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Fire Sum Insured Recommendation

  • To avoid under insurance deduction during a claim we strongly recommend that the Sum Insured indicates as follows:

    Building, Furniture fixtures and fittings : Reinstatement value basis (i.e New for Old)

    Plant ,Machinery, Equipment’s, Air Conditioners & Stabilizers, Generators, Transformer and accessories: New replacement value basis

    Stocks : Market Value Basis

    Under Insurance formula % = Sum Insured / New replacement value X100

    Note: Depreciation is Not applicable if Sum Insured indicates reinstatement value

      Sample of Market Value Settlement
    Replacement value at the time of Loss 1,50,00,000
    Less Depreciation say 20% 30,00,000
    Value at Risk 1,20,00,000
    Sum Insured under the policy 75,00,000
    Cost of repairs & replacements 10,00,000
    LESS: Depreciation 20% 2,00,000
    Less: Salvage 25000
    Loss Assessed 7,75,000
    Under Insurance 37.5% 2,90,625
    Claim payable 4,84,375
    Policy Excess 10000
    NET CLAIM PAYABLE 4,84,375
      Sample of Reinstatement Value Settlement
    Replacement Value at the time of reinstatement completion 1,50,00,000
    Sum Insured under the policy 1,50,00,000
    NO UNDER INSURANCE 0
    Cost of repairs & Replacements 10,00,000
    Less: Salvage 25,000
    Less: Policy Excess 10,000
    NET CLAIM PAYABLE 9,65,000
      Sample of any other Sum Insured chosen by the customer
    Replacement value at the time of reinstatement completion 1,50,00,000
    Sum Insured under the policy 1,25,00,000
    Under Insurance by 25,00,000
    % of Under Insurance 16.67%
    Cost of Repairs & Replacements 10,00,000
    Less : Salvage 25,000
    Loss Assessed 9,75,000
    Less : Under Insurance 16.67% 1,62,533
    Loss after Under Insurance 8,12,467
    Less: Policy Excess 10,000
    NET CLAIM PAYABLE 8,02,467
      Sample Settlement of Claim in respect of Stocks
    Market Value at the time of Loss 1,00,00,000
    Sum Insured under the policy 75,00,000
    Under Insurance by 25,00,000 i.e. 25%
    Claim assessed 10,00,000
    Less: Salvage 25,000
    Loss after deducting Salvage 9,75,000
    Less: Under Insurance 25% 2,43,750
    Loss payable after applying under insurance 7,31,250
    Less: Policy Excess 10,000
    NET CLAIM PAYABLE 7,21,250