Money Insurance

 

For businesses big or small, the daily monetary transactions are high, such as a retail store, garment store, manufacturing sector, the use of money is abundant, whether it is sales or disbursement of monies. Wherever there are sales activities the monies by the end of the day have to be deposited in a bank for accounting and book keeping.

The transit from the business premises to the bank needs high security especially where large funds are involved. Money insurance policy covers the risk of these transits and also cash in counter. We will examine the policy in detail here.

Who can take money policy?

Any business unit where large sums of money are drawn or deposited periodically for the purpose of day-to-day transactions, disbursement of salaries or depositing the sales proceeds.

What is money as per the insurance policy?

Cash, currency notes, treasury notes, bank drafts, cheques, postal orders, money orders, postal stamps etc.

What is covered? 

Cash in transit: Cover is available for money drawn for the payment of wages, salaries and other petty cash, in direct transit from the bank to the insured premises.

•        Deposit of cash received on sale of products from the insured’s premises to the bank.

 Cash in safe: Cash on the premises during business hours or whilst secured in locked safe or locked strong room on the insured’s premises.

 What is the risk covered?

Loss of money in transit carried by insured or his employees through robbery, theft or any other fortuitous cause.

Money kept in safe/strong room at insured’s premises against burglary, dacoity, housebreaking, robbery and hold-up.

How to arrive at the sum insured?

·        Sum Insured for transit represents total estimated amount of cash in transit during the year.

·        Each transit from specified location to another specified location to be treated as single transit.

·        If multiple locations are involved sum insured shall be aggregate of the transits of all the locations.

Maximum Single carrying limit is imposed. It means that the per carrying limit is agreed upon by the insured and the insurer beforehand. Per carrying limit is the amount of cash carried per transit. Insured should choose the per carrying limit based on the maximum amount carried in a single transit in the entire year.

Sum Insured under cash in safe indicates maximum amount of cash that would be kept in a safe at the specified location at any one point of time

An important point to note is that the insurer’s liability for any one loss will be restricted to per carrying limit

How is the premium charged in money policies?

Premium rate is charged on the estimated amount of money in transit during the policy period subject to adjustment on expiry of the policy period. Premium is collected on the approximate number of transits in a year or the total sum insured for the entire year. After the expiry of the policy the premium is calculated on the actual transits in the policy period and premium is adjusted. Either refund of premium is made or extra collected.

 Special features that affect the premium:

Some precautionary arrangements made by the insured will reduce the premium to some extent as they are favorable for the transits.

·        Security arrangements during transit

·        Security features like burglar alarms, CCTV camera, armed guards round the clock.

·        Location of premises is also a factor in premium rating along with accounting methods employed and level of control and supervision.

Extensions in the money insurance policy:

On payment of additional premium extra risks may be covered such as:

·        Infidelity of the employees

·        Riots/strikes/terrorism

·        Disbursement risk –during disbursement of wages.

·        Money in till or on counter during business hours only against hold-up.

 

Important conditions in the money insurance policy

·        Maintenance of books and keys.

·        Adjustment of Premium – for money in transit section.

Exclusions under the policy will further define the money policy coverage:

·        Shortages due to errors/omissions.

·        Losses of cash entrusted to any person other than the insured or an employee of insured.

·        Theft of money.

·        Loss from unattended vehicle.

·        Loss of cash in safe by use of duplicate keys unless obtained by force.

 

An immediate question that comes to a reader’s mind is whether the condition of average applies in money insurance policy. It does not since the money insurance policy is not a policy of indemnity hence the condition of average does not apply like it does for other insurance policies. An appropriate insurance cover is a must for a business and money insurance policy gives a definite edge to its financial planning.

 

We at Zen Insurance assist in a complete understanding of the various insurance covers offered. Contact us for assistance.

 

Disclaimer:   

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.