Page 65 - Fire Insurance Ebook IC 57

The Insurance Times

(v) Under the fire policy ,the sum insured is the
market value whereas under this policy new
reinstatement or new replacement value is the
sum insured.

(vi) This form of insurance was introduced in the
U.K in the post world war 1 scenario when the
cost of rebuilding and machinery had become
so high that the indemnity provided by the fire
policy was inadequate.

(vii)The depreciation funds provided by the business
concerns in their annual accounts were insufficient
till the gap between the amount payable under fire
policies and the cost of new buildings and plants.

(viii)The operative part of the reinstatement value clause
states that in the event of the property insured being
destroyed or damaged, the basis upon which the
amount payable shall be calculated as the cost of
replacing or reinstating a similar property

(ix) The words " Property of the same kind and type"
are important .e.g Textile machinery cannot be
replaced by chemical machinery or vice versa.

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 78

Copyright@ The Insurance Times. 09883398055 / 09883380339