Insurance Policies for Residential Property Series – Settlement of Claims

The compensation amount depends on the basis of the cover:

a. Indemnity basis will pay the cost of repairing the damaged building less the amount for wear, tear and depreciation; or

b. Reinstatement value basis will pay the full cost of repairing the damaged building without any deductions for wear, tear or depreciation, provided that the sum covered is adequate to cover the total cost of reinstatement.

In the absence of any special provision, the cover will be on indemnity basis. If you want to be covered on reinstatement basis, your policy should have the relevant clause attached to it.

Excesses, being the amount you have to bear before your insurance company indemnifies you, are applicable for certain perils, such as overflowing of domestic water tanks, windstorm, earthquake and flood claims.