Principles and Practice of Insurance and Survey and Loss Assessment (S-01)
Core principles
Every insurance answer ultimately rests on a handful of doctrines: insurable interest, utmost good faith (fair presentation of the risk), indemnity, contribution, subrogation and proximate cause. Know each one's purpose, not just its name. Indemnity restores the insured to his pre-loss financial position - no better, no worse - which is why average (underinsurance) and salvage recovery matter. Insurable interest must exist at the time of loss in most non-life classes (at inception for life).
Survey practice
A surveyor's job is fact-finding: establish the cause, date and extent of loss, verify the sum insured and basis of valuation, quantify damage, and advise on salvage and mitigation. Distinguish cause from symptom, and distinguish damage from betterment. Write the report so a claims handler can settle without re-visiting: chronology, documents examined, measurements, photographs described in words, and a reasoned recommendation on liability and quantum.
Traps
- Confusing proximate cause with the last event in the chain.
- Treating depreciation as a loss when it is only a valuation adjustment.
- Mixing salvage (residual value credited to insurer) with subrogation (recovery from a third party).
- Ignoring policy excess and average when computing settlement.
- Assuming a surveyor decides liability - he recommends; the insurer decides.
Worked rule of thumb
Settlement = (Adjusted loss × Sum insured ÷ Value at risk) − Excess. For a loss of 40,000 on a sum insured of 60,000 against a value at risk of 80,000, with a 1,000 excess: 40,000 × 0.75 = 30,000; less 1,000 = 29,000.