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  • Last Update : 04:24 pm

Loss and compensation

  • Published at 10:31 pm June 23rd, 2016
Loss and compensation

Q. A couple of years ago I insured my office (small proprietorship) against fire and accidental damage. Things went smoothly for the last couple of years, as no major accidents occurred and therefore I have not had to make any claims whatsoever. However, last week, we had a major fire accident at the office’s kitchen and the fire spread to the office’s premises. The damage was quite extensive and I’m now worried about making an insurance claim. I have not contacted the insurance company yet, but have heard horror stories about insurance companies refusing to issue payments. Any advice on how I should approach this?

Dear Reader, Thank you for writing in to us. Firstly, I have to commend you on doing the sensible thing – taking out insurance coverage against fire and accidental damage. It’s something that few of us generally practice in Bangladesh and something that needs more awareness generated about it. Since you have sensibly taken out insurance and I’m predicting that you have been paying the premiums regularly, recovering your insurance should not be too much of an issue.

The main thing to remember and consider here is that the payout, premiums, insurance conditions, etc will actually be governed by the contract between the insurance provider and yourself. It is essential that you go through this contract very thoroughly. The insurer should be informed about the loss as soon as the loss occurs. On receiving the notice, the insurer appoints an assessor to examine the facts of the case and to determine the amount of liability. It is likely that a procedure of claim settlement will then immediately fall into place.

A claim form is usually issued to the policyholder. The claim form requires the following information which must be provided by the insured:

a) Full description of circumstances of the loss such as date of loss time, the place of fire.

b) Cause of fire.

c) Particulars of the property affected by the loss such as description, value at the time of fire, value of salvage and the claim amount.

d) Statement of other insurance on the property, name of the insurer, the policy member and the sum insured.

e) Sound value of all the property.

Please note that the above points are simply a guide to the information usually required. There is always the possibility that your insurance provider may ask for different or further information. I will now briefly explain the usual steps which follow receipt of a claim for settlement. Following submission of the claim by the insured, the insurer takes the necessary steps to verify the genuineness of the claim and the subsequent claim settlement.

At first the insurer confirms the legality of the claim. The claim is recorded in the docket of claim, where facultative reinsurance is involved, and an advice of the loss is sent to the insurers. The insurer insures the payment of premium. If payment were not made then it would be deducted from the claim amount. For the inquiry of damage, insurer depends on the survey.

The survey report of the assessor contains the following information-

i) Cause of loss: it is necessary to know whether the fire was caused by an excepted peril or was caused by the negligence of a third party or there is any evidence of fraud, so the cause of fire is clearly obtained.

ii) The amount recommended for payment which is determined on the basis of current market value and under insurance.

iii) Detailed value of salvage.

iv) The position in respect of compliance with the warranties.

v) Apportionment of the loss and expenses among the insurers where there are more than one insurer.

vi) The exact amount of loss payable by the insurer. The presence of the average clause in the policy will determine the amount of loss payable.

vii) Any other relevant details.

Please note that after receiving all the required documents and examining all those, the insurer gives the claim amount to the insured. The insurer can take time for proper enquiry before paying the claim amount. Therefore please do not be disheartened if it starts taking a bit of time. However, it is yet too early to be worried and as long as all the legal steps are in place, it is likely that you will not face any major issues. Please keep us updated and wishing you the best of luck!

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