50:50 Clause

The 72-hour clause is part of all risk insurance policy. The clause that means any losses or damages that happen during 72 consecutive hours of any period during the term of the policy and which occurs due to the following perils mentioned below will be taken into consideration in claim assessment-

• Earthquake, volcanic eruption, fire
• Earth movement or collapse
• Bushfire
• Wind, storm, typhoon, hurricane, cyclone, rainwater, hail, etc.
• Flood, it means the inundation of usually dry land by escaping of water or released from the normal confines of any natural water activity or lake (whether or not modified or of any canal or dam), tsunami, the action of the sea, tidal wave or high water; shall be considered as happening from one event

The clause in constructors all risk insurance policy shall concern any of the combinations of the perils as mentioned above. Here no such 72-hour clause may be extended beyond the expiry of the insurance policy unless the insured shall first sustain any direct damage or loss before the expiry of the all risk insurance policy and that too within the duration of consecutive 72 hours.

The commencement of any 72-hour clause will depend on the discretion of insurance company and the policyholder as agreed upon. Although it is to be noted that there should never be overlapping of two or more 72-hour clauses in case the damage or loss happens over the extended duration of time.

Case Study

Saski Engineering hired L.K Construction to build a warehouse for their company in Hyderabad. When the project was still on-going, a storm and heavy rain happened, as a result of some portions of the under constructed pillar got damaged. Fortunately, there were no mishaps.

The storm and the rainy weather continued for two days, and on the second day, the rain damaged the other pillar as well. After some time, both the pillars collapsed, and the under-construction warehouse suffered major damages and financial loss.

In this case, L.K Construction had construction all risk insurance policy and the company approached the insurance company for the claim settlement. In this particular case, L. K Construction filed for two claims-

Damage caused to the pillar when it first started pouring

Damage caused to the other pillar due to incessant rain

As in this case, the damages reported happened due to one single peril, i.e., rain, the insurer took into consideration both the events under one single claim and settled the claim appropriately.

It is to be noted, as the damages happened at two different time slots but occurred due to a single peril which is rain and that too within the duration of 72 hours. The 72 hour clause was applied in the construction all risk insurance policy thus settling the claim and compensate for the damage and loss happened to the under-construction warehouse.