View Full Version : Claim amount payble for restatement policy and market value policy
Natraj
16-08-2009, 04:57 PM
Hey Guys,
I have one question, can you help me out -
If there is a loss of 100000 and sum insured is 1000000 and reinstantement value is 1200000 and rate of depreciation is 10% in this case what will be the claim amount payble in case of -
a)restatement policy
b) market value policy
Master
18-08-2009, 09:14 AM
It's obvious the market value or you say reistatement value / Sum assured which ever is less.
So in this case the Sum assured id less than Reinstatement value so 100000 is payable less depreciation.
Expert
18-08-2009, 09:22 AM
Hey Guys,
I have one question, can you help me out -
If there is a loss of 100000 and sum insured is 1000000 and reinstantement value is 1200000 and rate of depreciation is 10% in this case what will be the claim amount payble in case of -
a) restatement policy
b) market value policy
Sum Insured 1000000
Reinstatement value of the property 1200000
Loss 100000
Answer 1
Since Reinstatement value(RV) is more than the sum insured there is underinsurance and there is no depreciation since it is reinstatement value
therefore,
claim payable=SI/RV * Loss Payable
=(1000000/1200000) * 100000
=83333 is the claim payable for Reinstatement value
Answer 2
Market Value
Here sum insured is 1000000 but reinstatement value is 1200000 again there is underinsurance so 10% should be depreciated from Reinstatement value to arrive market value
1200000 -120000=1080000 is the sum insured
Loss payable is 100000 less 10%depreciation ie 90000
therefore
Claim payable = SI/Market value*loss Payable
=1000000/1080000*90000
=83333 is the claim payable for Market value
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Expert
18-08-2009, 09:24 AM
And yes there is no benifit or difference in taking insurance on restatement value or market value if its the case of underinsurance.
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