by Mr. Anuj
Tyagi, HDFC Ergo
It is essential to understand below mentioned
points before you purchase fire insurance.
Sum
insured ..!
^ It is important to
insure the property for the right amount. Sum insured (SI) represents the
maximum limit up to which the insurers are liable in the event of loss under
the fire insurance policy.
^ The value of SI should be identical to the
value of the property either on market value (MV) basis or / reinstatement
value (RV) basis.
^ The premium rate does not change whether one
opts for MV or / RIV, the SI representing the values are essentially different.
Thus, one cannot have MV declared as sum insured and policy issued on RIV
basis, because in such case, the under insurance is applied. This is where, one
needs to be careful to make sure that the sum insured selected is adequate.
Deductible
Excess..!:
^ One should not
neglect to make note of the deductibles / or excess applicable. This is an
amount which is to be compulsorily borne by the insured.
^ Any loss below this
amount, is not payable by the insurers, and losses exceeding this amount, will
be paid for the balance amount.
About the author..
Mr. Anuj
Tyagi is Head Corporate, Rural and Agri Business at HDFC Ergo
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