Importance of Add on Cover ”Omission to insure addition. Alterations or Extensions” under Fire Insurance Policy
It is observed that the most of Business Houses” are not opting this “Add on cover” under Fire policy. It may result either denial of claim or the under insurance will be applicable. There is always possibility that after insuring the assets at particular date, the new machines/buildings are added in most of the business houses.
- If the said “Add on cover” is not opted and the loss has taken place in new assets added after the date of commencement of the policy, the claim will be repudiated.
- If the said “ Add on Cover” is not opted and the loss has taken place in the existing assets insured as on date of commencement of the policy, the under insurance will be applicable depending on the value of new assets as the “value of risk” will be calculated after considering the value of the new assets.
- The said ‘Add on Cover” is available only up to 5% value of the existing Plant and Machinery /building and the value new assets exceeds the said 5% , again the under insurance may be applicable.
So kindly advise your customers accordingly as the new assets are not insured automatically unless this cover is either opted or additional premium is paid on receipt of these assets.