Page 45 - Ebook IC S01
P. 45

Survey And Loss Assessment IC-S01



                                           Motor Insurance








               Motor Insurance is a contract of Indemnity." Discuss



               Ans.    The  principle      of  indemnity  requires  that  when  a  loss    arises      under  an


               insurance policy, the loss must be made good  in such a manner that financially the


               insured is neither better  off  nor  worse  off  as  the  result  of  the  loss. The  object


               of  this  principle  is  to  place  the insured after a loss in the same pecuniary  position


               as  far  as  possible  as  he  occupied  immediately before the loss.





               The effect of this principle is to prevent the insured from making a profit out of a


               loss. Motor Insurance contracts are contracts of indemnity. The principle is applied to


               this insurance as under:





               Total Loss - In total loss of the vehicle, insurers pay the market value of the vehicle at


               the time of loss or the sum insured whichever is less. For total loss, market value


               determined by an independent surveyor will be the basis.





               For  extensive  damage  which  ultimately  makes  the  repair  uneconomical  may  be


               considered for total loss to be derived by the independent surveyor. In such cases,


               the  insured,  if  wishes  can  retain  the  salvage  and  net  amount  can  be  disbursed


               towards total settlement.








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