Page 266 - Motor Insurance Ebook IC 72

The Insurance Times

For example, the effect of rust is revealed only after
dismantling and will have to be rectified before a new
part is fitted. These costs are in the nature of
maintenance expenses and the insured will have to bear
the costs of these incidental repairs which are not directly
related to the accident.

Another area of misunderstanding between the insured
and insurer is that of depreciation charged when old
parts are replaced by new ones.

Here again, the insured is expected to bear a certain
part of the cost. This is based on the principle of
indemnity whereby the Insured must neither benefit
by the accident nor be left to suffer.

This is implied not by any specific condition in the policy
but by the operative clause itself which reads "The
Company will indemnify the insured against loss etc."

The rate of depreciation is highest for rubber parts,
whereas no depreciation is applied when windscreen
glass is replaced.

The standard package policy makes express provision
concerning deduction for depreciation at the rates,
mentioned in the policy in respect of parts replaced.

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