Page 61 - Ebook IC S01
P. 61
Survey And Loss Assessment IC-S01
Indemnity
The object of insurance is to indemnify the insured to the extent of loss suffered
The insured should not make profit out of loss.
The objective in insurance is to place the insured in the same financial position as
he was before the loss.
Indemnity and insurable interest are closely linked
The amount of claim made by the insured cannot exceed the extent of his
interest in the subject matter of insurance
In insurance at times some potential future losses are also compensated. For
example : Loss of profit insurance. If a factory is damaged in fire, even if the
insurance company pays the loss it will take some time to rebuild a factory and
start the production. If the insured takes the loss of profit insurance the insurance
company will compensate the insured for the loss suffered during the interim
period.
Losses must be assessed by a qualified surveyor in case of general insurance.
Precise valuation of human life is not possible
Principle of indemnity does not apply in life insurance
Insurance contract
In fire insurance principle of indemnity is strictly applied. The claim is paid to the
insured after deducting suitable amount for depreciation and wear and tear.
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