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Fire Claims > Case Study-IV

In one case, there was a fire in “Show Squeese Line” and the insured had taken the coverage for the material damage as well as the LOP. All the machines installed in the plant were imported machines, but very old.

After the fire, the insured had replaced/ repaired the plant and machinery with locally available parts and repairers which helps to reduce the loss on account of LOP, since it will take more time to import the original parts from abroad.

Thereafter they have appointed some insurance consultants to comply the requirements relating to material damage claim and they obtained the repair/replacement estimates from the imported machines original supplier and Claimsd the loss on market value basis.

The underwriters however confirmed that the policy was on RIV basis, however it was not written on the policy face. But they confirmed that the Sum Insured was taken on increased sum insured on RIV basis and in the previous years also the policy was on RIV basis. The insured had tried to exaggerate the claim by claiming loss on market value basis for imported machines

Total cost involved for repair/replacement (from local repairers) : Rs.75 Lacs (On Reinstatement basis)
Total Value of Estimates provided from the original suppliers : Rs.2.00 Crores
Less: Depreciation @20% : Rs.0.40 Crores (On Market value basis)
Claim of the insured : Rs.1.60 Crores

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