ELECTRONIC EQUIPMENT

INSURANCE

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 ELECTRONIC EQUIPMENT

 The EEI Policy covers sudden and unforeseen

material damage to Electronic equipments due
to any cause not specifically excluded.

(Policy covers fire & allied perils as well as

Machinery breakdown, Theft and Burglary).

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 Sudden / unforeseen
damage to electronics

 Its an all risk cover

EE Insurance is, of
immense importance to
the users of electronic
equipments.

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 EQUIPMENTS COVERED IN EEI

 All Electronic equipments like Computers,

Medical, Bio-medical and microprocessors,
Audio / visual equipments

 Electronic data processing machine

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 Transmitting and receiving installations Radio,
T. V. Cinema sound reproduction and studio-
equipments

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 Lets see an example of one of the coverage's –
Short circuit
 There was a electric skip on the
main electric board due to the
high voltage fluctuations,
resulting in short circuit in the
computer
Will it be covered under the
policy ?
The equipment will be covered
for the short circuit under EEI

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 WHAT DOES EEI POLICY
COVER?
 EEI is an all risk policy which covers Damage
due to;
 Smoke, soot, dust, corrosive gases etc
 Environmental contamination
 Water and Humidity
 Short circuit
 Falling objects and entry of foreign objects

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 Fire, lightning, explosion
 Human Errors like faulty/Careless/negligent
operations
 Riot, Strikes, Malicious damage
 Theft and Burglary
 Natural calamities like flood, Inundation,
Storm, Cyclone, Earthquake
 Subsidence, Land-slide, Rockslide.
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 Scope of Cover

 Location risks : Fire, lightning, theft,

burglary and house-breaking

 Operational risks:
Electrical/mechanical breakdown, faulty
design, faulty material, faults in
manufacturing

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 Scope of cover-Contd:
 Risks of human element : Faulty/
careless/negligent operation, riot, strike,
malicious damage

 Act of God risks: Storm, tempest,

hurricane, flood, inundation, subsidence,
landslide, rockslide, earthquake.

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 EXCLUDED PERILS

 War and similar risks including nuclear

reactions, radiations and radio active
contaminations.
 Normal Wear and Tear, gradual deterioration,
Corrosion (Eg: Rust)
 Willful act, gross negligence

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 Consequential loss of any kind

 The excess stated in the schedule

 Malicious damage by workmen

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 Defects existing at the time of taking insurance
within the knowledge of insured or his
representatives.

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 UNDERSTANDING EXCLUSIONS
BETTER
 The printer in Ajanta digital printers stops
functioning suddenly due to some unforeseen
condition and the production comes to a halt.
Ajanta digital printers face a huge loss, because their
printing orders get delayed and some even got
cancelled.
Hence the company demands a compensation for the
production loss.

Will this production loss be covered?

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 No. The production loss will not be covered as
it comes under the exclusions (Consequential
loss)
 But the machinery damage cost will be settled.

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 The policy has “Excess” stated at the time the
policy is taken.

If an excess amount exceeds the claim amount,

Will the claim amount be paid?

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 No. If the “excess amount” stated in the
policy exceeds the claim amount it shall not be
paid .

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 Electronic Equipment Insurance -
Extensions
Extension of cover is available for;
 External data media :
Cover may be obtained for financial loss that may
arise from accidental loss of information stored on
the external data media such as floppies.

The sum insured for this additional cover should be

the amount required for lost or damaged data media
by new material and reproducing lost information.
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Increased cost of working:

Eg: In the event of a breakdown of the insured computer,

the required computing capacity may have to be hired
from other sources. Cover may be obtained for the
reimbursement of these additional expenses involved such
as hire charges, transportation costs etc.

The Sum Insured should be the estimated amount which

the insured would have to pay as additional expenditure
for 12 months use of substitute equipment

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 Electronic Equipment Insurance –
Sum Insured

 Sum Insured should represent the present day

replacement value of similar new equipment
including all incidentals and cost of Erection.

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 Special Warranty in EEI

 EEI is subject to Maintenance warranty, that the

Maintenance Agreement in force at inception
should continue during the currency of policy

Maintenance includes:
 Safety Checks
 Preventive maintenance
 Rectification of loss/ damage/ faults arising from
normal operation as well as from ageing

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 The AMC warranty can be waived for Personal
computers with SI upto Rs 1lakh or for equipments
where the insured has a competent in-house
maintenance facility
 The AMC warranty can be deleted by charging
Additional Loading on the EEI rates (50% for
equipments upto Rs 1 lakh SI and 100% loading for
equipments above Rs 1 lakh SI).

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Claim settlement and First condition of
loss

 2 Types of losses are considered before

settling a claim:

 Partial Loss
 Total Loss

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Partial loss

 Where damage to the insured item can be

repaired: The full cost or replacement of part
damaged without deducting depreciation

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Total loss

 Insured value less depreciation for the period it

was in use

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 Underwriting Considerations:
 Description of equipment and its function,
manufacturer and model

 The age of the equipment

 The nature of the business, institution or

profession in which the equipment operates

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 What is the frequency and intensity of use?

 Are the operators skilled and experienced?

What training is given and does it follow
manufacturer’s guidelines?

 Loss prevention, control and security factors

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 Repair facilities

 Location/Nature of the risk

 Loss experience

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An “attractive” risk would involve;

 Reputable manufacturer, proven design and operation

 Trained & skilled personnel
 Purpose-built and controlled working environment,
air-conditioned and dust-free with minimum exposure
to impact and water damage
 Careful application of loss prevention, maintenance
and security standards.

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An “Unattractive” risk would involve;

 Usage and operation by unskilled or

inexperienced personnel
 Non-proven design and technology

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 Rules for Cancellation
 At the option of the Insurer, a pro-rata refund of
premium may be allowed for the unexpired term
on demand

 At the Insured's request, refund of premium may

be allowed after charging premium for the time
insurance was in force, on short period scale,
subject to retention of minimum premium by the
Insurer.

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 Short Period Policies
The policies, if to be issued for shorter period than twelve
months, should be issued at the rates set out hereunder
Policy Period Required % of Annual Rate
 Not exceeding 1 week 10 %
 Not exceeding 1 month 25 %
 Not exceeding 2 months 35 %
 Not exceeding 3 months 50 %
 Not exceeding 4 months 60 %
 Not exceeding 6 months 75 %
 Not exceeding 8 months 85 %
 Exceeding 8 months Full Annual Rate
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