Page 11 - Fire Insurance Ebook IC 57
P. 11
The Insurance Times
insured to act as if he is uninsured all the time, and
takes care and safeguards his assets from the perils.
Following a loss, he is then expected to salvage as
much of the property as possible.
(B) Principles of indemnity - The objective of the principle
is to place the insured , as far as possible, in the same
financial position after a loss, as that occupied by him,
immediately before the loss.
In simple words, the principle of indemnity means the
insured is indemnified only to the extent of his loss, no
profit or undue benefit is extended. The indemnity is
subject to the sum insured and other terms of the policy.
The sum insured can be fixed on the basis of
Reinstatement Value or Market Value.
The term 'Market value' means, for insurance purposes,
the present cost of construction of similar buildings,
after deducting depreciation based on age, usage,
maintenance etc.
Similarly for plant and machinery, market value is
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