There are 3 methods for calculating the insurance indemnity:
In case of absence of any provision in the policy with regards to the calculation of insurance indemnity, indemnity value (market value) of insured property at the time of risk is considered. However, the insurant and insurer may agree on indemnification over the replacement cost (new value) of policy. In this case, the policy would specify that indemnification is over the replacement cost (new value) of policy.
For the policies indemnified on the basis of market value, the value losses resulting from the share of aging, wearing, tearing, usage and other reasons are deducted in indemnification payments for the assets included in the coverage; and, specific performance and quality differences of the new ones are deducted from indemnification, if any.
For the policies indemnified on the basis of new value (replacement cost of the new including also the shipment, assembly, customs, tax expenses, dues, and fees) and for the payment of indemnification of assets included in the coverage;
- The replacement cost determined based on the rebuilding or purchase cost of asset as the subject of policy at the location and date of risk is considered, provided that the maximum rate or age specified in the policy for the share of aging, wearing, tearing, usage is not exceeded. However, the rights of insurer for discount resulting from incomplete insurance, salvage and specific technology difference are reserved.
- If the maximum rate or age specified in the policy for the share of aging, wearing and tearing (usage) is exceeded, the market value is considered as basis for the indemnification value.
Third method is the agreed value principle. The value of buildings, fixed wiring, machinery, fixtures or household property as the subject of insurance is determined during the execution of insurance or within the period of insurance by the experts selected by the insurant and insurer unanimously and if accepted by the parties, the parties do not object to this value in the calculation of indemnity in case of risk.
Value list to be determined for contracts concluded on the basis of agreed value is valid for maximum one year insurance period. Expert fees are laid on the party demanding contract on the basis of agreed value. Contract on the basis of agreed value cannot be concluded for commercial commodity.