Page 285 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes 7. Storm, cyclone, tempest, hurricane, tornado, flood and inundation.
8. Earthquake
9. Subsidence and landslide (including rockslide)
Policy B/Policy C

Fire Policy B covers the following perils:
1. Fire
2. Lightning
3. Explosion/Implosion
4. Impact damage

5. Aircraft damage
6. Riot, strike and malicious and terrorist damage
The tariff permits exclusion of riot, strike and malicious and terrorist damage perils, with
specified reduction in premium rate under policy.

13.8 Special Coverages

Apart from standard coverages, fire, policy may also be issued to meet the specific requirements
of clients, some of these are:
1. Reinstatement Value Policies
2. Stock Policies
3. Consequential Policies

Reinstatement Value Policies

In this policy, the settlement of claims is on basis of reinstatement value. The claim amount will
not be found adequate by the insured that desires to replace the property by a new one of the
same kind, type or capacity.
Insurer will pay the value, which takes into account depreciation, wear and tear, but also the
replacement cost. Thus, the losses will be settled on the basis of market value of the property on
the date of fire.
The difference between the amount payable on the basis of market value and the new replacement
value will become wider and wider, particularly when due to inflation, the cost of rebuilding
and the prices of the machinery show a sharp increase.
Under the policy, the insurers pay, not the depreciated value but, the cost of replacement of the
damaged property by new property of the same kind. The sum insured is required to reflect the
new replacement value and not the market value as under the normal fire policy.

Policies for Stocks

There are three types of policies for stocks.

Floater Policies

1. Stocks at various locations can be covered under one sum insured through floater policies,
since these policies take care of frequent changes in sum insured at various locations.

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