If at the time of loss or damage, the cost of
rebuilding exceeds the sum insured, then the insured will have to
bear a ratable proportion of the loss accordingly.
Illustration:
i) Total Loss
If the cost of rebuilding is
$500,000 but the sum insured taken up by client for the building is
$250,000. When a total loss occured, the company will have to be
responsible for
Sum
Insured $250,000
Value at time of loss $500,000
Loss or damage $500,000
$250,000 (Sum Insured)
------------------------------ X $500,000 (loss) = $250,000
$500,000 (Value at time of loss)
The company will be responsible for $250,000 (500,000 - 250,000)
ii)
Partial Loss
Sum Insured $250,000
Value at time of loss $500,000
Loss or damage $100,000
$250,000 (Sum Insured)
--------------------------- X $100,000 (loss) = $50,000
$500,000 (Value at time of loss)
The company will be responsible for $50,000 (100,000 - 50,000) |