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Title: Claims Management


1
Claim Management
  • PRESENTED BY
  • Dr. tariq Abdulsalam Omer

2
By the end of this course you will know
  • The role of claims in insurance and their
    importance.
  • The legal principles of insurance
  • The difference between health, life, and
    non-life claims
  • The Claim submission
  • Keeping Control of claims
  • Acquiring Knowledge
  • Managing Fraudulent and Malingering Claims

3
Insurance is about being insured and being able
to claim
4
Steps involved in taking out insurance
  1. Decide what risks you want covered. (ask a
    broker)
  2. Fill out proposal form.
  3. Pay your premium.
  4. File your policy in a safe place.

5
Steps involved in making a claim.
  • Contact guards ins. co.
  • Obtain estimates of lost/stolen items.
  • Fill out claim form.
  • Talk to assessor and agree on compensation.

6
Importance of claims
  • Payment of claims is primary service in insurance
    to the public. Proper settlement of claims
    requires a sound knowledge of the law, principles
    and practices governing insurance contracts and
    thorough knowledge of policy terms and conditions.

7
TheFundamental Legal Principles of Insurance
Contracts
8
Fundamental Legal Principles of Insurance
Contracts
  • 1. Principle of insurable interest
  • 2. Principle of indemnity
  • 3. Principle of utmost good faith
  • 4. Principle of subrogation
  • 5. Principle of contribution
  • 6. Principle of proximate cause

9
Principle of Insurable Interest
  • The insured must be in a position to financially
    suffer if a loss occurs.
  • Why?
  • To prevent gambling
  • Insurance on a property and wait for a loss to
    occur.
  • To reduce moral hazard
  • Issue a life insurance policy on a person and
    cause his/her or just pray for his/her death for
    insurance proceeds.
  • In order not to indemnify more than an insureds
    financial interest
  • It supports the principle of indemnity.

10
Principle of Indemnity
  • The insurer agrees to pay no more than the actual
    amount of the loss suffered by the insured.
  • Why?
  • The purpose of the insurance contract is to
    restore the insured to the same economic position
    as before the loss.
  • The insured should not profit from a loss.
  • It reduces the moral hazard by eliminates the
    profit incentive.

11
Principle of Indemnity
  • To support the principal of indemnity an
    insurance contact uses Actual Cash Value (ACV)
    method
  • Replacement cost (RC) less depreciation
  • RC current cost of restoring the damaged
    property with new materials of like kind and
    quality.
  • Fair market value
  • The price of a wiling buyer would pay a willing
    seller in a free market.
  • Broad evidence rule
  • The determination of ACV should include all
    relevant factors an experts would be required to
    determine the value of the property.

12
Principle of Indemnity
  • To support the principal of indemnity insurance
    contact includes Other Insurance Provisions.
  • Escape clause
  • The policy (or insurance) would not apply if the
    insured was covered by another policy.
  • Primary-Excess
  • It (or This insurance) is excess insurance over
    any other valid and collectible insurance.
  • Pro-rata provision
  • Proration by face amounts
  • Proration by amounts otherwise payable
  • Contribution by equal shares

13
Contribution
  • If a risk is insured with two insurance companies
    each will pay half of the compensation.
  • Eg A ring insured with two ins. co.s. for
    AED5000
  • Each will settle
  • AED2500 only

14
Principle of Indemnity
  • Pro-rata by Face Amounts
  • It limits an insurers maximum obligation to the
    proportion of the loss that the insurers policy
    limit bears to the sum of all applicable policy
    limits.
  • Assume that there are three polices covering the
    same loss and the loss amount is 150,000.

Insurer A Insurer B Insurer C
Policy Limit 100,000 200,000 300,000
Share 1/6 2/6 3/6
Payment 25,000 50,000 75,000
15
Principle of Indemnity
  • Exceptions to the Principle of Indemnity
  • Valued policy (or agreed value)
  • Pays face value of insurance if a total loss
    occurs
  • Life insurance, disability insurance, fine arts,
    antiques
  • Ex.) Value of a fine art is agreed at 250,000.
  • Valued policy law
  • A law that requires payment of the face amount of
    insurance to the insured if a total loss to real
    property occurs from a covered peril, regardless
    of the propertys ACV.
  • Replacement cost
  • No deduction for depreciation in determining the
    amount paid for a loss.

16
Principle of Utmost Good Faith
  • A higher degree of honesty is imposed on an
    insurance contract than is imposed on other
    contracts
  • Honesty is mainly imposed on the insurance
    applicants.
  • It is supported by three legal doctrines
  • Representation
  • Concealment
  • Warranty

17
Principle of Utmost Good Faith
  • Representation
  • Statements made by an applicant
  • Insurance is voidable at the insurers option.
  • Concealment
  • Intentional failure to disclose a material fact
  • Warranty
  • A statement of fact or a promise made by the
    insured, which is part of the insurance contract
    and must be true if the insurer is to be liable
    under the contract.
  • In exchange for a reduced premium, a store owner
    warrants that a burglar alarm will be always on.

18
Principle of Subrogation
  • Substitution of the insurer in place of the
    insured for the purpose of claiming indemnity
    from a third party wrongdoer for a loss paid by
    the insurer.
  • Why?
  • To prevent collecting twice
  • To hold the negligent party responsible
  • To hold down insurance rates

19
Principle of Subrogation
  • The insurer is entitled only to the amount it has
    paid under the policy.
  • What if the insurer collects more, from the
    negligent party, than the amount the insurer paid
    to its insured?
  • The insured cannot impair the insurers
    subrogation rights.
  • Subrogation does not apply to life insurance and
    to individual health insurance contracts.
  • The insurer cannot subrogate against its own
    insured.

20
Proximate Cause
  • The efficient cause which brings about a loss
    with no other intervening cause which breaks the
    chain of events.
  • ExampleFiremen remove undamaged stock from a
    burning building to avoid its involvement in the
    fire. It is stacked in the open yard and
    subsequently damaged by rain.
  • Question
  • Was the proximate cause of the damage the fire or
    the rain ?

21
Proximate Cause
  • Answer
  • If the rain damage occurred before the Insured
    had an opportunity to protect it then the
    proximate cause of the damage would be the fire
    and fire is covered under a fire policy. However,
    if the stock was left unprotected for an
    unreasonably long period, the rain would be a new
    and independent cause of damage and damage caused
    by rain may not be covered under a policy.

22
Health Insurance Claims
23
Health Insurance
Employer
Health insurance - provides money to pay for
health care
Government
Individual
If dollars are limited, health insurance is
extremely important to protect against high
medical bills
Mental health treatment
Hospital bills
Preventative care
Vision care
Prescription drugs
Doctors visits
Medical procedures
Dental care
24
Rejection of claims
  • The main reasons for claim not being passed in
    full are
  • Insured has pre-existing disease and it was
    already mentioned in policy document as an
    exclusion.
  • The specific disease is not covered under the
    policy
  • Disease is a pre-existing disease and it was not
    revealed by the insured at the time of issue of
    policy.
  • The main reasons for claim being passed in part
    are
  • Some of the tests conducted/treatment were not
    relevant to the disease for which patient was
    admitted.
  • Some costs like consumables are not payable by
    the insurance company

25
Life Insurance Claims
26
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27
MATURITY CLAIM
  • Payable as per the terms of contract- at the end
    of the term
  • Insurers inform the policyholder well in advance
    about the maturity date
  • Insurers send the form of discharge which is duly
    signed, and returned with-
  • Original Policy document
  • proof of age- to prove the identity
  • Document of assignment- if executed on a separate
    stamped paper
  • Gross amount includes basic sum assured, bonus
    etc
  • Deductions include loan amount, unpaid premium
    etc.
  • Circumstances like settling the claim on the
    basis of indemnity bond require more caution (in
    case original policy is not found)

28
Death claim
  • Intimation of death by a proper person and proof
    of death
  • Premature/early claim insured dies within 3
    years of taking out of policy
  • statement from the last medical attendant giving
    details of last illness and treatment
  • Statement from the hospital
  • Statement from the employer
  • Other claim insured dies after 3 years of
    taking out of policy
  • Policy number and Name of life assured
  • Date and Cause of death
  • Claimants relationship
  • Death certificate
  • Deeds of assignment

29
  • In case of unnatural death accident, suicide, or
    unknown cause etc
  • Police inquest report
  • Panchanama
  • Post mortem report
  • Chemical examination report
  • Under the some countries Evidence Act for
    example, a person is presumed to be dead if he is
    disappeared for 7 years
  • Upon the death of the life insured the amount is
    payable to the nominee given in the proposal form

30
Survival benefits claim
  • Some policies entitled for the survival benefit
    before the expiry of the full term of the policy
  • Settlement is easier than maturity claim
  • Insurer sends advance intimation and the
    discharge voucher which is returned with
    necessary documents
  • Proof of identity
  • Original policy
  • Document of assignment

31
steps followed in the processing of Insurance
Claim involves -
  1. The policy holder or the beneficiary calls up the
    insurer claiming the insurance asking about all
    the minute details of the process of claiming the
    same along with the documents required
  2. The insurance company asks for the details of the
    loss and the relevant documents in support of the
    Claim
  3. A notice has to be issued by the policy holder
    for claiming the same with utmost urgency
    mentioning all the possible details (namely, name
    of the policy holder, names of the persons
    associated with the accident, witness
    particulars, their addresses, etc).

32
  • The insurance company would make all the possible
    queries and inspections by the company
    representatives or consultants
  • They have the right to inspect all the relevant
    properties related with the loss along with
    police verifications and determination of the
    policy holder's liability structure
  • The processing period is mentioned in the
    contract document, which is the approximate time
    required for verification of the genuineness of
    the Insurance Claim
  • On agreement of claim amount between the insured
    and the insurer, the claim is settled
  • Claim form

33
Disputes in Claims
  • Identifying the person to whom the payment is to
    be made
  • Whether the payment is within the terms of policy
  • Whether the amount claimed is reasonable
  • Proof of Death
  • Identification of assignee, nominee or the legal
    heir to whom the payment is to be made

34
Preliminary Procedure
  • As claims manager you are iexpected to follow
    through the following procedure at the start
  • Whether the policy is in active state?
  • Whether the policyholder has performed his part?
  • The policy status with regard to payment of
    premium, age admission, outstanding loan
    interest, if any, legal restrictions such as
    under MWP Act, Foreign Exchange Regulations,
    report of investigation, police report, if any.
  • Whether insured event has taken place?
  • What are the obligations assumed under the
    contract, which are required to be performed like
    payment of bonus, survival benefits, payment of
    SA in instalments, waiver of future premiums,
    etc?

35
  • Who are persons entitled to demand performance?
  • Submission of Claim Form,
  • Submission of Primary level documents.

36
MATURITY CLAIMS
  • Under endowment policies, the SA is to be paid
    when the term of the policy is over. The amount
    payable on maturity is the SA, less any debts
    like loan and interest or outstanding premiums.
    If it is a with-profit policy, the bonuses, as
    applicable, would be added.
  • Advance intimation is sent to the insured
    informing him about the maturity and requesting
    for submission of discharge voucher and policy
    document.
  • As claims manager you have to satisfy that
  • there are no assignments
  • the identity of the policyholder is proved
  • the age stands admitted
  • all the premiums are paid
  • the original policy is submitted
  • the discharge voucher duly completed is received

37
  • Once the documents are received, you send a
    post-dated cheque few days in advance. In case,
    the original policy is reported to be lost, the
    matter is examined in detail to ascertain the
    genuineness of claim and is settled on the basis
    of indemnity and public notification, if found
    genuine.

38
  • Under MWP Act polices (Married Women's Property
    Act), the proceeds of the policy will be paid to
    the trustees. If there are no trustees, the
    official trustee will step in. But if the
    beneficiaries are major and competent to
    contract, payment can be made directly to them
    without intervention of trustees. The
    policyholder is not expected to sign the
    discharge.

39
  • In case of absolute assignment, the payment will
    be made to the assignee. If the assignment is
    conditional, reverting to the life assured on
    maturity, payment can be made to the assured
    himself. However, it will be prudent to check
    that the assignee has no outstanding claims.
  • Some maturity claims may be payable not on the
    date of maturity, but later in instalments. In
    such cases, while the decision to settle may be
    taken on the date of maturity, the settlement
    process will continue for few years.

40
SURVIVAL BENEFIT CLAIMS
Money During Policy Period
41
  • A survival benefit is paid during the currency of
    the policy, before the date of maturity. The
    procedure will be similar to payment of maturity
    claims.
  • The insured sends advance intimation and
    discharge voucher and the life assured is
    required to return the same duly stamped, signed,
    witnessed and send the original policy document
    also for necessary endorsement. Thereafter post
    dated cheques will be sent in advance.

42
  • If the policy is reported to be lost,
  • Insurers are unlikely to settle on the basis of
    an indemnity, as is done in case of a maturity
    claim. Because after payment of survival benefit,
    the policy remains in force. Hence, the insured
    is advised to obtain a duplicate policy.
  • If the insured dies after the date when the
    survival benefit was due, but before it is
    settled,
  • The survival benefit will not be paid to the
    nominee. Only the death claim will be paid to the
    nominee.

43
  • The procedures in settling a death claim are more
    complex than in the case of maturity claims. This
    is mainly because, the facts relating to death
    have to be studied and the identities of
    claimants have to be established.
  • The death claim action is initiated with the
    receipt of intimation from nominee/assignee/relati
    ve of life assured/the employer
    /agent/development officer.
  • The insurer need not wait till the receipt of
    intimation. They may even take note of the
    information received from newspaper reports/media
    provided identity of the deceased is established.

44
  • The following will be necessary before
    settlement of a death claim
  • Policy documents
  • Deeds of assignments/ reassignments
  • Proof of age, if not already admitted
  • Certificate of death
  • Legal evidence of title, if the policy is not
    assigned or nominated
  • Form of discharge executed and witnessed

45
  • If the death occurres within three years from
    the commencement of policy, or from revival,
    following additional requirements may be asked to
    verify the possibility of suppression of material
    facts at time of proposal
  • Statement from the last medical attendant giving
    details of last illness and treatment
  • Statement from the hospital, if the deceased was
    admitted to a hospital
  • Statement from the person, who had attended last
    rites and had seen the dead body
  • Statement from the employer, if the deceased was
    employed, showing the details of leave

46
  • If the life assured had an unnatural death, such
    as accident, suicide or unknown causes, police
    inquest report, panchnama, chemical analyzers
    report/ post mortem report, coroners report etc.
    would also be asked and examined. Depending on
    preliminary data, a special enquiry may be
    ordered.
  • In case a claim is repudiated, it is quite likely
    that the matter may go to court which tend to be
    sympathetic to the claimant because they are the
    weaker party. Hence the insurer has to prove
    beyond any doubt that there has been suppression
    of material facts duly supported by necessary
    evidences.

47
  • In many cases, the insurer may not be able to
    garner enough evidence to repudiate the claim,
    despite strong suspicion and even after extensive
    enquiries.
  • Ultimately such claims have to be paid. But still
    the insurers go through the process of enquiries
    in case of early death claims which enable them
    to improve the underwriting standards and also
    identify the agents and regions, which are prone
    to more early claims.
  • In case there is no nomination or assignment, the
    claimant would have to prove his title through
    legal process under relevant law of succession.

48
  • Death claims occurring within 2 years from the
    date of commencement of the policy, or from the
    date of revival of the policy is called Very
    Early Claim.
  • Death claims occurring and between 2 to 3 years
    from the date of commencement of policy or from
    the date of revival is classified as Early
    claim.
  • In all cases of early claims and very early
    claims, investigation will be done by the insurer
    to make sure that the claim is genuine.

49
ACCIDENT AND DISABILITY INSURANCE
50
  • These benefits are conditional on conclusive
    evidence, that all the eligibility conditions are
    satisfied and that the exclusions do not apply.
    The conditions are that
  • the accident must be caused by external, violent
    means, not self inflicted
  • the death must be as a result of injuries caused
    by that accident
  • the death must occur within 120 days or such
    other period as may be specified

51
  • The exclusions are
  • Intentional self injury, attempted suicide,
    insanity, immortality, intoxication
  • Accident while engaged in civil aviation or
    aeronautics, other than as a passenger
  • Injuries resulting from riots, civil commotion
    etc.

52
CLAIM CONCESSION
  • There are situations when, though the policy has
    lapsed and nothing is payable, yet the insurer
    pays the death claim.
  • The L.I.C. pays claim in full in the following
    circumstances, after deducting the outstanding
    premium with interest. In both the cases, the
    policy could have been revived by just paying the
    arrears of premium and no proof of good health
    would have been necessary
  • After three years, if death claim arises within
    six months from the date of lapse
  • After five years, if the death claim arises
    within twelve months from the date of lapse

53
  • If premiums have been paid for a period of 3
    years but less than 5 years and in case of death
    of policyholder within 6 months from the date of
    First unpaid premium (FUP), the full sum assured
    is paid to the beneficiaries. This is called
    claims concession.
  • If the premiums have been paid for 5 years and
    above, the claim concession is extended for a
    period 12 months. This is called Extended claims
    concession.
  • In both the above cases, unpaid premium that has
    fallen due/will be falling due in the policy year
    of death will be recovered.

54
PRESUMPTION OF DEATH
55
  • Sometimes a person is reported missing without
    any information about his whereabouts. some
    countries Evidence Act provides for presumption
    of death in such cases, if he has not been heard
    for seven years. If the nominee or heirs claim
    that the life insured is missing and must be
    presumed to be dead, insurers insist on a decree
    from a competent court.
  • It is necessary that the premium should be paid
    till the court decrees presumption of death. In
    special circumstances, the insurer may act on its
    own provided there is strong circumstantial
    evidence to show that the life assured could not
    have survived a fatal accident or hazard.
    Insurers as a matter of concession waive the
    premiums during the seven year period.

56
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57
PRECAUTIONS
  • As per the some countries Lunacy Act, if a person
    is mentally deranged, a court of law is required
    to appoint a person to act as a guardian to
    manage the properties of the lunatic. Wherever
    required, the discharge will be signed by the
    guardian only. If the person has recovered from
    mental disorder, a medical certificate to that
    effect, would be necessary.
  • Any order from a court or other judicial
    authority with reference to the policy moneys has
    to be respected.

58
Other Precautions.
  • If the life assured is reported to have died
    before the maturity date, the claim has to be
    treated as a death claim and processed
    accordingly. But if the insured is reported to
    have died after the date of maturity but before
    the receipt is discharged, the claim is to be
    treated as a maturity claim and paid to legal
    heirs.
  • Payment of claim amount to non-residents are
    governed by the FEMA and regulations made there
    under.
  • If a policy is financed by HUF, the policy
    belongs to HUF and policy moneys would be payable
    to the Karta of HUF.
  • If the intimation of death, is received in three
    years, after the date of policy issue, there is
    reason to be suspicious. The matter can be
    decided only after detailed investigations.

59
NON-LIFE INSURANCE CLAIMS
60
  • Claims can be categorized as Standard,
    Non-Standard and Ex-gratia.
  • While standard claims clearly fall within the
    scope of policy and settled to full extent,
  • The non-standard claims involve breach of some
    policy condition or warranty and their settlement
    would depend upon rules and regulations of the
    concerned insurer.
  • Ex-gratia payments are the losses which fall
    outside the scope of policy and hence not
    payable.
  • However, in very special cases, to avoid hardship
    to the insured, settlement of these losses is
    considered as a matter of grace. In such cases
    only certain percentage of the claim is paid and
    that too without precedent.

61
PRELIMINARY PROCEDURE
  • It involves immediate intimation of loss to the
    insurer so that necessary steps for inspection,
    investigation and loss minimization are taken by
    insurers.
  • In case of losses involving criminal act, police
    should also be informed.
  • In case of transit claims, notice should also be
    given to the carriers/ bailees.
  • After verification of policy validity and
    coverage, the claim is registered with the help
    of claim form.

62
MOTOR Claim-Preliminary Process
  • Giving the intimation
  • Be ready with Documents Registration certificate
    (photocopy original), Driving License
    (photocopy original), Insurance Policy/Cover
    note, Claim form duly filled signed by the
    insured if firm then duly stamped.
  • Appointment of surveyors
  • Assessment of the loss

63
FIRE Insurance Claim-Preliminary Process
  • Individuals/ corporate must inform insurer as
    early as possible, in no case later than 24 hours
  • Provide relevant information to the
    surveyor/claim representative appointed by the
    insurer
  • The surveyor then analyzes the extent/ value of
    loss or damage
  • Variety of documents are needed (True copy of the
    policy along with schedule, Report of fire
    brigade, Claim Form, Photographs, Past claims
    experience Forensic Departments report, if
    applicable, Original Repair/ Replacement Bills
    with receipt)

64
Marine Insurance Claim-Preliminary Process
  • In Marine Insurance claims, all the documents of
    the claim is to be submitted to the insurance
    company
  • The documents should be submitted in original
  • Wherever original documents are not available
    second copy may be accepted, but photocopies are
    not acceptable
  • The documents are to be submitted preferably in
    one lot and within reasonable time limit of
    occurrence of the claim and under all
    circumstances before claim becomes time barred
    against carrier etc

65
  • Plenty of documents are required for claims
    processing -
  • Claim Form duly filled in signed, Original
    Policy/Certificate, Short Landing
    Certificate/Landed But Missing Cargo/Damage
    Certificate (as applicable), Suppliers Invoice,
    Packing List, Quadruplicate copy of Bill of
    Entry, Steamer Survey report in original, Copy of
    Claim Notice served on Carrier/Port authorities
    along with postal acknowledgement card

66
Notice of Loss
  • Timely and prompt notice
  • Immediate information Practically
  • If contract is silent about reporting time of
    loss Act as prudent person
  • Dont presume that Insurer will get the
    information on its own Loss of right to claim
  • Fire Marine Immediate notice is utmost
    required
  • Motor Insurance Inform before displacement of
    damaged vehicle
  • Liability Insurance Involvement of third party
    as claimant

67
  • Notice should contain
  • Details of Insurance Policy
  • Date of incident
  • Full details of the accident/incident
  • Place of occurrence
  • Nature of loss
  • Expected causes of loss
  • Estimated financial loss
  • Proof of loss
  • After giving the notice of loss, claimant should
    submit the claim form in the prescribed format,
    with utmost good faith.

68
  • Notice will facilitate the insurer in following
    areas
  • To undertake investigation To know the causes
    circumstances of the loss( for present and future
    claims)
  • For taking decision about stand in negotiation,
    compromise or ex-gratia claims
  • To safeguard the remaining assets
  • For recovery of goods, under subrogation
  • Planning for amount of claim payable

69
  • To identify the suitable surveyors and loss
    assessors having expertise in that area
  • Notice is a recorded proof, which can be used in
    future disputes
  • Notice should be given to specified Branch of
    insurer as mentioned in the policy document. In
    absentia Notice may be given to registered
    office of the insurer
  • Notice given to an authorized agent, if nothing
    contrary has been stated in the policy, also
    fulfills the requirement

70
Loss Minimization
  • Common Law Duty on Insured to maintain good
    faith especially in situation of loss
  • To bring the legal position pointedly clear,
    conditions are incorporated in the policy to
    establish the duty on the insured
  • For ex- Motor Insurance In the event of an
    accident or breakdown the motor car shall not be
    left unattended without proper precautions
  • Marine Insurance Sue labour clause- To
    prevent or minimize the losses On occurrence of
    insured peril

71
Loss Minimization Methods
  • Protection of property after loss
  • Methods of salvage disposal
  • Methods of storage and segregation of damaged
    goods

72
Procedural
  • On receipt of intimation of loss of damage
    insurers checks that whether
  • The policy is force on the date of occurrence of
    the loss or damage
  • The loss or damage is by a peril insured by the
    policy
  • The subject matter affected by the loss is the
    same, as insured in the policy
  • Notice of loss has been received without undue
    delay
  • After the checkup a number has been alloted to
    loss and entered in claims register.
  • A separate file is opened for claim with a copy
    of the policy, or relevant extracts thereof.
  • Therefore a claim form is issued to the insured.

73
Claim Forms
  • Format varies with each class of Insurance
  • Generally requires information regarding
  • Circumstances of losses
  • Date of loss
  • Time of loss
  • Extent of loss
  • Other questions vary in accordance with different
    classes of Insurance
  • For Ex-
  • Motor Claim Form Rough sketch of the accident
  • Burglary Claim Form Notification to the police
  • Asset Insurance Valuation of the property

74
  • Questions related to other policies are asked, in
    relation to same subject matter of insurance
  • Involvement/ responsibility of any third party
  • Issue of claim form does not constitute an
    admission of liability on the part of the
    insurers Insurers put this remark on the claim
    form
  • All letters sent to insured carry the remark
    Without Prejudice To clarify, although the
    insurers are involved in correspondence, But the
    question of liability under the policy is left
    open.

75
Average Clause
  • Related to underinsurance and partial loss.
  • If you only insure an item for a fraction of the
    value, you only get the same fraction
    compensation.

76
Formula
  • SUM INSURED x CLAIM COMPENSATION
  • ACTUAL VALUE

77
EXAMPLE 1.
  • Mary insured her house for AED600000.
  • The market value is AED750000.
  • A fire causes AED60000 worth of damage.
  • How much compensation will she receive???

78
Solution 1
  • 600,000 x 60,000 48,000
  • 750,000

79
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