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INSURANCE LAW - Property Insurance
Related Topics : Auto Insurance . Business Insurance . Disability Insurance . Health Insurance . Insurer's Bad Faith . Life Insurance Law . Property Insurance


Valuation For Contents
[other than for antiques and works of art]

Insured on Indemnity or Replacement Value Basis

The basic valuation to be used for insurance on contents should be the new replacement cost.

One way to obtain this would be to get a supplier to quote for a new item of the same make and model. Let's say, the price of a new computer of the same make and model as yours is quoted by the supplier as RM6,000. This figure would serve as the basic value.

Certain adjustments may have to be made to this basic value, depending on the Basis of Insurance you have chosen i.e. whether Indemnity Basis or Reinstatement Value Basis.

Let's take for example, you choose to insure your computer set on the Indemnity Basis (i.e. old for old) then the deductions would have to be made for wear and tear based on the age of the computer set, say, RM6,000 less 30% = RM4,200. You may need to adjust this figure further to allow for any anticipated increase or decrease in the price of the TV during the period of insurance, say RM4,200 + 10% = RM4,620. Another way is to get the same make, model, age and condition.

If you were to opt for the Reinstatement Value Basis (i.e. new for old), no deductions need be made for wear and tear. However, allowance would have to be made for any anticipated increase or decrease in price during the insurance year and the period of reinstatement, say, RM6,000 + 10% + 10% = RM7,260.

If you have any doubts about whether the valuation is adequate for insurance purposes, seek help from a professional valuer.

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