Fire & special Perils - the basic of claim settlement

Submitted by Anonymous (not verified) on Thu, 04/19/2007 - 15:22

I am wondering a matter in the standard policy of Munich Re - fire & special perils.

The sum insured based on the depreciation value of asset.
No replacement value in the policy
If the loss can be repaired, whether do we apply any deduction to the cost of repair.

For an example:
The original value of asset is $10,000
The depreciation time is 10 years.
Used time is 4 year
The value of asset on the year of buying insurance is US$6,000
The Sum Insured is also US$6,000.
On the insurance period, the asset (one building) was damaged and roof need be repaired. The cost of repair is US$1,000.

How could we calculate the indemnity value in this case?

Do we as insurer have to pay total of US$1,000 for cost of repair?
Or we can deduct amount of US$400 for depreciation and pay only US$600?

Please advise me. Many thanks for your reply.

Regards,
C

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