Re: {Surveyors:26057} RE: Depreciation on Radiator & Intercooler under CPM Policy
M S Sainani, Surveyor / Loss Adjuster
Basis of Indemnity
No deduction shall be made for depreciation in respect of parts replaced, except those with limited life, but the value of any salvage will be taken into account. If the cost of repairs as detailed hereinabove equals or exceeds the actual value of the machinery insured immediately before the occurrence of the damage, the settlement shall be made on the basis provided for in (b) below.
In cases where an insured item is totally destroyed the Company will pay the actual value of the item immediately before the occurrence of the loss, including costs for ordinary freight, erection and customs duties if any, provided such expenses have been included in the sum insured, such actual value to be calculated by deducting proper depreciation from the replacement value of the item.
--Dear Mr. Raju Patel,Referring to your statement on "no depreciation applicable on the machinery covered under CPM Policy", I wish to advise you to go through the indemnity clause in the terms and conditions printed in the CPM Policies and you will find, that, during the repairs of the machine, the depreciation is applicable to such parts that have a limited life; besides if it is a total loss of the machine covered under the said policy, the loss is to be assessed after adjusting the depreciation for the spent useful life of the said machine.Hope this clarifies your wrong comprehension on the issue of depreciation in CPM policy.Good Wishes Mohan IsraniOn Tuesday, 2 February 2016 7:01 PM, raju <rajup...@hotmail.com> wrote:
--Dear sir:The CPM policy does not provide anything related to LIMITED LIFE. If you have any definition like this then please provide.With regardsR.K. Patel
Date: Mon, 1 Feb 2016 12:51:29 +0530
Subject: Depreciation on Radiator & Intercooler under CPM Policy
From: ananta....@gmail.com
To: iiisla...@googlegroups.com; iiisla-s...@googlegroups.com; insurance...@googlegroups.com; insurance-su...@googlegroups.comDear Friends,Please put up your comments on depreciation on Radiator and Intercooler under CPM Policy.Do they fall in the catagory of "Limited Life items"? Definitely, we shall do appreciate your comments on it.Regards.A.K.Dey(Surveyor)
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Lajpat Ray Chandnani
The “Basis of Indemnity” clause of the Policy provides that
“No deduction shall be made for depreciation in respect of parts replaced, except those with limited life, but the value of any salvage will be taken into account. If the cost of repairs as detailed hereinabove equals or exceeds the actual value of the machinery insured immediately before the occurrence of the damage, the settlement shall be made on the basis provided for in (b) below.
In cases where an insured item is totally destroyed the Company will pay the actual value of the item immediately before the occurrence of the loss, including costs for ordinary freight, erection and customs duties if any, provided such expenses have been included in the sum insured, such actual value to be calculated by deducting proper depreciation from the current day replacement value of the item.
It would as such be proper that for partial loss, case of replacement of parts (which are not excluded) having limited life (with regard to / with reference to life of the machine, (if we take a clue from MBD policy) i] - wear & tear parts, & ii] - parts for which manufacturers have a specified a fixed life depreciation would have to be applied. To my knowledge “parts with limited life differs from Machine to Machine” and you have you to go through the relevant literature (manual / handbook of the machine) provided by the manufacturing Company.
As regards applicability of depreciation for radiator & intercooler under CPM Policy, please refer to manual / handbook of the machine & check is it recommends periodical replacement of either of radiator or of intercooler the depreciation would be applicable otherwise not.
It is a usual practice that equipment under CPM Policy doesn't have such stipulations of periodic replacement of parts such as radiator, intercooler and like.
Enlightened views from other friends invited. .
Lajpat Ray Chandnani
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