In Property and Fire Insurance, what is a declaration policy? From the following information, ascertain the claim due under the policies taken to cover for a fire loss. Value of the stocks at the time of fire ₹3 Crore Lo

Declaration Policy - A special policy related to stock owned by the insured issued in the interest of traders who deal in seasonal goods. Stock may have fluctuating values and valuation may peak during seasons. It may result in over / under insurance depending on the seasons and the value put on the goods by the insured. Feature covered by a declaration policy- The sum insured is selected on the basis of the highest stock value. Premium on this value is paid provisionally. Monthly declarations of stock are made. Declaration policy can be issued for a minimum sum insured of ₹1 crore in respect of goods wholly owned by the issued. In case the policy covers goods stored in different locations, at least on one location the value of goods should be ₹25 lakh. The liability, on the basis of facts given in the problem under the different policies will be as under: Share under a policy: Insured Value / Value of the property Share of Policy A = (1 crore / 3 crore) × 30 lakh = ₹10,00,000 Share of policy B = (60 lakh / 3 crore) × 30 lakh = ₹6,00,000 Share of Policy C = (1 crore / 3 crore) × 30 lakh = ₹10,00,000 It is seen that the loss remains are unabsorbed even after the claims under policies A, B & C are calculated. Hence the cover under the declaration policy will be invoked. Declared value ₹3 crore Claims allocable under policies A, B & C ₹26 lakh Excess loss = ₹4 lakh Recovery under standard policies A, B & C = ₹26 lakhs. This will result under in a non-recovery of ₹4 lakh under standard policies A, B & C which will cover under declaration policy.