THE ORIENTAL INSURANCE COMPANY LIMITED
Sunrise Biz Park, 1st Floor, Charkhal, Dillibazar, PO Box: 165, Kathmandu,
Nepal Tel: 4522117, 4518578, 4520402, Fax: 977-1-4520399
E-mail: [email protected],
[email protected] Web: www.orientalinsurance.com.np
CONTRACTOR’S ALL RISKS POLICY
WHEREAS the Insured named in the Schedule hereto has made to THE ORIENTAL INSURANCE COMPANY LIMITED
(hereinafter called “the Company”) a written proposal by completing a Proposal Form which together with any other statements
made in writing by the Insured for the purpose of this policy, is deemed to be incorporated hereto.
Now this Policy of Insurance witnesseth that subject to and in consideration of the Insured having paid to the Company, the
premium mentioned in the Schedule and subject to the terms, exclusions, provisions and conditions contained herein or endorsed
hereon the company will indemnify the Insured in the manner and to the extent hereinafter provided.
GENERAL EXCLUSIONS
The Company will not indemnify the Insured in respect of loss, damage or liability directly or indirectly caused by or arising out of
or aggravated by: -
a) war, invasion, act of foreign enemy, hostilities or war like operations (whether war be declared or not), civil war, rebellion,
revolution, insurrection, mutiny, strike, riot ,lock out, civil commotion, military or usurped power, martial law, conspiracy,
confiscation, commandeering a group of malicious persons or person acting on behalf of or in connection with any
political organistaion, requisition or destruction or damage by order of any Government de jure or de facto or any
Public, Municipal or Local Authority;
b) nuclear reaction, nuclear radiation or radioactive contamination;
c) willful act or willful negligence of the Insured or of his responsible representatives;
d) cessation of work whether total or partial.
In any action, suit or other proceeding where the Company allege that by reason of the provisions of Exclusion (a) above any
loss, destruction, damage or liability is not covered by this insurance, the burden proving that such loss, destruction, damage or
liability is covered shall be upon the Insured.
PERIOD OF COVER
Construction Period: The liability of the Company shall commence, notwithstanding (not withstanding any date to the contrary
specified in the Schedule,) only from the time of commencement of work or after the unloading of the property specified in the
schedule from any conveyance at the site specified in the schedule whichever is earlier and shall expire on the date specified in
the schedule. However, the Company’s liability expires also for parts of the insured contract works over or put into service by the
principal prior to expiry date specified in the policy whichever shall be earlier.
If the actual construction period is shorter than the period indicated in the schedule, no refund of premium shall be allowed un
less specifically allowed by the Company.
At the latest, the insurance shall expire on the date specified in the Schedule but if the work of construction included in the insurance
is not completed within the time specified hereunder, the company may extend the period of insurance but the insured shall pay
to the company additional premium at rates to be prescribed by the company.
GENERAL CONDITIONS
1. The due observance and fulfillment of the terms of this Policy in so far as they relate to anything to be done or complied with
by the Insured and the truth of the statements and answers in the questionnaire and proposal made by the Insured shall be
a condition precedent to any liability of the company.
2. The Schedule and the Section(s) shall be deemed to be incorporated in and form part of this Policy and the expression “this
Policy” wherever used in this contract shall be read as including the Schedule and the Section(s). Any word or expression
to which a specific meaning has been attached in any part of this Policy or of the Schedule or of the Section(s) shall bear such
meaning wherever it may appear.
3. The Insured shall at his own expense take all reasonable precautions and comply with all reasonable recommendations of
the Company to prevent loss, damage or liability and comply with statutory requirements and manufacturers’ recommendations.
4. a) Representatives of the Company shall at any reasonable time have the right to inspect and examine the risk and the
Insured shall provide the representatives of the Company with all details and information necessary for the assessment
of the risk.
b) The Insured shall immediately notify the Company by facsimile and in writing of any material change in the risk and
cause at his own expenses such additional precautions to be taken as circumstance may require, and the scope of cover
and/or premium shall, if necessary, be adjusted accordingly.
No material alteration shall be made or admitted by the Insured whereby the risk is increased, unless the continuance of the insurance
be confirmed in writing by the Company.
5. In the event of any occurrence which might give rise to a claim under this Policy, the Insured shall-
a) immediately notify the Company by telephone or telegram/facsimile as well as in writing, giving an indication as to the
nature and extent of loss or damage;
b) take all steps within his power to minimize the extent of the loss or damage;
c) preserve the parts affected and make them available for inspection by a representative or surveyor deputed by the
Company.
d) furnish all such information and documentary evidence as the company may require;
e) inform the police authorities in case of loss or damage due to theft or burglary.
The Company shall not in any case be liable for loss, damage or liability of which no notice has been received by the
Company within 14 days of its occurrence.
Upon notification being given to the Company under this condition, the Insured may carry out the repairs or replacement of any
minor damage; in all the cases a representative of the Company shall have the opportunity of inspecting the loss or damage
before any repairs or alterations are affected. If a representative of the Company does not carry out the inspection within a period
of time which could be considered as adequate under the circumstances, the Insured is entitled to proceed with the repairs
or replacement.
The liability of the Company under this Policy in respect of any item sustaining damage shall cease if said item is not
repaired properly without delay.
6. The Insured shall at the expense of the Company do and concur in doing and permit to be done all such acts and things
as may be necessary or required by the Company in the interest of any rights or remedies, or of obtaining relief or indemnity
from parties (other than those insured under this Policy) to which the Company shall be or would become entitled or
subrogated upon their paying for or making good any loss or damage under this Policy, whether such acts and things shall
be or become necessary or required before or after the Insured’s indemnification by the Company.
7. If any dispute or difference shall arise on claim under this Policy, the same shall be resolved in accordance with the provisions
of the Insurance Act, 2049 of Nepal as amended from time to time and for the time being in force.
8. If a claim is in any respect fraudulent, of if any false declaration is made or used in support thereof, or if any fraudulent means
or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy, or if a claim is made
and rejected and no action or suit is commenced within three months after such rejection or, in case of arbitration taking place
as provided herein, within three months after the Arbitrator or Arbitrators or Umpire have made their award, all benefits under
this Policy shall be forfeited.
9. If at the time any claim arises under this Policy there be any other insurance covering the same loss, damage or liability, the
Company shall not be liable to pay or contribute more than their ratable proportion of any claim for such loss, damage or liability.
10. This insurance may be terminated at the request of the insured in which case the Company will refund the premium amount
as decided by the Company subject to the flowing condition:
i. Claims experience under the policy as on date of cancellation should be less than 60% of reworked premium.
ii. The expired period under the policy should not have exceeded 75% of the policy period.
iii. Testing period should not have commenced.
This insurance may also at any time be terminated at the option the company by 15 days’ notice to that effect being given to the
insured in which case the company shall be liable to repay on demand a ratable proportion of the premium of the unexpired term
from the date of cancellation.
SECTION I - MATERIAL DAMAGE
The Company hereby agree with the Insured (subject to the exclusions and conditions co named herein or endorsed hereon) that if, at any
time during the period of insurance stated in the said schedule, or during any further period of extension thereof the property
(except packing materials of any kind) or any part thereof described in the said schedule be lost, damaged or destroyed by any
cause, other than those specifically excluded hereunder. In a manner necessitating replacement or repair, the company will pay
or damage upto an amount not exceeding in respect of each of the items specified in the schedule the sum set opposite thereto
and not exceeding in the whole the total sum insured hereby.
The Company will also reimburse the Insured for the cost of clearance and removal of debris following upon any event giving rise to
an admissible claim under this Policy but not exceeding in all the sum (if any) set opposite thereto in the Schedule.
Exclusions to Section I
The Company shall not, however, be liable for
a) The first amount of the loss arising out of each and every occurrence shown as excess in the Schedule.
b) Loss discovered only at the time of taking an inventory.
c) loss or damage due to faulty design;
d) the cost of replacement, repair or rectification of defective material and/or workmanship, but this exclusion shall be limited
to the items immediately affected and shall not be deemed to exclude loss or damage to correctly executed items resulting
from an accident due to such defective material and/or workmanship;
e) normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use or obsolescence or otherwise, rust,
scratching of painted or polished surfaces or breakage of glass.
f) loss of or damage to vehicles licensed for general road use or waterborne vessels or machinery / equipment mounted or
operated or fixed on floating vessel/craft/barge or aircraft;
g) loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidences of debt, notes, securities, cheques;
packing materials such as cases, boxes, crates.
h) loss or damage discovered only at the time of taking an inventory.
i) The cost necessary for rectification or correction of any error during construction unless resulting in physical loss or damage.
j) Any damage or penalties on account of the insured’s non fulfillment of the terms of delivery or completion under his contract
of construction or of any obligations assumed there under or lack of performance including consequential loss of any kind
or description or for any aesthetic defects or operational deficiencies.
Provisions Applying to Section I
Memo 1-Sum Insured: It is a requirement of this insurance that the sums insured stated in the Schedule shall not be less than
for item 1: the full value of the contract works at the completion of the construction, inclusive of all materials, wages, freight,
custom duties, dues and materials or items supplied by the Principal;
for items 2 and 3: the replacement value which shall mean the cost of replacement of the insured items by new items of the
same kind and same capacity;
and the Insured undertakes to increase or decrease the amounts of insurance in the event of any material fluctuation in wages or
provided always that such increase or decrease shall take effect only after the same has been recorded on the Policy by the
Company.
If, in the event of loss or damage, it is found that the sums insured are less than the amounts required to be insured, then the amount
recoverable by the Insured under this Policy shall be reduced in such proportion as the sums insured bear to the amounts required
to be insured. Every object and cost item is subject to this condition separately.
Memo 2 PREMIUM ADJUSTMENT: The sums insured under the policy representing the complete value of the contract works
shall be adjustable at completion of the construction on the basis of actual values to be declared by the insured in respect of
freight and handling charges, custom dues and construction cost and difference in premium shall be met with by payment at the
rate agreed to or by the insured as the case may be. Any increase or decrease in the prime cost of materials shall not be the
subject matter of premium adjustment.
Memo 3 REINSTATEMENT OF SUM INSURED: In the event of loss or damage the insurance shall not withstanding be
maintained in force during the period if insurance for the sum insured the insured undertaking to pay a pro-rata additional premium
on the amount of each claim for the loss of damage from the date of the expiry of the period of insurance.
Memo 4 - Basis of Loss Settlement: In the event of any loss or damage the basis of any settlement under this Policy shall be
a) in the case of damage which can be repaired - the cost of repairs necessary to restore the property to their condition immediately
before the occurrence of the damage less salvage, or
b) in the case of a total loss - the actual value of the property immediately before the occurrence of the loss less salvage,
However, only to the extent the cost claimed has to be borne by the Insured and to the extent they are included in the sums insured
provided always that the provisions and conditions have been complied with.
All damage which can be repaired, shall be repaired, but if the cost of repairing any damage equals or exceeds the value of the
property immediately before the occurrence of the damage, the settlement shall be made on the basis provided for in (b) above.
The cost of any provisional repairs will be borne by the company if such repairs constitute part of the final repairs and do not increase
the total repair expenses.
The cost of any alterations, additions and/or improvements shall not be recoverable under this Policy.
Memo5 Extension of Cover: Any Extra charges incurred for overtime, nightwork, work on public holidays, express freight (excluding
air freight) are not covered by this insurance, unless agreed upon at an additional premium to be prescribed by the Company.
Memo 6 CONSTRUCTION PLANT AND MACHINERY: Loss of or damage to Construction Plant and Machinery excluded loss or
damage directly caused by its own explosion or its own mechanical or electrical breakdown in derangement.
Memo 7 SURROUNDING PROPERTY: Loss of or damage to property located on or adjacent to the site and belonging to or held
in care, custody or control of the Principal(s) or the Contractor(s) shall only be covered if occurring directly due to the construction
of the items insured under section 1 and happening during the period of cover, and provided that a separate Sum insured therefore
has been entered in the schedule under Section 1, item 5 for Principal’s surrounding property. This cover does not apply to
construction /erection machinery plants and equipment.
Memo 8 MAJOR PERILS /AOG PERILS: The major peril claims shall mean the claims arising out of:
A) Earthquake- Fire & Shock
B) Landslide/Rockslide/Subsidence
C) Flood/Inundation
D) Storm/Tempest/Hurricane/ Typhoon/Cyclone
E) Collapse
F) Water damage for “Wet risk” ie; contract involving works in rivers, canals, lakes or sea.
SECTION II - THIRD PARTY LIABILITY
The Company will indemnify the Insured against:
a) Legal liability for accidental loss or damage caused to property of other persons including property held in trust or under
custody of the insured for which he is responsible excluding any such property used in connection with construction
thereon:
b) Legal liability (liability under contract excepted) for fatal or non-fatal injury to any persons other than the insured’s own
employees or workmen or employees of the works or premises or other firms connected with any other construction work
thereon, or members of the insured’s family or of any of the aforesaid; directly consequent upon or solely due to the
construction of any property described in the schedule.
Provided that the total liability of the Company during the Insurance under this clause shall not exceed the limits of indemnity set
opposite therein the schedule.
In respect of a claim for compensation to which the indemnity provided herein applies, the Company will in addition indemnify the
Insured against
a) all costs and expenses of litigation recovered by any claimant from the Insured, and
b) all costs and expenses incurred with the written consent of the Company,
The exclusion contained in paragraphs (g), (h) & (i) in section 1 of this policy shall apply also to this section.
Special Exclusions to Section II
The Company will not indemnify the Insured in respect of
1. the excess stated in the Schedule to be borne by the Insured in any one occurrence related to property damage.
2. the expenditure incurred in doing or redoing or making good or repairing or replacing anything covered or coverable under
Section I of this Policy;
3. damage to any property or land or building caused by vibration or by the removal or weakening of support or injury or damage
to any person or property occasioned by or resulting from any such damage (unless especially agreed upon by endorsement);
4. liability consequent upon
a) bodily injury to or illness of employees or workmen of the Contractor(s) or the Principal(s) or any other firm connected with
the project which or part of which is insured under Section I, or members of their families;
b) loss of or damage to property belonging to or held in care, custody or control of the Contractor(s), the Principal(s) or any
other firm connected with the project which or part of which is insured under Section I, or an employee or workmen of one
of the aforesaid;
c) any accident caused by vehicles licensed for general road use or by waterborne vessels or aircraft;
d) any agreement by the Insured to pay any sum by way of indemnity or otherwise unless such liability would have attached
also in the absence of such agreement.
Conditions Applying to Section II
1. No admission, promise, payment or indemnity shall be made or given by or on behalf of the Insured without the written
consent of the Company whom shall be entitled, if they so desire, to take over and conduct in the name of the Insured the
deference or settlement of any claim or to prosecute for their own benefit in the name of the Insured any claim for indemnity or
damages or otherwise and shall have full discretion in the conduct of any proceedings or in the settlement of any claim and
the Insured shall give all such information and assistance as the Insurers may require.
2. The Company may, so far as any accident is concerned pay to the Insured the limit of indemnity for any one accident / any
one period, but deduction there from in such case any sum or sums already paid as compensation in respect thereof or any
lesser sum for which the claim or claims arising from such accident can be settled and the company shall thereafter be under
no further liability in respect of such accident under this section.
“SPECIAL CONDITION CONCERNING REMOVAL OF DEBRIS
FROM LANDSLIDES”
It is agreed and understood that otherwise subject to the terms, exclusion, provisions and conditions contained in the
policy or endorsed therein, the insurer shall not indemnify the insured in respect of:
- Expenses incurred for the removal of debris ‘from landslide in excess of the costs of excavating the original materials
from the area affected by such landslides.
- Expenses incurred for the repair of eroded slopes or other graded areas if the insured has failed to take the measures
required or to take them in time.
PROVISION APPLYING TO SECTION -1
“TERRORISM DAMAGE”
Loss of or damage to the property insured by explosion or otherwise directly caused by
I) An act of terrorism committed by a person or persons acting on behalf of or in connection with any organization.
II) The action of any lawfully constituted ‘authority in suppressing or attempting to suppress any such act referred to
in (i) above or minimizing the consequence thereof.
For the purpose of this provision, “Terrorism” means the use of violence for the purpose of putting the public or
any section of the public in fear.
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