Page 218 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

hence cost of replacement less deduction " for depreciation is an
adequate basis of indemnity.
n If such property is damaged, the cost of repair less deduction for
any betterment that may result from the repairs, is the basis of
indemnity.

Salvage

The term "salvage means
(i) all property covered by insurance which escapes destruction or

damage from the operation of an insured peril.

(ii) the residual value of property which is partially damaged.

(iii) the amount of money received from the sale of the damaged
property.

n When a loss occurs the full property/stock may not be destroyed.
In such cases the salvage goods are disposed of in the market
and the value is realised.

n As per understanding between the parties the salvage is either
disposed of by the insurer or the insured.

n The amount of insurance claim is reduced by the money received
from sale of salvage.

n If the insurer retains the salvage it pays the insured the gross
amount of claim and retains the salvage proceeds. If the insured
sells the salvage the insurer pays the net amount of claim ie gross
claim less salvage.

Contribution

n If a policyholder has more than one policy for the same risk, in
case of any claim he will not receive the full claim amount from
each insurer.

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