Page 373 - IC38 GENERAL INSURANCE

value of the car. Insurers provide a range of 5% to 10% to decrease IDV to
the insured. Less IDV would mean lesser premium.

d) Fire insurance

In fire insurance the sum insured may be fixed on the basis of market value
or reinstatement value for buildings / plant and machinery and fixtures.
Contents are covered on the basis of their market value which is cost of the
item less depreciation.

e) Stocks insurance

In case of stocks, sum insured is their market value. The insured will be
reimbursed at the cost at which these stocks can be purchased in the market
to replace the damaged raw material, after the loss.

f) Marine cargo insurance

It is an agreed valued policy and the sum insured is as per the agreement
between insurer and insured at the time of contract. Normally it would
consist of the sum of cost of the commodity plus Insurance + freight i.e. CIF
value.

g) Marine hull insurance

In marine hull insurance, the sum insured is the value, agreed between the
insured and the insurer at the beginning of the contract. This value would be
arrived at by a certified valuer after an inspection of the hull/ship.

h) Liability insurance

In case of liability policies, the sum insured is the liability exposure of the
industrial units based on the degree of exposure, geographical spread.
Additional legal costs and expenses may also form part of claim
compensation. The sum insured is decided by the insured based on the
above parameters.

Test Yourself 4

Suggest an insurance scheme for a doctor to protect him from any claims of
negligence against him.

I. Personal accident insurance
II. Liability insurance
III. Marine hull insurance
IV. Health insurance

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