSURANCE

This policy covers sudden and unforeseen physical damage or loss to machinery at work or at rest during inspection, resting, overhauling or removal to another positon within the premises.

However, since there is already a fire policy in place, the MB policy would exclude fire.

MACHINERY BREAKDOWN LOSS OF PROFIT (MBLOP) INSURANCE

The MBLOP policy provides coverage for loss of gross profit due to business interruption caused by an accident covered under the MB insurance. The loss of profit or increase in cost of working is covered, just like the fire con loss policy. The rationale for a claim is that following an insured event there is down time or reduction in business turnover.

PRODUCT LIABILITY

This Policy provides coverage for loss of or damage resulting in deterioration to frozen or refrigerated goods, caused by the accidental rise or fall in temperature due to the breakdown (whether mechanical or electrical) of your refrigeration device, escape of refrigerant gas, non-operation of thermostatic or automatic controlling or recording apparatus. Coverage for loss of or damage of stock as a result of accidental failure of the public electricity supply can also be added at additional cost.

This policy covers loss due to deterioration of stock in the cold storage rooms following material damage to the plant covered by the machinery breakdown insurance.

DETERIORATION OF STOCK INSURANCE

The products liability insurance covers manufacturers or suppliers’ risk of liability claims. The cover is in respect of defective design, manufacturing processes, packaging and labeling. The plaintiff would normally have to prove an injury or property damage before a legal suit can be brought to the policy holder.

The products liability policy would then provide coverage to the Insured for the sums the Insured becomes legally liable to pay as damages for death, bodily injury or property damage arising out of the defective products. As with most liability policies, legal defense fees and expenses are covered.

Like a PI policy, products liability covers are normally issued on “claims made” basis.

With additional premium, the policy can be extended to cover the cost of recalling defective products and also vendors’ liability.

GROWING TREES INSURANCE

If you operate a rubber, palm oil, cocoa or other plantations, we can cover the loss of your trees due to fire or lightning or selected perils as per the fire tariff.

TRADE CREDIT INSURANCE

Trade credit insurance, in which we are one of the pioneers, provides cover against the risk of buyers on payment for goods and services provided a seller. If the buyer refuses to pay or cannot pay due to bankruptcy or liquidation, or just protracted delay, the insurers will indemnify you. Political risks are also covered in many circumstances if your buyers are outside the country.

EMPLOYERS’ LIABILITY (EL) INSURANCE

The EL covers employers for law suits brought about by employees who are not protected by the WC Acts or SOCSO. This policy covers you against liability at law to pay compensation and cost and expenses to your employees in respect of accidental bodily injury or disease arising out of or in the course of employment.

DIRECTORS’ AND OFFICERS’ (D&O) LIABILITY INSURANCE

The D&O policy provides coverage for directors and officers against personal liability that they may incur in respect of amounts which they legally have to pay in respect of claims made against them. These claims arise out of the performance of their duties. Claims can be paid due to civil damages or settlements, financial loss of third parties and defense costs.

Basically many wrongful acts are covered, and retroactive dates can be included. The policy can also be added to include various extensions like spouse and subsidiary companies. If a Director has left but a legal suit arrives, we can also advise you on the coverage under this circumstance.