ComGI 6th Ed Ver 1.2 - Chapter 1

1.
Property Insurance
CHAPTER 1
PROPERTY INSURANCE
CHAPTER OUTLINE
1. Introduction
2. Fire Insurance
3. Theft Insurance
4. Electronic Equipment Insurance
5. Glass Insurance
6. Commercial Special Risks Insurance
7. Industrial Special Risks Insurance
8. Property Terrorism Insurance
LEARNING POINTS
After studying this chapter, you should be able to:
▪ define property and distinguish tangible property from intangible property, real from
personal property, and moveable property from immoveable property
▪ understand the necessity to define the subject matter of insurance in Property
Insurance
▪ know what Fire Insurance is all about
▪ understand the scope of cover, period of cover, common policy provisions and
conditions, customarily required underwriting information, common exclusions and
extensions, claim procedures and claim documents of Fire Insurance
▪ know what Theft Insurance is all about
▪ differentiate the legal and insurance definitions of “theft”
▪ realise the need for Theft Insurance
extensions, claim procedures and claim documents of Theft Insurance
▪ know about the first loss basis of coverage under Theft Insurance
▪ know what Electronic Equipment Insurance is all about
▪ realise the need for Electronic Equipment Insurance
extensions, claim procedures and claim documents of Electronic Equipment Insurance
▪ know what Glass Insurance is all about
▪ realise the need for Glass Insurance
extensions and claim procedures of Glass Insurance
▪ know what Commercial Special Risks Insurance is all about
▪ realise the need for Commercial Special Risks Insurance
Copyright reserved by the Singapore College of Insurance Limited [ComGI Version 1.2] 1
Commercial General Insurance
conditions, customarily required underwriting information, common exclusions, claim
procedures and claim documents of Commercial All Risks Insurance
▪ understand the policy coverage for Industrial Special Risks Insurance
▪ understand the scope of cover, common policy provisions and conditions, customarily
required underwriting information, common exclusions, claim procedures of Property
Terrorism Insurance
2 Copyright reserved by the Singapore College of Insurance Limited [ComGI Version 1.2]
1. Property Insurance
1. INTRODUCTION
1.1 In law, the word “property” embraces both tangible and intangible property and
may refer to either Real Property and/or Personal Property. Tangible property is
something one can touch, e.g. a building. Intangible property has no physical
existence; e.g. goodwill, patents, copyrights, trademarks, etc. Real Property
refers to land and things permanently attached to the land, thus the term “realty”;
while Personal Property generally refers to everything else, the items which are
moveable and not part of the land.
1.2 In the context of Property Insurance, the word “property” covers every material
thing or physical object which may suffer an unexpected loss or damage by an
insured peril. The term “property” includes:
▪ Moveable Property, such as household contents, cash, jewellery, silverware,
and cargo being shipped or transported; and
▪ Immoveable Property, such as buildings, land, swimming pools, and tennis
courts.
1.3 There are many types of policies insuring the different types of property. Some
businesses have special requirements, but generally a business will have the
following:
▪ Fire Insurance for buildings, plant, machinery, equipment and stock to protect
against fire and special perils;
▪ Theft Insurance to protect against theft risks;
▪ Electronic Equipment Insurance and Glass Insurance to guard against the loss
of or damage to the more specific assets of the business; and
▪ All Risks Insurance for all unforeseen and accidental damage to the property
subject to exclusions.
2. FIRE INSURANCE
A. What Is Fire Insurance?
2.1 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.
2.2 In Property Insurance, it is imperative to clearly identify and state the subject
matter of the intended insurance. The subject matter of insurance is one of the
key determinants to the risk assessment – whether to accept, decline and
ultimately the determination of its terms, pricing and formation of the insurance
contract.
2.3 For the purpose of identification, such description must be an adequate

description of the subject matter. This is because insurers do not, in their policies,
undertake to indemnify the insured against loss by fire, but only against loss
arising from the destruction of the specific object insured. In order to recover
under the policy, the insured must show that the property contemplated by the
policy is the subject matter of insurance, and that it answers the description of
the subject matter contained in the policy under which the claim is made.
2.4 Property owned by and/or under the care, custody or control of many businesses
is likely to fall under one or more of the following broad categories of description:
▪ buildings;
▪ plant, machinery and equipment;
▪ stock-in-trade; and
▪ furniture, fixtures, fittings and “all other contents”.
2.5 These properties as mentioned above are subject to fire risk. Normally, a Fire
Insurance policy is underwritten on the basis of separate sums insured for each
of the above items. The main headings under which the property is insured are
always reflected in the schedule of the policy, and a list of such items can run to
many pages, depending on the size of the insured company.
B. Scope Of Cover
2.6 A Fire Insurance policy insures property against loss or damage caused by certain
perils. The policy covers loss of or damage by fire, lightning or explosion of gas
used for lighting or domestic purposes (FLEX Cover).
2.7 Other common circumstances that are proximately caused by fire are also
covered, such as:
▪ property damaged by water or other extinguishing agents used for
extinguishing the fire;
▪ property damaged by the fire brigade in the execution of its fire-fighting duties,
like damaging a door or window to gain access to a fire to put it out;
▪ property blown up to prevent a fire from spreading; and
▪ damage caused by falling walls or parts of a building, where there is a fire.
C. Period Of Cover
2.8 Fire Insurance policies provide cover for any property loss or damage by the
insured perils (i.e. FLEX), which occurs during the period of insurance (usually 12
months).
D. Policy Provisions & Conditions
2.9 A couple of the common provisions and conditions which are specific to a Fire
Insurance policy are described below:
(a) Fall Or Displacement
Under this condition, the insurance ceases to be effective immediately upon
any fall or displacement to the building impairing its usefulness, or subjects
it to increased risk of fire. However, if the fall or displacement was

consequent upon the fire of any of the property insured, then, this condition
would not apply; i.e. the insurance would remain effective.
(b) Marine Exclusion
This condition excludes liability altogether if the damaged property is also
covered by a Marine Insurance policy. The main reason for this exclusion is
the potential disputes and difficulties that may arise in event of claim, to
determine the satisfactory contribution between Fire Insurance and Marine
Insurance policies. The range, extent and conditions of cover may vary
considerably. For example, there is the possibility that, before the fire, the
goods may have sustained undiscovered and undefined damage by sea
water, pilferage or any of the other marine perils. It would have been unfair
for the fire insurers to bear such losses.
2.10 Note that detailed discussions on the policy provisions and conditions common
to most general insurance policies are in the “Basic Insurance Concepts &
Principles” Study Guide, published by the Singapore College of Insurance Limited.
E. Underwriting Information Required
2.11 The customarily required underwriting information is as follows:

• construction of the building, trade processes, storage arrangements;
• geographical location of the property;
• description and occupation of the property to be insured;
• types of special peril extensions required for the property to be insured;
• loss history of the previous five years and any termination of cover or non-
renewal by other insurers; and
• sum to be insured for building, plant, machinery, equipment, stocks and other
contents.
2.12 Note that the underwriter may require additional information, and that details of
the required information may differ from insurer to insurer.
F. Exclusions
2.13 The Fire Insurance policy has several exclusions (perils and properties that are
not covered by the policy). The main reasons for having exclusions are to enable
insurers to avoid paying for catastrophes (for which no cover is ever intended to
be provided). Insurers also do not wish to cover property in which its value may
be difficult to assess, as well as risks that call for special underwriting
considerations, and/or should be more appropriately covered under other policies.
F1. Risks Excluded
2.14 Other than the usual exclusions that relate to war, nuclear, strike, riot and civil
commotion (SRCC) risks, the other common exclusions specific to this class of
insurance are as follows:

▪ loss by theft during or after the occurrence of a fire;
▪ loss of or damage to property caused by its own fermentation, natural heating
or spontaneous combustion, or by its undergoing any heating or drying
process. Although the property undergoing fermentation in itself is not
covered, any resulting fire damage to other insured property is covered, e.g. a
sack of palm oil seeds catches fire on their own spontaneous heating – the
damage to the oil seeds itself is not covered, but if the fire spreads and causes
damage to nearby property, that property damaged by the fire spread is
covered; as well as
▪ loss or damage caused by:
- the burning of property by order of any public authority; and
- subterranean fire.
2.15 If the damage occurs from the excluded perils that do not involve fire (e.g. a
typhoon blows down a building), the policy also does not cover as such, since
this is a Fire Insurance policy covering only fire and lightning damage. Any other
perils not specifically excluded here, which results in fire damage, are deemed to
be included.
F2. Items Excluded
2.16 Unless expressly included by endorsements, the following items are generally not
covered:
▪ bullion or unset precious stones;
▪ any curiosity or work of art exceeding a certain amount (e.g. S$200);
▪ manuscripts, plans, drawings or designs, patterns, models or moulds;
▪ securities, obligations or documents of any kind, stamps, coins or cash notes,
cheques, books, accounts or other business books, or computer systems
records;
▪ coal, against loss or damage caused by its own spontaneous combustion;
▪ explosives;
▪ any loss or damage caused by, or through, or in consequence of the burning,
whether accidental or otherwise, of forest, bush, and the clearing of lands by
fire; and
▪ any loss or damage caused by or through explosion; but loss or damage by
explosion of gas used as lighting or for domestic purposes in a building in
which gas is not generated, and which does not form part of any gas works
will be deemed to be a loss by fire within the meaning of the policy as
discussed earlier.
2.17 Note that the exclusions for a Fire Insurance policy vary from insurer to insurer.
G. Policy Extensions (Special Or Extraneous Perils)
2.18 Special Perils (also known as Extraneous Perils or Extended Perils or Extra Perils)
are, as the name suggests, additions to the standard cover and are available as
an option. These are normally subject to extra premiums payable.
2.19 These special perils are commonly classified under the following headings:
Classification Of Special Perils Examples
1. Perils of a Chemical explosion, spontaneous fermentation,

Nature heating or combustion
2. Social Perils riots and strikes, locked-out workers,

persons taking part in labour disturbances
and malicious damage
3. Perils of Nature earthquake and volcanic eruption,

subsidence, hurricane, cyclone, typhoon,
windstorm and flood
4. Miscellaneous Perils sprinkler leakage, bursting or overflowing of

pipes or water tanks, smoke damage,
impact by road vehicles and aircraft
2.20 Other common clauses that provide coverage extensions following a covered fire
may include Architects, Engineers and Surveyor’s Fees; Removal of Debris; and
Public Authorities’ Requirements.
H. Claims
2.21 Most policies will contain some conditions specifying the claim procedures in the
event of a loss. The purpose is to involve the insurer as soon as possible, so that
the insurer can help to mitigate or verify the extent of the loss, and/or to seek
the insured’s cooperation in matters such as providing the necessary claim
evidence.
2.22 The insured must:

▪ notify the insurer immediately after the event giving rise to the claim;
▪ notify the police immediately in the case of damage by malicious means;
▪ carry out and permit any reasonable practical actions necessary to prevent
further damages; and
▪ deliver to the insurer at insured’s expense (within a stipulated time or such
further time as allowed by the insurer):
- full information in writing of damage and amount;
- details of other insurance covering the same property;
- all evidence and information as may reasonably be required; and
- if demanded, a statutory declaration of the truth of the claim or any
connected matters.
2.23 No claim shall be payable under this policy, unless the terms of this condition
have been complied with.
2.24 The request for a declaration on oath (or in other legal form) of the truth relating
to the claim or any information submitted is seldom called for, as it is only
required if the insurer finds that the claim is highly suspicious.
3. THEFT INSURANCE
A. What Is Theft Insurance?
3.1 A basic Theft (or Burglary) Insurance policy insures:

“… loss or destruction or damage to property insured as a result of:
▪ theft or attempted theft involving forcible and violent entry to or exit
from the premises, or
▪ theft following assault or violence or threat thereof to the insured or any
director, partner or employee of the insured …”
3.2 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.”
3.3 However, this is a very wide definition, as it does not state the need for an
existence of force or violence in committing that act of theft. Simply, it indicates
that shoplifting and pilferage are also considered as acts of thefts. However, note
that these two acts are not insurable owing to the high risk of easy
accomplishment and frequency of occurrences. For this reason, most basic Theft
Insurance policies require the evidence of forcible and violent entry to or exit from
the insured premises.
B. The Need For Theft Insurance
3.4 Theft Insurance policies have the same aim as that of standard Fire Insurance
policies in that they intend to provide compensation to the insured in the event
of loss of the property insured.
3.5 The common descriptions of the property insured are:
▪ stock-in-trade;
▪ goods held in trust or on commission; and
▪ plant, machinery, office equipment, furniture, fixtures and fittings.
3.6 Theft Insurance policy will usually include cover for damage to buildings arising
from a theft or attempted theft; e.g. damage to any windows, doors, wall, roof,
shutters, locks as a result of the entry into and/or exit from the buildings. This is
provided that the insured is not responsible for causing the damage.
3.7 Note that theft from domestic premises is usually not insured under a commercial
Theft Insurance policy but rather, as part of Householder’s Insurance1.
C. Scope Of Cover
3.8 Basically, the insurer’s intention in issuing a Theft Insurance policy is to cover
the loss of property resulting from a break-in. Hence, a typical Theft Insurance
policy incorporates the following wording:
“theft involving entry to or exit from the premises by forcible and violent
means”.
3.9 The intention of the cover is that “theft” should be accompanied by either forcible
and violent entry or exit from a building. “Forcible” on its own means “the mere
use of any kind of force”. “Violent” has the notion of aggression and extra force
with accompanying damage.
D. Period Of Cover
3.10 Theft Insurance policies provide cover for any property loss or damage by the
insured perils (i.e. theft), which occurs during the period of insurance (usually
12 months).
E. Policy Provisions & Conditions
3.11 Some of the common provisions and conditions which are specific to a Theft
(a) Reasonable Precautions
The insured shall take all reasonable precautions for the safety of the property
insured, such as relating to the selection and supervision of the employees,
securing doors, windows and other means of entrance and exit.
(b) Alteration
No claim shall be payable if there are any material changes made to the
premises or in the conditions of the risks, after acceptance.
(c) Occupancy
The policy shall cease to be in force if the premises are unoccupied for a
period longer than the stipulated number of days; usually 30 consecutive
days (60 days for some insurers).
(d) Burglary Alarm Warranty
Some policies incorporate the following conditions:
1
Detailed discussions on the Household Insurance are in the “Personal General Insurance” Study Guide,
published by the Singapore College of Insurance Limited.
▪ the alarm system and other security devices shall be in full operation at
all times, and shall be maintained and serviced regularly under a
maintenance contract;
▪ the insured shall notify the insurer and obtain the insurer’s agreement
before replacing, extending or modifying the intruder alarm system in the
premises.
F. Underwriting Information Required
3.13 Shops dealing in wine and spirits, expensive dried foodstuff, such as bird’s nest,
shark fins and abalone are of particular attraction to thieves.
3.14 A poor security system in the insured premises can increase the risk of theft as
well. Many insurers are concerned about this physical aspect of risk, and very
often, risk surveyors are engaged to investigate the effectiveness of the insured’s
security system. If the insurer is not satisfied with the security precautions that
are in place at the point of application, the insured may be requested to upgrade
the security system before the risk can be accepted.
3.15 The customarily required underwriting information is as

follows:
▪ type of goods to be insured;
▪ value of goods to be insured;
▪ locations where goods are stored;
▪ maximum amount of risk per location if the goods are stored at different
premises;
▪ types of security measures taken for the premises, e.g. the use of locks, grills,
burglar alarms, security guards, etc.; and
▪ previous claims experience.
3.16 The rate of premium varies with the degree of theft hazard. Naturally, the higher
the risk associated with the value of the goods, the higher will be the rate of
premium.
required information may differ from insurer to insurer.
G. Exclusions
commotion risks, the common exclusions specific to this class of insurance are
as follows:
▪ loss or damage by or consequent upon fire or explosion;

▪ loss or damage to coin and similarly operated gaming and/or amusement
machines;
▪ damage to plate glass or any decoration or lettering;
▪ loss of or damage to bonds, bills of exchange, promissory notes, money or
securities for money, coins or stamp collections, plans, patterns, models,
moulds, designs, documents of title to property, contracts or other documents,
business books, manuscripts, livestock, motor vehicles and accessories,
unless they are specifically insured;
▪ loss or damage resulting from collusion with any of the insured’s staff or
employees or any person lawfully on the premises (collusion refers to the
plotting and agreement between the thief and the employees on how to gain
entry and/or get out of the insured’s premises after having stolen goods from
the premises); and
▪ consequential loss of any kind and description.
3.19 Note that the exclusions of a Theft Insurance policy vary from insurer to insurer.
H. Extensions
3.20 Some common extensions specific to Theft Insurance are described below:
(a) Robbery and/or Hold-up
A robbery and/or hold-up can be defined as theft accompanied by assault
or violence, or the threat of it to the insured or his employees, irrespective
of whether there was forcible entry.
(b) Full Theft Cover
This extension covers loss of or damage to the property insured by theft
without violent and forcible entry into the premises. Hence, if the loss
occurred when entry/or exit is achieved via an open door and/or window,
the loss will be covered.
3.21 However, the Full Theft extension does not cover any of the following:
▪ unexplained loss, mysterious disappearance or loss or shortage while taking
inventory or stock;
▪ loss or damage from infidelity or dishonest acts of the insured or his employees
or agents; or
▪ the first amount of loss shown in the schedule of the policy as the excess.
I. First Loss Basis Of Coverage
3.22 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. For example, if the insured’s stocks of laptops are valued at S$500,000,
and the value is spread throughout a warehouse, it may be considered unlikely
that any theft will cause a claim greater than S$100,000. Therefore, the insured
arranges Theft Insurance on the basis of losses up to S$100,000. In other words,
the S$100,000 sum insured is on a First Loss basis.
3.23 The above arrangement means that, in the event where all the stock is stolen,
the insurer will pay only a maximum of S$100,000 for items worth S$500,000.
In other words, the insurer’s liability for the theft loss is limited to the First Loss
sum insured, notwithstanding that the actual loss amount may be much greater.
In consideration, the insured achieves savings in premium by insuring on a First
Loss basis. The condition of average (under-insurance) does not apply in this
case.
J. Claims
3.24 Upon the happening of any event that may give rise to a claim under the policy,
the insured must:
▪ give immediate notice to the police, and take all practical steps to discover the
guilty person(s) and to recover the property lost or stolen; and
▪ report within seven days (or 14 days for some insurers) of the event supplying
detailed particulars, proof and evidence in support of the claim.
3.25 In the event of a claim being made against the policy, the insured must:
▪ provide evidence to prove that the loss or damage claimed for has actually
arisen from one of the causes insured against, and that the property in respect
of which a claim is made is not merely mislaid or missing;
▪ give all reasonable assistance to the insurer who may at any time at its own
expense use all legal means in the name of the insured for recovery of any of
the property lost or stolen; and
▪ not abandon any property to the insurer, although the insurer can be entitled
to any property for the loss of which a claim is paid under the policy.
4. ELECTRONIC EQUIPMENT INSURANCE
A. What Is Electronic Equipment Insurance?
4.1 An Electronic Equipment Insurance policy (also known as Computer Loss or

Damage/Data Processing Equipment Insurance policy) provides 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. It can also be extended to cover the cost of reconstructing data files
and programs, as well as additional costs incurred when making use of alternative
facilities to avoid business interruption after physical loss to insured items.
4.2 Such electronic equipment may comprise data processing systems used in
research and development, commercial computer centres, administration and
industry, medical equipment for diagnostic and therapeutic purposes,
telecommunication systems, etc.
B. The Need For Electronic Equipment Insurance
4.3 Modern businesses have become more reliant on computers in some form or
another. Computers and electronic equipment often entail huge capital
investment and are critical to the operation. The equipment is susceptible to
damage and a breakdown/disruption of any form can cause a severe impact on
the business. For instance, even a partial failure to a computer installation may
have far-reaching and damaging effects on the business, as a computer
installation is usually the nerve centre of an organisation. Hence, it is of utmost
importance that a business purchases adequate insurance cover for the electronic
equipment.
C. Scope Of Cover
4.4 Electronic Equipment Insurance is designed to provide an “All Risks” cover

catering to the actual repair and/or replacement cost and other financial
consequences, following the loss of or damage to the insured electronic
equipment (hardware and software2), arising from any accidental cause. “All
Risks” means all unforeseen and sudden damage/loss whatsoever, other than
those specifically excluded, are included for coverage.
4.5 In other words, the basic Electronic Equipment Insurance policy insures against
any sudden and unforeseen physical loss or damage to any part of the insured
items, from any cause whatsoever other than those specifically excluded. The
insurers will pay for all such loss or damage up to an amount not exceeding the
sum insured.
D. Period Of Cover
4.6 Electronic Equipment Insurance policies provide cover for any insured property
lost or damaged which occurs during the period of insurance (usually 12 months).
E. Policy Provisions & Conditions
4.7 Some of the common provisions and conditions which are specific to an
Electronic Equipment Insurance policy are described below:
(a) Sum Insured
It is a common provision that the sum insured must represent the cost of
replacing the insured item with new items of the same kind and capacity, i.e.
replacement costs, including freight, installation costs and any customs
2
Hardware is any electronic, mechanical or electromechanical device, e.g. CPU, disk drive and printer.
Software is a set of instructions that tells the computer what to do, e.g. word-processing software. The
Electronic Equipment Insurance insures the hardware, as well as the software.
duties and dues. Otherwise, the claim payment shall be subject to average if
the sum insured is less than the insured amount required.
(b) Basis Of Indemnity
Where damage to an insured item can be repaired (i.e. partial loss), the insurer
will pay all expenses necessarily and reasonably incurred to repair the
equipment, including other charges like dismantling, transport fees, etc.
For loss to equipment that is beyond economic repair (i.e. total loss), or if the
repair cost equals or exceeds the actual value of the insured item immediately
before the occurrence of the damage, the settlement shall be made on the
following basis:
▪ pay the actual value of the item immediately before the occurrence of the
loss, i.e. replacement value less depreciation (replacement value will
include costs for ordinary freight, installation and customs duties and dues,
if any); or
▪ if the policy was extended to insure the full replacement value of the items,
pay the replacement value without deduction for depreciation.
4.8 The customarily required underwriting information is described below:

(a) General information – This comprises details like name of proposer, address
and location of risk, nature of business and the required period of insurance.
(b) Declaration of the interests to be insured under the three sections:
▪ Section 1: Description of electronic equipment to be insured, such as
model and type of equipment, and the sums insured.
▪ Section 2: Description of data media to be insured, such as types of data
media, and the sums insured. These may comprise detachable optical,
magnetic and electronic storage media.
▪ Section 3: Extra Expenses, such as rental fees for replacement
equipment.
(c) Risk-specific information – This includes questions on claims and insurance
history, any other insurance covering the same interest, any maintenance
contract, any risk aggravating circumstances, etc.
G. Exclusions
4.10 Other than the usual exclusions that relate to war, riots, strikes, and nuclear risks,
the common exclusions specific to this class of insurance are as follows:
▪ earthquake, volcanic eruption, tsunami, hurricane, cyclone, typhoon or
windstorm;
▪ perils covered under any other type of insurance, such as theft and
consequential loss;
▪ faults or defects existing at the time of commencement of the insurance which

were known to the insured;
▪ failure or interruption of gas, water or electricity service or supply;
▪ wear and tear as a direct consequence of ordinary use or operation, as well as
cavitations, erosion or corrosion (e.g. rust);
▪ elimination of functional failure, unless such failure caused by an indemnifiable
loss of or damage to the insured items;
▪ maintenance of the insured items, including any parts being replaced in the
course of such maintenance;
▪ fault or defect for which the supplier is responsible either by law or under
contract (loss covered by warranty);
▪ equipment rented or hired for which the original owner is responsible either by
law or under a maintenance agreement or contract;
▪ loss of or damage to parts with short service life (e.g. bulbs, valves, belts,
wires, etc., and operating media) and aesthetic defects (e.g. scratches on
painted surfaces) are excluded (unless such parts or defects are affected by
an indemnifiable loss of or damage to the insured items); and
▪ wilful act or negligence of the insured or representatives.
4.11 Note that the exclusions of an Electronic Equipment Insurance policy vary from
insurer to insurer.
H. Extensions
4.12 Some extensions specific to the Electronic Equipment Insurance policy are
described below:
(a) External Data Media
This extends the coverage to any data processing media that is insured, for
any sudden and unforeseen loss of or damage to any part of the electronic
data processing media as described in the schedule of the policy, from any
cause whatsoever, other than those specifically excepted.
The exceptions are:
▪ the deductible as stated in the schedule of the policy to be borne by the
insured in any one occurrence;
▪ any cost arising from false programming, punching, labelling or inserting,
unintentional cancelling of information or discarding of data media, and
from loss of information caused by magnetic fields; and
▪ consequential loss of any kind.
(b) Increased Cost Of Working
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. However, the insurer shall not be liable for any additional
expenses incurred by the insured as a result of:
▪ restrictions imposed by any government or public authority concerning

the reconstruction of operation of the electronic data processing
equipment; and
▪ the repairs or replacements of the damaged/destroyed equipment being
delayed because of the insured not having the necessary funds to effect
them.
4.13 In addition, excluded perils in the basic policy like earthquake, strike, riot, civil
commotion, hurricane, typhoon, etc. may also be “brought back” or included with
additional premiums payable.
I. Claims
4.14 The claim procedures for Electronic Equipment Insurance are quite similar to those
insurance policies which we have covered so far. In the event of any occurrence
which may give rise to a claim, the insured shall:
▪ immediately inform the insurer verbally (telephone) and in writing, giving an
indication of the nature and extent of the loss or damage (notice must be given
to the insurer within the number of stipulated days);
▪ take reasonable steps to minimise the extent of loss or damage;
▪ preserve the damage/affected parts and make them available for inspection by
the insurer;
▪ furnish all necessary information and documents as required by the insurer;
and
▪ inform the police in the case of damage or loss resulting from theft or burglary.
5. GLASS INSURANCE
A. What Is Glass Insurance?
5.1 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. Glass Insurance
policy is issued to cover practically all kinds of fixed glass within the insured’s
premises, as reflected in the general description as specified in the schedule of
the policy, e.g. “All glass panels, including fittings and fronts contained in or fixed
on the insured’s premises.”
5.2 Although there are many ways in which glass can be damaged without breakage
occurring, Glass Insurance covers only the breakage (or destruction) risk. There
is, however, an almost unlimited number of breakage causes. Therefore, this
insurance is subject to certain exclusions.
B. The Need For Glass Insurance
5.3 Glass is an integral part of any building nowadays. It is also common to see
buildings with “all-glass” structures. Within the building structure, glass is found
in most offices, such as glass partitions and glass doors. Glass of many different
types is subject to breakage by a variety of causes, which can result in hefty
replacement costs.
C. Scope Of Cover
5.4 The Glass Insurance policy insures the glass (including any lettering or logo on
the glass) as described in the schedule of the policy and fixed in the insured’s
premises, against the destruction or breakage. The insurer shall at its option:
(a) replace the broken glass according to the description in the schedule of the
policy; or
(b) pay the sum equivalent to the value of the broken glass at the time of the
destruction or breakage up to, but not exceeding, the value as specified
against each item in the schedule of the policy.
5.5 The replacement value of the glass normally excludes the cost of removal,
alteration or replacement of any fittings, fixtures, frames or framework necessary
for the reinstatement of the broken glass.
5.6 However, it should be noted that “breakage” does not include scratching or
chipping.
D. Period Of Cover
5.7 A Glass Insurance policy provides cover for the insured glass against breakage
occurring during the period of insurance (usually 12 months).
E. Policy Provisions And Conditions
5.8 Some of the common provisions and conditions which are specific to a Glass
(a) Reasonable Precautions
The insured shall take all reasonable precautions for the safety of the glass,
including salvage glass.
(b) Alteration Of Risk
No claim shall be recoverable under this policy if, without the consent of the
insurer in writing of:
▪ the alteration of the nature of the business being carried on by the
insured;
▪ the alteration of the property insured;
▪ the insured premises being occupied by a tenant of the insured; or
▪ the risk being in any way increased.
5.10 The customarily required underwriting information is described below:

(a) Situation
The location of the risk will indicate if there are any adverse features, such
as risks located on busy streets and street corners, where there is a greater
risk of damage by vehicles or stones thrown up by passing cars. On the other
hand, the situation may also show that the premises have better than average
protection in that they may be situated in a shopping centre which is closed
to the public after business hours.
(b) Occupation
Obviously, there are some occupations which are more attractive to thieves
than others, these raise the risk of smash-and-grab burglaries, such as
jewellers and liquor stores. These risks can be reduced in some instances by
the removal of goods from the window display after hours, and/or the
installation of steel mesh behind the glass.
(c) Additional Perils
There are some risks that are more susceptible to additional perils, such as
proximity to explosive manufacturers.
(d) Loss History
Questions like previous occurrence of breakages, causes of breakages,
declination of risk and previous claims history will provide an indication of
any moral hazards and/or adverse features, like disgruntled tenants or
customers.
(e) Type, Size And Thickness Of Glass
All these factors indicate the probability of breakage of the glass.
G. Exclusions
commotion risks, the common exclusions specific to this class of insurance are:
▪ breakage of ornamental glass, silvered glass, bent glass, glass containing
embossing or lettering, or other than plain fixed glass (unless specifically
provided for);
▪ breakage of or damage to frames or framework;
▪ cost of removing or replacing fixtures, fittings or other obstructions;
▪ breakage arising during (unless it be proved by the insured that such breakage
was not caused by) or in consequence of:
- fire, lightning, explosion, earthquake;
- strike, riot, civil commotion; or
- the wilful act or with the connivance of the insured or any employee of the
insured; and
▪ breakage of cracked glass, unless such cracks are specially declared as such,
and the insurer has been informed.
5.13 Note that the exclusions of a Glass Insurance policy vary from insurer to insurer.
H. Extensions
5.14 The usual extensions to a Glass Insurance policy (additional premiums may be
imposed) are:
▪ the cost of temporary shuttering (e.g. temporary boarding up of windows after
breakage);
▪ replacement of ornamentation and sign-writing;
▪ removal of debris; and
▪ replacement of any fittings, frames or framework.
I. Claims
5.15 The insured must give immediate notice in writing to the insurer on the happening
of any event that gives rise to a claim under the policy, stating the full
circumstances of the case, and providing evidence as may be required. Unless
the insurer receives such notice within a stipulated time, the insurer shall not be
liable for the claim. The insured, at his own expense, must also take all feasible
steps to ascertain the person who is liable for the breakage.
6. COMMERCIAL SPECIAL RISKS INSURANCE
A. What Is Commercial Special Risks Insurance?
6.1 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.
6.2 The term “All Risks” Insurance is, unfortunately, a misnomer, because it does not
cover every conceivable risk of loss or damage as its name implies. Consequently,
it is more common these days to refer to it as “Commercial Special Risks”
Insurance. 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.
B. The Need For Commercial Special Risks Insurance
6.3 Uncertainty of losses is not restricted to events brought about by fire or theft
alone, nor is it limited to events happening on the insured’s premises. This has
led to the development of this wider form of previously called “All Risks” cover.
The Commercial Special Risks Insurance today represents the widest form of
cover available for commercial property.
C. Scope Of Cover
6.4 The Commercial Special Risks Insurance policy states that, if at any time during
the period of insurance, the property insured while in the “situation” as described
in the schedule of the policy be accidentally, physically lost, destroyed or
damaged by any cause other than those excluded, and subject to any other terms
and conditions, the insurer agrees to (at its option):
▪ pay the insured the value of the property at the time of its loss or destruction;
or
▪ pay the amount of the damage; or
▪ reinstate, repair or replace such property or any part of it.
6.5 The “situation” is usually defined as in the insured’s premises.
6.6 Any payment by the insurer in respect of any claim will also reduce the sum
insured by that amount, for the remaining period of insurance, unless it is
reinstated with the agreement of the insurer.
D. Period Of Cover
6.7 Commercial Special Risk Insurance policies provide cover for the sudden and
unforeseen loss or damage of property by any cause (other than those excluded)
which occurs during the period of insurance (usually 12 months).
E. Policy Provisions And Conditions
6.8 Some of the common provisions and conditions which are specific to a
Commercial Special Risks Insurance policy are described below:
(a) Alteration Of Risk
Unless admitted by the insurer in writing, no claim shall be payable in respect
of the insured property should there be, after the commencement of the
policy, any alteration:
▪ by removal;
▪ whereby the risk is increased; or
▪ whereby the interest of the insured ceases, except by will or operation of
law.
(b) Excess
The policy does not cover the amount of the excess as stated in the schedule
of the policy for each and every loss, as ascertained after the application of
all other policy terms and conditions, including the condition of average
(under-insurance).
6.10 The customarily required underwriting information is as follows:

▪ description, location, construction and occupation of property to be insured;
▪ details of the security features on the property i.e. how is it being protected
from intrusion;
▪ fire extinguishing features on the premises; and
▪ loss history.
6.11 In addition, “management’s attitude” may also be an important key rating factor.
For example, some underwriters believe that if a client is not willing to undertake
risk improvements, particularly those relating to housekeeping, it is better to
decline the proposal, rather than load the rates or apply an excess. Carelessness
and inefficiency in management will be considered a moral hazard.
G. Exclusions
6.13 Being a “Special Risks” policy, the list of exclusions is of particular importance.
The excluded perils are mostly uninsurable, difficult to insure, or commonly
insured under other forms.
commotion risks, the common exclusions specific to this class of insurance are
as follows:
(a) loss of or damage to property owing to non-accidental means, such as:
▪ shortage owing to clerical or accounting error and misfiling, or shortage
in supply or delivery to or from the insured,
▪ mere disappearance or loss discovered during stock-take, unless proven
that such loss being due to theft,
▪ unexplained or mysterious circumstances;
(b) “unavoidable” or causes of gradual operating loss, such as scratching, wear
and tear, depreciation, moth, mildew, inherent vice, corrosion, rust,
dampness, fungus, change in colour, atmospheric conditions, weather
(except lightning), etc.;
(c) electrical or mechanical breakdown of machinery and equipment;
(d) breakage of fragile items, such as glass and china (unless caused by fire or
theft);
(e) faulty defective design, materials or workmanship;
(f) interruption of:
▪ utilities, such as water, gas and electricity supply,
▪ fuel systems;
(g) loss or damage arising directly from the property undergoing any process,
alteration, repair, restoration, testing, renovating, servicing, installation,
removal, dismantling, re-erection;
(h) damage or loss caused by or arising from:
▪ pollution or contamination,
▪ wilful act or wilful negligence by the insured or his representative,
▪ cessation of work, delay, lack of performance, loss of market or any
other consequential or indirect loss;
(i) loss of or damage to property:
▪ in transit,
▪ not contained within an enclosed building,
▪ more specifically insured; and
(j) requisition or wilful destruction by order of the government or any public
authority.
6.15 Note that the exclusions of a Commercial Special Risks Insurance policy may vary
from insurer to insurer.
H. Claims
6.16 In the event of any damage or loss, the insured must:

▪ immediately notify the insurer;
▪ notify the police immediately if the loss or damage has been caused by
malicious persons or thieves;
▪ take reasonable and practical steps to prevent or mitigate further damage;
▪ deliver to the insurer, at the insured’s expense and within a stipulated time
frame:
- full information in writing of the property lost, destroyed or damaged, and
the amount of the loss or damage;
- details of any other insurance on the same property; and
▪ submit all proof and supporting documents relating to the claim as may be
reasonably required by the insurer.
7. INDUSTRIAL SPECIAL RISKS INSURANCE
7.1 The Industrial “Special Risks” policy provides coverage for any physical accidental
loss to property insured at the business premises subject to exclusions. 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. Section II is also known as
the Business Interruption section. The Industrial “Special Risks” policy is

commonly used for insuring industrial properties.
7.2 Much of the coverage, exclusions, etc. for the Material Damage section is similar
to those already described in Commercial Special Risks Insurance.
7.3 We shall study Business Interruption Insurance in greater detail in the next chapter
of this Study Guide.
8. PROPERTY TERRORISM INSURANCE
A. Introduction
8.1 There has been an increased awareness of the threat of violent terrorist attacks
in the region. The events of 11 September 2001 led to the withdrawal of
terrorism cover in many lines of insurance business. While companies in
Singapore have not been subject to such attacks, it is prudent for businesses to
realise that their operations may be adversely affected by either a direct attack
or suffer collateral damage from such an event. In addition, their overseas
operations are obviously at risk.
8.2 As most property insurance policies would exclude damage caused by terrorism,
it is vital for businesses to take out appropriate insurance to provide cover their
properties against such risks. A severe terrorist attack could cause irreparable
damage to the organisation.
B. Scope of coverage
8.3 Property Terrorism insurance 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.
8.4 More specifically, Property Terrorism Insurance insures buildings and contents
against physical loss or physical damage by an Act or series of Acts of Terrorism
and/or Sabotage, occurring during the period of insurance.
8.5 Insurers usually define an “Act of Terrorism” as 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.
8.6 As for an “Act of Sabotage”, insurers define it as an act or series of acts of

deliberate subversion by 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. Subversion is the
act of trying to destroy or damage an established system or government3.
8.7 The reader will note that the intention to influence any government and/or to put
the public in fear for such purposes is a common element in both definitions
above.
C. Exclusions
8.8 A Property Terrorism Insurance policy contains numerous exclusions. Some

examples include:
i. All losses or damage caused by nuclear detonation, reaction, nuclear
radiation or radioactive contamination.
ii. Loss or damage occasioned directly or indirectly by war, invasion or warlike
operations (whether war be declared or not), hostile acts of sovereign or
government entities, civil war, rebellion, revolution, insurrection, civil
commotion assuming the proportions of or amounting to an uprising, military
or usurped power or martial law or confiscation by order of any Government
or public authority.
iii. Loss by seizure or illegal occupation.
iv. Loss or damage caused by confiscation, requisition, detention, legal or illegal
occupation, embargo, quarantine, or any result of any order of public or
government authority which deprives the Assured of the use or value of its
property, nor for loss or damage arising from acts of contraband or illegal
transportation or illegal trade.
v. Loss or damage directly or indirectly arising from or in consequence of the
discharge of pollutants or contaminants, which pollutants and contaminants
shall include but not be limited to any solid, liquid, gaseous or thermal irritant,
contaminant of toxic or hazardous substance or any substance the presence,
existence or release of which endanger the health, safety or welfare of
persons or the environment.
D. Occurrence
8.9 As for “occurring during the period of insurance”, insurers define “Occurrence”
as any one loss and/or series of losses arising out of and directly occasioned by
one Act or series of Acts of Terrorism for the same purpose or cause.
8.10 The duration and extent of any one “Occurrence” shall be limited to all losses
sustained by the insured at the property insured during any period of 72
consecutive hours arising out of the same purpose or cause. However, insurer
also state that no such period of 72 consecutive hours may extend beyond the
expiration of the policy unless the insured shall first sustain direct physical
damage by an Act of Terrorism prior to the expiration of the policy and within
3
Source: dictionary.cambrige.org
said period of 72 consecutive hours.
8.11 Insurers also make it clear that any period of 72 consecutive hours shall not
commence prior to the attachment or inception of the policy.
E. Claims
a) Notification
Insurers stipulate that the insured, upon knowledge of any occurrence likely to
give rise to a claim, shall give immediate written advice thereof to the insurers.
b) Proof of Loss
Insurers require the insured to render a signed and sworn proof of loss within
sixty (60) days after the occurrence of a loss (stating the time, place and cause
of loss, the interest of the insured and all others in the property, the sound value
thereof and the amount of loss or damage thereto.
c) Subrogation
If the insurer becomes liable for any payment under the Policy in respect of loss
or damage, the Underwriters shall be subrogated, to the extent of such payment,
to all the rights and remedies of the insured against any party in respect of such
loss or damage and shall be entitled at their own expense to sue in the name of
the insured.
d) Salvage and Recoveries

If any salvages, recoveries and payments are recovered or received after a loss
settlement, they shall be treated as if they have been received before the loss
settlement.
F. Conditions
8.12 Most of the policy conditions are similar to those found in other Property
Insurance policies.
F1. Due Diligence
8.13 Just like most general insurance policies, the insured is required to act as if
uninsured.
F2. Maintenance
8.14 Insurers require that any protection provided for the safety of the insured property
shall be maintained in good order throughout the period of the policy and shall be
in use at all relevant times.
F3. Average
8.15 In the event of any under-insurance at the time of the loss and where there is a
partial loss, the insurer will penalise the insured and pay less than indemnity by
applying the average clause in the policy.
F4. Inspection and Audit
8.16 This condition states that the insurer shall be permitted but not obligated to
inspect the insured’s property at any time.
G. Underwriting Information
8.17 Insurers will usually require the following information before they can quote for
Terrorism Insurance cover:
▪ Details of Insured/Location
▪ Details of Control of Access
▪ Details of Building Precautions
▪ Details of Management/Staff Preparation
▪ Details of Locality
− Insurers will be interested to know if any facilities is within say, 500
metres of the building(s) to be insured. Examples of such facilities
include Diplomatic Facility or Military Facility.
▪ Details of Threats or Losses
− Details of any threats or losses within the last five years.

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1.

A. What Is Fire Insurance?

2.3 For the purpose of identification, such description must be an adequate

D. Policy Provisions & Conditions

it to increased risk of fire. However, if the fall or displacement was

E. Underwriting Information Required

2.11 The customarily required underwriting information is as follows:

F1. Risks Excluded

insurance are as follows:

F2. Items Excluded

G. Policy Extensions (Special Or Extraneous Perils)

Classification Of Special Perils Examples

1. Perils of a Chemical explosion, spontaneous fermentation,

2. Social Perils riots and strikes, locked-out workers,

3. Perils of Nature earthquake and volcanic eruption,

4. Miscellaneous Perils sprinkler leakage, bursting or overflowing of

2.22 The insured must:

A. What Is Theft Insurance?

3.1 A basic Theft (or Burglary) Insurance policy insures:

B. The Need For Theft Insurance

3.5 The common descriptions of the property insured are:

E. Policy Provisions & Conditions

F. Underwriting Information Required

3.15 The customarily required underwriting information is as

▪ loss or damage by or consequent upon fire or explosion;

I. First Loss Basis Of Coverage

4. ELECTRONIC EQUIPMENT INSURANCE

A. What Is Electronic Equipment Insurance?

4.1 An Electronic Equipment Insurance policy (also known as Computer Loss or

B. The Need For Electronic Equipment Insurance

4.4 Electronic Equipment Insurance is designed to provide an “All Risks” cover

E. Policy Provisions & Conditions

F. Underwriting Information Required

4.8 The customarily required underwriting information is described below:

▪ faults or defects existing at the time of commencement of the insurance which

▪ restrictions imposed by any government or public authority concerning

A. What Is Glass Insurance?

B. The Need For Glass Insurance

E. Policy Provisions And Conditions

F. Underwriting Information Required

5.10 The customarily required underwriting information is described below:

6. COMMERCIAL SPECIAL RISKS INSURANCE

A. What Is Commercial Special Risks Insurance?

B. The Need For Commercial Special Risks Insurance

6.5 The “situation” is usually defined as in the insured’s premises.

E. Policy Provisions And Conditions

F. Underwriting Information Required

6.10 The customarily required underwriting information is as follows:

6.16 In the event of any damage or loss, the insured must:

7. INDUSTRIAL SPECIAL RISKS INSURANCE

the Business Interruption section. The Industrial “Special Risks” policy is

8. PROPERTY TERRORISM INSURANCE

8.6 As for an “Act of Sabotage”, insurers define it as an act or series of acts of

religious or ideological purposes including the intention to influence any

8.8 A Property Terrorism Insurance policy contains numerous exclusions. Some

said period of 72 consecutive hours.

d) Salvage and Recoveries

F1. Due Diligence

applying the average clause in the policy.

F4. Inspection and Audit

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