All the essential elements of a valid
contract are applicable to fire insurance contract., but following are the
main principles of fire insurance
contract. (1). INSURABLE INTEREST: The
insured should have insurable interest
in the subject matter of the
insurance, . Such an interest may arise legally by various of legal
ownership or equitably ( by virtue of some other pecuniary relationship
following short or ownership) . In fire insurance the insurable interest
must be present both at the time of insurance and at the time of loss. In case
of goods, insurable interest arises on
the account of (Ownership: (b) Possessions: ( C ). Contract:. Generally the following persons have insurable
interest in the subject matter of
insurance in case of of fire policy: (a) A person has insurable interest in the
property he owns. (b) A businessman has
insurable interest in his stock, plant
and a machinery and building. ( C ) . Agent the has insurable interest in
the property of his principle. (d).
Partner has insurable interest in the
property of partnership fi8rm., (e)
Mortgages has insurable interest
in the property , which is mortgaged.,
(2). UTMOST GOOD FAITH: According to this principle both insured and
insurer are supposed to disclose all material facts relating to subject matter or of insurance to each
other. In the case of ordinary risks,
all the statement made by the insured in the proposal form are quite sufficient for a correct
estimation of the risk. But in complicated cases, the insurer surveyor makes an
estimation of the property. Any facts open to his observations are presumed to have been disclosed. The observance of good faith is
necessary throughout the term of insurance. Any contrary behaviour
by either of the parties will become a
breach of good faith. (3).INDEMNITY: According to this principle the insurer agrees to make good the loss suffered
by the insured. The insurer will
indemnify the actual loss suffered by
the insured and not more than that.
Under any circumstance., the insured will not be allowed to make profit out of
the loss. Hence, the insured shall not be paid anything in excess of loss
or the amount of the policy.
(4). SUBROGATION:’
The doctrine of subrogation is a corollary to the principles of
indemnity . The term subrogation means
the right of the one person to stand in
place of another . Under the this principles
the insurer after paying compensations
has got right to take away the damaged property which has some value from the insured as the latter should not be compensated twice (I , E,
by selling the damaged property and receiving compensations
from the insurer)., for the same loss, . Similarly the insurers, after
settlement of claims, stands in the place of the insured with all the rights and remedies against the
third parties. For examples, X suffers a lost or Rs. 20,000 by fire, Y the
insurer indemnifies X up to Rs. 20,000,
X has another alternative to seek compensations . He may claim damage for the
person for those negligence the fire
occurred. If X prefers to take compensations
from insurers, he cannot ask
third party for compensation . But
the insurer can recover damage from the
third party because the gets the rights of X after paying him compensations. (5).
CONTRIBUTIONS: The principles of
contributions applies when there is more
than only policy covering the same subject matter against the same peril for the same period and for the same insured . In such as
cases the insurer for the
after the payment of claims the has the right to recover a
proportionate amount from other
co-insurer who are a liable for the
same. In other words each co-insurer has to contributes the loss rateably to the insured. (6). CAUSA PROXIMA: The maxim “causa proximate not remote
spectature means that proximate nearest cause and not the remote one is to be
taken notice of at the time of the determining
the liability of the insurer. The
insurer should try to ascertain the nearest cause of the damage to the property
which is subject matter of insurance, while paying the claim. If the property
insured is burnt is by the fire was preceded and brought in to the operations by the an expected
peril, the legal position depends upon
whether excepted peril was the
proximate cause of fire or not.
PROCEDURE OF TAKING A FIRE INSURANCE
POLICY: If an individual/ businessman
wants to go get his property insured he has to adopt the following procedure.
(1) PROPOSAL FORM: First of all the
proposal will have to fill up the proposal from which is collected from any one of the public sector general
insurance companies such as a New India Assurance Ltd., Oriental Fire and General insurance Co. Ltd.,
United India Fire and General insurance Co Ltd., and National Insurance Co
Ltd., or from any one of the private
companies. The proposal form requires
him to give detail such as a name address and occupations of the propose
value and nature of the property to be
insured, type of the policy required amount of assured sum etc., After furnishing these details,. the proposal
will have to put his signature in the proposal
form and send the same to same to the respective company for acceptance.
(2). EVIDENCE OF RESPECTABILITY: Before
assuming the risk, the insurer has to ascertain whether the proposer is
a respectable and person and is taking
policy in utmost goods faith. This precautions is mandatory as the fire
insurance involves a high degree of moral hazard which arises from the
behaviour of the human beings connected
with subject matter of insurance. If a
policy is taken with an intention to set fire to the property the insured might
set a get a lump sum and make a quick buck out of it. If the proposer is a well known person. risk can be assumed without any enquiry. In case of
the proposer is a stranger, the insurer
will insist him to get a certificate
from some known person to prove his
credibility.
(3). EVALUATING THE PROPOSAL: On receipt of the proposal form, the insurers evaluates the possible loss involved in the proposal . In case of the subject matter is of very high value of the a surveyor may be sent to evaluations the proposal. In this case, the surveyor’s report is taken as the basis for determining the nature of risk and a this is a premium. (4). ACCEPTANCE: If the insurer is satisfied with the proposal and interested in taking up such risk, it will send a letter fo the acceptance of proposal to the proposer. By this the contract comes into the existence. The amount of premium, to be paid to the is also mentioned in the letter of acceptance. (5). COVER NOTE: After assuming the risk, the insurer will have to send a fire policy to the insured . As the preparation of fire policy takes sometimes, the insurer will issue a provisional document known as cover note. The cover note is effectively till the fire policy is issued. (6). INSURANCE POLICY: Later on,. the insurer prepares the fire policy (to replace the cover note), and sends it to the insured. The policy is a documents in which all terms and condition regarding insurance, are mentioned . Generally this policy is issued for one year.
(3). EVALUATING THE PROPOSAL: On receipt of the proposal form, the insurers evaluates the possible loss involved in the proposal . In case of the subject matter is of very high value of the a surveyor may be sent to evaluations the proposal. In this case, the surveyor’s report is taken as the basis for determining the nature of risk and a this is a premium. (4). ACCEPTANCE: If the insurer is satisfied with the proposal and interested in taking up such risk, it will send a letter fo the acceptance of proposal to the proposer. By this the contract comes into the existence. The amount of premium, to be paid to the is also mentioned in the letter of acceptance. (5). COVER NOTE: After assuming the risk, the insurer will have to send a fire policy to the insured . As the preparation of fire policy takes sometimes, the insurer will issue a provisional document known as cover note. The cover note is effectively till the fire policy is issued. (6). INSURANCE POLICY: Later on,. the insurer prepares the fire policy (to replace the cover note), and sends it to the insured. The policy is a documents in which all terms and condition regarding insurance, are mentioned . Generally this policy is issued for one year.
