Page 68 - Fire Insurance Ebook IC 57

Fire and Consequential Loss Insurance

indemnity according to the fire policy.
2) Until reinstatement is carried out by the insured,

the liability of the company is limited to the normal
market value.
3) This provision relates to the application of
prorate average. If at the time of reinstatement
or replacement, their cost exceeds the sum
insured at the time of loss ,it is deemed to be
underinsurance and insured has to bear a ratable
portion of the loss.

Since the cost at the time of reinstatement is
considered it is advantageous to complete the
reinstatement as soon as possible. Secondly it
emphasizes the need for fixing an adequate sum
taken into account the future cost and the inflation
factor.

4) Reinstatement basis of settlement will not apply
1) If the insured fails to intimate the insurer

within six months from the date of loss,

his intentions to replace the damaged

property,

Sashi Publications - www.sashipublications.com 81

Copyright@ The Insurance Times. 09883398055 / 09883380339