Insurance Report

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Whether a consumer has assumed responsibility for using an obviously dangerous product or misused a relatively safe product depends on who the user is likely to be.

In addition, If a company facing explosion because of careless of the worker or lightning and does not have standard fire policy, the company cannot claim if damage or destruction of the property by fire or other specified perils during a stated period. So the standard fire policy functionally as to make good the financial loss suffered by an individual as a result of fire. Fire Insurance can never replace fire waste, it merely effects equitable distribution of such waste among all those who are insured.

STEP 2: EVALUATING POTENTIAL RISK

Once the risk is identified, the risk manager must evaluate them in terms of financial loss. This means measuring the severity (potential size of the loss) and frequency (the probability that it is likely to occur).

Losses with high severity may not necessarily be a direct damage. For example, our company has careless in mixing the raw material and it cause injuries or infection to the consumer. The victim may sue our company for the losses sustained.

Our company focuses on the financial impact which is important risk. Important risk include those exposures in which the possible losses would not lead to bankruptcy, but would require the firm to borrow in order to continue operations.

STEP 3: EXAMINING ALTERNATIVE RISK MANAGEMENT TECHNIQUE

Once the risk have been identified and evaluated, the next step is to examine all possible ways to handle it. There are two main ways to classify the Risk Management Technique which are Risk Control and Risk Financing. For VC Enterprise, this company have choose Risk Control which is Separation and Risk Financing technique which is Insurance.

RISK CONTROL (SEPARATION)

This method involves the dispersal of the firms’ asset in several locations instead of confining it to one major area. For VC Enterprise, we has separate our department into marketing, operation, organization and financing department.

RISK FINANCING (INSURANCE)

Insurance is a risk financing method of transferring the financial consequences of potential accidental losses from an insured firm or family to an insurer.

VC Enterprise choose:

1. STANDARD FIRE POLICY from ETIQA INSURANCE

Scope of cover

Cover is provided in respect of three perils which are fire, lightning and explosion.

- Fire

Fire is actual burning damage following ignition under accidental circumstances. Once there is a fire within the meaning of the policy, the various other types of losses come within the scope policy. Examples are:

- Damage during or immediately following a fire caused by smoke, scorching, and falling walls.

- Damage caused by fire brigades in the discharge of their duties.

- Damage of property removed from burning building caused by exposure to weather, provided the removal was made in an endeavor to mitigate the loss.

Exception:

- ‘Its own’ spontaneous fermentation.

- ‘Its’ undergoing any process involving the application of heat.

- Earthquake.

- Subterranean fire.

- Riot or Civil Commotion.

- War, invasion, act of foreign enemies, hostilities (whether war be declared or not) civil war, rebellion, revolution, insurrection or military or usurped power.

- Lightning

All lightning damage is covered whether there is a fire or not.

- Explosion

There is a limited amount of cover only provided by a standard fire policy. The policy provides cover against explosion as follows:

- Loss or damage by explosion of gas used for illumination or domestic purposes in a building in which gas is not generated and which does not form part of any gas works, will be deemed to be loss by fire within the meaning of this policy.

- The explosion cover does not include explosion of gas used in trade process.

The policy may be extended to cover the following special perils with additional premium being charged:

- Aircraft damage

- Earthquake and volcanic eruption

- Storm, tempest

- Flood

- Explosion

- Impact damage

- Bursting or overflowing of water tanks, apparatus or pipes

- Bush / Lalang fire

- Subsidence and Landslip – Special Questionnaire Form is to be completed

- Spontaneous combustion

- Riot strike and malicious damage

- Damage by falling trees or branches and objects

Duration of cover is for one year. You need to renew your insurance policy annually.

2. PRODUCT LIABILITY INSURANCE POLICY from

ALLIANZ GENERAL INSURANCE COMPANY (MALAYSIA) BERHAD

Scope of cover

Generally speaking, cover is given in respect of legal liability for damages in respect of accidental bodily injury to third parties and accidental damage to their goods and/or property arising from defects in goods sold or supplied.

In most jurisdictions, a plaintiff's cause of action may be based on one or more of four different theories:

- Negligence

Refers to the absence of, or failure to exercise, proper or ordinary care. It means that an individual who had a legal obligation either omitted to do what should have been done or did something that should not have