Page 438 - IC38 GENERAL INSURANCE

a) Categories of claim

The claims which are dealt with in insurance policies fall into the following
categories:

i. Standard claims

These are claims which are clearly within the terms and conditions of the
policy. The assessment of claim is done keeping in view scope and the sum
insured opted for and other methods of indemnity laid down for various
classes of insurance.

The claim amount payable by the insurer takes into account various factors
like valuation at time of loss, insurable interest, salvage prospects, loss of
earnings, loss of use, depreciation, replacement value depending on the
policy taken.

ii. Non-Standard claims

These are claims where the insured may have committed a breach of
condition or warranty. The settlement of these claims is considered subject
to rules and regulations framed by the non-life insurance companies.

iii. Condition of average or average clause

This is a condition in some policies which penalises the insured for insuring
his property at a sum insured less than its actual value known as
underinsurance. In the event of a claim the insured gets an amount that is
proportionately reduced from his actual loss in accordance to the amount
underinsured.

iv. Act of God perils - Catastrophic losses

Natural perils like storm, cyclone, flood, inundation, and earthquake are
termed as “Act of God” perils. These perils may result in losses to many
policies of insurer in the affected region.

In such major and catastrophic losses, the surveyor is asked to proceed to
the loss site immediately for an early assessment and loss minimisation
efforts. Simultaneously, insurers‟ officials also visit the scene of loss
particularly when the amount involved is large. The purpose of the visit is to
obtain an immediate, on the spot idea of the nature and extent of loss.

Preliminary reports are also submitted if the surveyors face some problems
in regards to the assessment and may desire guidance and instructions from
insurers who are thus given an opportunity to discuss the issues with the
insured, if necessary.

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