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• Under the Actual Cash Value/Sound Value (ACV/SV), in case of a loss, you will be paid based on the depreciated value of the damaged property at the time of the loss. The ACV/SV is arrived at by establishing the replacement value of the affected property at the time of the loss and deducting the corresponding depreciation rate (spent life/economic life).
• Under the Replacement Value (RV), in case of a loss, the insurance company will pay you based on the replacement/reinstatement cost of the damaged property (brand new cost at the time of the loss), without deduction for wear and tear or depreciation. However, it is important to note that any betterments/improvements that will be introduced will not be covered by your insurance policy.

When a property is under-insured, any claims will be subject to an average. Your Fire Policy carries the condition known as Average Clause that says:

“If the property hereby insured shall, at the time of the loss, be collectively of greater value than the sum insured thereon, then the insured shall be considered as being his own insurer for the difference, and shall bear a ratable proportion of the loss accordingly.”
Every item, if more than one, of the Policy shall be separately subject to this Condition.

Your claim will be computed as follows:

Claim Amount = Amount of Insurance/Actual Value of Insured Property x Amount of Loss

Your Fire policy also has a condition saying that it is an “Open Policy” unlike other insurance that you are buying. It is called open as the true value of the property will only be determined at the time of the loss.

The insurance company will pay 100% of the claimed amount for the covered property provided:

1. All the properties you are claiming are insured;
2. The sum insured declared in the policy is based on the actual/current value;
3. The cause of the loss is covered by the policy; and
4. Your Policy does not specify a Deductible.

Deductible is your participation on the Claim and this amount varies according to the insured perils. Your insurance company will only pay the claim in excess of your Deductible. In the Philippines, there is a mandatory Deductible for catastrophe perils like earthquake, typhoon and flood. This is being applied by all non-life insurance companies operating here. For every loss or event, your share will be 2% of the actual cash value of the affected item* at the time of the loss.