The insurance regulator may step in if insurers to Gammon India’s ill-fated Hyderabad bridge refuse to pay claims as per clauses in the contract, reported Economic Times today.
It is alleged that insurers including ICICI Lombard and Reliance General insurance could refuse to pay claims citing wilful negligence and faulty design-risks which are not covered under such policies.
The state government appointed an enquiry committee, which is expected to submit its report shortly. If investigations reveal that the collapse was due to wilful negligence and faulty design, insurers will not pay out claims. Both ICICI Lombard and Gammon India officials refused to comment.
Risks such as wilful negligence, faulty design and workmanship, normal exclusions like war and nuclear perils are not covered under such covers. Not only will basic claims not be paid, even third party claims may be ruled out, said sources.
It is understood that Oriental Insurance Company also has exposure to the Gammon India project for building the flyover. Sources in an insurance company said negligence as a risk is not spelt in statutory law, but under torts, it may be established that the victims were under the flyover by their own discretion.
It is not clear whether specific instructions were put out by the contractor or Gammon India warning the risks at the construction site. Gammon India did not respond to an e-mailed query. Consultants were appointed on behalf of the government and were supposed to monitor the implementation of the project. The 1.7-km flyover was taken up in September 2005 for an estimated cost of Rs 30 crore.
Already, a case has been registered against Gammon India for criminal negligence. If the claim payout is substantial, it could have a material impact on the balance sheet of the company.
Officials at Oriental Insurance said, “Usually policies for civil structures are all-risk covers where elements such as the property erected, the implementing machines and a third party extension that covers loss of life and property is insured.” Specific details of the policy were not disclosed.
The sum assured is determined by the company depending on the exposure to risk. In a busy area, the third party risks will be higher and will need a higher premium. There is enough credible data on risks involved with such construction to give a reference point on the size of the risk and premium needed, he said.
The size of the premium for such policies is decided by the cost of the project and the creation of liability. The claims are usually determined by litigation — and largely settled outside court on a case-by-case basis.
In motor accidents, the compensation is linked to income status and productive years left as per Supreme Court guidelines. In this case, the vehicles crushed under the flyover would be paid compensation by the government if they are not covered by motor insurance
Source: The Economic Times
It is alleged that insurers including ICICI Lombard and Reliance General insurance could refuse to pay claims citing wilful negligence and faulty design-risks which are not covered under such policies.
The state government appointed an enquiry committee, which is expected to submit its report shortly. If investigations reveal that the collapse was due to wilful negligence and faulty design, insurers will not pay out claims. Both ICICI Lombard and Gammon India officials refused to comment.
Risks such as wilful negligence, faulty design and workmanship, normal exclusions like war and nuclear perils are not covered under such covers. Not only will basic claims not be paid, even third party claims may be ruled out, said sources.
It is understood that Oriental Insurance Company also has exposure to the Gammon India project for building the flyover. Sources in an insurance company said negligence as a risk is not spelt in statutory law, but under torts, it may be established that the victims were under the flyover by their own discretion.
It is not clear whether specific instructions were put out by the contractor or Gammon India warning the risks at the construction site. Gammon India did not respond to an e-mailed query. Consultants were appointed on behalf of the government and were supposed to monitor the implementation of the project. The 1.7-km flyover was taken up in September 2005 for an estimated cost of Rs 30 crore.
Already, a case has been registered against Gammon India for criminal negligence. If the claim payout is substantial, it could have a material impact on the balance sheet of the company.
Officials at Oriental Insurance said, “Usually policies for civil structures are all-risk covers where elements such as the property erected, the implementing machines and a third party extension that covers loss of life and property is insured.” Specific details of the policy were not disclosed.
The sum assured is determined by the company depending on the exposure to risk. In a busy area, the third party risks will be higher and will need a higher premium. There is enough credible data on risks involved with such construction to give a reference point on the size of the risk and premium needed, he said.
The size of the premium for such policies is decided by the cost of the project and the creation of liability. The claims are usually determined by litigation — and largely settled outside court on a case-by-case basis.
In motor accidents, the compensation is linked to income status and productive years left as per Supreme Court guidelines. In this case, the vehicles crushed under the flyover would be paid compensation by the government if they are not covered by motor insurance
Source: The Economic Times
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