Discussion on Spontaneous combustion reg.

[ASAR]

Dear members

 

I can not understand the importance of the words 'of or' in the spontaneous combustion clause of fire policy.  Without these words, I can understand that any loss caused by spontaneous combustion, self heating and or own fermentation is covered only when there was covered. For example, loss due to just smouldering can not be considered unless there was a loss due to fire.
 
Now, the words 'of or' in the line confuses me.  Definitely, there must be some meaning for the words.  Kindly explain. For ready reference, I am enclosing the wordings of the subject clause as appears in the polcy.
 

 

6.	Spontaneous Combustion
Policy may be extended to cover the above subject to following endorsement wordings:
"In consideration of the payment by the Insured to the Company of additional premium of Rs. ____________ the Company agrees notwithstanding what is stated in the printed exclusions of this policy to the contrary that the insurance by (items …....) of this policy shall extend to include loss or damage by fire only of or to the property insured caused by its own fermentation, natural heating or spontaneous combustion."
N.B.:The expression „by fire only‟ in the endorsement above must not be omitted under any circumstances.

 

 

   NOTE to Members  :  This is one of the discussion I have with Sri.M.N. Easwaran, Ex. AGM, TAC and Sri.Karunanakaran.  After

                                   discussion in the board, if he permits, I will post the explanantion of Sri.M.N.Easwaran.

 

--

   A.S.Antony Raj,

Insurance Surveyor,

727-G, Srivilliputhur Road,

Near Indian Oil Bunk,

Satchia Puram,

Sivakasi - 626 124

asantony...@gmail.com

09443135563

--

A.S.Antony Raj,

Insurance Surveyor,

727-G, Srivilliputhur Road,

Near Indian Oil Bunk,

Satchia Puram,

Sivakasi - 626 124

asantony...@gmail.com

09443135563

[Er.Balvinder Singh]

Dear Antony,

I think it is clear that spontaneous combustion is covered only when there is actual fire incurred due to it.

Second 'of or' means whether the property damaged by inbuilt spontaneous combustion or occurred in nearby property.

Both type of losses are covered under this extension.

Regards

Balvinder 

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[shailesh shah]

Of or to means -
of the property or to the property

for example -

Consider a steel structured godown storing coal.
Due to vicinity, the columns of shed buckled due to heat of spontaneous combustion of coal. Along with the coal material damage, civil damages could also be payable .
This is what could be the thinking behind the wordings.

 

Let us hear from your TAC interactions dear

This message is from
Shailesh B. Shah

On Wed, Jul 4, 2012 at 5:57 AM, ASAR <asant...@gmail.com> wrote:

[ASAR]

Dear Friends,

 

For the reference of the members, I am giving below the reply received from Sri.M.N.Easwaran.

 

QUOTE:

 

Dear Mr Antony,
Good morning.

Due to pressure of work, I could not write to you yesterday as promised.

You have raised an interesting question.

As rightly pointed out by you, the wordings are not clear.

 

The words ‘of or’ appearing in the endorsement create the confusion. Without the words ‘of or’, it is clear that only fire loss from spontaneous combustion etc is covered. A plain reading of the present endorsement gives an impression that ‘this policy extends to cover loss or damage by fire or loss or damage to the property insured caused by its own fermentation, natural heating or spontaneous combustion’.

 

I have checked up Association of British Insurers recommended wordings for this endorsement. The wordings say that ‘damage (by fire only) resulting from the property’s own SPONTANEOUS COMBUSTION OR HEATING’ which is clear without any confusion.
 
I checked the endorsement wordings in the Fire Insurance publication brought out by the Federation of Insurance Institutes in the year 1973 which I had bought in 1975 for Licentiate examination. The words ‘of or’ do not appear in the endorsement. The words ’of or’, however,appear in the endorsement wordings of All India Fire Tariff introduced with effect from 1st. January 1979. It appears that the change has taken place with the introduction of All India Fire Tariff to give a broader coverage, but the wordings did not coin up well.
 
I have also checked up the legal position. National Consumer Disputes Redressal Commission, New Delhi, in Original Petition No. 89 of 1991 has given a verdict that loss or damage by spontaneous combustion without fire is also covered if spontaneous combustion endorsement is opted for by payment of additional premium. I quote below the relevant portion from the judgment:

“SPONTANEOUS COMBUSTION       

 

                                      In consideration of the payment by the Insured to the Company of additional premium of Rs. _____ the Company agrees notwithstanding what is stated in the printed Exclusion of this policy shall extend to include loss or damage by fire only of or to the property insured caused by its own fermentation, natural heating or spontaneous Combustion.

”N.B.:    The expression ‘by fire only’ in the endorsement above must not be omitted under circumstances.”            

 

Firstly, it is to be stated that under Item No.8 of the policy spontaneous combustion is covered for which additional premium is recovered. Secondly, the aforesaid term is apparently vague. It provides that for consideration of additional premium the Company agrees, “notwithstanding what is stated in the printed exclusion of this policy shall extend to include loss or damage by fire only of or to the property insured caused by its own fermentation, natural heating or spontaneous combustion.” By a bare reading of this clause, it would be difficult to conclude what it exactly conveys. It is required to be read down as – ‘This policy shall extend to include loss or damage by fire only’, or ‘loss or damage to the property insured caused by its own fermentation, natural heating or spontaneous combustion’. In any case, if it was intended to cover only loss or damage by fire, there is no question of taking additional premium, because the first part of the policy itself provides that it gives coverage by loss or damage by fire.             Further, it makes it clear that there is insurance coverage in case of damage caused by its own fermentation, natural heating or spontaneous combustion.       Therefore, this condition apart from fire covers damage caused by the aforesaid three causes.”

 

If you need any further information, please do write'. 

UNQUOTE

 

For the immediate reference of the members, I am attaching some of the case laws.  I feel that the insurers intentions are not clear in the wordings and several wordings need changes according to the real intentions. 

 

I thank all the members who participated in the subject discussion.

 

ASAR