Every successful partial loss has the effects of reducing the sum insured by the claim amount. The insured has to restore the sum insured or limits of liability to its original amount for the unexpired period of insurance. A pro –rata premium will be charged after remaining period of insurance.
If the amount of additional pro-rata premium is in significant the insurer can reinstate the sum insured without charge
For example
Sum Insured KES. 1000,000
Policy Period 1/6/18 to 31/12/18
Date of loss 31 march 2018
Amount of loss KES. 400,000
Premium rate 2%
The sum insured reduces by KES 400,000 (claim amount) to 600,000
Pro – rata premium required to reinstate the sum insured to its original
KES. 400,000@2×274/365 (unexpired period of insurance)
= KES 600.25
