OUTPUT REPLACEMENT

If any interest insured under this Policy constitutes property which has a measurable output and which is capable of replacement with a new item or items which perform a similar function then such property shall be valued for insurance purposes as follows, and values for the settlement of any damage in respect thereof shall be on the same basis:

(a) Where any damaged property is to be replaced by an item or items which have the same or a lesser total output, then the insurable value of such damaged property is the new installed cost of such replacement item or items as would give the same total output as the damaged property.

(b) Where any damaged property is to be replaced by an item or items which have a greater total output and the new installed cost of such replacement property is no greater than the replacement value of the damaged property, then no deductions shall be made from any claim for the improved output of the replacement property.

(c) If any damaged Property Insured is to be replaced by an item or items which have a greater total output and the new installed cost of such replacement property is greater than the replacement value of the damaged property, then the insurable value of such damaged property is either :

(i) The estimated cost of reinstatement of such damaged property as defined in sub-clause (a) of the Reinstatement and Replacement Memorandum,

or

(ii) That proportion of the new installed cost of the replacement item or items which the output of the damaged property bears to the output of the replacement item or items;

whichever amount is the greater.

The difference between the insurable value as defined in this memorandum and the new installed cost of the replacement item or items shall be borne by the Insured.

Provided that where any damaged property is to be repaired the Insurer shall pay the cost of restoration of such damaged property to a condition substantially the same as, but not better or more extensive than, its condition when new and the liability of the Insurer shall not exceed the sum representing the cost which the Insurer could have been called upon to pay if such Property Insured had been wholly destroyed.