EXCESS UNDER CPM POLICY IN TOTAL or CTL LOSS SCENARIO

[Amol Sawant]

Dear Sir,

Request your comments in the following case.

One 300 Tonn Crawler crane was damaged (Non-AOG Loss). The damages were entirely to the Boom of the crane.

However the repair charges were found to be more than actual value of the crane (i.e. Replacement Cost - Depreciation). Therefore CTL was considered.

Now what would be the excess applicable in this case. The policy has following excess wordings:-

	For claims arising out of AOG perils	For claims arising out of perils other than AOG	Boom Section
For more than Rs. 50 Lacs	0.5 % of S.I.  Subject to a minimum   of Rs. 5,00,000/-	Rs. 5,00,000/-	20 % of claim   amount subject to minimum of Rs. 5,00,000/-

The Replacement Value is Rs. 5,00,00,000/- and deprication@75% is Rs. 3,75,00,000/-. Therefore actual value = Rs. 1,25,00,000/-.

Now considering Salvage at Rs. 25 lacs.(for ease of calculation) Loss after salvage is Rs. 1,20,00,000/-.

Now this is a total loss. Whether both the excess for Main section i.e. 5,00,000/- and 20% claim amount (for boom section) is to be applied or only the highest of the excess is to be applied. Can you please guide?

The CPM Tariff has a clause as follows:-
Quote

"Note:- Excess for Boom section of cranes of above 10 tonnes capacity -

   In case damages occur to the crane body as well as boom arising out of the same incident, the respective excess will be applicable. In case one of the two is damaged,  the corresponding excess only  will apply"

UnQuote

So what should be calculation:-

Both Excess:-

Loss After Salvage                            = 1,00,00,000/-

Boom Section Excess @ 20% Claim =    20,00,000/-

Add: Excess for main section            =     5,00,000/-
------------------------------------------------------------------------------

Net loss after Excess                       =     75,00,000/-

OR

Highest of Excess:-

Loss After Salvage                            = 1,00,00,000/-

Boom Section Excess @ 20% Claim =    20,00,000/-
----------------------------------------------------------------------------

Net loss after Excess                       =     80,00,000/-
 

PLEASE GUIDE.

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Best Regards,
Amol Sawant

[ashok k.gupta]

Dear Sir, I feel that only normal excess is to be applied as boom excess will apply in case we go for repairing of boom i.e partial loss. In case of TL/CTL only normal excess of Rs. 500000/ will be applicable. This we can ascertain by assuming that in case of theft of vehicle, both machine as well as boom section is lost than only normal excess is applied.I will be enlighten by any comment. Ashok Gupta Vigilance Officer New India Assurance co.ltd Jaipur.0141.-2745763 --- On Thu, 2/5/13, Amol Sawant <amol.t...@gmail.com> wrote:

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[Rajan.P, Raj Assessors & Consultants, Trichur- 680010.]

Normal excess need to be applied.

 

Rajan

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P.Rajan
Chartered Engineer
Raj Assessors & Consultants
First Floor, Lakshmi Photostat Buildings
Opp. Power House, Viyyur.P.O,
Trichur - 680010
Kerala State
Phone. 0487 - 2320235
Mob.    9447223094

[Piyush Singhal]

Hello Everyone,

I really wonder if that reached any conclusion. I wish to take opinion regarding how both the excess operate in tandem with each other in various scenario.

[R. L. AGARWAL INSURANCE SURVEYORS AND LOSS ASSESSORS PVT. LTD.]

As per the CPM Tariff, the Excess is to be applied as under:

"Note:- Excess for Boom section of cranes of above 10 tonnes capacity -   In case damages occur to the crane body as well as boom arising out of the same  incident, the respective excess will be applicable. In case one of the two is damaged,  the corresponding excess only  will apply."

From the above, it is amply clear that since only the Boom was damaged and although it has resulted in settlement of loss on total loss basis, the Excess applicable to the Boom Section only will be applicable.

Regards 

O. P. Agarwal

Mob: 0-9810129056

Off: +91-124-4740933

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[Sandeep Mashru]

Dear Agrawal Sir,

Thanks for your clarification with tariff extract.

 

Sir, I my view this wording is right if Loss is Assessed only for the Boom.

 

Now in present case entire Crane is CTL due to repair cost of Boom, then don’t we have to adjust Entire Machine excess only.

 

Your view will be appreciated.

Others too can share their views.

 

Regards

Sandeep Mashru

Nagpur

[R. L. AGARWAL INSURANCE SURVEYORS AND LOSS ASSESSORS PVT. LTD.]

As the damage has occurred to only the Boom, the Excess applicable to Boom damage only will be applicable even though it has resulted in assessment of loss on CTL basis. The excess as per tarrif is to be decided based on the damage to the boom, main body or both and not on the assessment which is being carried out as per the basis of loss assessment specified under the Policy.

[Chandrasekhara Raju]

Dear Sir,

When two excess are in the reckoning, the highest will be applocable.

Regards,

dcs raju.

[Atul Deshpande]

Dear friend

Just apply boom excess and mention in it as per excess condition mentioned. That boom only is damaged in single incident, excess applied as per the condition, don't apply any logic behind it.  Why condition are expressed and mentioned in policy, is there any excess for CTL.   No then why we are thinking in other way.   The excess is condition applied on experience of claim or the probability of accident to insurrd property,  for boom 20percent condition is applied by insurer after recommendation of policy designer who are expert while deciding premium for risk is decided.  So how we can change the condition.  As the loss is due to boom then excess of boom is applicable no combine excess or no higher or lower excess applicable.

With Best Regards
Atul Deshpande
Insurance Surveyor
Fellow Member F/w 03632
07972246542
Yavatmal

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