How to protect Hurricane Damage with Insurances?

How to protect Hurricane Damage with Insurances?

How to protect our property from Hurricane Damage with Insurances? Typhoons and hurricanes frequently occur to our shore. Thus, are we prepare for this monstrous destruction?. Having said that, have we buy adequate insurance coverage to protect the sweet nest. But nevertheless, it is not too late to consult your intermediary. Not only frequently occur, but also the damage becomes more severe as times go. In fact, Climate change is taken too lightly by world leaders. Likewise, climate change also highlighted by Greta Thunberg in the recent United Nations youth forum.

Generally speaking, Malaysia is a safe haven from the natural disaster, but lately, storm-lashed on Penang, Kedah, and Perlis. The storm was a side effect of Typhoon Lekima heading towards eastern China, according to the Malaysia Metrological Department.

How to protect Hurricane Damage with Insurances?
How to protect Hurricane Damage with Insurances?

How to protect Hurricane Damage with Insurances?

Can I insure my house against Hurricane, cyclone, typhoon, windstorm, and flood? Of course, you can. 1st you need to have a fire or home insurance, not only your house, but also the contents, including your personal effect. You need to incur some extra premium with these 2 extension clauses. In the long run, it is worth it.

How to protect Hurricane Damage with Insurances?
How to protect Hurricane Damage with Insurances?


Basically, typhoon insurance covers only wind damage. Loss or damage caused by rain, regardless of whether driven by wind. The damage covered only the actual damage to the roof or walls by the direct force of a typhoon. The insurer is liable for loss or damage to the building. Whereby, the rain entering the building through openings in the roof or walls caused by the typhoon. Having said that, the negligence of the insured, not payable for the water damage due to the doors, windows, transoms or roof lights left open. Even, with the existence of the presence of a typhoon. In fact, the insurer does not cover human error whether it is intentionally or unintentionally. There is no such saying the insured’s right to claim when one has policy coverage of their home or house content. 

Will Homeowner Policy Cover Hurricane Damage?


How to protect Hurricane Damage with Insurances?

Homeowner policies cover different aspects of damage to your home caused by storms and tempests. Some hurricane damage may be covered. However, in most cases due to the types of extensive damage, a hurricane may cause. The majority of the people in a hurricane-prone area need more than one policy to cover damages. Whether you covered or not depends on:

  1. The type of damage.

2. How it was caused.

3. The type of homeowner coverage you purchased and where you live.

How to protect Hurricane Damage with Insurances?

High-Risk Zones and Restrictions on Coverage

As a matter of fact, different coverage for property that build on high or low-risk zone designation. Depending on the location you live, your home, renter or condo policy may cover some of your property from damages resulting from hurricane-force wind damage. However, areas that are prone to hurricanes (and also tornadoes) may have exclusions for this type of wind damage. Additionally, you need to add an endorsement for windstorm coverage. 

In addition to variations in coverage based on the state or area, you live in. To make the matter worse, due to the complexity of hurricanes cause different kinds of damage. Thus, under your homeowner policy alone,, not all damages are covered. Therefore, it is best to consult a qualified agent to handle the contract of policy.

How to protect Hurricane Damage with Insurances?

Need More policy for Hurricane Home Damage Coverage

Hurricanes damage to property hail from various sources. Although people often worry about wind damage from hurricanes. In actual fact, they forget that the water damage is the most severe. Because of this, it is important to consider the different kinds of coverage. The insurance covers Hurricane damage in three ways:

  • Homeowner, Renter or Condo Insurance (Windstorm and sewer backup endorsements).
  • Windstorm Coverage.
  • NFIP Flood Insurance and Excess Flood Insurance (for sum insured of homes above $250,000 in value).

Sewer Back-Up Endorsement

How to protect Hurricane Damage with Insurances?
How to protect Hurricane Damage with Insurances?

Note the actual cause of sewer backup may also occur. If the cause is heavy rainfall, a sewer backup endorsement needs to appear in the policy. The coverage based on the wording and exclusions of your policy. However, equally important how the insurer gives a definition of the event. If it is a result of a flood, sewer backup may not pay.

For example: If the sewer backup caused by a flood, and you did not have flood insurance, thus, no liability to the insurer. Sewer Back-Up could happen without a flood, and in this case, it may be covered if you had the endorsement.

What Kinds of Damage Will a Hurricane Cause?

Hurricanes cause various types of damage. The most common damages to your home from a hurricane or tropical storm will occur from certain risks and perils like:

  • Wind 
  • Heavy Rainfall
  • Flooding
  • Storm surge
  • Tornadoes
  • Sewer Back-Up

Flood Insurance

How to protect Hurricane Damage with Insurances?

The flood insurance, not cover are loss or damage caused directly or indirectly by landslide, subsidence, explosion whether incidental or not. Likewise, it applies to theft whether occurring during or after a flood. The following do not constitute a flood.. For instance, overflowing, bursting or leakage of water tanks, pipes, gutters, downpipes, and public water supply mains, backing up of sewers or drains.

How Flood Insurance Works

How to protect Hurricane Damage with Insurances?

By definition, a flood insurance policy is conversely different than basic hazard insurance or homeowner’s insurance policy. As a matter of fact, it only covers losses due to flooding. Standard homeowner’s insurance policies will cover most other losses with the exception of flooding. Moreover, the claimable events for homeowner’s insurance include losses sustained by fire. Also, it includes wind damage, and falling trees, to name a few. However, unlike a standard hazard policy, the insured need to buy separate flood insurance for a building and its contents.

National Flood Insurance Program’s

Flood insurance policies cover not only for all homes and commercial properties but also in the National Flood Insurance Program’s (NFIP) floodplain. However, properties located in a flood zone and are mortgaged by a federally backed lender. Thus it will require adequate flood insurance coverage to receive financing aids. The NFIP regulates premiums are all the same regardless of purchase from an agent. Uniquely, consideration like flood probe zone designation, age of the property, and numbers of floors coupled with the frequency occurrence of the flood have impact premium calculation.

Motorcar damage insurance

The standard 1st party motor Car policy does not cover “any accident, loss, damage. Or liability directly or indirectly, proximately or remotely occasioned by caused by any traceable of a flood, typhoon, and hurricane. Some insurers to cover these perils at an additional premium. Others reject it even though the insured willing to pay the extra premium. It is mainly due to a reinsurance or co-insurance treaty.

Personal accident policy usually does not cover against a tidal wave.

Some insurers cover you against hurricane only if your house made of concrete under a galvanized iron roof. Or against flood only if your house is built on high ground. It is best to let your insurance agent or broker negotiate with their principal.

In the final analysis, the insured should take up an adequate hurricane damage house insurance.

Temple Riot How to Protect your Property from being Damages?

Temple Riot How to Protect your Property from being Damages?

Temple Riot How to Protect your Property from being Damages?

Recently, the Subang Jaya Hindus temple riot shocking and terrified the whole world with prominent coverage by the mass media. The churned car piling on the eerie silence road aftermath had alarmed the public. How to safeguard their private property?  Contrasting, 2000 mobs rioted on the Hindus temple caused horrendous massive traffic on a standstill that stretching for miles. The hiring of the professional thug, would anybody can self-defences against them? Of course, the most sensible is to flee for your own safety. But, nevertheless, how shall we protect our movable and immovable chattels?Temple Riot How to Protect your Property from being Damages? 1

Temple Riot, how to protect your property from being damaged?

Riot in a nutshell.

At least three persons present in one venue.
Gather for a common purpose.
Execute or inception of the common purpose.
Assist mutually one another by force, if necessary, in the execution of the common purpose.
Display forcibly and violence to alarm one person of reasonable firmness and courage.

Malicious Damage covers the non-fire damage acted by an individual person acting out of personal malice as opposed to a large group. Nevertheless, the riot coverage formed part of malicious damage.

Virtually, a malicious person with the sole intention to damage your property e.g. like spraying acid or paint.

A malicious act caused by anyone committed during a disturbance of the public peace resulting in the physical loss or damage yielding a fruitless result. Who is the victim? Often the public needs to pay a high hefty loss of money and endless emotional damage. Loss caused by sabotage and terrorism with the use of force or violence. Regardless the purposes could it be political, religious or ideological motivated with the intention to influence any government and/or to put the public in fear for such purposes.

How to protect our property from riot?

Regardless of your social status in the community, when a disaster strikes on your house, indeed a misfortune, so, how shall we overcome? Depend out a handout from the concerned authority or seeking a public donation. Notwithstanding, Self-help is a wise idea.

Having said that, the preferred solution by examined closely your fire or householder or house owner policy. Finally, contributed an insignificant sum of premium and have a peaceful mind. In the end, an insurer shall pay any physical damage or loss due to riot provided strike, riot and malicious damages inserted as an extension clause. Terminated the countless sleepless night and pointless to save a penny, ultimately, you lost an arm and leg when a riot occurs.

Let put a scenario, an exporter stuffed their produce in the FCL, as the space constraints in the factory premises. The container parked by the side of the public road in front of the premise, within the view of the 24 hours security guard.

Well, in another case, an importer due to the closing of unloading bay was full, after 6 pm, the workers had gone home for the day. Consequently, on seeing this situation, the haulier company left the FCL container on the opposite of the road.

If the rioters damaged part of the consignment cover under ICCC “A” clause for both cases, will the insurer repudiate the claim?

What about land transport like car, low-loader, forklift. Excavator, motorcycle, Is riot cover such movable automobile?.

A riot occurs, how we can protect the merchandise from riot? How shall we deal with kind of situation, Reader, please share your view and comment!. Humbly, I sincerely appreciated your time for writing your view or comments. Let us share the knowledge in this forum together.

Typhoon survival tips before and aftermath

Typhoon survival tips before and aftermath

Typhoon survival tips before and aftermath

Florida braced the impact of Hurricane Irma destroyed of million homes, gigantic economic lost. The economic cost of Hurricane Irma could rise as high as $300bn the storm lashes Florida, damaging homes, businesses and key crops including orange groves.
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The recent masses 6.3 million evacuations of Florida before the imminence of the category 5 of Hurricane Irma is a lesson learned by the Trump admiration about the global warming. The speed of 150 Km per hour sweep away houses, vehicle along its path uproot trees, resulting in a million lost their home, no supply of electricity and clean water.

The storm has already unsettled the monetary markets, sending insurance shares falling. An analyst from a stockbroker company positioned the general economic value at $300bn, with insurance firms probably at the hook for among $100bn and $150bn while the smooth-up operation gets underway.

The bulk of Irma’s claims are probably for wind damage. With a predicted 300 000 claims for wind damage and one 150 000 claims for flood damage, insurance claims for Irma expected to obtain extra than $40 billion. However, insurers handling Irma can also attempt to wriggle out of protecting houses with each wind and water damage through bizarre “anti-concurrent-causation” clauses – that is, clauses that put off insurance for wind damage if an “uninsured flood” takes place on the equal. Those egregious clauses are not possible for consumers to understand, as the general public cannot consider insurers could sell them a policy with wind coverage that could disappear playing with insurance technical jargon words.

What to do with a Typhoon imminent?

Typhoon survival tips before and aftermath

Before the Typhoon:

  • Prepare an adequate storage supply of meals and drinking water.
  • It is vital to store at the least 2 weeks of canned food and mineral water.
  • Preserve flashlights, candles and battery-powered radios within easy reach.
  • Examine your own home and restore its unstable parts
  • Harvest the mature plants or crops.
  • Keep domesticated animals in a safety ground.
  • For the fisherman, anchor boats in a sheltered area.
  • Have you needed to evacuate, carry clothing, blankets, whistles, first aid package, candles/flashlight, battery-powered radio, meals, and some cash?

At some point of the storm:

  • Stay indoors.
  • Prepare constantly having the latest weather forecast result from radio or social media.
  • If the drinking water is not suitable for human consumption, advise boiling the water at least 20 minutes before drinking.
  • Covers container of water with a lid.
  • Saves some lighted candles or fuel lamps.
  • Do not go through floodwaters to avoid being electrocuted and contracting illnesses.
  • If there is a need to move to an evacuation center, follow those instructions.
  • Evacuate calmly.Close the home windows and turn off the main electricity switch.
  • Put essential home equipment and belongings on a high floor.
    Keep away from the fast swift following water.
  • Make a communication plan with family
  • Ensure a proper meeting place if the smartphone is not working.
  • Note down the important emergency number.

After the typhoon:

  • If typhoon destroys your private home, it is advisable to stay elsewhere.
  • Watch out for snakes which can have entered your house
    Return home only after authorities have given the green light announcing the if is safe for the dwelling.
  • Be careful with the wires immersed in water that can cause electrocution
  • Make a report of broken electrical cables and fallen posts to the concerned authority.
  • Do not allow the water stagnant in tires, cans or pots to avoid a breeding ground for mosquito.
  • Remember, preparedness is the key. Be smart and stay alert.

Can I insure my house against typhoon and flood?

Yes, 1st you need to have a fire or home insurance, not only your house, but also the contents, including your personal effect. You need to fork out the extra premium with these 2 extension clauses.

What does Typhoon Insurance cover?

Basically, typhoon insurance covers only wind damage. Loss or damage caused by rain, regardless whether driven by wind. The damage covered only the actual damage to roof or walls by the direct force of a typhoon. The insurer liable for loss or damage to the building or insured property whereby the rain entering the building through openings in the roof or walls caused by the typhoon. No cover for the water damage due to the opening of the of doors, windows, transoms or roof lights being left open, in spite of the existence or presence of a typhoon.

Flood Insurance

The flood insurance does not cover are loss or damage caused directly or indirectly by landslide, subsidence, explosion whether incidental to flood or not, theft whether occurring during or after a flood. The following do not constitute as a flood: overflowing, bursting or leakage of water tanks, pipes, gutters, downpipes, and public water supply mains, backing up of sewers or drains.

Motorcar damage insurance

The standard 1st party motor Car policy does not cover “any accident, loss, damage, or liability directly or indirectly, proximately or remotely occasioned by caused by any traceable of a flood, typhoon, and hurricane.” Some insurers are willing to cover these perils at an additional premium. Other rejects it even though the insured willing to pay the extra premium. It is mainly due to reinsurance or co-insurance treaty.

Personal accident policy usually does not cover against a tidal wave.

Some insurers cover you against typhoon only if your house made of concrete under galvanized iron roof, or against flood only if your house is built on high ground. It is best to let your insurance agent or broker negotiate with their principal.

Typhoon survival tips before and aftermath 2Typhoon survival tips before and aftermath 3

Determine the Sum Insured for Loss of Profit Insurance

Determine the Sum Insured for Loss of Profit Insurance

How to Determine the Sum Insured for Loss of Profit Insurance?

Loss of Profit insurance is a complex field sending a spine- chilling signal to even veteran insurance broker, but when mastering the subject, another income from cross-selling. Providing an insight into this cover explains, in plain layman English, to derive the sum insured.

The accountant terms on gross profit are entirely different from the insurance point of view as the definition relates to Income minus Expenses during shut down period.

Two ways on calculates the Loss of profit insurance either on an Additions or on a Difference basis.

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Addition

The Additions basis insure by adding the Net Profit and all the Standing Charges.
* The total Net Profit (before deduction of Income Tax) generated annually for running a year of business without interruption.
* Standing Charges are those expenses incur regardless whether the business is in operation, e.g. rent, salaries, hire purchases, lease agreement payments, etc.

Difference

The Difference basis deducts those working expenses not required to cover from the Turnover.

* Turnover is the total sales amount received for the business activity undertaken.

* Uninsured Working Expenses are the total of all those eliminated expenses not required any business termination, e.g. purchases, commissions, packaging, outsourcing, contract workers, part-time worker, transport.

Insurance Gross Profit

We establish the insurance Gross Profit figure based on

Net Profit before tax known called it Net Profit before Tax
Standing Charge termed as fixed costs.

Uninsured Working Expenses termed as variable expenses.
Turnover called “income” or “sales” or “revenue”.

Notice that the Turnover of the business comprises Net Profit before Tax + Fixed and Variable costs or expenses.

Rate of Gross Profit

The Loss of profit policy wording is the only wording that actually guides insured on how to calculate a claim and therefore assists in establishing a sum insured. The claim settlement requires that the Rate of Gross Profit applies to the shortfall in Turnover expected by looking backward and adding any future enhanced trends. Briefly to say that businesses rarely change on a successful duplicated operating system to generate further turnover and any supplement to keep up with the inflation upward trends.

However, copying last year operating system means that all the ratios against Turnover will probably remain stable – so the more sales volume means the more increase the operation cost. So a 15% increase in turnover correspondingly 15% increase in the working cost. (This is a minimum percentage to keep ahead of inflation) If not, then the business has not copied last year’s system 100% and the broker needs to prove the reason.

The Rate of Gross Profit is the percentage ratio of the insurance Gross Profit to the Turnover. In other words:

Rate of Gross Profit =Turnover x 100

The broker assists the insured by taking the last financial report (Balance Sheet and profit and loss account and stock) figures for fixed costs, variable costs and NPBT and calculates the Gross Profit, as per the insurance definition. When both agreed on the method to establish the rate of gross profit and will use for future reference provided the rate is correct. Since all business increases their Turnover every year by more than the inflation rate, the client must agree to their expected annual Turnover increase percentage.

So the insured now has a Rate of Gross Profit and an annual expected Turnover increase rate.

Next, the insured needs to calculate their expected Turnover for the year after the expiry of the next period of insurance. This means that the insured looking two years beyond for projection. This turnover applies the Rate of Gross Profit and that is the expected Gross Profit.

Adding the VAT to this expected rate of gross profit and round to the nearest $100.00, inflates twice the figures, but the premium only charged on 75% of this Gross Profit sum insured.

Example figures

Fixed Charges= $5 million
Variable Expenses= $4 million
NPBT= $500 000.00

Turnover 31/12/2016= $10 million
Insurance Gross Profit =$6 million
Rate of Gross Profit =60%
Turnover increased =15%

Period of Insurance 01/01/2017 to 31/12/2017
Expected Turnover =$11.5 million

Year after expiry of policy 01/01/2018 to 31/12/2018
Expected Turnover= $13 225 000.00
Thus Insurance Gross Profit= $13 225 000.00 x 60% (Rate of Gross Profit)
Gross Profit Sum Insured= $7 935 000.00
Plus 6 % Vat ($7 935 000.00 + 476 100.00) = $8 411 100.00
The sum insured calculates on 75% of $8 411 100.00 =$6 308 325.00

It is our broker’s duty to aid the insured on deriving a reasonable sum insured. The insured’s understanding on the calculation is crucial to avoid future dispute when a claim incurs. However, to safely guide the broker from the insured sued the former for professional indemnity. Advisable requesting the insured signs a document stating that they agree with the method used and that the figure is acceptable.

End of Policy Year Adjustment

If the client achieves marginal  15% increase in their Turnover, during the insured period, adjustments require, we arrive at the following figures:

Turnover= $11 500 000.00

Gross Profit =$6 900 000.00 (60% of Turnover)

Plus 6 % VAT ($6 900 000 x 6%) =$7 314 000.00

Initial sum insured of  $6 308 325.00 but their real Gross Profit was $7 314 000.00, the sum insured difference is $1 005 675.00, a lesser premium collected. The insured paid a 75% as a deposit premium, providing a correct calculation; the insured had 100% coverage with a 75% of the paid premium.

If the premium rate was 0.10% the client paid a deposit premium of $6308.33 plus an adjustment premium of $ 1 005.68, which totals $7 314.01, instead of a full premium of $8 411.10.

A Mistake did by broker Howard

The broker utmost responsibility duty to decide the insured NPBT figure, Howard does not include NPBT in their coverage. Consequently, wrongly calculate the sum insured on Consequential Loss Policy, arriving at a Rate of Gross Profit of 56.24% which converts into a sum insured of $5 400 000 +6% VAT = $5 724 000.00. Not to forget the deposit premium and end of policy year adjustment for this coverage.

Bearing in mind

Loss of profit insurance works either all the fixed cost items for the Additions basis only or all the variable charges for the Difference basis only.

Not using the above 2 methods, this leads to either the law of average applies or the insurer not agreeing with the client’s calculation of their claim. Also, the  Loss adjusters find in a daunting task in finalizing a claim if excluded the charges.

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Your Thoughts

As usual, I would love to hear any thoughts or questions that you have in the comments section below.

 

Email me at myonlineinsurances@gmail.com.

Thank.

Determine the Sum Insured for Loss of Profit Insurance 4

Determine the Sum Insured for Loss of Profit Insurance 5
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Loss of Profit Insurance What and why are the coverage?

Loss of Profit Insurance What and why are the coverage?

Loss of Profit Insurance What and why are the coverage?

The Loss of Profits policy covers the monetary loss occurring from a break in a business activity arising due to the physical loss of property by an event covered by insurance.

What is the coverage?

In general term, the Policy broadly covers loss of Gross Profit for business interruption, consequent upon Material Damage to property due to Fire or any other insured peril under the Standard Fire and Special Perils Policy.
It also covers standing charges which continue incurring during the interruption thereby increasing the working cost necessarily and reasonably incurred to support the business to its formal activity. Consequently, therefore, that loss under net profit and standing charges can avoid or mitigate.

It also covers standing charges which continue incurring during the interruption thereby increasing the working cost necessarily and reasonably incurred to support the business to its formal activity. Consequently, therefore, that loss under net profit and standing charges can avoid or mitigate.

An eye-opening for the bewilderment insured during the closed-door discussion between me, and insured’s finance controller.

Why need to cover the loss of profit insurance?

“Boss, by having fire insurance is not a perfect shield for your business empire, a complimentary policy utmost important for your factory with a workforce of closed a thousand. Let me introduce the Loss of Profit Insurance” I announced.

“What is that? Such policy exists?” they questioned me with their disbelief eye.

” Your factory premises and machinery all under financed with a local bank, a short-circuit would curtail the production flow, subsequently a reduction turnover, How shall you keep the monthly installment repayment to the bank in addition to ongoing costs like staff salary utility bills, lease payments or advertising. The board of Director and the top management lives on fresh air and the sunshine with dwindling in bank cash flow?

The owner and the finance controller trying to fob off me, “We really don’t need this kind of policy.”

Increase working cost

“Well, having some oversea buyers with the confirmed letter of credit at sight, can you offend your buyer by postponed shipment date? If so, how many times, is there no late penalty and your goodwill and credit-worthiness could restore when it tarnished. This policy would solve this temporary relocation cost and the rental cost to compile with the shipment date. Pouring salt on the wound, some supplier would inflate your buying cost price besides the logistics cost. Your creditor adds fuel to fire, giving a shorter credit payment term.  The maxim goes, misfortune always knock twice”

“The bank would close their umbrella during this trying time, and seek for a reduction of capital-outlay to your factory when the building blaze to the ground, coupling with these 2 events, Can you cope with  it?”

The following clauses are the extension of the Standard Policy for Loss of Profit Insurance.

Free of Charge Clauses:-

  • Denial of Access/adjoining Premises risk.
  • Alternative Indices.
  • Waiver of Material damage proviso.
  • Payment of account – cash call*.
  • Premium Payment.
Payment Clauses.
  1. Supplier’s and Customer’s premises.
  2. Upward adjustment Clauses 25%.
  3. Failure of supply from public utilities at least 48 hours.
  4. Accumulation of Stock.
  5. Department Clauses.
  6. New Business for 1st year only.
  7. Salvage sales.

*Payment of account: The beauty of this policy when an insured peril occurs, the insured can evoke by asking insurer for advanced payment at least 50% of the sum insured within 14 days’ notice without incurring any interest charges prior to finalize a report provided that it is a genuine claim.

How to derive adequate sum insured for Loss of profit Insurance will roll out soon?

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Loss of Profit Insurance What and why are the coverage? 6
Loss of Profit Insurance What and why are the coverage? 7Loss of Profit Insurance What and why are the coverage? 8
Loss of Profit Insurance What and why are the coverage? 9
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Earthquake and Volcanic Eruption property coverage

Earthquake and Volcanic Eruption property coverage

The Earthquake and Volcanic Eruption property coverage under in the Fire Insurance for Malaysian. Without any apparent warning sign, a magnitude size of 6.00 on 5th June 2015 erupted at Mt Kinabalu had rocked the nation off guard. The  Sabah earthquake, not only devoured 18 life but brought masses destruction to the infrastructure and building with estimated total damage to US$2.84 billion. Consequently, we are no longer living the free earthquake zone. Malaysian starts to realize and the urgent need to have the earthquake and volcanic eruption for the house or commercial property.

The basic Earthquake and Volcano Eruption Clause

All kinds of damages including those arising directly or indirectly out of earthquakes,
tsunami or volcano eruptions including fire, explosion, landslide, and land collapse including the foundations and retaining walls in the cover.

Additional Covered Causes Of Loss

The following 4 items to cover the loss due the cause of

Earthquake.

The Volcanic Eruption means  eruption,
explosion or effusion of a volcano.

Any Sprinkler Leakage resulting from Earthquake.

The Sprinkler Leakage resulting from  Volcanic
Eruption. Volcanic Eruption means the
eruption, explosion or effusion of a volcano.

All Earthquake shocks or Volcanic Eruptions
concurrently occurrence within 168-hour period will constitute a single Earthquake or Volcanic Eruption.
The expiration of this policy will not reduce
the 168-hour period.

Exclusion clause

The insurer shall not liable for any damage arising out
of the loss of insured items during fire and explosion caused by earthquakes or volcano.

Deductible:

Insurers are liable for damages in excess of Total Loss occurrence in 72 hours the period in damages caused by earthquake and volcano eruptions excluding fire.

The concrete building will attract higher deduction in comparing with a wooden structure as the former razes to the ground completely. Nevertheless, it is unusual to have an excess of $50 000 for any claim loss unless you can prove to the underwriter that building will build to earthquake resistance proof like in Japan. Sad to say that Malaysian government lukewarm attitude, sitting on the comfort zone has not acquired such enforcement skill.

Premium Rate: 0.010%

If you are insuring your commercial building for a sum insured of $2 million, thus, the affordable premium is $200 per year. Why saves a penny now, spending a fortune later to reconstruct your sweet home later on?

Important to have this clause

Occasionally occurrence tremor on the Peninsular Malaysia hailing from large earthquakes in the Sumatran plate
margin. The highest observation recorded VI on
the Modified Mercalli (MM) scale. No exception to East Malaysia with the localized earthquake rampages on properties damage and human casualties.
The peak VII on MM scale intensity earthquake on the Southern Philippine and in the Straits of Macassar, the Sulu, and the Celebes Sea had spilled over the Sarawak and Sabah.
The earthquake occurs, the magnitude size is not a contributing factor for asunder destruction, but the population density and fire as a secondary event.

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Bank wrongly insured different classes of fire insurance

bank wrongly insured different classes of fire insurance

Bank wrongly insured different classes of fire insurance.

The working class will always dream to have a roof over their head. In order to archive the goal, they toil hard from dawn to sunset.  Some even do moonlight on several jobs in a day. They save every a single penny. They called the modern Zombie living merely eat and sleep. They come out to face the sunshine when they save enough to make the 10% or even 30% down payment. Are they happy? Please read on.

Client’s Call

“Jamin, how come your insurer sent my fire insurance policy to the old address? The building had already demolished.” my relative called me during a fine morning after having my morning 10.00 break.

“Let me check first, I shall call you later.”

“What is the policy number you are referring to? I asked her.

“I do not have such policy number, could it be you taking a loan from a bank. It arranged the fire insurance on your behalf.”

Yes, it is correct the bank already auto debit my account for the past 3 years on this shop house.” she answered me with a soft tone.

I was on my way back home on a routine visit to the hospital.  I dropped by to read their policy, shocking to find out that the bank for the 3 years making the same imbecile mistake.

Classification of Risk

As per attachment here, the policy stating the building is vacant and occupied also the sum insured. But, in fact, it occupied as a shop doing retaining business. Dear readers, let us think out of the box.

Which risk is higher? Is it the vacant shop house or retailer? The answer is crystal clear the retailing business attract many customers, thus the higher the risk compared with the unoccupied building.

The vacant risk the insured pay lesser premium, higher for the retailer shop house. Occurring of fire razed the building to ash, will insurer pay? The Principle of Utmost good faith shall apply to whom.  Is the bank or the insured party?

Insurable Interest

Malaysia is a unique country with different rule and regulation. The local bank also has a subsidiary composite insurance. It could be a general or life insurance. Despite the Bank Negara Malaysia gave warning to the bank stating it could not force the borrower to buy fire insurance with them.   Nevertheless, it has fallen to a deaf ear, either the bank is greedy to make an excess profit out from the borrower or the insured is very ignorant. Do bank has any insurable interest in the building? Does the bank suffer any financial loss without the building?

Creditor Insurance

The insured is still continuing paying the installment even without the existence of the building. The bank providing the credit to the borrower, the bank should issue the creditor’s insurance to the borrower.  In the event, the borrower passed away, the bank would suffer the financial loss, as it has insurance interest on the loan amount, not on the building.

Under insurance

The Malaysian ringgit has depreciated against the US dollars about 30-35% coupling with the 6% of GST implemented 1st April 2015. It was inadequate to cover the building that brought from the developer in 2014. The purchase price was RM350 000.00 and the loan amount was RM244 000.00. On 2017, the sum insured was still the same amount as before without any upward adjustment.  No inflation for the past 3 years in Malaysia? Even the kid knows the answer. When a claim occurs, the average would apply. People would say insurer always conned people.

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Bank wrongly insured different classes of fire insurance 12

Bauxite vessel sinks off Vietnam coast of Vung Tau

Bauxite vessel sinks off Vietnam coast of Vung Tau

Bauxite vessel sinks off Vietnam coast of Vung Tau. M.V.,”Bulk Jupiter” left Kuantan Port carrying a cargo of bauxite ore sank off Vietnam waters on the way to China killing 18/19 crewmembers. The only Filipino chef survival said that he did not know why the ship suddenly capsized and sank when it was about 150 nautical miles from the southern city of Vung Tau on the morning of January 2, 2015 (Vietnam time).

The cause of sinking

The liquefaction of cargo causing the cargo to behave like a liquid inside the cargo hold of the ship hence causing instability to the ship and making it basically turn turtle.

The following was my comment on the FB on 7th April 2017 in the Insurance Forum.

IMSBC CODE PROVISION

Under the Code, bauxite is stated to be a Category “C” cargo, with the following cargo composition: Size
70% of 90% Lumps:
2.5 mm to 500 mm
10% to 30 % powder.

We assuming the cargo is sufficiently dry and in any event has a moisture content below the Transportable Moisture Limit (the “TML”) which is, of course, a figure at 90% of the Flow Moisture Point (the “FMP”). In this case, the port surveyor engaged by the Charter Party i.e the shipper did not test the cargo before loading. If the test was not in their favor, the shipowner could refuse to load the said cargo. Refer to the IMSBC code for further explanation.

Flag of convenience

The MV “Bulk Jupiter” was a flag of convenience registered in the Bahamas, thus it was the sub-standard class of vessel. Was it a member of the London P& I club.? Also, the annual dry docking for inspection would able to find out the vessel fatigue. Had the sea-worthiness and crew-worthiness certificate been obtained from the classification society namely Lloyd, Bureau Veritas, American Bureau of Shipping, Russian maritime of shipping and Nippon Kaiji Kyokai?

The Master’s Knowledge

The master of the ill-fated vessel knew that the bauxite can turn into a liquid state, by 10% of moisture content, which risks increase from C to A category. Therefore, there was a chance of cargo shift that leads the vessel capsizing. Was the crew constantly monitor on the bulk cargo in the various hold? The stability of the vessel depends on the crew competency. During the Northwest monsoon, the sea wave is choppy in the South China Sea, with the frequency of Typhoon Signal of 3 or even higher that bring disaster to vessel plying along the coastal area or in the open sea. Had the master been warned about it?

P & I club will never engage a pre-shipment surveyor. Whether it is loading in America, Canada, Thailand, Indonesia, Malaysia and Australia port. According to various sources, the cargo insurer was actively threatened by the bauxite syndicate and practically tossed out of port” Was it true? Any evidence to prove it?

Finally, the chartered party term and insurance policy need to examine closely. The master log book report with a special detail of the sea weather condition like wind speed and, wave level need to study carefully before it can derive a final report.

CARRIAGE OF BAUXITE THAT MAY LIQUEFY

The Sub-Committee concluded that:

  • There is a need to raise awareness, despite the efforts to date made by the Member clubs of the International Group of P&I Clubs, of the possible dangers of liquefaction associated with carriage of bauxite.
  • The potential for bauxite to liquefy is not specifically addressed in the IMSBC Code since it is only classified as Group C cargo.
  • If a Group A cargo is shipped with moisture content in excess of its transportable moisture limit (TML) there is a risk of cargo shift, which may result in capsizing.
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Bauxite vessel sinks off Vietnam coast of Vung Tau 13
Lazada MalaysiaBauxite vessel sinks off Vietnam coast of Vung Tau 14

Air Transportation Linear Accelerator Ex USA after 9/11

Air Transportation Linear Accelerator Ex USA after 9/11

How to underwrite the Air transportation Linear Accelerator Ex USA after 9/11? I was in Kuantan port at that particular time for being part of the team of investigating shipment from Indonesia being hijacked. Lloyd Intelligence mid-ocean satellite AIS coverage detected the ship was abandon at the Kuantan port minus cargo.

Back to the hotel for a rest, there was an email pops up in the inbox requesting me to underwrite a shipment of air cargo. Why me again? Totally exhausted for the past 4 days with a few hours of sleep, I slept like a log until the next day.

Linear Accelerator

The USA’s manufacturer supplied me the detail specification of the medical equipment. What is Linear Accelerator? A linear accelerator (LINAC) is the customized medical equipment. It produces high energy x-rays or electrons to conform to a tumor’s shape.  It can destroy cancer cells while sparing surrounding normal tissue.

The danger of X-ray

X-rays and electrons are classified as dangerous material. The terrorists can use it to make dirty bombs.  X-rays can cause mutations in our DNA. It might develop cancer in later in life. For this reason, X-rays are classified as a carcinogen by both the World Health Organization (WHO). The possibly at low doses, radiation might increase the risk of cardiovascular disease and some other non-cancer diseases. The long term effect might inherit down to the third generation.

I emailed the party for the following detail before I can issue their air cargo policy with terrorism clause.

REQUESTING

1. A copy of product liability. 2. The size of the unit load container. 3. How to pack the equipment? The prevention measure for the leakage of x-ray. 4. Any depletion of uranium after constant use of the linear accelerator? 5. How to dispose of the balance dosage?

Risk Management Visualization

The ong wait for 2 hours in the hotel indeed killing me. My mind occupied with the full the images and video clip. The collapsed of the Twin Towers of the
World Trade Center like a match box with people jumping off from the window for the precious life. My memory etched with the horror of the dead bodies strewn on the debris. What was the probability of terrorist attack for another passenger plane after 9/11? If the plane was shot down, the catastrophic impact on the people around the zone area? Accept or decline the risk.?What is the precaution step is taken if I accepted the risk.? If I decline the risk can they find another underwriter in a short span of time? The plane would take off in the next 12 hours.

Upon receiving the full detail of my request, I issued the policy. The additional clause with an extra premium for the sum insured of RM (Malaysian Ringgit) 12 000 000.

Policy Issued
  • ICC (Air)
  • Terrorism Extension Clause:  It is agreed and understood that subject to the Insured having paid the agreed additional premium, this Policy shall be extended to cover the Insured’s liability for claims made against the Insured for the bodily injury of and or property damage to any third party at the specified premises directly caused by any terrorist organization. This clause is subject otherwise to the terms, conditions, and exceptions to this Policy.
Warranties:

A.) 2 armed air marshals on the plane to escort the cargo from the USA to Singapore Airport.

B.) Another 4 plain armed escorts to accompany the conveyance from Singapore to a designated hospital in Malaysia during the off-peak period.

C.) A compliment Public liability policy with the Terrorism extension clause.

All the term and conditions were complied with, the consignment arrived sound.  A few years later, the fungal infected the 2 units of medical equipment as the hospital had not found suitable professional personnel to handle the equipment.

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Air Transportation Linear Accelerator Ex USA after 9/11 15



Underwrite a health hazardous marine cargo with terrorism extension

Underwrite a health hazardous marine cargo with terrorism extension

How to underwrite a health hazardous marine cargo with terrorism extension? A topic that most underwriter will reject the insured especially after September 11. Is it difficult to underwrite such a cargo? A veteran who had conquered the Mount  Everest seeing no danger of in climbing it.

Receiving an email from Texas USA to cover a shipment of 1 full load of a container of aluminum oxide ex-warehouse to Pasir Gudang plant. Reading an email was a luxury for me at that time, nevertheless, I received a call at 5.30 pm.

USA Call

A lady called me, “Can I speak to Mr. Jamin Wong”

“Yes, I am speaking, how can I help you, lady?

“An Full container load of aluminum oxide tentatively to leave the factory premises at midnight, can you cover this shipment for us?

“Sure, no problem, but, I need a chemical analysis report of the cargo, also the packing method and material use.”

“OK, that is fine, just give me half an hour to furnish you all the necessary documents, if you have the doubt please call me and my aides, we work 24 hours.”

Underwriting

After 30 minutes, upon notifying the full chemical analysis report that the aluminum oxide used as a catalyst for the plastic manufacturing plant.

The inorganic compound filled in a double side steel metal drum to prevent any spillage on the ground. Thick carton paperboard gaping between the drums prevent the shifting movement in the container.

Health Hazard of Aluminum oxide

  • It can absorb into the body by inhalation of its aerosol.
  • The short term exposure can cause eye and upper respiratory tract irritation.
  • Aluminum oxide on the long-term exposure causing damage to the central nervous system.

Premium calculation

Any chance of hijacking and the consignment falls into the hand of the terrorists? The probability of risk calculation determines like the launching of a satellite using rocket.   Chances of an explosion of the rocket to derive the reasonable and acceptable premium?

Condition Attached

“I accept the risk but on condition with an addition a public liability coverage. Is it ok with you?” I called the lady counterpart in the USA.

“Why a public liability insurance attachment?” she asked me.

” Due to the health hazard associated with the biohazard cargo during an impact damage, the substance in the powder form will pose a danger to the public at large. Would you like your company being sued for billions of dollars? I advised her.

“OK. Do what is deemed necessary and not to forget to give us your insurer’s bank detail for payment of premium. Have a nice day and I look forward to receiving the policy via email.”

I underwrite the policy promptly with a restricted clause, covering both of policies with the sum insured totaling more than 2 million dollars.

“The consignment on land transit permitting only during the off-peak period avoiding any accident occurs.”

Inserting such clause prevent any unforeseen accident when the shipment destined at the Johor Baru causeway. Cars and truck bumper-to-bumper crawling along the causeway stranding thousands of people. A disastrous scene when a collision with the container, people valued their precious life either run or jump into the Johor Strait.

A few months later, we had lunch with the regional manager. The HQ marine underwriter informing us they turned down the regional manager’s proposal initially, subsequently, you had underwritten it finally. Indeed, a shocking discovery of that day! Having a vast decade of experience more than me in the industry but did not pursue the Chartered Insurance Institute marine paper. A loss prevention is always the best practice of insurance.

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Underwrite a health hazardous marine cargo with terrorism extension 16

Underwrite a health hazardous marine cargo with terrorism extension 17Underwrite a health hazardous marine cargo with terrorism extension 18