Insurance Loans: FIRE INSURANCE

TYPES OF INSURANCE

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 Broadly  speaking there are two  main branches of insurance  in our country, viz.,  life insurance  and General 
insurance . The general insurance 
is subdivided  into three types,
fire insurance , marine insurance  and miscellaneous
insurance  This classifications  is highlighted in the figure given
below:  The above mentioned types of the
have been briefly discussed below:<br />
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 (1).  LIFE INSURANCE: It refers to
a contract in which is the  insurer
agrees to pay a specified  amount of the
on the death of the assured or on the expiry of a certain fixed period,
whichever  is earlier, . In consideration
of this, the insurer  collects
premiums,  from the insured. Since the
sum for which a policy  is take is
assured to be paid, whether there is death or not, Life insurance is also
often  referred to as : Life Assurance”
In  India 
the life business is being undertaken by the Life insurance
Corporation  (LIC), of India and twelve
private insurance companies such as<br />
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(2).  GENERAL INSURANCE:  Except 
life insurance  all other
insurances  come under general insurance  . Before 1971, there were about the 107
general insurance  c9ompanies,  in India both Indian and foreign . These  companies were mismanaged  insurance 
was a meant  for big industrial,
services to clients  was partial, there
were no  service conditions   to staff. In view of these was partial there
were no service conditions or to staff. In view of these limitations  the Govt. of India  has enacted General insurance  Business ( Nationalizations)  Act 1972, to take over general insurance  business. Under the provisions  of the. Act the general insurance  Corporations (GIC) India was established  in Jan. 9173, for the purpose  of a this directing controlling and carrying
a  on the general insurance  business in India. Later all the 107
companies,  were amalgamated and
grouped  into the 4 operating companies
viz., National Insurance Co Ltd.,  H. O.
Calcutta the New India Assurance  Co
Ltd., H. O. Mumbai.,  The
Oriental insurance  Co Ltd., H. O  New Delhi and United India  insurance 
Co. Ltd., H. O. Chennai . These 
four companies  became
subsidiaries of the general insurance 
corporations  of India. These four
companies were established  to achieve
the following twin objectives:  (a) . To
ensure that these are so situated  as to
under render their combined services effectively  and in all the parts of the India and,<br />
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(b) . 
To ensure proper service  to the
public through mutual competitions.  In
1999, the IRDA act introduced a an amendment 
to the General insurance 
Business  (Nationalizations)  Act 1972, 
by which the exclusive 
privilege  enjoyed by the GIC and
its four subsidiaries  for carrying  on general insurance  was removed . (1) FIRE INSURANCE:   This insurance covers risk of fire to the
property because there is a  every
likelihood of fire spreading of the in big factories, godowns houses, shops and
a  ships. The insurance not only covers
risk of fire insurance but also the consequential  losses from such loss.  (2) . 
MARINE INSURANCE:  This is a
oldest from if insurance and covers a are a 
all the marine perils. Due to the marine perils, the ship can be damaged
or destroyed  cargo and can be lost and
consequently  there can be  loss of freight  . Therefore the marine insurance covers  the risk to ship, cargo and freight on the
high seas.<br />
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(3).  MISCELLANEOUS  INSURANCE: 
All other general insurances fall under the miscellaneous  category. It include  Motor insurance, public liability  insurance, product liability insurance,  Professional indemnity insurance, workman
compensations  insurance, personal
accidents insurance, Individual  medi
claim  policy,  Group mediclaim  policy, Overseas mediclaims  policy, Bhagyashree child  welfare policy, Rajeshwari Mahila Kalyan Bima
Yojna,  Burglary insurance, Shop  keepers 
insurance, Jewellery block insurance, Money insurance,  Fidelity guarantee insurance, Neon sign
policy, Duty insurance,  Electronic
Equipment insurance,  Boiler
Explosion  insurance, Machinery breakdown
insurance, Erection  all risks insurance,
Contractor’s  all risks insurance,
Refrigeration insurance. Baggage  
insurance, All risks insurance, Amartya Siksha Yojna insurance policy,
Sahana safer insurance . Householders 
insurance, pedel cycle insurance, Plate glass insurance, Advance loss of
profits policy, Marine cum erection 
policy, sports insurance, Special contingency  policy, Students safety insurance, and a
Rural insurance.</div>
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TYPES OF INSURANCE

Broadly speaking there are two main branches of insurance in our country, viz., life insurance and General insurance . The general ...

MEANING OF FIRE INSURANCE

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 The term “Fire” means   
a visible or glow accompanied  by
heat. In fire insurance, that the term fire means  actual ignition mens., : burning”: The
presences  of flame is a condition  pre-requisite 
., Thus  damage by the smoke  heating, scorching of charring  without actual burning , is not
consideration  as  “Fire”.,  
Secondly  the ignition has to be
fortuitous  or accidental . But the this
applies only to the insured. If a third party wilfully  sets fire to the insured property., it is a
still accidental so far as a insured  is
concerned provided  the third party  is not a acting  with the direct connivance of the insured.,
If they the insured  himself sets fire to
the insured property, it is a certainly not accident,  in fact it is a fraud., However a fire caused
by the negligence of the insured or if he is the his employees will be payable
as so long as a  there is no element of
fraud.<br />
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MEANING OF FIRE INSURANCE:  Fire insurance is a  social device in the  insurer, in return for the premium  paid, undertakes to pay or make good loss
suffered by the insured as a result of a damage caused by the fire to the
property covered by the policy., It is a 
offered for building or a flat furniture 
, fixture, stocks  and loss of
profit (consequential loss)., It is a also 
covers losses the due to lightning 
, aircraft, damage the losses and due to 
terrorist attack, earthquake, riots, strikes, malicious damage.,  floods and landslide., It could be taken by
the  owner  of the premises to be insured., A tenant is
not eligible  to insurer rented premises.
However the tenant had the options  of
insuring the contents of the premises., 
The premium on the value of the property insured.,  </div>
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DEFINITION 
OF FIRE INSURANCE;  According to
V. R.  Bhushan and Prof. R. S. Sharma.,
fire insurance is an agreement 
whereby  one party (the insurer),
in return, for a consideration undertakes to the indemnify  the other party (the insured)  against 
financial loss which he may sustain by reason of certain  defined subject matter being damaged by the
destroyed by fire  or other defined
perils up to an agreed amount., The documents ., which contains the terms and
conditions of the contract of the fire insurance is known as the policy. The
consideration  for the contract of fire
insurance is termed as the premium., The 
subject  matter of the contract of
fire insurance  is the insured property.
The sum set forth in the contract of fire insurance is called the Insured sum.
FEATURES OF FIRE INSURANCE:  The following  are the features of the fire insurance:.  (1). A Fire insurance contract like by the
any other contract  must fulfill the
essential elements of a valid contract like offer and the acceptance., lawful
consideration  legality of object
etc.,   (2).,  A fire insurance contract  is a contract of indemnity.,  This means that in the event of loss, the
insured  can recover from the insurer the
actual amount of loss or not the maximum amount for the which the subject  matter is a insured whichever is less.,  (3). 
In fire insurance, the insured should have been insurable interest in
the  subject matter of the contract  both in the at the time of taking the policy
and the at the time of loss.,  (4).  Premium is a required to be paid the at the
time of taking policy.,   (5). Fire
insurance usually taken for any year duration but in the some cases for short
periods also.,  (6). Fire policies can be
assigned with the prior consent of the insurer.,  (7)., 
The loss must be outcome of fire or ignition only.,  (8). Nothing can be recovered under a fire
policy if the fire is caused deliberately., 
(9). In case of several policies for the same property each insurer is
entitled to contributions from other insurers. After indemnification, the
insurer is subrogated on to the  rights
and interest of the policy holders.,  </div>
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SCOPE OF FIRE INSURANCE==According of section 2  of the insurance act 1938, the scope of fire
insurance includes.,   (a). Fire
insurance business is different from other insurance business operation and
covers the risks caused by fire:   (b) In
addition to the risk cause by the fire, it also includes other reasons and
occurrences,. which can be customarily be included  among risk insured  under fire insurance contracts., Thus we can
be study the scope of fire insurance 
from two angles viz., (1) Ordinary 
scope f fire insurance and, (2), Comprehensive  scope of fire insurance., 1. ORDINARY  SCOPE OF FIRE INSURANCE:  It includes 
only those risks which define the narrower  scope of fire insurance viz., the losses
caused  by fire only. Some losses caused
by the fire and are included  in the
insurance against fire and some  losses
are left out.  (A)., RISKS COVERED UNDER
FIRE INSURANCE:  The risk causing
losses  have to be stated in the fire
policy  and only these risks are
indemnify  are by the insurance company.,
in case of the loss.,  The following
risks caused by the fire are generally included in the fire insurance.,  (a) Fire or ignition: (b)., Blasting of
boiler  used for household  cooking.,  ( C ) Blast of gas etc,. used for the purpose
of lightning  and heating in any  building (not being  an industrial concern or factory using gas
for purpose other than lighting  and
heating).,  Above mention blasts causing
fire must be uncertain and accidental., 
(B) RISKS NOT COVERED BY FIRE INSURANCE:   There are certain risks for the which
insurer do not indemnify the insured  in
case of loss.,  They are as following
.,  (a). 
Loss, durations,  damage to
precious stones and metal artistic goods and 
article ,maps., stamps., cheques., 
account. books archieves  and rate
documents  etc.,  (b)., Loss, destruction or damage caused by
riot.,  civil disturbances , revolutions
, war, aggression, internal emergencies, storms,  cyclones., etc.,  ( C ). 
Spontaneous fire in jungle or bushes., 
(d). Spontaneous  combustion
caused by the chemicals.,  (e) Theft
during fire or after break out the  of
fire.,  (f). Compulsory  burning of goods are or properties  by the orders of Government  or court’s 
decision.  </div>
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COMPREHENSIVE  SCOPE OF FIRE INSURANCE: Numerous fire
policies have been introduced  to cover
various types of the risks allied to the risks of fire. Coverage of such risks
under the ambit of the fire  insurance
has been widened the scope of fire insurance. Some special  policies have helped  in a great way in broadening the scope of
fire insurance in the following manner:  
(A). By including the included perils and risks:   (B). 
By including  consequential losses
and the other indirect fire risks., In the first category such excluded
risks,  which cannot be  insured under general insurance
schemes.,  have been brought under the
cover the of fire insurance. Such policies 
are called  special insurance
relating  to spontaneous  combustion earthquake  blasts., etc.,  In the second category  the indirect 
risks or losses are covered. Such risks are or losses are also  know as par consequential  risks or losses. Expenses after at the
fire  rehabilitation, expenses  of the burnt factory, expenses of reorganizing
the proper  production etc., are some of
the  examples  or such risks or losses. Such risks have been
through  brought under the cover of fire
insurance. Generally  insurance.
Generally consequential  loss insurance
and profit and loss insurance policies cover such indirect  risks., 
HAZARDS IN FIRE INSURANCE:  Fire
loss is the result of two types of hazard: 
(1). PHYSICAL  HAZARDS:  It refers to the inherent  risk of the fire in the property which may be
on account  of the situation,  inflammable nature, constructions artificial
lighting and heating, lack of the  fire
extinguishing  is a appliances,
etc.,  Fire insurance, providers
protections to the property against the occurrence of fire, an unavoidable
physical hazard.  (2).  MORAL HAZARD: The term  Moral Hazard 
refers to the wilful and melicious setting on fire of on the
property  by the owners  or some body else. Moral hazard may be in
anyone of the following forms:  (a) IN
CENDIARISM:  It refers to the deliberate
destruction of one’s own property by fire. Some insured indulge  in such activities  to realize the insured amount from the
insurer.  (b). ARSON: It refers  to setting on fire the property of the
insured by the some other persons. Some persons may set fire to property of
others with a view to getting a reward for information  about the break out of the fire or
assisting  in extinguishing it. ( C ).
PASSIVE DISHONESTY:  It refers to the
wilful neglect to the by the insured to take proper action for
extinguishing  fire and his
carelessness  during the occurrence of
fire</div>
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MEANING OF FIRE INSURANCE

The term “Fire” means a visible or glow accompanied by heat. In fire insurance, that the term fire means actual ignition mens., : bu...

FUNDAMENTAL PRINCIPLES OF FIRE INSURANCE

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 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.,<br />
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(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.<br />
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  (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.<br />
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  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.<br />
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(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.<br />
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