IRDAI License Number: IRDAI/INT/ISNP/2022/250
In the insurance domain, floater is a word that we come across in health insurance and property insurance. In health insurance- it indicates the coverage being available to one/all members of the family for the total sum insured in the policy. In fire or burglary insurance- it means covering properties at different locations for an aggregate sum insured. On same lines, Floater cover in a CPM policy provides for coverage for equipment/machinery at different locations under a single policy.
The CPM policy is a specific location policy. It requires the specification of the machinery like make, year of make, chassis number etc to be declared in the policy along with the specific location at which it is working/ stored.
Let us consider a NHAI road contractor working on road sections in different parts of a district or a State. At the beginning of the work, he would need a Crawler excavator for earth work & a road roller for compacting, whereas later he would require asphalt mixing plant or a concrete mixing plant.. So, if a contractor has projects at different locations in different phases of completion, he would like to move the appropriate machinery from one location to another as require, for optimum utilization.
If different location wise policies are issued for CPM equipment, every movement from our location to another would require the specific machine to be taken out from one policy for one location & to be included in a different location policy. This may prove to be cumbersome and chances of slippage cannot be ruled out. So, the obvious answer to this issue is to have a coverage on floater basis. However this would require payment of the Floater premium as well as a good movement control register at the individual project sites.
“In consideration of Floater Extra charged over and above the policy rate the Sum Insured in aggregate under the policy is available for any one, more, or all locations as specified in respect of movable property. At all times during the currency of this policy the insured should have a good internal audit and accounting procedure under which the total amount at risk and the locations can be established at any particular time if required. The changes in the address of locations specifically declared at inception should be communicated”
An interesting issue that came up before the West Bengal State Consumer Disputes Redressal Commission was of M/S. Banowari Lal Agarwalla Pvt. Ltd. vs ICICI Lombard General Insurance The CPM policy issued in this case was on floater basis. The insured had communicated the movement of three Volvo tippers from one location to another in the state of Jharkhand. This was done by way of a letter sent under Certificate of posting. But it is not clear if the letter was either not received or not taken note of by the Insurer in the policy. A claim occurred at the transferred location which was disputed by the Insurer.
The commission verified the genuineness of posting of the letter and looking at the floater basis of the policy, decreed the claim amount to be paid to the insured.
To sum up- the Check Points for a Contractor with several work sites are:
1. Check if there is a need for movement of machinery from one location to another
2. Check if the machinery movement control system is efficient
If the answer to above is yes, evaluate your mental comfort/peace against the extra premium on floater cover.
We suggest- go for it.
