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In this policy the indemnity is a fixed amount agreed upon at

the time of signing the contract.

The insurance company pays that amount regardless of the

actual loss due to fire. The insured is benefited when the market value of the

property declines , but suffer loss when the market value

appreciates.

It is also known as Value insured policy. The valued insurance policy is usually offered for such items

like jewellery, furs, or paintings, which value is difficult to

estimate once they are damaged or destroyed by fire.

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The policy indemnifies the cost of replacement of machinery to a

condition equal to but not better or more extensive than itscondition when new. Hence this policy is new for old.

This policy can be issued for Building, Plant and Machinery,

Furniture Fixture & Fittings only. Any technical improvements will goto the account of the insured.

Reinstatement must be carried out by the insured in order to obtain

the benefits of the special basis of settlement.

The work of reinstatement must be completed within 12 monthsfrom the date of loss, failing which the claim will be settled on

market value basis.

The insured also needs to pay higher rate of premium.

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It is taken out for those goods which are frequently changing in a

warehouse. This policy can be taken on those goods which are lying

on different localities or godowns.

Since quantity of goods lying in the warehouse or at different placesfluctuate from time to time, it becomes difficult for the owner to take

a specific policy.

Floating policies are suitable to those traders or products whose raw-

materials or merchandise are lying at different localities or godowns.

For example:-Some of the goods of other trader are kept in one

godown, and few kept in another godown, some kept in the railway

godown or some at the sea port open. To cover the risk of goods

lying at different places under one policy.

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Many insured may have stocks which frequently fluctuate in value.

To take care of such fluctuation in quantity/ value , a declaration

policy is issued.

The sum insured will be the maximum possible value at any point oftime during the policy period. The minimum sum insured will be Rs. 1

cr. in one or more locations and shall not be less than Rs.25 lacs in

atleast one of these locations.

Monthly declarations based on

a) The average of the values at risk on each day of the month or

b) The highest value at risk during the month.

must be submitted by the insured before the end of the succeeding

month.

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REINSTATEMENT VALUE POLICY

for Buildings, Plant and Machinery etc

-- In claim Settlement Depreciation is notdeducted from new Replacement value.

-- Physical Reinstatement is required for thismode of settlement. Otherwise Marketvalue mode is

adopted.-- Within 6 months intention to reinstate & within

12 months actual reinstatement to be carried out.

-- No Extra premium, SI= RIV value-- Not applicable for stocks-- For Under Insurance, RIV on completion will be

compared with SI on Loss Date.

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It is issued for existing stock.

In this policy premium rate shall be adjustedaccording to increase or decrease in the

value of stock, this change will be notified tothe insurer by the insured.

In case of loss by fire, the amount notified by

the insured at the maturity of the policy istaken as final and indemnified upto that limit.

It is a contract limited to merchandise orstock in trade other than farming stock.

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A specific policy is a type of policy in which the propertyis insured for a specific sum irrespective of its value.

If there is loss, the stated amount will have to be paid to

the policyholder.

But the actual value of the subject matter is notconsidered in this respect.

For example, if a property is insured for Rs. 10000

though its actual value is Rs. 20000. In the event of lossto property, not more than Rs. 10000 can be recovered.

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Where a property is insured for a sum which is less than itsvalue, the policy contain a clause that the insurer shall notbe liable to pay the full loss but only that proportion of theloss which the amount insured for, bears to the full value ofthe property.

Amount of Indemnity = Policy money x Actual amount of loss

Market value of the propertyinsured

For example Avalue of the property is Rs.1,00,000. It isinsured for Rs.60,000 and the amount of loss isRs.60,000. The insurance company will not pay Rs.60,000to the policyholder but will pay Rs.36,000 .

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The insurance is affected on the maximum value of stock

remains throughout the year and accordingly premium

charged.

In the case of no indemnity, one third of the premium

paid is return to the insured at the end of the year. It can

be treated as a discount in consideration of variations in

value of goods.

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