S-01 Surveyor Formula Sheet
Ten formulas, what each one is for, and a worked example.
A surveyor's report ends in a number. S-01 tests the steps that get you there: measuring the loss, deducting depreciation and salvage, applying under-insurance and the excess, and assessing loss of profits.
These ten formulas follow the order a surveyor works in.
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The 10 Formulas
1
Formula
Gross loss (property)
Expression
Value before loss − Value after loss
Use it for
The starting measure of damage.
2
Formula
Depreciation deduction
Expression
Replacement cost × Depreciation % (by age and condition)
Use it for
Moving from new-for-old to indemnity value.
3
Formula
Indemnity value of loss
Expression
Repair or replacement cost − Depreciation − Salvage
Use it for
The insured's actual loss before policy terms.
4
Formula
Salvage credit
Expression
Net realisable value of damaged goods
Use it for
Deducted from the loss, or retained by the insurer after a total loss.
5
Formula
Average (under-insurance)
Expression
Adjusted loss = Loss × Sum insured ÷ Value at risk
Use it for
Applied when the sum insured is less than the value at risk.
6
Formula
Net claim
Expression
Adjusted loss − Policy excess
Use it for
What the insurer pays.
7
Formula
Rateable contribution
Expression
Loss × Policy sum insured ÷ Total sum insured
Use it for
Sharing a loss between policies on the same property.
8
Formula
Rate of gross profit
Expression
Gross profit ÷ Turnover (previous financial year)
Use it for
Loss of profits (business interruption) claims.
9
Formula
Loss of profits
Expression
Rate of gross profit × Shortage in turnover
Use it for
Loss of gross profit during the indemnity period.
10
Formula
Increase in cost of working
Expression
Allowed up to Rate of GP × Turnover saved by the expense
Use it for
Extra expense to keep trading, capped by the economic limit.
| # | Formula | Expression | Use it for |
|---|---|---|---|
| 1 | Gross loss (property) | Value before loss − Value after loss | The starting measure of damage. |
| 2 | Depreciation deduction | Replacement cost × Depreciation % (by age and condition) | Moving from new-for-old to indemnity value. |
| 3 | Indemnity value of loss | Repair or replacement cost − Depreciation − Salvage | The insured's actual loss before policy terms. |
| 4 | Salvage credit | Net realisable value of damaged goods | Deducted from the loss, or retained by the insurer after a total loss. |
| 5 | Average (under-insurance) | Adjusted loss = Loss × Sum insured ÷ Value at risk | Applied when the sum insured is less than the value at risk. |
| 6 | Net claim | Adjusted loss − Policy excess | What the insurer pays. |
| 7 | Rateable contribution | Loss × Policy sum insured ÷ Total sum insured | Sharing a loss between policies on the same property. |
| 8 | Rate of gross profit | Gross profit ÷ Turnover (previous financial year) | Loss of profits (business interruption) claims. |
| 9 | Loss of profits | Rate of gross profit × Shortage in turnover | Loss of gross profit during the indemnity period. |
| 10 | Increase in cost of working | Allowed up to Rate of GP × Turnover saved by the expense | Extra expense to keep trading, capped by the economic limit. |
Worked Example: Loss of Profits
Last year's gross profit rate was 25%. Standard turnover for the indemnity period was ₹50 lakh, but actual turnover after a fire was ₹35 lakh.
- 1
Shortage in turnover
50 − 35 = ₹15 lakh.
- 2
Apply the rate of gross profit
25% × 15 lakh = ₹3,75,000.
- 3
Then apply policy terms
Check the sum insured on gross profit for under-insurance, add any allowed increase in cost of working, and deduct the excess.
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Order of Deductions Matters
Assess the loss, deduct depreciation and salvage, apply average, then deduct the excess, unless the policy wording says otherwise. Exam options are often built by changing the order.
FAQs
Is depreciation deducted on every claim?expand_more
No. On an indemnity policy, yes. On a reinstatement value policy, the insurer pays new-for-old if the property is actually reinstated.
What is the standard turnover?expand_more
Turnover in the matching period of the year before the damage, adjusted for trends. It's the benchmark for the shortage in turnover.
Who keeps the salvage?expand_more
If the insurer pays for a total loss, the salvage belongs to the insurer. If the insured keeps it, its value is deducted from the claim.
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