Insurance

Yes, it is important to insure both buildings. Property insurance also forms shared group of general insurance. Property insurance plays an imperative role in the mechanisim of the wealth of the company or business. It is essential in the development of the organisation.

In this instance, property refers to buildings which each of Safe Pte Ltd is valued at $5m today. Buildings also comprised of structures i.e gates, walls, fences and etc.

It is vital that the building and structures are sufficiently protected from risks of lightning, fire, flood, explosion, collision, burst pipes and etc.

Property insurance not only covers reconstruction cost. It takes account of commercial and industrial assets with ongoing daily profitable events. Additionally, it covers cost of the property, the machinery, tools and equipments which are significant assets that ought to be shielded also.

It is vital for the insured owner to constantly preserve suitable level of coverage for his property insurance in order to be compensated for the full value of his property in the event of the insured perils. Full value of the building refers to the estimated cost of reconstruction in the event the building was totally damaged.

If the building is insured at a lesser price than its full value at the time of claim, it will be regarded as a co-insurance if a claim is due to an insured peril as illustrated below.

Property Full value : $5,000,000

Insured Amount : $3,750,000(i.e 75% of Full Value)

I.e Supposed an insured Owner is self-insured for 25% of the full value.

In the event of a claim due to an insured peril,

Claim Amount : $2,500,000

Insurer pays : $1,875,000 (75% X $2,500,000)

Insured Owner’s share: $625,000 (25% X $2,500,000)

The insurer will pay for the reconstruction of the insured property should it be destroyed, the repair and restoration of the damaged portion of the insured property to its near-original conditions and the cost of...