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Temporary Removal of Stocks Clause

 

When a manufacture takes a fire insurance policy to pay for a loss the loss must have occurred at the premises specified in the policy. For this an add-on cover known as the temporary removal of stocks clause has to availed in the insurance policy. Normally the standard fire cover is a named-peril policy covering following named perils:

  • Fire
  • Lightning
  • Explosion / Implosion
  • Aircraft Damage
  • Riot, Strike, Malicious Damages (RSMD)
  • Storm, Tempest, Cyclone, Typhoon, Hurricane, Tornado, flood, inundation (STFI)
  • Impact damage by any rail/ road/ vehicle/ animal (other than own)
  • Subsidence, Landslide and Rock slide
  • Missile Testing operations
  • Bush Fire
  • Bursting and/or overflowing of Water Tanks, Apparatus and Pipes
  • Leakage from Automatic Sprinkler Installations

 

If the stock is shifted to temporary premises for the purpose of manufacturing and if there is an unexpected loss due to fire, storm   etc.  at the temporary premises ,fire policy will not pay the loss as the premises specified in the fire policy is different from the place of loss.

Temporary removal of stocks clause addresses this issue and allows insurance cover for stocks removed temporarily for the purpose of   fabrication, processing, finishing or other similar purposes.

 

With the help of this clause, if there is a loss of stock at the temporary premises due to operation of insured perils under the fire policy, fire policy will pay the loss.

This is an add-on cover under the fire policy and insured has to obtain the add-on cover at the inception of the policy.

 

Temporary removal of stocks clause

The clause states that:

It is agreed that the stock insured hereby not exceeding 10% of the total sum insured of such stock is covered while temporarily removed to any other premises for purposes of fabrication or processing or finishing or other similar purposes. This extension does not apply to stock if and so far, as it is otherwise insured.

The pro-rata condition of average shall be applied to the limit of stocks temporarily removed as well as to the total sum insured of such stock under the policy.

In the course of business process, the insured sends the stocks to another address for further process. Cover for stocks at such premises is required and this clause will ensure continuous cover to the insured’s stocks without a shortage of cover for shifted stocks.

Important points of the clause

·       Insured is required to mention the address of the temporary premises which is used for such processes which is different from the business premises.

·       Insured can opt for temporary removal of stocks clause by paying additional premium at inception of the policy.

·       This clause is applicable only to stocks.

·       Sum insured allowed under this clause is 10 % of the total sum insured.

·       Condition of average is applicable.

·       Any process which does not form part of the business process will not be covered.

Temporary removal of stocks clause helps the insured in maintaining seamless insurance   cover without interruption in manufacturing activity. Many add-ons are designed in the fire policy to cater to the manufacturer’s / business requirements and insured should   finalize   the insurance plan with a well-informed formula that suits his business needs.

 

We at Zen Insurance assist in choosing the right insurance cover for your business units. Plan your insurance program wisely and 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.

 

 

 

 

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