New AL vehicle got burnt due to short circuit; Is the insurance co. liable?

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S. Anoop Kumar

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Apr 17, 2016, 9:33:33 PM4/17/16
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Friends, 

This is purely for the motor surveyors.   Here is a classic case of a new Ashok Leyland AL3116IL / 2016 model heavy goods carrying vehicle getting burnt due to short circuit.  The  vehicle is a new one puchased on 14-01-2016 (drive away chassis) and after getting the cabin and load body building at a local body builders place the vehicle got regd. with RTA on 28-01-2016 and started on commercial trips.  

The vehicle got burnt on 04-04-2016 at about 05.00 pm when the vehicle was parked for sometime and when the driver attempted to start the vehicle by switching on the ignition key, the vehicle caught fire due to short circuit and supposedly from the engine side and from under the bonnet.  The vehicle is less than 2 3 months old as on date of loss has run about 20000 kms as on date of loss.  The vehicle is still under manufacturer's warranty.

The cabin, the FES and engine assy. on the head side got severely burnt & damaged.  There is no damage to the under chassis parts and/or tyres and the load body. Even the transmission gear box just got exposed to severe heat but the gear box casing is not melted and or deformed.     

Now please ponder on the following questions and share your answers with explanations and quoting relevant sections of the policy:

  1. Is Ashok Leyland as manufacturer liable to make good the loss?  The vehicle is still under manufacturer's warranty.
  2. Is insurance company liable to admit the claim and pay for the cost of the repairs?  Remember fire due to short circuit and self ignition are covered under the policy.  
  3. Is there any policy condition or exclusions that specifically states that the claim is not admissible or payable in the event the manufacturer is responsible for the loss under warranty and as per law?
  4. AL fellows have already disowned any responsibility and all they state is the fire may not have originated from the engine side and advised the insured to take up the claim with the insurance under the policy issued.  
  5. But the insured and driver are firm that the fire originated from the engine side when the driver attempted to move the vehicle for unloading by switching on the ignition key.  
  6. The engine wiring and dash board wiring are completely burnt & destroyed including the fuse boxes.  
This is all the information I have and I have shared.  I cannot provide any further inputs.  Please do not quote the logics.  Let us talk purely of the insurance contract and the law.  


With best regards,
S. Anoop Kumar.  

S. Anoop Kumar

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Apr 17, 2016, 9:36:01 PM4/17/16
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Just for the info of the members, the IDV is standing at Rs. 28.00 lakhs and the estimate loss is Es. 18.00 lakhs including the engine and gear box, steering gear box, cabin and FES, Intercooler, radiator, etc.  

S. Anoop Kumar

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Apr 18, 2016, 12:52:00 AM4/18/16
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Bhatia sir,

Your comment....

"The policy condition on exclusion is that claim is not payable if there is a manufacturer's fault."

Kindly share the policy condition. This is what I am actually searching for. I remember to have read it but unable to locate it now.

S. Anoop Kumar,
Sent from my iPhone 6S

> On 18-Apr-2016, at 10:12 AM, Chand Bhatia <bhatia...@gmail.com> wrote:
>
> The policy condition on exclusion is that claim is not payable if there is a manufacturer's fault.

S. Anoop Kumar

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Apr 18, 2016, 1:26:33 AM4/18/16
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Bhatia sir,

The condition is specifically mentioned in CPM policy and I have dealt with those cases and made the manufacturer pay for the cost and not the insurer's.  But such condition is not in the motor policy.  Which makes it that the insurer's will have to accept the claim and liability.  

Regards,


S. Anoop Kumar,
Sent from my iPhone 6S

On 18-Apr-2016, at 10:39 AM, Chand Bhatia <bhatia...@gmail.com> wrote:

The condition of manufacturing fault is probably not a written condition,  but an implied condition based on principles of insurance that the loss is not due to any accidental reason. This is probably a written condition in engineering policy. 

But here again the part which is damaged can be disallowed, but other parts have got to be paid. 

However such cases are important to be discussed and a firm opinion is to be framed, and implemented, so that the decision is not on discretion from company to company or officer to officer or surveyor to surveyor. 

C K BHATIA

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Ulhas Desai

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Apr 18, 2016, 1:45:08 AM4/18/16
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If ant extra Electrical fittings/load  installed without proper adapters/fittings. 
Generally local electricians use cut joint & twist method and coveres with insulation tape.
Extra Horn, High power Lights, Decorative lights, Audio system etc.
Then how manufacturer will take responsibility, Insurance is covered for Additional fittings
Assemblies Like Wooden Cabin, Load Body with extended hood etc. or any other fittings.
Hence I feel It should be covered under Insurance policy.
Regards 
U B DESAI


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S. Anoop Kumar

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Apr 18, 2016, 2:17:35 AM4/18/16
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Dear friends,

Please read the issue on hand carefully. Please do not assume or presume the things and do not quote logic. The loss is genuine and the loss is due to short circuit. As per the insured and his driver the short circuit occurred in engine area leading to vehicle catching fire leading to the loss. The vehicle is less than 3 months old from the date of purchase and less than 2 1/2 months from the date of reign. and going on commercial trips.

Can the insurance company deny the claim and liability on the grounds that the vehicle is still under warranty and advise the insured to lodge his claim on the Ashok Leyland company itself?

Now under which provision of the motor policy can the insurer's repudiate the claim or even refuse to entertain the claim?

What if the insured approaches the legal fora to pursue the claim against the insurer's?

Ashok Leyland already refused to entertain the claim under warranty.

This is all I have and all I can share.

Regards,
S. Anoop Kumar

S. Anoop Kumar

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Apr 19, 2016, 1:04:30 AM4/19/16
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Mr. Anil Jhauri,

Thanks for sharing your reply. The insurer's are liable to pay the claim for there is no such policy condition in motor claim that says the insurer's are not liable to indemnify the loss if there is any manufacturing defect or short comings even while the vehicle is under warranty. Such clause is available in CPM policy and MBD policy.

Here the cause of fire is due to fire that originated from under the bonnet and from the engine side. Complete wiring, hose pipes, fuel lines, etc. are gutted. AL engineers simply ruled out the possibility of electrical short circuit from engine wiring harness or from self stater wiring on the simple ground that there are various fuses and circuit breakers which act as safety measures. We are not able to pinpoint and establish the actual cause and origin of fire now for everything is destroyed.

And now insurer's have no option but to accept and pay the claim in full subject to policy conditions by excluding the cost of wiring harness as cause of loss.

Thanks once again for sharing your inputs,

With best regards,
Sincerely,

S. Anoop Kumar.

S. Anoop Kumar

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Apr 19, 2016, 1:27:13 AM4/19/16
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Mr. Sree Kumar,

Any claim arising out of contractual liability is to say any penalties or compensation to be paid by the insured for not fulfilling the contract terms. It is between the insured and his client. Here it means the claim raised on the insured by any other party who is a party to the contract for defaulting on any contract terms.

In other or simple words, this is consequential loss.

The claim is payable by insurer's in the case narrated by me.

Regards,
Sincerely,
S. Anoop Kumar.

Sanjay Singh

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Apr 19, 2016, 3:43:10 AM4/19/16
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Short circuit in a veh is not a manfg. Defect.

Sanjay kr singh
Patna

Ashok Kumar Singh.

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Apr 19, 2016, 3:43:10 AM4/19/16
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Respected sir,

Motor policy is a different policy as compare to Engineering policy. As per my opinion We should fallow the terms & conditions as written in policy contract.. Here is no meaning of probable conditions.

As per Motor policy coverage:-

The company will indemnify that insured against loss or damage to the vehicle insured here under & or its accessories,-

1. By fire explosion, self ignition or lightning.





And there is no exclusion for:----- But here again the part which is damaged can be disallowed, but other parts have got to be paid. 

(Self ignition is also a accident form) 

All burnt parts will be payable in motor claim in situation of self ignition.

With regards,
Ashok Kumar Singh.
Surveyor & Loss Assessor.
Greater Noida, U.P..

Dilip Ashtekar

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Apr 19, 2016, 3:43:10 AM4/19/16
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Loss to the insured vehicle due to fire is covered under the comprehensive policy.
A material which has caused the loss ( electric components of I.V.) should be deleted & the loss on repairs basis should be work out. If the loss on repairs basis is more than the limit, a suitable decision may be taken.
Even though the insured is demanding for Total Loss Settlement, than the Constructive Total Loss Settlement may be offer.
Then let insured & manufacture may settle the compensation at there level.
It is surveyors duty to assessed the loss. Let insurance company may take their suitable decision.

On Mon, 18 Apr 2016 07:04:58 +0530 "S. Anoop Kumar" wrote

>Just for the info of the members, the IDV is standing at Rs. 28.00 lakhs and the estimate loss is Es. 18.00 lakhs including the engine and gear box, steering gear box, cabin and FES, Intercooler, radiator, etc.  

On Monday, April 18, 2016 at 7:03:30 AM UTC+5:30, S. Anoop Kumar wrote:Friends, 
This is purely for the motor surveyors.   Here is a classic case of a new Ashok Leyland AL3116IL / 2016 model heavy goods carrying vehicle getting burnt due to short circuit.  The  vehicle is a new one puchased on 14-01-2016 (drive away chassis) and after getting the cabin and load body building at a local body builders place the vehicle got regd. with RTA on 28-01-2016 and started on commercial trips.  
The vehicle got burnt on 04-04-2016 at about 05.00 pm when the vehicle was parked for sometime and when the driver attempted to start the vehicle by switching on the ignition key, the vehicle caught fire due to short circuit and supposedly from the engine side and from under the bonnet.  The vehicle is less than 2 3 months old as on date of loss has run about 20000 kms as on date of loss.  The vehicle is still under manufacturer's warranty.
The cabin, the FES and engine assy. on the head side got severely burnt & damaged.  There is no damage to the under chassis parts and/or tyres and the load body. Even the transmission gear box just got exposed to severe heat but the gear box casing is not melted and or deformed.     
Now please ponder on the following questions and share your answers with explanations and quoting relevant sections of the policy:
Is Ashok Leyland as manufacturer liable to make good the loss?  The vehicle is still under manufacturer's warranty.Is insurance company liable to admit the claim and pay for the cost of the repairs?  Remember fire due to short circuit and self ignition are covered under the policy.  Is there any policy condition or exclusions that specifically states that the claim is not admissible or payable in the event the manufacturer is responsible for the loss under warranty and as per law?AL fellows have already disowned any responsibility and all they state is the fire may not have originated from the engine side and advised the insured to take up the claim with the insurance under the policy issued.  But the insured and driver are firm that the fire originated from the engine side when the driver attempted to move the vehicle for unloading by switching on the ignition key.  The engine wiring and dash board wiring are completely burnt & destroyed including the fuse boxes.  This is all the information I have and I have shared.  I cannot provide any further inputs.  Please do not quote the logics.  Let us talk purely of the insurance contract and the law.  


With best regards,S. Anoop Kumar.  



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Ashok Kumar Singh.

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Apr 19, 2016, 3:43:10 AM4/19/16
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Respected All,

I want to share some views on fire risk & exclusions under in Motor Package Policy.

The company will indemnify the Insured against loss or damage to the vehicle insured here under and / or its accessories whilst thereon,-

1.by fire explosion, self ignition or lightening.
2.by burglary, housebreaking or theft.
3.by riot & strike.
4.by earthquake (fire & shock damage).
5.by flood typhoon, hurricane, storm tern pest, inundation, cyclone, hailstorm, frost.
6.by accidental external means.
7.by malicious act.
8.by terrorist activity.
9.whilst in transit by road rail inland-waterway, lift elevator or air.
10.by landslide, rock slide.

 
 
Company shall not be liable to make any payment in respect of;-      (I am sharing only one point)

1.Consequential loss, depreciation wear & tear, mechanical or electrical breakdown, failures  or breakages. :- Although, After Mechanical breakdown losses has covered in motor insurance policy except mechanical breakdown part.

Now I come to the point;-

1. We should assess the loss as per policy terms & conditions as per written in policy contract. So I want to clear fire case is also a accidental  case. We can not refuse it as based on principles of insurance that loss is not due to any accidental reason. Motor policy is change as compare to engineering policy. There is no meaning of probable condition in motor policy.


2. As above mentioned case is a self ignition case.  As per Motor policy this risk is covers under motor policy.  So it is very clear, it is a payable loss.

3. I have a different opinion on issue of    by excluding the cost of wiring harness as cause of loss (Origin of fire not covered issue).



As per me there are some differences in between Electric breakdown cases & Self ignition cases.

Probable normal chances of fire in a motor vehicle as under,-

1. Self ignition,-

a.  Sparking from battery terminals or any wiring sources.
b.  Short circuit any where in the car.
c.  Heating reasons.
d. from Starter motor side, from Alternator side, from Iginitation coil side, from differen Electrical sensors side, from exhaust emmision side. 
d. Fuel leakage on hot surface. & etc

2. lightening via external sources.
3. fire explosion.


 In case of self ignition, we can not say exactly  the origin of fire.There can so many causes for self ignition. There is no condition in motor policy that origin of fire is not covered in motor policy. Wiring harness  is a very costly part in vehicle. And also we have no proof for it that wiring is the exactly origin of fire. If we have any doubt about it then its benefit should be go in favor of insured. 

So as per my opinion Wiring also should be payable in this type claim.



With regards,

Ashok Kumar Singh.
Surveyor & Loss Assessor.

Greater Noida, U.P.
19.04.2016.

 

But here again the part which is damaged can be disallowed, but other parts have got to be paid. 

However such cases are important to be discussed and a firm opinion is to be framed, and implemented, so that the decision is not on discretion from company to company or officer to officer or surveyor to surveyor. 

Vasantharao Gadde

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Apr 19, 2016, 3:43:10 AM4/19/16
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Dear Sir


What are the Fiber & plastic parts in Automobile Motor Cycle & Cars and how to define them

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PS Ramnathan

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Apr 20, 2016, 2:02:52 AM4/20/16
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Deer Anoop ji
This is a sort of case law reference and is not exclusive a matter for motor SLAs.
Starting with root cause analysis and manufacturers primary warranty everything needs to be looked into.
The manufacturers will IMO readily state that alterations to chassis is violating their stipulations and cause of loss could be attributed to the same. It may also be somewhat technically sustainable. 
Let's hence open out the discussion to the aam  surveyors and not restrict it to motor professionals alone. 
Best wishes 
PSR 
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