COMMERCIAL

GENERAL
INSURANCE

( 6 th E D I T I O N )
CHAPTER
01

TERM
Property
Tangible property
Intangible property
Fire Insurance
Scope of cover
Legal definitions of “theft”
Insurance definition of theft
First loss basis of coverage
Electronic Equipment Insurance
Increased Cost Of Working
Glass Insurance
Commercial Special Risks
Insurance
“All Risks” Insurance
Industrial “Special Risks” policy
DEFINITIONS
property” covers every material thing or physical object which may suffer
an unexpected loss or damage by an insured peril
Tangible property is something one can touch
Intangible property has no physical existence;
The basic Fire Insurance policy provides indemnity to the insured in
the event of any damage to the property caused by certain perils, with
obviously the primary peril being fire.
The policy covers loss of or damage by fire, lightning or explosion of gas
used for lighting or domestic purposes (FLEX Cover).
Under Section 378 of the Singapore Penal Code (Cap. 224), the legal
definition of the term “theft” states that:
“Whoever, intending to take dishonestly any movable property out of
the possession of any person without that person’s consent, moves that
property in order to such taking, is said to commit theft.”
most basic Theft Insurance policies require the evidence of forcible and
violent entry to or exit from the insured premises.
In Theft Insurance, an insured may insure on a First Loss basis. The
insured may feel that any loss or damage is unlikely to affect all his
property at once, and so he agrees to a limit on the insurer's liability on
any single claim to an agreed amount
an “All Risks” cover for damage to electronic equipment, such as
computers and computer related peripherals, data processing equipment,
auxiliary equipment, such as uninterrupted power supplies (UPS), air-
conditioning system, in the computer or electronic room, data carrying
media, telecommunication systems and printing equipment.
This extension insures the additional expenditure incurred for the use of
a substitute system to maintain normal business operations during the
interruption, caused by any loss of or damage to the insured electronic
equipment
Glass Insurance is commonly known as Plate Glass Insurance in the
market, but this policy is not restricted only to coverage of only plate glass
The policy is designed to cover items, such as machinery, equipment and
other contents and at one time used to be commonly called an “All Risks”
Insurance policy.
The intention of the insurer is to cover anything that is not expressly
excluded under the policy, unlike in a “Specified” or “Named Perils” policy
where no risk is insured, unless clearly specified.
It is a single policy comprising two sections i.e. Section I is the Material
Damage section covering accidental and unforeseen damage to the
insured’s property at the business premises subject to exclusions while
Section II covers loss of income resulting from the disruption of the
insured’s business in consequence of an indemnifiable material damage
loss under Section I.

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CHAPTER
01

TERM
Property Terrorism insurance
“Act of Terrorism”
DEFINITIONS
Covers the insured’s property against damage caused by Acts of Terrorism.
In particular, it covers the following risks:
• Sabotage i.e. a deliberate subversion to cause harm or destruction of
property and
• Terrorism i.e. the unlawful use of violence against persons or property.
An act, including the use of force or violence, of any person or group(s) of
persons, whether acting alone or on behalf of or in connection with any
organisation(s), committed for political, religious or ideological purposes
including the intention to influence any government and/or to put the
public in fear for such purposes.

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CHAPTER
02
TERM
Business Interruption Insurance
Gross Profit
Increased Cost Of Working (ICOW)
Payroll
Maximum indemnity period
Actual indemnity period
Period of cover
Addition basis, gross profit
Difference basis, gross profit
Uninsured working expenses
100% payroll cover
Basis rate
Length Of The Indemnity Period
Interruption Happening Anytime
Time excess
Extensions That Do Not Require
Additional Premiums
4
DEFINITIONS
complementary to material damage insurance (e.g. Fire Insurance).
Material damage insurance provides the funds to reinstate, replace or
repair assets damaged by certain perils, while Business Interruption
Insurance provides protection against losses of the immediate and future
earning capacity of the business.
Insurers consider “gross profit” as net profit and specified standing
charges (these are expenses that do not cease even during business
interruption, e.g. bank mortgage charges, salaries of retained full-time
staff members, etc.).
This cover relates to additional expenses reasonably incurred with a view
to restoring trading or manufacturing activities i.e. minimising the period
of disruption, such as hiring alternative premises, contracting out to
competitors in order to meet the contractual obligations to the customers,
etc.
It refers to salaries and/or wages paid to retained staff members during
the indemnity period
the one fixed by the proposer when arranging the insurance is called the
maximum indemnity period.
evident only after an interruption, and while it can be longer than the
maximum indemnity period, insurers are only liable to indemnify the
insured for loss of profits up to the maximum indemnity period.
period of insurance during which the policy is in force
Gross Profit = Net Profit + Standing Charges
Gross Profit= (Turnover + Closing Stock)- (Purchases +Uninsured Working
Expenses + Opening Stock)
variable expenses
the whole of the payroll wages and salaries is included within the
insurance of gross profit.
derived from the annual rate charged under a material damage insurance
policy
Where the indemnity period (disruption period to the business) is
likely to exceed 12 months, the resultant annual figures will have to be
proportionately increased
A fire or a flood or whatever peril may occur on the very last day of the
insurance period. That is when the indemnity period will start
excludes losses arising in the first “x” hours or days after the occurrence of
the damage.
• Payment On Account
• Material Damage Proviso Waiver
• Interdependency
• Accumulation Of Stock
• New Business
CHAPTER
02

TERM DEFINITIONS
Extensions That Require (a) Specified Suppliers
Additional Premiums (b) Unspecified Suppliers
(c) Specified Customers
(d) Accountant Clause
(e) Prevention Of Access
(f) Public Utilities
(g) Infectious Or Contagious Disease, Murder, Suicide, Pest, Food Or
Drink Poisoning, Or Defective Sanitary Arrangements
(h) Leeway Clause
(i) Reinstatement Of Loss
(j) Transit
(k) Contract Sites
Loss Of Book Debts It deals only with the costs of tracing and establishing the debts owed by
the customers. It does not cover the failure to recover such debts from the
customers.
Advance Loss Of Profits Advance Loss of Profits cover deals with protection of future earnings of a
future business

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CHAPTER
03
TERM
Common Law Liability
Statutory Liability
Definition Of An “Employee”
The Earnings Of An Employee
Arising Out Of And In The Course
Of Employment
Benefits Which An Employer Must
Provide Under The Act
Scope Of Cover
Avoidance Of Certain Terms &
Right Of Recovery
Public Liability
Limit Of Indemnity Clause
Adjustment Of Premium
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DEFINITIONS
the insurer’s liability under the WICI policy in respect of Common Law
claims is usually limited to S$10 million for any one claim or series of
claims arising out of one event.
The Act mandates that the employer must provide compensation to his
employees for personal injuries, death and certain occupational diseases
arising out of and in the course of their employment
For the purpose of the Act, an “employee” is generally any person who is
engaged under a contract of service or of apprenticeship, regardless of
their level of earnings.
The “earnings” of an employee include his wages, food and housing
allowances, overtime, bonus or annual wage supplement, but do not
include travelling allowance, employer’s CPF contributions or pension or
money paid to cover any special expenses incurred by him by nature of his
employment.
An accident that happens:
(i) owing to the employee’s work in connection with the employer’s
business is regarded as “arising out of employment”; and
(ii) during working hours/overtime or while on official duties is regarded
as “arising in the course of employment”;
unless there is evidence to prove otherwise.
An employer is required to provide the following benefits for his
employees:
medical expenses;
medical leave wages (compensation for temporary incapacity);
lump sum compensation for permanent incapacity; and
lump sum compensation for death
WICI policies can be issued on one of the following bases:
covers employer’s liability under both Common Law (for death and bodily
injury), as well as the provisions of the Act; or
covers employer’s liability under Common Law only.
This clause essentially provides that, if by virtue of the Act, the insurer
has had to pay a claim when it is actually excluded or non-admissible by
reason of a breach of warranty, non-disclosure, misrepresentation, etc; the
insurer will nevertheless pay the claim, but may thereafter proceed to seek
recovery of the amount from the insured.
Public liability covers the insured’s liability for injury caused to third party
individuals or damage to third party properties. It does not cover claims
made by the employees, servants or agents of the insured.
This clause states the maximum liability of the insurer in respect of any
claim or any series of claims for personal injury and/or property damage
caused by or arising out of one occurrence to the amount of indemnity as
stated in the policy schedule
This condition requires the insured to keep accurate records containing
all particulars relating to the variables (e.g. payroll, sales, turnover) that
are used to calculate the premium. The insured has to furnish the actual
amount of the variables within one month from the expiry of the period of
insurance, and has to allow the insurer access to the information relating
to the variables at all times.
CHAPTER
03
TERM
“Occurrence Basis”
Products Liability Insurance
Claims Made Basis
Professional Indemnity Insurance
“wrongful acts”
Directors’ & Officers’ (D&O)
Liability Insurance
D&O- three sections
Libel & Slander Insurance
Errors & Omissions (E&O)
Insurance
Bailees Liability Insurance
DEFINITIONS
Occurrence based claims refer to those, where the occurrence or event for
which indemnity is sought under the policy, must occur within the policy
period of insurance, i.e. between the dates of cover during which the
policy is operative. This means that the coverage trigger of an occurrence
form is bodily injury or property damage that occurs during the policy
period of insurance.
designed to cover legal liability for bodily injury to and/or damage to
property of any third-party resulting from the products manufactured,
retailed, sold, supplied or distributed by an insured.
Claims Made claims refer to those where the claim must be made against
the insured within the policy period of insurance, regardless of whether or
not the occurrence or event also happened within that period
designed to protect professionals, such as accountants, architects,
dentists, doctors, engineers, lawyers, surgeons, and even insurance
brokers and financial adviser representatives, against claims which may be
made against them
wider in that they cover negligence, as well as other acts, errors,
omissions, misstatement and misleading statements, and even breach of
duty whether these are committed, attempted or allegedly committed or
attempted.
designed to indemnify the insured (a corporation or insured person) for
the amount that it/he becomes legally bound to pay for claims made
against it/him for wrongful act(s) committed or allegedly committed during
the period of insurance of the policy.
(a) Side A: Directors’ & Officers’ Cover
(b) Side B: The Company Reimbursement Cover
(c) Side C: The Entity Cover For Securities Claims And/Or Employment
Practice Claims
Libel & Slander Insurance policies are designed to indemnify the insured
against liability at law for damages, claimant’s costs and expenses as well
as the insured’s legal costs in respect of claims against the insured for:
libel (written word of defamation);
slander (spoken word of defamation);
infringement of trademark, registered design, copyright and patent right,
titles and slogans, arising from matter contained in specified publications;
misappropriation of ideas under a contract; and
unfair competition.
Errors & Omissions (E&O) Insurance policies cover persons with E&O
liability exposure, as opposed to professional liability exposure.
Bailees Liability Insurance policies are purchased by businesses who
have in their care, custody or control of personal property that belongs to
someone else either in their premises or when they are in the process of
delivering them to their destination
This policy may be offered on a “Claims Made Basis” or an “Occurrence
Basis”.
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CHAPTER
03
TERM
Commercial General Liability
Insurance
Innkeeper’s Liability Insurance
Environmental Impairment
Liability (EIL) Insurance Coverage
Terrorism Liability Insurance
Cyber Liability Insurance
Contingency Insurance
8
DEFINITIONS
this policy covers a wide range of legal liability both under Common Law
and Contract. The cover for Common Law Liability includes:
bodily injury resulting in actual physical damage or loss;
property damage or loss;
personal injury (including libel and slander);
pollution liability; and
advertising injury.
Innkeeper’s Liability Insurance is designed to provide cover for the legal
liability of the innkeeper or insured (i.e. the owner or operator of any
lodging facility, such as hotel, inn, motel and restaurant) under Section 3
of the Innkeepers Act (Cap. 139) [“the Act”] for property loss or damage
sustained by its guests, while such property is within the premises or in
the possession of the insured
The standard coverage of an EIL insurance policy includes:
First-party and third-party remediation costs (on-site and off-site);
Third-party bodily injury (on-site and off-site);
Third-party property damage (on-site and off-site);
Natural resource / biodiversity damages;
Legal and associated defence costs;
Civil fines and penalties.
A Terrorism Liability Insurance policy indemnifies organisations in
respect of their operations, for the liability imposed upon them by law for
damages in respect of a claim, arising out of third party bodily Injury and /
or property damage and / or removal of debris resulting solely and directly
from an act or acts of terrorism.
A Cyber Liability insurance policy in general is designed to cover a wide
range of exposure including “third-party” legal liability claims arising out of
business use of the Internet or computer system whether for marketing or
e-commerce purposes, as well as “first-party” financial and even reputation
loss suffered by the company, in the event of a cyber-attack.
A cancellation of an event may result in event organisers facing very
serious financial consequences Liability Insurance often do not cover
financial exposures, such as contractual liabilities, lost revenues and ticket
refunds. This is where Contingency Insurance plays a vital role in covering
such exposures.
CHAPTER
04
TERM
Commercial Motor Insurance
Sections of a Commercial Motor
Insurance Policy
Section III – Towing Disabled
Vehicles
No Claim Discount (NCD)
Third-Party Working Risk
Claims-Commercial Motor
Insurance
Motor Fleet Insurance
Motor Trade Insurance
3 kinds of Motor Trade policies
DEFINITIONS
insures all types of commercial vehicles (except for private cars and
motorcycles) that are owned by businesses. However, the period of cover,
parties to the contract, underwriting considerations, general exclusions
and claims are similar to those of Private Motor Car Insurance
The Commercial Motor Vehicle Insurance policy is structured into sections
as follows:
• Section I – Insurance On The Motor Vehicle;
• Section II – Liability To Third Parties; and
• Section III – Towing Disabled Vehicles
If the insured motor vehicle is being used to tow any disabled vehicle, the
insurance under Section II “Liability To Third Parties” shall be provided to
cover for any liability in connection with the towed vehicle, except when it
is being towed for reward. However, damage to the towed vehicle itself, or
the property being conveyed by it, is not covered
Period Of Insurance Discount
The preceding year 10%
The preceding two consecutive years 15%
The preceding three or more consecutive years 20%
This extension covers third-party liability arising from the use of the
insured motor vehicle as a working risk, e.g. in the case when the cranes
are fitted onto the motor vehicles, i.e. when the cranes are being operated,
while the motor vehicles are not moving on the roads.
while most Private Motor Car Insurance policies use the “market value”
as a basis for claims, the “market value” may not be applicable to some
commercial vehicles, such as taxis, and motor vehicles used in certain
restricted roads like airports, ship ports, military and naval bases. The
values for such motor vehicles are agreed on other bases e.g. Straight-Line
Depreciation and Book Value
Motor Fleet Insurance is used to insure a fleet of vehicles under a single
policy. A fleet is simply a number of motor vehicles owned by a firm or
corporation. It can be a fleet of private cars, motorcycles, goods-carrying
vehicles, or other types of vehicles (or even a mixture of vehicle types).
Motor Trade Insurance policies are designed for businesses that deal
primarily with motor vehicles, such as car dealers and car repairers. Some
insurers may use a specially adapted Commercial Motor Vehicle Insurance
policy for such risks. They do so by adding suitable endorsements to the
policy, so as to cover all of the insured’s vehicles while in the insured’s
care, custody or control, while being driven on the road, or while being
kept in the business premises
3 main kinds of Motor Trade policies:
• Motor Trade (Road Risks);
• Motor Trade (Internal Risks); and
• Combined Road and Garage Risks.
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CHAPTER
05

TERM
Marine Cargo Insurance
Parties to a Marine Cargo
Insurance contract
INCOTERMS
The Party To Insure Cargo Under
CIF, FOB & CFR Trading Terms
DEFINITIONS
Marine Cargo Insurance provides the insured with indemnity for loss of or
damage to the goods during transit.
• importers;
• exporters;
• freight forwarders;
• traders; and/or
• other buyers and sellers engaged in international and/or local trade.
INCOTERMS deal with the rights and obligations of the parties to a sale,
i.e. the seller or buyer. They show at which stage of the transit that the
interest in the cargo lies with the seller, and at which stage that the
interest is transferred to the buyer
The Party To Insure Cargo Under CIF, FOB & CFR Trading Terms
CIF FOB CFR
Seller/Exporter To Insure 
Buyer/Importer To Insure  

Institute Cargo Clauses (ICC) • Institute Cargo Clauses A (ICC A);

• Institute Cargo Clauses B (ICC B); or
• Institute Cargo Clauses C (ICC C).
Voyage Policy This is the most common type of policy for insuring cargoes. The policy
provides cover for a voyage, and this is clearly mentioned in the policy
where it is stated “from … to …”.
Time Policy a Time Policy is then issued to cover risks for a period of time, usually
12 months. Essentially, the cover for any voyage commences from the
time that it leaves the insured’s/supplier’s premises and terminates on
arrival at his customers’ premises. All voyages during this period will be
automatically covered.
Open Cover An Open Cover is essentially an agreement between the insured and
the insurer to cover all the shipments which fall within the terms and
conditions as agreed by both parties
Marine Cover Note The need for a Marine cover note arises when the insured wishes to effect
Marine Cargo Insurance, but he does not have all the details sufficient to
issue a policy. For example, when the insured wishes to import goods and
to get a Letter of Credit (LC) from a bank, proof of insurance is required.
Claims-Marine A Marine Cargo Insurance policy is generally a valued policy as stated in
Section 27(3) of the Marine Insurance Act (Cap. 387). This means that, in
the absence of fraud, the value that has been agreed upon and stated
in the policy shall be taken as the value of the cargo for the purpose of
settling a claim.
Marine Hull Insurance Marine Hull Insurance covers the shipowner against the physical loss or
damage to a vessel or ship, i.e. the actual hull or the steel plates, as well as
the engines and auxiliary machinery, found on board a vessel.
Parties to Marine Hull Insurance The parties to a Marine Hull Insurance contract will be the insurer and
the ship owner. If the ship is chartered, this can then include the demised
charterer
Marine Hull Cover Unlike a Marine Cargo Insurance policy, there is usually no “All Risks” cover
for vessels. Instead, these covers are in the form of “Named Perils”.
Actual Total Loss here is an actual total loss when the subject matter insured, e.g. the hull
itself, is destroyed
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CHAPTER
05
TERM
Constructive Total Loss
Particular average
Sue & Labour Charges
Builders’ Risks Insurance
Marine Liabilities Insurance
Ship Repairer’s Liability Insurance
Charterers’ Liability Insurance
DEFINITIONS
A constructive total loss occurs when the vessel is damaged to such an
extent by an insured peril that, although it is not an actual total loss, the
expenditure required to prevent it from becoming an actual total loss,
as well as the estimated cost of repair would be greater than the insured
value of the vessel.
Partial loss, or particular average, means any loss that is not a total loss
Where expenses are incurred by the insured with a view to averting or
minimising a loss recoverable under the policy, such expenses are known
as Sue and Labour Charges
Builders’ Risks Insurance is typically against all risks of loss of or damage
to the subject matter insured caused and discovered during the period of
insurance, including latent defect. In case of failure of launch, the policy
covers all subsequent expenses incurred while completing the launch.
• Marine Liabilities Insurance includes, among others:
• Ship Repairer’s Liability Insurance;
• Charterers’ Liability Insurance;
• Port Authorities Liability Insurance;
• Stevedore Liability Insurance; and
• Terminal Operators’ Liability Insurance.
A Ship Repairer’s Liability Insurance policy covers:
• vessels which are in the care, custody or control of the ship repairer
for the purpose of being worked upon against the risks of fire damage,
explosion, contact damage and machinery damage;
• cargo and other property aboard a vessel under repair or discharged
from a vessel to facilitate repairs against similar risks to the vessel
itself, as well as the risks of theft, pilferage and deterioration;
• third-party liabilities, including personal injury and loss of life;
• liability for wreck removal which may arise out of ship repairing
activities;
• contractual liability assumed by the ship repairer as hirers of tugs,
tenders, or other craft in connection with his ship repair activities;
• liability pertaining to other work undertaken by the ship repairer and
which does not fall under the definition of ship repairing; and
• legal liability for detention of a vessel which may arise from the
consequences of loss of or damage to that vessel while under repair.
A Charterers’ Liability Insurance policy is designed to protect charterers
of vessels against various legal and contractual liabilities which can arise
from their obligations under a Charter Party (i.e. a contract between the
ship owner and the charterer for the use of a vessel).
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CHAPTER
05

TERM
Port Authorities Liability
Insurance
Stevedores’ Liability Insurance
Energy Insurance
Aviation insurance
DEFINITIONS
A Port Authorities Liability Insurance policy, which covers the
responsibilities and risk exposure of a port authority, is mainly arranged
by general insurance brokers.
Stevedores’ Liability Insurance covers against legal liabilities incurred for
damage caused to vessels, to cargo being handled, to property (buildings,
wharves, etc.) or for third-party death or injury.
Energy Insurance serves to protect upstream, midstream and downstream
organizations cum operations against certain risks. These risks include
equipment damage, rig physical damage, business interruption, loss of
production income, control of well costs etc.
Aviation insurance is insurance coverage tailored to the operation of
aircraft and the risks involved in aviation. In the aviation market, there
is a wide range of insurance coverage available to meet different needs
of individuals to international airlines. There is also cover available for
ancillary activities like manufacturers and airports.

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CHAPTER
06

TERM
Contractors’ All Risks (CAR)
Insurance
Parties To A Contractors’ All Risks
(CAR) Insurance Contract
Principal
Contractor
Types Of CAR Insurance Policies
Scope Of Cover
Other Types Of Cover Related To
Contract Works
Erection All Risks (EAR) Insurance
Erection All Risks (EAR) Insurance
Versus Contractors’ All Risks (CAR)
Insurance
Cover For Testing &
Commissioning Risk
The testing and commissioning
work
DEFINITIONS
A Contractors’ All Risks (CAR) Insurance policy provides financial security
for all parties involved in a construction project during the course of
construction. It is a comprehensive policy that covers any sudden and
unforeseen physical loss or damage relating to the construction project,
subject to a number of exclusions.
A CAR Insurance contract basically involves three parties, namely the
contractor, the principal and the insurer
The principal is the party who commissions the work, usually by way
of a tender. He is usually the owner of the land and/or buildings when
completed. Therefore, he is sometimes referred to as the property owner.
The contractor is under contract to the principal for the purpose of
carrying out the contract works.
• Specific Project Policy
• Annual Policy
CAR Insurance policies are usually written with two sections as described
below:
• Section I: Deals with the material damage aspect. This section provides
“All Risks” cover on buildings or infrastructure works in the course of
construction; and
• Section II: Covers third-party liability arising from the construction
project (including property damage, death and bodily injury to
persons, i.e. third parties).
Besides effecting a CAR Insurance policy, there may be other types of
related insurance protection which the insured needs to consider, such
as:
• Project Professional Indemnity (PI) Cover;
• Work Injury Compensation Cover;
• Construction Business Interruption Cover; and
• Performance Bond.
An Erection All Risks (EAR) Insurance policy is primarily intended to cover
risks in the installation and erection of ready-built engineering projects,
such as power plants, refrigeration plants, electrical generator stations,
overhead gantry cranes, machinery, equipment, other fittings in factories
and complexes, etc.
An EAR cover is very similar to a CAR cover, in terms of both the perils
provided and the markets involved. However, there is one major
difference, and this concerns the testing and commissioning risk
Cover for testing and commissioning is to provide for loss, destruction
and/or damage to the property insured occurring during testing and
commissioning work carried out by the contractor (or sub-contractor)
within the terms of the installation or erection contract.
The testing and commissioning work may involve:
testing of various kinds;
• commissioning, i.e. initial operation; maintenance, i.e. rectification of
any defect manifested during the maintenance period;
• staff training; and
• operation of the completed works.

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CHAPTER
06
TERM
Automatic Reinstatement Clause
Cover For Cross Liability
Maintenance Visits Cover
Removal Of Support Extension
Stationary equipment
Movable equipment
Boiler & Pressure Vessel Insurance A Boiler & Pressure Vessel Insurance policy is designed to cover the
damage to property and liability of the insured arising from all types of
boilers and pressure plants
Plant
Collapse
Machinery Breakdown Insurance
Deterioration Of Stock Insurance
14
DEFINITIONS
The insurer allows the policy sum insured or limits to be automatically
reinstated after a loss,as long as the insured pays the appropriate extra
premium on the amount of loss.
The insurer is willing to cover all insured parties named in the schedule of
the policy against third-party liability, as if a separate policy has already
been issued to each party. However, the insurers will not pay for:
• loss of or damage to items insured under Section I – Material Damage
of the policy; or
• injuries or illnesses of employees or workmen who should have been
insured under a Work Injury Compensation Insurance policy.
With the payment of additional premium, the insurer is willing to extend
cover for the maintenance period to cover solely the loss of or damage
to the erection or installation works in the course of carrying out the
maintenance job.
The indemnity granted under Section II – Third-Party’s Liability of the CAR/
EAR Insurance policy can be extended to include liability in respect of
damage to property, land or building caused by vibration or by removal or
weakening of support.
• Tower Cranes;
• Conveyer Systems;
• Passenger Lifts;
• Elevators;
• Hoists
• Mobile Cranes;
• Gantry Cranes;
• Forklifts;
• Loaders;
• Loading Shovels;
It refers to “those parts of the permanent structure which are subject
to steam or other fluid pressure, up to and including fittings and direct
attachments, subject to such pressure and which are connected to the
permanent structure without an intervening valve or cock”.
It means “the sudden and dangerous distortion (whether or not attended
by rupture) of any part of the plant caused by the crushing stress of
external steam or other fluid pressure (other than pressure of ignited flue
gases).”
Machinery Breakdown Insurance is designed to cover expensive plant,
machinery and mechanical equipment against unforeseen and sudden
damage caused by breakdown.
The Deterioration of Stock Insurance is designed as a cover against
deterioration of stock in cold storage owing to a breakdown of the
refrigerating plant/machinery as a result of any material damage to the
refrigerant plant, which is indemnifiable under the Machinery Breakdown
Insurance
CHAPTER
06

TERM
Machinery Breakdown
Consequential Loss insurance
DEFINITIONS
It provides coverage against loss of gross profit due to business
interruption caused by an accident indemnifiable under Machinery
Breakdown Insurance. The loss of gross profit is as a result of reduction in
turnover due to decreased in production and increased in cost of working.

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CHAPTER
07

TERM DEFINITIONS
Pecuniary “Pecuniary” means “relating to money and pecuniary insurance covers businesses
against purely financial losses (e.g. from fraud, legal expenses or business
interruption) rather than physical damage to property”
Fidelity Guarantee Fidelity Guarantee (FG) Insurance is an undertaking by the insurer to make good
Insurance any financial loss incurred by the insured (employer) resulting from an employee’s
defalcation (i.e. the act or an instance of embezzling), forgery or fraudulent acts.
“discovery period” the insurer is not liable, unless such acts are discovered during the “discovery
period”. There is no standard definition for “discovery period”, but obviously, it
includes discovery during the period of insurance as stated in the schedule of the
policy
Types Of Fidelity Policy Type Description
Guarantee Insurance
Policies (a) Individual Policy This type of policy is used where an individual
employee is covered, by name, for a stated
amount. The loss must be discovered within 24
months (maximum) of the event.
(b) Collective Policy This type of policy is preferable when two or
more employees are to be covered. As with
an individual policy, the schedule sets out the
names and positions of the employees, and the
amount for which each is covered.
(c) Floating Policy A Floating policy is similar to the Collective
policy in that the individual employees are
named, but only one amount of guarantee is
given under a Floating policy. This means to say
that only one amount of insurance “floats” over
all persons covered. This amount of guarantee
stipulates the maximum amount for which the
insurer is liable, regardless of the number of
faults occurred or the number of employees
involved in the default.
(d) Blanket Policy This is a form of unnamed policy, which in-
cludes all employees without showing their
names or positions. Staff members are covered
based on broad categories, such as “inside
staff” or “outside staff”. The amount of cover
may be per employee or per loss occurrence.

Deduction From Loss The employer is obliged to retain money which it may legally control belonging to
the defaulting employee (e.g. wages), and such amounts shall be deducted from any
amounts payable by the insurer under the policy. This condition is specific to a FG
Insurance policy.

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CHAPTER
07

TERM DEFINITIONS
Differences between FG Fidelity Guarantee Insurance
Insurance and Crime
Insurance. Covers "act" of theft.
The onus is on the insured to
identify the employees who acted.
The insured may be required
to secure a prosecution of the
perpetrator, before the loss is
payable.
Does not cover a loss perpetrated
through electronic means.
Does not cover overseas
employees.
The insured may be required to
declare to the insurer if there are
any changes to the job scope,
remuneration or internal controls
that affect the employees.
Does not cover investigative costs
that are incurred by the insured in
establishing the loss.
Limits are small because of
underwriting restrictions.
Crime Insurance
Covers "conduct" of fraud and
dishonesty.
Covers loss even by unidentifiable
employees.
There is no such requirement.
Covers loss perpetrated through
the electronic medium.
Covers all employees, including
those located overseas.
There is no such requirement.
Includes coverage for investigative
costs incurred by the insured, in
order to establish the quantum of
the fraud.
Insurers are prepared to offer high
limits on a stand-alone basis.

Money Insurance Money Insurance is an important class of Pecuniary Insurance. As its name implies,
it is an insurance for “money”. The definition of “money” in this context includes
cash, bank and currency notes, cheques, bank drafts, money orders, credit company
sales vouchers belonging to the insured (organisation), and current postage stamps
Accumulation Clause This extension clause allows the limit of liability for any one loss to be raised to
a higher level for cash-peak periods, such as weekends, public holidays, festive
seasons, bonus payment period, where the insured may tend to hold a higher
amount of cash.
Credit Insurance Credit Insurance provides cover to companies or corporations in the event of
default in payments by their customers or buyers for the goods or services provided
Types Of Credit • Comprehensive Policy
Insurance Policies • Domestic Credit Policy
• Contracts Policy
• Annual Aggregate Deductible Policy
• Specific Policy
Political Risks Insurance Credit Insurance covers non-payment for goods or services. Political Risks Insurance
(PRI) covers this as well but also covers the destruction of physical assets. For
example, a company may invest overseas by establishing companies involved in
items such as infrastructure, manufacturing facilities, pipelines, power stations
etc. There could be investments in or loans to a joint venture or a subsidiary.
Profits from the overseas ventures may be at risk. PRI provides cover to protect
investments against the host country government confiscating, expropriating,
nationalising or in other ways depriving the investor of his assets

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CHAPTER
08

TERM DEFINITIONS
Bond A bond is a writing of obligation (sometimes under seal), whereby a
person/company undertakes to pay a sum of money or to perform a
contract. An insurance bond is a three-party instrument, whereby one
party (the insurance company or bank ) guarantees a second party (the
principal) financial protection against a third party (the contractor or
insurance company’s client) for failing to perform in accordance with
the terms and conditions of a contract. In other words, the insurance
bond guarantees the fulfilment of a legal obligation on the part of the
contractor. Such a relationship is known as suretyship.
Types of Bonds The types of bonds commonly issued by insurers are:
• Advance Payment Bonds;
• Bid Bonds;
• Credit Bonds
• Security Bonds;
• Licence & Permit Bonds;
• Maintenance Bonds;
• Payment Bonds;
• Performance Bonds;
• Rental Bonds;
• Sub-Contractor Bonds; and
• Supply Bonds.
Underwriting of Bonds Usual underwriting practices include:
• hazard identification and evaluation;
• pricing; and
• monitoring the project.
Forms Of Bonds Bonds are usually issued in one of the following forms:
• unconditional on demand basis;
• unconditional general indemnity basis; or
conditional indemnity basis
“Unconditional on demand” basis When a bond is issued on an “unconditional on demand” basis, the insurer
will have to make payment to the principal, once the principal makes a
claim on the bond. The contractor/client is not allowed to interfere to
prevent payment under the bond
“Unconditional general indemnity” the principal cannot call on the bond if the contractor has properly
performed in accordance with the terms of the contract. The condition for
the bond to be called is that there must be default under the contract
Novation Agreement For non-demand bonds (those issued on “unconditional general
indemnity” and “conditional indemnity” basis), instead of calling for the
bond, the principal may allow another contractor to complete the project.
This may be done by way of a Novation Agreement.
The Novation Agreement is made among the parties, namely:
• the contractor;
• the new contractor; and
• the owner (principal).

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CHAPTER
09

TERM
Medical Insurance Requirements
For Foreign Worker
Security Bond Requirements
Policy Conditiions- Foreign Worker Some of the policy conditions to take note of under the Foreign Worker
Medical Insurance
Scope Of Cover-FWMI
Claims-FWMI
DEFINITIONS
The employer must buy and maintain medical insurance coverage of at
least S$15,000 per year for each Work Permit holder.
The employer has to post a S$5,000 Security Bond in the form of an
insurance/banker's guarantee in respect of each foreign worker (except
that, if the foreign worker is a Malaysian).
Medical Insurance include the following:
• Termination of Cover;
• Cancellation of Policy; and
• Other Insurance.
The insurer will indemnify the insured (i.e. the employer) for hospital and
surgical expenses incurred in Singapore by the insured person (i.e. the
FW), in the event that the insured FW requires to be hospitalised because
of accidental bodily injury, sickness or disease
The insured or the insured person must inform the insurer within the
specific number of days (usually 30 days) following the date of hospital
discharge or surgery. The insurer typically provides a prescribed claim
form (usually to be downloaded from its website) and require relevant
supporting documents of evidence, such as original itemised hospital
bills, medical receipts, invoices, inpatient hospital discharge summary and
medical report, to be submitted at the expense of the insured

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CHAPTER
10
TERM
Group Personal Accident (GPA)
Insurance
Differences From Group Term Life
Insurance
Temporary disability benefits
Temporary disability benefits
Death and TPD benefits
Reimbursement Of Medical
Expenses
Extended benefits
Total & Permanent Disability (TPD) This benefit is payable only in the event that the insured person is as a
result of an accident, totally unable to engage in any gainful occupation or
employment for wages or profit or from giving attention to any business
whatsoever
Temporary Total & Temporary
Partial Disabilities
Geographical Limits
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DEFINITIONS
The purpose of a Group Personal Accident (GPA) Insurance is to provide
financial protection and relief of financial burden to the insured persons
against the risk of accidental death or bodily injury happening to them.
In the event of any insured person’s accidental death, this policy will pay
monetary sum to their beneficiaries. It also serves to mitigate the potential
loss of income and to cover additional expenses incurred if any insured
person is disabled and unable to attend to his usual occupation or work.
Generally, a GPA Insurance policy is not a contract of indemnity. GPA
Insurance contract is generally considered a benefit policy
Firstly, GPA Insurance covers death and disability by accident, but does
not cover that arising from natural causes, such as disease, illness and
sickness
with the exception of Term Life, Life Insurance policies offer savings or
investment benefits on top of death benefits
a GPA Insurance policy carries no savings or investment benefits, nor any
bonuses reflecting the investment income
The policyholder may choose to insure temporary disability benefits, in
which case, the insured person need not suffer severe injury, before such
a benefit becomes payable. If, as a result of the accident, the insured
person is totally unable to perform all normal activities, or is able to
perform some, but not all of his usual activities, the GPA Insurance policy
pays temporary total or temporary partial disability benefits as the case
may be
The temporary disability benefit is usually a weekly benefit expressed as
a percentage, such as 1% of the insured person’s capital sum insured,
subject to a maximum of an absolute monetary amount, or a percentage
(e.g. 75%) of the insured person’s last drawn weekly income
The death and TPD benefits are usually paid in lump sums or capital sums
While GPA is not a contract of indemnity, the reimbursement of medical
expenses is subject to indemnity
Extended benefits may include:
(a) strike, riot, civil commotion and terrorism;
(b) hijack, kidnap, unprovoked assault and murder;
(c) drowning and suffocation by gas, poisonous fumes or smoke;
(d) exposure (to the natural element immediately following an accident);
and
(e) disappearance (usually relating to an accident of an aircraft or vessel
in which the insured person is travelling as a fare-paying passenger,
and his body cannot be found after a certain period of time, e.g. one
year).
To reduce the possibility of ambiguity, it is best to define Total Disability
as the total inability to perform ANY occupation. However, it is commonly
defined as the total inability to perform OWN occupation.
The coverage is usually 24 hours a day, worldwide, unless otherwise
endorsed or amended in the group policy.
CHAPTER
10

TERM
Group Insurance Fact-Finding
(GIFF) Form
GPA Claims
Corporate Travel Insurance
Employee Replacement Benefit
DEFINITIONS
Under regulatory and industry guidelines, any request for a quotation for
certain group insurance (including GPA Insurance) must be accompanied
by a completed Group Insurance Fact-Finding (GIFF) Form.
Besides the claim form, depending on the types of benefits claimed, the
relevant documents will include:
• police report of the accident (if involving malicious intent);
• death certificate (for death benefit claim);
• medical report and inpatient hospital discharge summary (to certify
disablement and hospitalisation treatment); and
• medical certificates and original medical and hospital bills, invoices
and receipts (for claiming medical expense reimbursements, as well as
daily hospital income benefits if covered under the group policy).
A Corporate Travel plan covers any accident, sickness, loss and even
medical attention in an emergency that may occur while travelling. It
allows a company’s employees to travel with complete peace of mind.
Insurers will indemnify the Insured in respect of all reasonable
transportation costs necessarily incurred for sending a substitute
employee to complete another employee’s work duties. Such costs shall
be limited to economy airfare, travel and accommodation expenses for
transportation of the substitute employee.

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