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Chapter 8 Property Insurance

Chapter 8 Property Insurance. Content. 1. Meaning of property insurance 2. Sum insured in property insurance 3. The calculation of value in property insurance 4. Reinstatement 5. Provision of property insurance. 1. Meaning of property insurance.

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Chapter 8 Property Insurance

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  1. Chapter 8 Property Insurance

  2. Content 1. Meaning of property insurance 2. Sum insured in property insurance 3. The calculation of value in property insurance 4. Reinstatement 5. Provision of property insurance

  3. 1. Meaning of property insurance The insured pays the premium to the insurance company, the insurer undertakes to indemnify the insured against any financial loss he may directly sustain as a result of the happening of an insured event to the subject matter of the insurance.

  4. 2. Sum insured in property insurance If the insurer receives a premium commensurate with the risk, the sum insured represents its full value at the time of issuing policy. If the sum insured is less than the full value of the property, it is underinsurance. If the sum insured is ￥800,000, the insurance value of the property is ￥1,000,000, it is under insurance. If the partial loss is ￥300,000, how much is the insured entitled to get the indemnity? ￥240,000

  5. 3. The calculation of value in property insurance 3.1 Buildings The normal basis for buildings is the cost of repair or reinstatement 3.2 Machinery When repair of machinery is possible, the basis of indemnity is the cost of restoring it to its previous condition. If total loss, indemnity is the cost of replacement less wear and tear.

  6. 3.3. Retainer's stock For retainer's stock, the indemnity is generally based on the wholesale price paid by the insured, not the selling price, since the latter includes a profit. The cost price can be ascertained from the wholesalers' invoices. Discounts should be deducted, since the insured will obtain similar discounts when the goods are replaced by new stock.

  7. 3.4 Manufacture's stock In the case of goods manufactured but unsold at the time of the fire or other insured damage, indemnity is generally based on the cost of production which includes the costs of raw materials, labor, factory overheads and administrative costs but excludes profit. However, if the total exceeds the market value of the goods (that is, the price at which they can be ‘bought in' elsewhere), then the market value is the true indemnity.

  8. Section 4 Reinstatement • Reinstatement means the restoration of the property insured to the condition in which it was immediately before the fire. • In the event of a total loss, it is made by rebuilding the premises or replacing the goods by similar goods. When there is a partial loss, reinstatement is made by executing the necessary repairs. • Reinstatement may be made by the insurers under the terms of the policy, by the insurers under statute and by the insured under contract.

  9. 5. Provision of property insurance （I）NON-INSURABLE PROPERTY 1. Gold, silver, pearls, diamonds, precious stones and jades; 2. Antiques, ancient coins,ancient books and ancient paintings; 3. Works of art or postage stamps; 4. Advertisements, aerials, neon, pieces of solar energy apparatus. 5. Computer system records or its making and copying costs.

  10. The following articles are not covered 1. Guns, ammunition or explosives; 2. Banknotes, securities, bills, documents, files, account books or drawings; 3. Animals, plants and agricultural crops; 4. Mobile phones, portable computers, removable photograph apparatus or other precious articles; 5. Vehicles licensed for general transport use.

  11. （II）SCOPE OF COVER 1. Fire 2. Explosion 3. Lightning; 4. Hurricane, typhoon and tornado; 5. Storm, tempest and flood; 6. Hailstorm;

  12. 7. Landslide, rockslide, avalanche; 8. Volcanic explosion; 9. Subsidence of ground 10. Crashing aircraft and parts or articles falling from aircraft and other flying objects; 11. Bursting of water tank or pipe

  13. (III) EXCLUSIONS • Loss & damage by intentional act or negligence of Insured • Loss of or damage by earthquake or tsunami; • Depreciation, loss of market, loss of use • Loss of or damage from war, warlike operation, hostilities, armed conflicts, terrorism, conspiracy insurrection, strike, riot, and civil commotion; • Confiscation, requisition, destruction or damage by any action or order of any government or by any public authorities;

  14. Loss of or damage directly or indirectly caused by nuclear fission, nuclear fusion, nuclear weapon, nuclear material, nuclear radiation and radioactive contamination; • Loss or damage caused by pollution of any kind or description • The deductibles stated in policy to be borne by the Insured; • Loss or damage from any other perils not listed in this Policy.

  15. (IV) TREATMENT OF CLAIM The Company shall at its option, indemnify the Insured in respect of loss or damage: • Paying the amount of the actual value of the property lost or damaged or; • Paying the necessary cost of repairing or restoring the damaged property to its nearest condition immediately preceding the damage or; • Repairing or restoring the damaged property to a condition near to other property of like kind and quality.

  16. Sample of property insurance policy

  17. The end of Chapter 8 Next Chapter

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