Sum insured and insured value

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Depending on the insured value of the property, the amount of the contribution and compensation will be calculated. But the mandatory types already have their own price base.

When signing a policy, it is important to know in advance how much the company requires from the client and whether it corresponds to the realities of the market.

Types of insurance

Insurance today is a separate area of the economy. The client of the company pays for the fact that the latter undertakes to assume his risks. Then the policyholder can sleep peacefully and not worry about possible troubles.

You can insure anything:

• real estate;
• jewelry;
• cars;
• life and he alth;
• business and financial risks;
• travel insurance;
• intangible values (works of art);
• land, other.

The insured and his client have a mutual benefit from the transaction. And if the company complies with the "rules of the game" in its market, more and more customerswill invest in it. The main thing is to reach a consensus between both parties regarding the amount of compensation. In order to calculate it correctly, it is necessary to assess the property, that is, to determine the insurance value.

Concepts of insurance value and sum insured. Differences

According to the legislation of the Russian Federation, in the event of an accident specified in the policy, the insurer is obliged to issue a certain amount to the client. This amount is the key moment of the conclusion of the contract, it is calculated by the company and, after agreement with the client, fits into the contract of personal or property insurance. This is the insurance amount.

However, the sum insured and the insurance value are not identical concepts. The insured value may be equal to the amount, however, in practice, the amount of money that the client can receive on hand is less than the real market value of the object. The amount of insurance cannot exceed the cost, which is established by paragraph 2 of Art. 10 of the Law on the organization of insurance business, since insurance is designed to compensate for damage, and not to increase capital.

What is the insurance value? It is determined after assessing the property or assessing the risk that the insurance company takes on. Most often, this is the market value.

It should be noted that only with voluntary insurance the amount of compensation is negotiable. In the event that the signing of the policy is mandatory, the amount will be established by law.

The amount of insurance sometimes has a fixed amount. BUTsometimes, it is set based on a certain percentage of the cost.

Types of insurance costs

The most common insurance - property. The cost of property insurance, as already mentioned, is calculated using different methods. Based on the choice of this method, the following types of insurance value are distinguished:

• Full insurance. The cost of the insurance object is equal to the indemnity.
• Proportional.
• Replacing the object with a new and working one. Used when selling household appliances.
• Replacement cost. The amount that is needed to repair the object is reimbursed.

Depending on the features of the tariff calculation, individual insurance risk and mass risk are distinguished. Under the mass type of risk, we mean insurance against natural disasters. The insurance value here is calculated according to separate tariffs.

Calculation of insurance value

To determine the cost of insurance, you must first choose a method for assessing the object of insurance. It can be comparative, income or expense. In most cases, the comparative method is used. The cost is derived based on the analysis of previous transactions and the market situation. After that, the amount of compensation is determined.

The formula for calculating the insurance indemnity when using the proportional calculation system is the same everywhere. Only the fare changes.

The formula looks like this: Q=T S/W.

To calculate the insurance value, we substitute the initial numbers into this formula:

• S - amountinsurance;
• W - real value of property;
• T is the coefficient chosen for this type of risk.

Cost of property insurance. Risks

Real estate appraisal is usually carried out in the department of Rostekhinventarizatsiya or in any private property appraisal company that has a license.

Several factors affect the cost estimate:

• risk category;
• real value;
• duration of insurance;
• type of insured object.

Very important point - risk category. The insurance company will not operate at a loss. All risks associated with the conclusion of the transaction are checked by the highest professionals - underwriters. These are the persons who are responsible for the insurance portfolio. They classify the types of risks and decide which ones to accept and which ones to reject. The main risk categories are:

1. theft of property;
2. damage to property by intruders;
3. accidents of various kinds;
4. disasters associated with the elements (floods, landslides, other).

In this regard, many parameters are analyzed. If real estate is insured, then the location and the degree of deterioration of this building are checked. When calculating the insurance value, the appraiser will also analyze the inventory and cadastral value of the property.

Enterprise Insurance Appraisal

When a legal entity is insured, the tariff is selected based on the size of the enterprise. For mediumenterprises operate one tariff, for large - others. During the valuation, everything is taken into account: fixed assets, working capital, warehouse stocks, and even the cost of those buildings that are not completed.

When analyzing risks, all available information is used, since the amounts in this type of insurance are large. Be sure to take into account all the statistics available from other companies.

In Russia, business risk insurance is not very common. The unstable state of the economy makes it unattractive.

Can I change the price after signing the policy?

After signing the policy, its terms cannot be changed. But there are some nuances. The sum insured can be disputed by the firm itself or by the tax authorities, if there are doubts about the correctness of the calculation of the insurance value. And when the insurer manages to prove in court that he was deceived, he has the right to reduce the amount of compensation.

Another nuance is acceptance - an internal check in an insurance company. If during the check it is found that the amount of compensation is too high, the insurer informs the client about the acceptance, and the contract will be rewritten and renegotiated.

Undoubtedly, there are advantages to taking out a policy. Having insured, an individual or organization receives a guarantee of reimbursement of funds. But the principles of calculation are too confusing, and most insurers cannot understand this system. Therefore, the state should control insurance.