Insurance loss assessment

For the claim lodged in insusance for flood damage, their surveyor assessed the machinery damage as per below. Plz advise whether its right.

1) For calculation of under insurance value, he has taken purchase value of machinery and applied inflation index to that value without considering the depreciation.

2) For calculation of loss, for the new spare part of machinery, he has deducted depriciation of 5% per year fom the year of puchase for the entire machinery.

3) For calculation of under insurance for 5 machcineries he has taken total value of all 25 machineries in factory and discounted total under insurance value of machinery on the loss of 5 machineries.

please advise on the correcttness of this damage assessment.

I'll break down each point to help you understand the correctness of the surveyor's assessment:

1. Under Insurance Value Calculation: - The surveyor calculated the under-insurance value by taking the purchase value of the machinery and applying the inflation index without considering depreciation. -

*Correctness*: Incorrect. The correct approach is to calculate the under-insurance value based on the current market value of the machinery, considering depreciation.

2. Loss Calculation for New Spare Part: - The surveyor deducted depreciation of 5% per year from the year of purchase for the entire machinery. - *Correctness*: Partially correct. The depreciation deduction is correct, but it should be applied only to the specific spare part being replaced, not the entire machinery.

3. Under Insurance Calculation for 5 Machineries: - The surveyor took the total value of all 25 machineries in the factory and discounted the total under-insurance value of the machinery for the loss of 5 machineries. -

*Correctness*: Incorrect. The under-insurance value should be calculated separately for the 5 damaged machineries, considering their individual values and depreciation.

Recommendations:

1. *Re-calculate Under Insurance Value*: Calculate the under-insurance value based on the current market value of the machinery, considering depreciation.

2. *Correct Depreciation Deduction*: Apply depreciation deduction only to the specific spare part being replaced.

3. *Separate Under Insurance Calculation*: Calculate the under-insurance value separately for the 5 damaged machineries. It's essential to discuss these points with the surveyor and your insurance provider to ensure a fair and accurate assessment of the damage.