Coverage of Boundary wall under Standard Fire and Special Perils Insurance Policy (SFSP)
Whether boundary wall is included in the building, if the word boundary wall is not specifically mentioned in the policy?
As per regulation 7 of All India Fire tariff, it is not permissible to issue a policy, covering only certain portion of a building. No separate premium rates are defined for the boundary wall in the current tariff wef 1/4/2001, as compared to previous tariff. Hence, the principle of “per se” will be applicable as “one occupation one rate” on the boundary wall also.
It is observed that in various claims of boundary wall, damaged due to flood, the boundary wall was not specifically mentioned in the policy & the Surveyor’s are being reluctant to recommend the claim on the pretext it is not part of the building even if the boundary wall is capitalized with building and “Designated Property Clause” is included.
Further, TAC issued a circular no. FT/26/2001 dated 21/12/2001 namely “Rating of Compound Walls, Fencing and Crematoriums” where the normal Boundary wall’s rate is defined as Rs 1.50 per mili Section V “Utilities located outside the Compounds of industry /manufacturing risks” . The question arises whether the regulation 7 “no partial insurance” will be applicable or the circular of different rate will be applicable.
The legal interpretation taken by Maharashtra State Commission as Building includes boundary wall relied on the Supreme Court’s judgment in case of Municipal Corporation of Greater Bombay Vs India Oil Corporation.
The Insurers do not apply this decision in each and every case, therefore, it is suggested that boundary wall may be specified separately and the benefit of rate may be availed, if fire rate is higher that Boundary wall rate.
Interesting incident: One of our clients asked to insure the building under “Burglary insurance” also. The undersigned was shocked on the insurance policy of burglary desired by him. On query, he replied that very frequently the nearby villagers are removing the bricks say 500 to 1000 at night and they have to rebuild and incurring heavy expenses as availability of labour is very poor. To cover such risks the burglary insurance is required at least some expenses are recovered. I explained him that the insurer may put excess clause to avoid such losses. Therefore, the burglary policy is not recommended.
Waiting for your valuable suggestions and comments.