Insurance firms are willing to indemnify in case of damage to the assets

Insuring life and vehicles are common. But did you know that even the roads you ride on can be insured? Roads, including the East Coast Road and Rajiv Gandhi Salai that are developed or maintained under Build-Operate-Transfer (BOT) basis by construction companies are insured against fires and other perils.

The Chennai - Tada stretch on the Kolkata Highway, Krishnagiri- Wallajahpet Road and Ahmedabad - Mallya tollway are some of the other roads insured.

Insurance firms are willing to indemnify these companies in case of damage to the assets. “Not just the road but every single piece of street furniture, including streetlights and traffic signals, is covered under this. We take insurance for every year and the premium changes according to the depreciation value,” said an official in the Tamil Nadu Road Development Company (TNRDC), which maintains the ECR and Rajiv Gandhi Salai.

These roads are insured against everything including losses due to damage of natural calamities, such as unprecedented floods, cyclone, fire, lighting, volcanic eruption, earthquakes and even tsunamis. The recent Thane cyclone saw damages worth around Rs.5 lakh on the ECR near Hanumanthai and around 75 per cent of this cost was borne by the insurance company.

Similarly, two years ago, when the 1-km long Palar River bridge was damaged extensively in an accident, the insurance company indemnified the cost. “We took the insurance policy because though we pay premium, the insurance company would bear at least a portion of the costs,” the TNRDC official told me.

On Rajiv Gandhi Salai, the traffic signals at the Tidel Park junction are hit frequently. “Each signal costs around Rs.6-7 lakh. It is not possible for the company to bear such charges,” the TNRDC official said. From 2004, 24 claims have been submitted for ECR whose assets are worth Rs.150 crore and 22 times from 2007 for damages on Rajiv Gandhi Salai which is worth Rs.260 crore.

Road users feel that BOT roads are always better maintained than those maintained by local bodies or the State Highways Department or the National Highways Authority of India. “This is because the companies get funds from toll collection. There is constant maintenance because they are supposed to do that under the contract,” said a road expert.

However, this kind of insurance is not possible for other roads and highways said a source in the National Highways Authority of India. “Our roads too are treated as assets. They are shown in our balance sheets. But we do not have any insurance. For the amount of road length that we maintain, the sum to be paid as premium would be very high,” an NHAI official said.

On its part, the Highways Department has something called Contractors All Risk Policy under which the contractor opts for insurance cover from the time of the construction to the end of the defect liability period (till when they have to maintain the facility). Roads, bridges, flyovers, subways and even the smallest of roads are covered under this. For roads, the period of coverage is three years after completion of work and for bridges and flyovers it is five years.

“The CAR policy is mentioned in the tender document itself. We are ensuring that the contactor takes a policy for this. He has to present a certificate to the effect. The contractor also takes a policy to cover the labourers,” said a Highways Department official.

It appears that insurance is a good way to ensure quality upkeep of roads. Alternatively, dedicated funds and special agencies can also take care of road maintenance.

Deepa H. Ramakrishnan writes on Chennai Corporation and civic issues for The Hindu.

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