Property Insurance Frequently Asked Questions (FAQ’s)

The proposer of the policy should first and foremost have an insurable interest in the assets being proposed for insurance, i.e. the insured should stand to lose financially in the event of loss or damage to such assets. The proposal form should disclose all details, which are true to the insured’s best knowledge and other information, which the proposer may feel is relevant.
Generally, there are two methods. One is Market Value (MV) and the other is Reinstatement Value (RIV).
  • Market Value Method (MV) - In the event of a loss, depreciation is levied on the asset depending on its age. Under this method, the insured is not paid amount sufficient to buy the replacement.
  • Reinstatement Value Method (RIV) – here the Insurance Co. will pay the cost of replacement subject to ceiling of the overall Sum Insured. Under this method, no depreciation is levied. One condition is that the damaged asset should be repaired / replaced in order to get the claim. It may be noted that RIV method is allowed only for FIXED ASSETS and not for other assets like stocks and stocks in process.
Every insured is expected to behave as though he is uninsured. Take all precautions to prevent / aggravate the loss. Inform Insurance Company who have to be given an opportunity to inspect the damages. Inform fire brigade who will assist to put out the fire. During fire fighting, any damage caused to other insured property caused by water, will be paid by Insurance Company. Give completed claim form and documents as required by Insurer, in support of your claim. After repairs / replacement, submit bills to Insurer.
No. When you apply for a fire insurance policy, the current market value of the property or the Reinstatement value of the property, depending upon the basis of the Sum Insured, should be accurately calculated for arriving at the correct amount to be insured. The compensation payable when a covered loss or damage occurs shall be based on whether or not the property has been insured adequately. If the amount insured is excessive, it will mean overpayment of unnecessary premium; if the amount insured is inadequate you will receive amounts in proportion to the market value only.
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