Engineering Insurance

ENGINEERING INSURANCE. The use of machinery involves manufacturers in certain special risks which are under taken by engineering insurance companies. Unlike most other classes of insurance, which are designed to indemnify the insured after he has suffered loss, engineering insurance endeavours pri marily to reduce the possibility of a loss occurring. To this end insured machinery is periodically inspected by skilled engineers to ascertain defects before they result in an explosion of, or breakdown in, the plant. A very large proportion of the premiums received is expended upon these services, which enable the in sured to receive the advice of experts as to methods of obtaining the utmost economy and efficiency from the plant.

The Factory Acts stipulate that all boilers under pressure must be periodically examined by competent engineers, and in the event of explosion an enquiry will be instituted by the board of trade, or similar authority out of England, under the Boiler Explosions acts to ascertain its cause. The inspections thus rendered essential are undertaken by the insurers in the terms of the boiler policy, which also indemnifies the insured in respect of claims made against him by third parties in respect of personal injuries and covers damage to surrounding property caused by the explosion. Law costs incurred with the consent of the insurers in defending claims are also included.

Policies are not confined solely to boilers, whether under pres sure or not, but are issued for all classes of plant working under pressure. Insurances are sought extensively for such items as superheaters, calorifiers, hot water and steam heating boilers with heating pipes and radiators and other vessels working under steam, liquid, air or gas pressure.

In connection with cast-iron sectional low pressure boilers, the risk of cracking of sections and of explosion and cracking pipes may be insured, whilst in approved cases water damage to surrounding property following leakage may be covered.

Breakdown risks of gas, oil and steam engines and power gas plants are commonly insured and subject to the exclusion of certain inexpensive parts, the breakage of any part of a machine proper whilst running, causing a sudden stoppage of the machine and necessitating repair before work can be resumed, is covered. No compensation is payable for loss of use under this type of policy. Whilst gas and oil engine policies include an indemnity in respect of damage due to flying fragments caused by the break down, such cover is not provided under the steam engine policy unless specifically insured. Periodical inspections of the plant are followed by the despatch of engineers' reports to the insured containing advice as to its use, although non-compliance with the suggestions made does not invalidate the contract.

Lift insurance covers the risk of liability to third parties for personal injuries due or alleged to be due to defects, or to negligence of attendants, in connection with the lift, its gates, hatchways or shaft. Whilst lift accidents are fortunately infre quent, they are usually attended by serious results followed by substantial claims upon the lift owners for damages. The ordinary lift policy does not include the risk of damage to property, al though it may occasionally be covered by special arrangement with the insurers. The proposal form requires full details of the lift to be insured and the proposer is required to indicate the limits of indemnity required in respect of (a) any one person, (b) any one accident, and (c) any one year of insurance. The indemnity selected is generally inclusive of any law costs which may be payable to claimants, but law costs incurred in the de fence of the insured are invariably paid by the insurers in addi tion. The policy stipulates for the quarterly inspection of the lift by skilled engineers and, whilst the insured may select the engineer, subject to the insurers' approval, engineering insurance companies are willing to undertake these services.

Policies similar in principle are issued in respect of hoists and cranes, although the premiums required are frequently greater, having regard to the increased possibility of goods falling upon third parties, particularly when such devices overhang public thoroughfares. Cranes of certain types are liable to collapse and also to toppling risks which may be specifically insured under a special form of policy.

Time loss policies guarantee the payment to the insured of a fixed sum per day to cover the loss of time consequent upon the breakdown of engines, explosion of boilers, or the collapse of flues. Normally the first 48 hours after each breakdown is ex cluded. Immediate notice must be given to the company of any breakdown, and, as these policies are only issued in conjunction with the appropriate damage or breakdown insurances, the in surers make arrangements for repairs.

Engineering insurance companies are also prepared to under take inspections of plant for valuation and sale purposes and in many cases superintend the manufacturing processes. Chemical analysis of water for use in boilers in different districts and tests regarding water softeners are also undertaken.

(A. G. M. B.) Fundamentally insurance means the acceptance of a risk of loss for a premium and the payment of that loss if it arises. In this sense there is no such thing as engineering insurance in the United States. Engineering insurance is furnished as a policy service, but not as an insurance or contract undertaking. This service is safety engineering and in its application to insured risks it is commonly called "inspection." In America risks are written which are made up of boilers and machinery, the ma chinery risks being limited largely to prime movers. This risk group has been sometimes improperly called "engineering in surance." A majority of underwriters appear to favour the term "power plant insurance." Insurance is by policy contract, and safety engineering is a voluntary service for the policy holder. Power-plant insurance includes : boiler insurance covering explo sion of vessels and piping subject to internal pressure ; engine insurance covering the breakdown of prime movers and some accessories; wheel insurance covering the breakdown of fly- or transmission-wheels or other rotating parts which may include shafting; electrical machinery insurance covering the breakdown of electrical transmitters and accessories.

Safety Engineering.

The obvious duties of safety engineers are to prevent losses, and that is true of all lines. Safety engi neering (see INDUSTRIAL ACCIDENTS, PREVENTION OF) has prac tically become a profession in the United States and constant efforts are made to apply to safety problems all obtainable skill and knowledge. In the fields mentioned above the duties of the safety engineer are particularly exacting, because resulting losses are by no means limited to the thing particularly insured but involve remote and indirect losses of many kinds, such as dam age to the property of others, injuries to persons, use and occu pancy losses and spoiling of product because of enforced suspen sion. This suspension is not always due to machinery within the plant, but may be covered for failure of power furnished from the outside by public utilities and others. The safety engineer cannot hope to prevent remote losses except by preventing loss to the thing insured or against failure of outside power sources. In the early days the companies prepared plans and specifications for boilers and other pressure containers, but this has been largely superseded by the standardized plans of the American Society of Mechanical Engineers. The safety engineering force usually includes one or more chemists who test boiler water and suggest chemical treatment to avoid scale or possible rupture. The general practice is to provide in the policy contract for the privilege of inspection by the company's safety engineers.

The most extensive, and probably the most promising, field for safety engineering grows out of the relation between employers and employees. This is particularly true under the workman's compensation laws. There are workman's compensation laws with varying provisions in all States except five. This means that there are 43 different compensation laws to which effective safety engineering practice must be adapted. Practically all companies work upon the theory that an injury prevented is a benefaction, an injury compensated an apology. It would be impossible within reasonable limits to undertake a detailed explanation of this line of safety work. Policy holders are usually advised not only upon mechanical safety but also on sanitation, light, heat and ventilation. Insurance companies assist in the forming of safety organizations in industrial plants, and instruct the members of such organizations in safety principles.

A feature of this form of loss which is not generally recog nized is of particular interest to the employer. The loss due to a personal injury is only a small part of the loss which the employer actually sustains. The indirect losses due to the excitement nat urally caused by an accident, the general stoppage of work for a time by a considerable part of the force and the temporary loss of moral have been demonstrated as losses amounting to several times as much as the direct loss because of the accidental injury, and these collateral losses cannot be insured because of their nature. Insurance companies generally have no right to enforce their safety recommendations, and their only recourse is cancel lation.

Extent of Practice.

This engineering practice is not limited to shops or other fixed work places, but extends to a very large number of fields. The construction operations of contractors, for instance, involve special safety engineering work, and this is also true of mining activities. Insurance companies assume no engi neering control over construction, but merely keep the operation, as such, under constant observation to prevent accidents. The companies in the United States undertake many kinds of public liability insurance. These are frequently concurrent with work men's compensation or employers' liability, yet very often they are written alone. General property damage (meaning liability for damage to the property of others) is written usually with as much freedom as the laws permit in connection with public lia bility lines. The service of the safety engineer is required prin cipally where there are concurrent types of insurance policies, but may be required in any one of them. Elevator insurance re quires special safety engineering work, usually applied at stated intervals during the term of the policy. This class of insurance may include personal injury, property damage and collision. In automobile insurance policies the services of the safety engineer are principally directed to fleets where five or more commercial automobiles are in the same ownership or operation. The com panies form safety groups among the employees and instruct them on various occasions. Automobile insurance includes personal injury, property damage, collision, fire and theft.

Plate-glass insurance involves no collateral risk, the loss being limited to the particular glass insured. The U.S. companies gen erally use a surveyor rather than an engineer, although the sur veyor has sufficient engineering training to report upon safety con ditions. Many companies write policies where the obligation is direct to the policy holder without any question as to liability. In fire policies the companies consider safety engineering im portant. The obvious purpose is to prevent fires, and recom mendations are not usually influenced by probable rate reduction. The safety engineer gives attention to sprinkler systems, loca tion of supply tank, exposure of head to heat sources, defective flues, defective wiring, etc. Burglary insurance with its collateral types is written quite extensively by United States companies and here safety engineering finds an important field. In "mercantile open stock" insurance the safety engineer is called upon to study the best known methods of protection. Apartment house risks receive some attention by the safety engineer particularly as respects door and window locks and fire-escapes. Sprinkler leak age and also various kinds of water damage, including that caused by plumbing, provide a field for the safety engineer in various directions. (W. G. C.)