Indemnity Flashcards
Whats the difference between indemnity insurance and non indemnity insurance?
Indemnity only pays if a loss occurs and for the amount lost (classed as unliquidated damages as the amount is decided after the event)
Non indemnity pay an agreed sum when a particular event occurs (contingency insurance)
How to measure indemnity on a general property insurance policy?
Determined by the value at date and place of loss
Up to the value of the SI
How to measure indemnity on a general buildings insurance policy?
Cost of repair or
Reconstruction with a deduction for ‘betterment’
How to measure indemnity on a machinery and equipment insurance policy?
The cost of repair less an allowance for wear and tear or
The cost of replacement less wear and tear
How to measure indemnity on a MANUFACTURERS stock insurance policy?
The cost at the time and place of loss to replace the goods or return them to the condition they were in
(Not value of stock)
If raw materials it will be replacement and delivery costs
How to measure indemnity on a wholesale and retail stock insurance policy?
Cost of replacing the atock including transport and handling costs
How to measure indemnity on a farming stock insurance policy?
The local market price for the livestock
What are pecuniry insurances?
BI or credit insurances that cover bad debt arising from insolvency or default of insureds trading partners
What does indemnity cover on credit policies?
Amount of bad debt less any recoveries
What does indemnity cover on BI policies?
Loss of earnings calculated by looking back at past profits
What is the measure of indemnity on a liabilty policy?
Any court award or negotiated ‘out of court’ settlement
+ costs and expenses
+ any other expenses agreed
What is the measure of indemnity on a Marine insurance policy?
Most policies are valued
Unvalued policies will be the value of the subject matter at inception of risk cover - called ‘insurable value’
Why might a policy pay less than indemnity? (5)
SI or limit of liabilty maxed out Other policy limit e.g. Single article limit Under insurance Excess Franchise
What is an average clause?
Where the PH under contributes to the ‘common pool’ by underinsuring their risk
Loss payments are scaled down
Insured is considered own insurer for portion of risk not insured
SI at time of loss x amount of loss divided by value at risk at time of loss = liability of insurer
how can a PH recover more than strict indemnity? (4)
Cover on a reinstatement basis
New for old cover
Agreed value cover
Partial losses under agreed valued policies
