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    Sunadvce PDF

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    rajeev
    There are two main ways to insure property: indemnity value (IV) coverage and replacement cost or replacement value (RV) coverage. IV coverage pays the depreciated value of the property based on its age, while RV coverage pays the amount required to replace the property at current construction costs. When insuring a property, RV coverage is recommended as it protects the policyholder from underinsurance due to rising construction costs over time. While RV coverage has slightly higher premiums, it lessens the financial burden if a claim needs to be made. International statistics show on average homeowners underinsure their property value by 24%, so the extra premium for RV coverage can provide significant protection.

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    Sunadvce PDF

    Uploaded by

    rajeev
    24 views1 page
    There are two main ways to insure property: indemnity value (IV) coverage and replacement cost or replacement value (RV) coverage. IV coverage pays the depreciated value of the property based on its age, while RV coverage pays the amount required to replace the property at current construction costs. When insuring a property, RV coverage is recommended as it protects the policyholder from underinsurance due to rising construction costs over time. While RV coverage has slightly higher premiums, it lessens the financial burden if a claim needs to be made. International statistics show on average homeowners underinsure their property value by 24%, so the extra premium for RV coverage can provide significant protection.

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    There are two main ways to insure property: indemnity value (IV) coverage and replacement cost or replacement value (RV) coverage. IV coverage pays the depreciated value of the property based on its age, while RV coverage pays the amount required to replace the property at current construction costs. When insuring a property, RV coverage is recommended as it protects the policyholder from underinsurance due to rising construction costs over time. While RV coverage has slightly higher premiums, it lessens the financial burden if a claim needs to be made. International statistics show on average homeowners underinsure their property value by 24%, so the extra premium for RV coverage can provide significant protection.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    24 views1 page

    Sunadvce PDF

    Uploaded by

    rajeev
    There are two main ways to insure property: indemnity value (IV) coverage and replacement cost or replacement value (RV) coverage. IV coverage pays the depreciated value of the property based on its age, while RV coverage pays the amount required to replace the property at current construction costs. When insuring a property, RV coverage is recommended as it protects the policyholder from underinsurance due to rising construction costs over time. While RV coverage has slightly higher premiums, it lessens the financial burden if a claim needs to be made. International statistics show on average homeowners underinsure their property value by 24%, so the extra premium for RV coverage can provide significant protection.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    PROPERTY INSURANCE

    INDEMNITY VALUE
    or
    REPLACEMENT VALUE
    When insuring property (building or house) we are always faced with a question on what the correct insured sum should be. If you are
    underinsured you not only get penalised for the under insured amount but also through the average clause if partial loss occurs.
    However, if you are over insured you are probably paying excess insurance premium. So how do you decide? There is two ways in
    which property insurance sum can be determined, these being;
    Indemnity Value (IV)Cover Replacement Cost or Replacement Value (RV)
    This is the value of the item at the time of the loss. Payment of the The term replacement cost or replacement value refers to the
    indemnity value is designed to put you in the same financial amount that an entity would have to pay, at the present time to
    position you were in immediately before the loss occurred. This replace any one of its assets. Replacement cost is not market
    therefore takes into account the issue deprecation thus if a value, but is instead the cost to replace an item or structure at its
    property was built for $100,000 in year 1, assuming a straight-line pre-loss condition. Using the same example as IV cover, assuming
    deprecation of 1%, after 10 years the depreciated value of the the cost of construction increased by 15% over 10 years, the RV of
    property will be $90,000 thus the indemnity value. the building would be $115,000 in its 10th year of insurance.

    How Do I Calculate my IV How Do I Calculate my RV


    Depending on make of the building (wood, concrete or mixed)a You don’t. You get a registered value to carry out A Valuation for
    a set deprecation percentage is used normally to depreciate the Insurance Purposes. At Sun Insurance this is normally valid for a
    cost of the building until its insurance period period of 3 years

    SUN Insurance Advice


    In view of large fluctuations in construction prices in Fiji combined with the fact that IV may be a ‘guesstimate’ Sun Insurance in its
    professional opinion advises all its customers that RV cover is by far the more secure option. Whilst the cost of carrying out the
    valuation and paying higher premium may bring some extra associated costs, it will lessen the financial burden at claim time.
    International statistics show that policy holders underinsure their property by 24% on average. For a little extra premium, this 24% or
    $24,000 on a value of $100,000 could mean a lot.

    Do not hesitate to contact Sun Insurance directly or your nearest Service Centre for any further clarifications or email us on
    [email protected]

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