FAQ-Answers

What is market value? How is it different from reinstatement value and agreed value?

In fact, insurance policies are contracts of indemnity which compensate the loss up to the sum insured, whether by way of repair, reinstatement or replacement at market value, Market Value is the cost of buying a similar item arrived at after applying the depreciation for the age and deduction of the salvage value of the old item insured. On the other hand, Reinstatement value can be the cost required for rebuilding of the asset without considering any depreciation. Sometimes, when it is not possible to calculate the exact value of items, for e.g. paintings and art works etc., Sum Insured may be arrived at on an agreed value basis via. value is mutually agreed before issuance of the policy. Therefore, the exact nature of coverage depends on the specific policy wordings.