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Here we apply the average because insured value is under insurance.i.e the insurance policy sum insured amount to70 is less than the actual value of the property100
Accordingly the amount of claim payable should be calculated as follows :i
Average = insured value /actual value 70/100 =70%
claim payable =50 by70% =35
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Sum Insured divided by Actual Value multiplied by loss = claim payable
In fire insurance policy property is not destroyed by fire...
In this case the payable claim mount sould be calculted as ratio of sum insured,,in this case the insurance Co. Shall pay only70% from the incured claim amount.
in fire policy the client should declare his goods in monthly basis, so if it is yes the claim payable amount should be calculated as it is and in the end of policy insurer povide either debit note or credit note for client goods declaration.
70% of50 =35