FAQs: Part 3
Why should anyone insure a building? Fire can't possibly do any harm to the building? Fire and other perils (normally covered under a fire insurance policy) can cause loss/damage to buildings. There have been fire accidents that have completely destroyed multistorey buildings. Floods can also bring about devastating losses. Similarly, riots and acts of terrorism can also cause huge losses to human lives as well as property. One has taken an insurance policy covering his building. The bank that has financed his business has also taken insurance separately. Both policies are in force covering the same property. How then is a claim settled? In the event of a claim, each insurer will pay the loss amount in proportion to the sum insured under their respective policies, in accordance with the principle of contribution. The object of the principle of indemnity is to place the insured in the same place as he occupied prior to occurrence. Insured is prevented from making claim for full amount of loss under each policy. Insurance company indemnifies the insured only to the extent of actual loss suffered subject to depreciation, policy excess, etc., and does not allow for making profit out of a loss. One wants to cover his household goods against burglary when he is away. Can he get a burglary insurance policy? A burglary insurance policy covers goods against the risk of burglary. A burglary insurance policy may also offer extension of cover against theft. A burglary insurance policy will usually cease to operate if the house is not occupied beyond a certain defined period unless you have intimated the insurance company and they specifically agree to extend the cover even when the house is not occupied. It’s a good idea to ensure that you have a burglary policy always, rather than opting for one only when you are away. You might not get one if you want to insure the contents only when the house is locked. One needs to cover his jewellery. What policy should he take? Insurers offer ‘all risks’ policies for covering jewellery. You must ensure that your jewellery is valued correctly and you are able to show proof of valuation should a claim occur. An ‘all risks’ policy also has exclusions, so go through the terms and conditions thoroughly.