As per the claims series clause in Construction all Risk Policy, where a series of losses or damages or bodily injuries and deaths happen due to factors that are directly or indirectly related, then claims for such losses shall be added together and treated as one claim. We consider such claims as made at a single point in time when the first claim was submitted in writing.
A claim for a series would define as the series of two or more claims arising from a single common clause, i.e., a unifying factor of some kind, which occurs, for example.
- Due to the same fault in designing, manufacturing, or instructing for use or product labeling
- Due to the supply of the same products/services showing some defects
In those situations where the series of claims is aggregated under a single claim head, the deductible is also applied to the aggregate amount and not to the individual claims.
However, claims stemming from a single specific cause and filed more than 3 years after the first claim of the series will not be covered.
In situations where the description of the event or act is specific, aggregating the claims will not be easy. However, employing broad terms to describe unifying acts expedites the identification of the claims requiring aggregation.
Case: Claims Series Clause in Construction all Risk Policy
Incepted in 2013, L.J Work had established a name for itself in the construction sector. Since its formation, the company has successfully completed various construction projects in Delhi and Pune. Though the company always acts diligently, it has also bought a construction all-risk insurance policy to get financial coverage in case any loss or damage happens.
Last year, when the company was building a five-story building in Pune, an earthquake happened and damaged two pillars of the under-constructed building. Thankfully, there was no loss of life, and the company approached its construction all-risk insurer to get coverage for the financial losses or damages to the building.
A few weeks later, the engineer at the construction site found some cracks in the roof as well. The engineer called for an investigation and the investigation results found that damages happened due to the impact of earthquake.
Earlier, they were minor and therefore, did not come into notice but now they became visible in few weeks period.
When L.J Work reported the second loss to insurer, construction all-risk insurance company treated both incidents as one claim. The first claim resulted from an earthquake, which also caused damage to other parts of the building, discovered later on. It means, the peril was the same in both events and there were a series of claims.
L.J Work’s construction all-risk insurance policy also comes with a deductible limit of Rs Rs 50,000. In this case, when 2 claims were aggregated under a single claim, only one deductible needed to be paid. The insurer settled the claim by deducting Rs 50,000 as a deductible, which L.J Work paid.
If there’s no common factor to combine multiple claims, the insurer will ask for deductible payment for each claim separately. In other words, if L.J Work’s claims were deemed distinct, the insurer would have requested separate deductibles for each claim.
About The Author
Shivani
MBA Insurance and Risk
She has a passion for property insurance and a wealth of experience in the field, Shivani has been a valuable contributor to SecureNow for the past six years. As a seasoned writer, they specialize in crafting insightful articles and engaging blogs that educate and inform readers about the intricacies of property insurance. She brings a unique blend of expertise and practical knowledge to their writing, drawing from her extensive background in the insurance industry. Having worked in various capacities within the sector, she deeply understands the challenges and opportunities facing property owners and insurers alike.
