Sum insured is an extremely important aspect of a contract of insurance. Companies suffer substantial financial losses on account of under insurance. Under insurance becomes apparent only at the time of claim settlement. Insurance can provide full protection only when the sum insured is adequate at inception, during the period of policy and at renewals.
Adequacy of the sum insured is important to protect the interest of the stakeholders in the insured entity.
Insurance of assets can be a tricky area for businesses. One area in particular where problems arise is where Insured are asked by Insurers to give their valuations of how much their assets are worth.
It can be difficult for businesses to calculate the accurate reinstatement value of its assets. It usually comes as a surprise for many, when they are informed that there is “under-insurance” in the event of a claim, by which time it can be too late.
RNC has been carrying out assessment of major losses in the country for the past three decades. RNC has been a preferred service provider by Insurance Companies, Insurance Brokers, Banks and Corporate houses to carry out the Valuation for Insurance Purpose.
RNC’s diverse and indepth knowledge, long experience and expertise of both – Insurance and Valuation – enables RNC to provide accurate and precise valuations for Insurance purpose.
By adopting scientific methods of valuations, RNC provides accurate valuations to ensure that the client’s assets are neither under insured, so that the client doesn’t face a deduction at the time of the claim, nor are they over insured so as to add an unnecessary burden of the additional premium for the increased sum insured for the company’s assets.
The Reinstatement Value is represented by the cost of replacing the asset by new items of similar nature and capacity. Thus it gives new price of an old machine if available as new today. In case of old plant and machinery, we may have serious challenges working out the reinstatement value i.e. the price cost of the original plant and machinery on current day replacement cost of a new similar plant and machinery. Obviously original cost of capitalization cannot be a basis for sum insured.
The settlement of claim is on “new for old” basis.
We advise our clients on how much they should insure their property for in case it is damaged by fire, flooding or some other insured peril.
It reflects the cost of replacing the existing asset by a new asset of similar type, capacity and utility.
No depreciation is deducted.
The insured here will have least financial strain.
Accurate replacement cost data can ensure that the insurer, lender and owner are adequately protected in case of an event leading to loss of property and/or business.