Page 16 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

market to replace the damaged raw
material.
(ii) Semi finished goods - Market Value, i.e the
cost of raw materials plus all the overhead
expenses incurred up to the stage it has
been produced.
(iii) Finished goods - Market value, i.e, the cost
of raw materials plus all the overhead
expenses incurred till it reaches the finished
goods stage. However, selling price including
profit cannot be taken as the sum insured.

So, it can be summarized as such :
(a) The sum insured is always fixed by the insured.
(b) It is the maximum limit of liability under the

policy.
(c) This is the amount on which the rate is applied

to arrive at the premium.
(d) The sum insured should represent the actual

value of the property insured. If there is over
insurance, there is no benefit to the insured.

If there is under insurance, the claim amount will

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