All insurance policies are based on providing the policyholder with an indemnity, but how that indemnity is quantified can often be confusing and misinterpreted by the policy holder. Insurance companies take the view that if something was of no value to an insured before it was lost or damaged, then the insured can suffer no loss as a result of any such loss or damage. Equally, if an insured had only limited interest – for example shared ownership of something – then they can only suffer a loss to the extent of their share of the financial loss/ value of any item. Indemnity policies are in place to protect against fire insurance claims, & other building insurance claims. This applies to both commercial and domestic claims – the exact specifics of which will be in your policy documentation and policy wording.
The basis of an indemnity settlement is to reflect the age and condition of items before the loss, second hand value effectively at the time of the loss. It is easy to assume that the repair costs for a damaged item are payable as an indemnity and only if an item is completely replaced are deductions required for wear and tear. For example, some repairs involve the replacement of components that have limited life spans and Insurers will attempt to apply reductions on this basis as the item damaged would have been ‘X’ % into that lifespan.
A perfect example is that of a Waste management company who had purchased new equipment at start up. They paid upfront and had cover for £500,000 in the event of an incident. A fire occurred and a claim was made for the plant that was completely damaged by fire. They had an indemnity based policy. As the plant was now 7 years old at the time of the fire, the second hand value of the items at the point of loss was only £212,000 and of course this was what the insurance company offered less their excess. The policy holder’s expectations were for £500,000 but they never understood the policy or the term Indemnity, second hand with deductions for wear & tear. Ideally get some help with your insurance claim handling.
There is assistance available with Leak claim help or fire Claim Help through the use of an Insurance assessor. Loss assessors will correctly interpret and quantify the claim and meet with the Insurance loss adjuster to prepare and present the claim. They generally get you your full entitlement and there is a whole industry that is geared up to assist and protect you the policy holder with the same level of expertise as the insurance companies have.