Rule of Variable Indication in Spontaneous Amendment of the Insurance Amount
If the insurance is upon one thing, there is no difficulty in enforcing the Pro-Rata Rule, as it is enough to know the damaged part of that thing. If the percent is the half, third or fourth for example, the Insured can obtain from the insurance amount, which is less than value of the thing at time of risk occurrence, its half, third or fourth, and a part of the damage stays uninsured, and the Insured endures that loss. WhatsApp: +971555570005
Rule of Variable Indication in Spontaneous Amendment of the Insurance Amount
If the insurance is upon one thing, there is no difficulty in enforcing the Pro-Rata Rule, as it is enough to know the damaged part of that thing. If the percent is the half, third or fourth for example, the Insured can obtain from the insurance amount, which is less than value of the thing at time of risk occurrence, its half, third or fourth, and a part of the damage stays uninsured, and the Insured endures that loss.
The pro rata rule is not of the public system, and parties of the insurance may not abide by it, therefore the Insured can impose a clause for obtaining full compensation against the damaged part, without ignoring the condition of not exceeding the insurance amount. This case requires the Insured paying higher installments for the insurer.
The Insured may not desire to pay higher installments, and at the same time he becomes afraid from the idea that value of the insured upon thing could exceed the insurance amount when the risk occurs. This case means his submission to the pro rata rule, and he can then avoid applying this rule through seeking the variable indication as follows:
The two contracting parties take a specific economical indication that foretells movement of the price change. This indication helps every year in amending the insurance amount, amount of the installment, spontaneously up or down according to increase or decrease in prices, and through that the insurance amount stays equal to value of the thing as possible. In France, prices of building are generally used as economical indication in the Parisian area, and these prices are published periodically.
Insurance on multiple things: Insurance could be on multiple independent things, and the insurance amount could be very high at some of them and very low at others. Originally in this case, each thing should be independent from others, with its insurance amount. The pro rata rule should be enforced in case the amount is very low, and this low amount should not be compensated through increasing the other amounts.
Attorney / Mohamed Al Marzooqi
Mohamed Al Marzooqi Advocates & Consultancy
Lawyer in Abu Dhabi, Dubai – UAE
