PLATE GLASS INSURANCE - Simple Subject matter; - Complex Solutions

In modern construction, we often see buildings with façade of glass standing out impressively. These ‘glass houses’ have lots of plate glasses fixed on trusses which are exposed to the perils of breakage, especially by vandalism and wind related perils.

Plate glass by definition is - a strong rolled and polished glass containing few impurities, used for mirrors and large windows. This would include glasses ground and polished, clear glass in thick sheets used for shop windows, mirrors, etc.

By process, plate glass is a type of glass which is cast in a solid plate, typically through a roller process. The resulting glass is extremely flat and free of distortions. This type of glass is often used to make windows, and it is also utilized in the manufacture of mirrors, tables, and other objects which require extremely flat glass. There are a variety of different weights of plate glass available, ranging from incredibly thick and highly durable plate glass to more delicate varieties.

Initially we understood the subject matter only to be those glasses in the show rooms, display windows of shops etc., but now a days all sorts of glasses – tourniket doors, glass doors, big French type windows, glass panels facading building and a host of others are insured under this head.

These are insured under various policies viz., Fire, Package Policies, Plate glass insurance policies etc., Quite often, at the time of a claim (i.e., after breakage of a glass) the question crops as to whether the indemnity should include various other expenses like transport costs, cost of fixing, labour charges etc., As these could exceed the value of the glass itself, there could be serious differences which lead to arguments and dissatisfied customer.

Of course there is clarity that wherever it is not specified, the glass is meant to be ordinary non embossed, non lettered ones and any special ones will have to be so described.

One interesting aspect found is that, this policy takes reference to the proposal in a very clear way. The operative clause of the common Plate glass Policy reads “ The Company agrees that if at any time during the Period of Insurance, there shall be any breakage (excluding damage by scratches) of any of the Glass in the Premises and specified in the Schedule, the Company will pay or make good to you the intrinsic value of the Glass up to the total value specified in the Schedule against each item respectively. An additional amount not exceeding 5% of the admissible claim will be payable towards boarding charges of the damaged area however this amount is subject to overall limit of indemnity laid down under the Policy.

It further adds that “This policy has been prepared in accordance with the answers given and the declaration on the proposal form signed by the Insured and any other information provided to the Company by the Insured.

The Policy, the Schedule, the Exceptions, the Conditions and Endorsements shall be read together as one contract and any word or expression which carries specific meaning shall bear such meaning throughout.” The Insured and the Company agree that the Proposal shall be incorporated in and be the basis of the contract”

So the first argument on coverage Vs non coverage of the extra expenses is dictated by the golden rule :

WHAT IS INSURED IS WHAT IS INDEMNIFIABLE i.e., THE CLAIM FOLLOWS WHAT IS UNDERWRITTEN i.e., WHATEVER COMPONENTS FORMS PART OF SUM INSURED ARE ELIGIBLE TO BE CONSIDERED TO BE INDEMNIFIED.

Now going back to the proposal, the details called for and proposed are that of “particulars and measurements” and hence generally represent the value of the glass only. Having proposed only the price of the glass, the indemnity should be limited to the price alone is a natural corollary. However, there are occasions where a thoughtful aided by a good Broker provides either the landed cost or the expenses for fixing the glass at the place sought to be insured, in which case, the indemnity should be considered accordingly.

INDEMNITY AS DEFINED IN THE POLICY: - the policy states expressly that “All salvage glass shall be the property of the Company, and must be carefully preserved. It shall be at the option of the Company either to pay to the Insured the amount of the intrinsic value in money or to make replacement with glass of a similar manufacture and quality.”

Though the option of providing replacement is never exercised and is frought with dangers, the value of a similar replacement is what is talked about. As could be seen the reference here is to the intrinsic value which should be the plain value of the glass. Intrinsic value is a Finance World term and relates to stocks - there it connotes the actual value of a security, as opposed to its market price or book value.

Perhaps the intention in insurance in relation to Goods / property being the subject matter insured could be that we are talking of its physical value and not any sentimental value that could be attached to it. We are perhaps trying to define the value of the product irrespective of the holder’s perception, which could be more relevant in case of curio.

Personally, I maintain that it should always the landed cost or the cost at the insured location which would include the transportation and handling costs and cost of fixation or labour costs wherever specifically included that should form the basis of indemnity.

The Policy is guided by General Exceptions of which some important are : : Breakage of Glass caused by Fire or Explosion; War invasion and like, STFI and convulsions of nature, breakage of cracked or imperfect glass, damage to frame work, cost of removal or replacement of any fitting or fixtures in order to replace glass.

Quite interestingly there could be claims for breakage of glasses arising out of "fluctuation in temperature". Quite understandably, in peak summer, Shops and Establishments do run their air conditioners to the maximum cooling the room internally. One side of the glass could be exposed to the heat and Sun light. There would be heat induction leading to expansion and possible compression due to cooling. Though shattering of glasses have not been regularly known to be reported, there could be one odd claim.

Though there is no intention to cover this vagary, it is unfortunate that the policy has no express exclusion on this aspect.

It is inappropriate that there is no express condition of average also – though this being a basic principle – is being applied at the time of claims.

As cited earlier, the policy provides for expenses upto 5% of the admissible claim towards boarding charges. What constitutes boarding is not clearly defined.

The reference to ‘ board and lodging’ is quite inappropriate here. In that context - lodging is a place in which someone lives or stays temporarily and board is the provision of regular meals when one stays somewhere, in return for payment or services. So, lodging is the place where you stay temporarily, and board is your food.

What is intended here besides the reimbursement of full replacement cost, the additional expense of repairing frames, installing temporary plates or boarding up openings of plate glass windows.

Hope you found this post interesting and informative. In case you have views to the contrary, please do share.

With regards – S Sampathkumar.