Minimum Amount of Cover
- The minimum cover must be at least P2.5 billion for property damage per one location.
- "One location" refers to the premises occupied by the insured within a 10-kilometer radius from the main plant.
Indexing of Coverage Amount
- The minimum cover amount is to be indexed according to the Consumer Price Index (CPI) at the time of policy issuance.
- Computation follows the steps outlined in the annexes attached to the circular (not included here).
Policy Exclusions
- Coverage excludes risks specifically listed in the standard IAR policy form.
Standardized Policy Form and Attachments
- The IAR insurance policy, including applications, riders, clauses, warranties, and endorsements, must conform to the standard form.
- Approval of the form is required from the Insurance Commissioner under Section 226 of the Insurance Code.
Rate Determination
- The insurance rate for IAR policies is non-tariff.
- Approval of rates by the Insurance Commissioner requires acknowledgment or acceptance by internationally reputable underwriters/reinsurers.
- Such underwriters/reinsurers must cover at least 20% of the total sum insured.
- Additional charges such as brokerages, commissions, taxes, and overrides may be added to form the gross rate.
- Full disclosure of all foreign securities and reinsurance facilities is mandatory to the Insurance Commission.
Basis of Coverage and Indemnification
- The coverage basis is the sound value of the industrial risks and ancillary properties as contemplated by the standard fire policy.
- Alternatively, replacement value may be used as the basis at the insurer's option.
- This option must be clearly indicated on the policy by an endorsement.
Effective Date
- The Circular Letter and its provisions took effect on October 1, 1989.