Q: We are civil construction contractors. Our equipment is insured under the Plant and Equipment All Risks policy. As per our insurer's requirement, we have provided them with the replacement values of new equipment for calculating the premium. Recently, one piece of our equipment fell and was damaged. The insurance company has suggested that we write off the equipment as a total loss. But the amount they want to pay us is less than 25% of the original value, which we provided to them as the sum to be insured. We have not yet accepted their offer. How can we convince the insurance company that their offer is insufficient? A: Normally, insurers insist on the replacement values of equipment in order to cover them under Plant and Equipment policies. The calculations are based on a certain percentage of the value of the equipment. In case of a total loss, the insurance company will settle the loss based on the market value or replacement value, whichever is less. If you declare a smaller value, then there is a provision of application under insurance. Even though this condition may not be explicit, it is usually implied. Check whether you can buy the same model of equipment at the value offered by the insurance company as a settlement. If so, then accept the settlement. No insurance company will pay more than your actual loss. Q: I have Life Insurance coverage and Personal Accident Insurance coverage provided by my company up to a sum equal to my one year of my salary. Can I buy additional life insurance policies to get more coverage and what is the maximum limit that I can buy? A: Since life is considered to be invaluable, no one can fix a limit to the value of someone's life. However, most of the insurance companies have a limit to the sum insured for life and personal accident policies. Normally under life policies, depending upon the type of coverage, the cap limit is a maximum of 3-6 years of one's salary, and the limit for personal accident policies is much higher. Since your current limits are very low i.e., one year's salary, you can buy more insurance. However, certain companies require that you declare any other policy coverage that you hold. This should be declared correctly to avoid prejudicing your claim. Shujaath Ahmed Khan, an MBA, General Manager, Creative Associates is also a consultant and an expert in Insurance, Investments and Real Estate. He can be contacted at [email protected], website-www.creativeassociates.blogspot.com. __
