Lesson 4
Indemnity vs New for Old
Work out how an accepted loss becomes a payment: the settlement basis, the order of deductions and the method.
Two questions, not one
Burglars take your five-year-old laptop. Two separate questions now decide what you get. First, is the loss covered? That is the four checks: listed event, exclusions, conditions, limits. Second, how is a covered loss turned into money? That is the settlement basis, and it’s where two policies with identical cover can pay very different amounts.
The two common bases are indemnity and new for old. Limits and the excess apply under either.