A contract of Insurance comes into being when a person seeking insurance protection enters into a contract with the insurer to indemnify him against loss of property by or accompanying fire and or lightening, explosion, etc. fire insurance in india pdf
this is often often often primarily a contract and hence as is governed by the overall law of contract.
this is often often often primarily a contract and hence as is governed by the overall law of contract.
these principles are common altogether insurance contracts and are governed by special principles of law.fire insurance in india wikipedia
FIRE INSURANCE:
According to S. 2(6A), "fire insurance business" means the business of effecting, otherwise than incidentally to a special class of insurance business, contracts of insurance against loss by or accompanying fire or another occurrence, customarily included among the risks insured against in insurance business.
According to Halsbury, it's a contract of insurance by which the insurer agrees for consideration to indemnify the assured up to a selected extent and subject to certain terms and conditions against loss or damaged by fire, which can happen to the property of the assured during a selected period.
Thus, insurance could even be a contract whereby the person, seeking insurance protection, enters into a contract with the insurer to indemnify him against loss of property by or accompanying fire or lightning, explosion, etc.
This policy is meant to ensure one's property and other items from loss occurring due to complete or partial damage by fire. fire insurance in india notes
In its strict sense, a fire insurance contract is one:
1. Whose principle object is insurance against loss or damage occasioned by fire?
2. The extent of insurer's liability being limited by the sum assured and not necessarily by the extent of loss or damage sustained by the insured:
3. The insurer having no interest within the safety or destruction of the insured property aside from the liability undertaken under the contract.
LAW GOVERNING insurance
There is no statutory enactment governing insurance, as within the case of marine insurance which is regulated by the Indian Marine Insurance Act, 1963.
the Indian Insurance Act, 1938 mainly addressed the regulation of insurance business intrinsically and not with any general or special principles of the law relating fire of other insurance contracts. fire insurance in india ppt
So also the overall Insurance Business (Nationalization) Act, 1872.
within the absence of any legislative enactment on the topic, the courts in India have in handling the subject of fireside insurance have relied thus far on judicial decisions of Courts and opinions of English Jurists.
In determining the worth of property damaged or destroyed by fire for the aim of indemnity under a policy of fireside insurance, it had been the worth of the property to the insured, which was to be measured.
clear that value was measured by reference to the market price of the property before and after the loss. fire insurance companies in india
In such cases, the measure of indemnity was the price of reinstatement. within the case of Lucas v. New Zealand Insurance Co. Ltd.
where the insured property was purchased and held as an income-producing investment, and thus the court held that the right measure of indemnity for damage to the property by fire was the price of reinstatement.
INSURABLE INTEREST
A person who is so inquisitive about a property on having enjoyed its existence and prejudice by its destruction is claimed to possess interest therein property.
Such a person can insure the property against fire.
The interest within the property must exist both at the inception also as at the time of loss.
If it doesn't exist at the commencement of the contract it can't be the subject-matter of the insurance and if it doesn't exist at the time of the loss, he suffers no loss and wishes no indemnity. Thus, where he sells the insured property and it's damaged by fire thereafter, he suffers no loss.
RISKS COVERED under attack policy
The date of the conclusion of a contract of insurance is the issuance of the policy is different from the acceptance or assumption of risk. fire insurance policy in india
Section 64-VB only lays down broadly that the insurer cannot assume risk before the date of receipt of premium. Rule 58 of the Insurance Rules, 1939 speaks about advance payment of premiums insight of sub section of Section 64 VB which enables the insurer to assume the danger from the date onwards.
If the proposer didn't desire a specific date, it had been possible for the proposer to barter with the insurer that term. Precisely, therefore the Apex Court has said that final acceptance is that of the assured or the insurer depends simply on the way during which negotiations for insurance have progressed. insurance fire in india 90s
Though subsequent are risks which seem to possess covered policy but aren't covered under the Policy. sort of contentious areas are as follows:
FIRE: Destruction or damage to the property insured by its fermentation, natural heating or ignition or it's undergoing any heating or drying process can't be treated as damage due to fire. E.g., paints or chemicals during a factory undergoing heat treatment and consequently damaged by fire aren't covered.
Further, the burning of property insured by order of any Public Authority is excluded from the scope of the canopy. about fire insurance in india
LIGHTNING: Lightning may end in fire damage or other forms of injury, kind of a roof broken by a falling chimney stuck by lightning or cracks during a building due to a lightning strike.
Both fire and other forms of damages caused by lightning are covered by the policy.
AIRCRAFT DAMAGE: The loss or damage to property (by fire or otherwise) directly caused by aircraft and other aerial devices and/ or articles dropped therefrom is roofed.
However, destruction or damage resulting from pressure waves caused by aircraft traveling at supersonic speed is excluded from the scope of the policy.
RIOTS, STRIKES, MALICIOUS AND TERRORISM DAMAGES:
The act of a person participating in conjunction with others in any disturbance of public peace (other than war, invasion, mutiny, civil commotion, etc.) is construed to be a riot, strike or terrorist activity. fire insurance policy new india assurance
Unlawful action wouldn't be covered under the policy.
STORM, CYCLONE, TYPHOON, TEMPEST, HURRICANE, TORNADO, FLOOD and INUNDATION:
Storm, Cyclone, Typhoon, Tempest, Tornado, and Hurricane are all various kinds of violent natural disturbances that are amid thunder or strong winds or heavy rainfall.
Flood or Inundation occurs when the water rises to an abnormal level. Flood or inundation shouldn't only be understood within the sense of the terms, i.e., arrive river or lakes, but also the buildup of water due to choked drains would be deemed to be flooded.
IMPACT DAMAGE:
Impact by any Rail/ Road vehicle or animal by direct contact with the insured property is roofed. However, such vehicles or animals shouldn't belong to or own by the insured or any occupier of the premises or their employees while acting within the course of their employment.
SUBSIDENCE AND LANDSLIDE INCLUDING ROCKSIDE:
Destruction or damage caused by Subsidence of a neighborhood of things on which the property stands or Landslide/ Rockslide is roofed. property insurance new india assuranceWhile Subsidence means sinking of land or building to a lower level, Landslide means sliding down of land usually on a hill.
However, normal cracking, settlement or bedding down of latest structures; settlement or movement of made up ground; coastal or river erosion; defective design or workmanship or use of defective materials; and demolition, construction, structural alterations or repair of any property or ground-works or excavations, aren't covered.
BURSTING AND/OR OVERFLOWING OF WATER TANKS, APPARATUS AND PIPES:
Loss or damage to property by water or otherwise on account of bursting or accidental overflowing of water tanks, apparatus, and pipes is roofed.
MISSILE TESTING OPERATIONS:
Destruction or damage, due to impact or otherwise from trajectory/ projectiles about missile testing operations by the Insured or anyone else, is roofed. best fire insurance policy in india
LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS:
Damage, caused by water accidentally discharged or leaked out from automatic sprinkler installations within the insured's premises, is roofed.
However, such destruction or damage caused by repairs or alterations to the buildings or premises; repairs removal or extension of the sprinkler installation; And defects in construction known to the insured, aren't covered.
BUSH FIRE:
This covers damage caused by burning, whether accidental or otherwise, of bush and jungles and thus the clearing of lands by fire, but excludes destruction or damage, caused by fire.
RISKS NOT COVERED BY policy
Claims not maintainable/ covered under this policy are as follows:
Theft during or after the occurrence of any insured risks
War or nuclear perils
Electrical breakdowns
Ordered burning by a public authority
Subterranean fire
Loss or damage to bullion, precious stones, curios (value quite Rs.10000), plans, drawings, money, securities, checkbooks, computer records except if they're categorically included.
Loss or damage to property moved to a special location (except machinery and equipment for cleaning, repairs or renovation for quite 60 days). fire insurance policies in india
CHARACTERISTICS of hearth INSURANCE CONTRACT
A fire insurance contract has subsequent characteristics namely:
(a) insurance could even be a private contract
A fire insurance contract doesn't confirm the security of the insured property.
Its purpose is to figure out that the insured doesn't suffer loss because of his interest within the insured property.
Hence, if his regard to the insured property ceases by being transferred to a special person, the contract of insurance also involves an end.
it is not so connected with the subject matter of the insurance on pass automatically to the new owner to whom the subject is transferred.
The contract of hearth insurance is thus a mere private contract between the insured and thus the insurer for the payment of money.
it's often validly assigned to a special only with the consent of the insurer.
(b) it's an entire and indivisible contract.
Where the insurance is of a binding and its contents of stock and machinery, the contract is expressly agreed to be divisible.
Thus, where the insured is guilty of breach of duty towards the insurer in respect of 1 material covered by the policy, the insurer can avoid the contract as a whole and not only in respect of that specific subject mater, unless the right is restricted by the terms of the policy.
(c) the explanation for fire is immaterial
In insuring against fire, the insured wishes to protect him from any loss or detriment which he may suffer upon the occurrence of a hearth, however, it's getting to be caused.
goodbye because the loss is because of fire within the meaning of the policy, it's immaterial what the reason for the fireside is, generally.
Thus, whether it had been because the fireside was lighted improperly or was lighted properly but negligently attended to thereafter or whether the fireside was caused on account of the negligence of the insured or his servants or strangers is immaterial and thus the insurer is vulnerable to indemnify the insured.
within the absence of fraud, the proximate explanation for the loss only is to be looked to.
The explanation for the fireside, however, becomes material to be investigated
(1) Where the fireside is occasioned not by the negligence of, but by the willful
(2) Where the fireside is due is to cause falling with the exception within the contract.
LIMITATION of some time
Indemnity insurance was an agreement by the insurer to confer on the insured a contractual right, which clear, came into existence immediately when the loss was suffered by the happening of an event insured against, to be put by the insurer into the same position during which the accused would have had the event not occurred but in no better position.
There was a primary liability, i.e. to indemnify, and a secondary liability i.e. to put the insured in his pre-loss position, either by paying him a specifying amount or it would be in another manner.
But the fact that the insurer had an option on how he would put the insured into pre-loss position didn't mean that he wasn't vulnerable to indemnify him during a method or another, immediately the loss occurred. who insurance fire in indiana
the primary liability arises on the happening of the event insured against.
So, the time ran from the date of the loss and not from the date on which the policy was avoided and any suit filed then the deadline would be barred by limitation.
WHO MAY INSURE AGAINST FIRE?
Only people who have an interest during a property can erupt insurance thereon. the next are among the category of persons who are held to possess an interest in, property and should insure such property:
1. Owners of property, whether sole, or joint owner, or partner within the firm owning the property. it isn't necessary that they need to possession also.
Thus a lesser and a lessee can both insure it jointly or severely.
2. The vender and purchaser have both rights to insure. The vendor's interest continues until the conveyance is completed and even thereafter if he has an unpaid vendor's lien over it.
3. The mortgagor and mortgagee have both distinct interests within the mortgaged property and should insure, per Lord Esher M.R."The mortgagee doesn't claim his interest through the mortgagor but under the mortgage which has given him an interest distinct from that of the mortgagor"
4. Trustees are legal owners and beneficiaries of the beneficial owners of trust property and each can insure it.
5. Bailees like carriers, pawnbrokers or warehouse men are responsible for there safety of the property entrusted to them then can insure it.
PERSON NOT ENTITLED TO INSURE
One who has no interest during a property cannot insure it. For example:
1. An unsecured creditor cannot insure his debtor's property, because his right is simply against the debtor personally. He can, however, insure the debtor's life.
2. A shareholder during a corporation cannot insure the property of the company as he has no interest in any asset of the company albeit he's the sole shareholder.
As was the case of Macaura v. Northen Assurance Co.
Macaura. Because neither as a simple creditor nor as a shareholder had he any interest in it.
CONCEPT OF UTMOST FAITH
As all contracts of insurance are contracts of utmost straightness, the proposer for insurance is additionally under a positive duty to make full disclosure of all material facts and do not make any misrepresentations or misdescriptions thereof during the negotiations for obtaining the policy.
This duty of utmost straightness applies equally to the insurer and thus the insured.
There must be complete straightness on the neighborhood of the assured.
This duty to observe utmost straightness is ensured b requiring the proposer to declare that the statements within the proposal form are true, that they shall be the thought of the contract which any incorrect or falsehood therein shall avoid the policy.
The insurer can then believe them to assess the danger and to repair appropriate premiums and accept the danger or decline it.
The questions within the proposal form for a hearth policy are so framed on getting all information which is material to the insurer to know to assess the danger and fix the premium, that is, all material facts. Thus the proposer is required too give information relating to:
The proposer's name and address and occupation
the outline of the subject interest be insured sufficient for identifying it including,
an overview of the locality where it's situated
How the property is getting used, whether for any manufacturing purpose or hazardous trade.etc
Whether it's already been insured
And also ant personal insurance history including the claims if any made buy the proposer, etc.
Apart from questions within the proposal form, the proposer should disclose whether questioned or not-
1. Any information which could indicate the danger of hearth to be above normal;
2. Any fact which could indicate that the insurer's liability could even be quite normal is often expected just like the existence of valuable manuscripts or documents, etc, and
3. Any information bearing upon the more; hazards involved.
The proposer isn't obliged to disclose-
1. the knowledge which the insurer could even be presumed to know within the standard course of his business as an insurer;
2. Facts which tend to mean that the danger is lesser than otherwise;
3. Facts on which information is waived by the insurer; and
4. Facts that need not disclosed thanks to a policy condition.
Thus, assured is under a solemn obligation to make full disclosure of cloth facts which may be relevant for the insurer to need into account while deciding whether the proposal should be accepted or not. While disclosing the relevant facts, the
DOCTRINE OF PROXIMATE CAUSE
Where more perils than one act simultaneously or successively, it'll be difficult to assess the relative effect of each peril or detect one of these because of the particular explanation for the loss.
In such cases, the doctrine of proximate cause helps to figure out the actual explanation for the loss.
Proximate cause was defined in Pawsey v. Scottish Union and National Ins. Co.,[5]as "the active, effective cause that sets in motion a train of events which brings a couple of result without the intervention of any force started and dealing actively from a replacement and independent source." it is a dominant and effective cause albeit it isn't the closest in time.
It is, therefore, necessary when a loss occurs to research and ascertain what is the proximate explanation for the loss to figure out whether the insurer is liable for the loss.
The PROXIMATE explanation for DAMAGE
A fire policy covers risks where damage is caused by way of the hearth. the fireside could even be caused by lightening, by explosion or implosion.
it's getting to be a result of riot, strike or on account of any, malicious act.
However, these factors must ultimately cause a hearth and thus the hearth must be the proximate explanation for damage.
Therefore, a loss caused by theft of property by militants wouldn't be covered by the fireside policy.
The view that the loss was covered under the malicious act clause and thus .
the insurer was vulnerable to meet the claim is untenable, because unless and until the fireside is that the proximate cause f damage, no claim under a hearth policy would be maintainable.
PROCEDURE FOR TAKING a hearth policy
The steps involved in taking a hearth policy are mentioned below:
1. Selection of the Insurance Company:
Many companies offer insurance against unforeseen events. The individual or the company must lookout within the choice of an insurance company.
The judgment should rest on factors like goodwill, and future standing within the market.
The insurance companies can either be approached directly or through agents, a variety of them who are appointed by the company itself.
2. Submission of the Proposal Form:
The individual or the business owner must submit a completed prescribed proposal form with the specified details to the insurance company for proper consideration and subsequent approval.
the knowledge within the Proposal Form should tend in straightness and must be amid documents that verify the actual worth of the property or goods that are to be insured.
Most of the companies have their personalized Proposal Forms wherein the precise information possesses to be provided.
3. Survey of the Property/ Consideration:
Once the duly filled Proposal Form is submitted to the insurance company, it makes an "on the spot" survey of the property or the products that are the subject matter of the insurance.
this is often usually done by the investigators, or the surveyors, who are appointed by the company which they need to report back to them after thorough research and survey.
this is often imperative to assess the danger involved and calculate the speed of premium.
4. Acceptance of the Proposal:
Once the detailed and comprehensive report is submitted to the insurance company by the surveyors and related officers, the previous makes a radical perusal of the Proposal Form and thus the report.
If the company is satisfied that there is no lacuna or evil or fraud involved, it formally "accepts" the Proposal Form and directs the insured to pay the first premium to the company.
it's to be noted that the policy commences after the payment and thus, therefore, the acceptance of the premium by the insured and therefore the company, respectively.
The insurance company issues a Cover Note after the acceptance of the first premium.
PROCEDURE ON RECEIPT OF NOTICE OF LOSS
On receipt of the notice of loss, the insurer requires the insured to furnish details about the loss during a claim from concerning the next information-1. Circumstances and explanation for the fire;
2. Occupancy and situation of the premises during which the fireside occurred;
3. Insured's interest within the insured property; that's capacity during which the insured claims and whether any others have an interest within the property;
4. Other insurances on the property;
5. Value of each item of the property at the time of loss in conjunction with proofs thereof, and value of the salvage, if any; and
6. Amount claimed
Furnishing such information concerning the claim is additionally a condition precedent to the liability of the insurer. The above information will enable the insurer to verify whether-
(1) The policy is in force;
(2) The peril causing the loss is an insured peril;
(3) The property damaged or lost is that the insured property.
Rules for calculation of the price of a property
The value of the insured property is-
1) Its value at the time of loss, and
2) At the place of loss, and
3) Its real or intrinsic value with none regard for its sentimental value. Loss of prospective profit or other consequential loss isn't to be taken into account.
FILING OF CLAIMS
How a claim arises?
After a contract of hearth insurance has inherent existence, a claim may arise by the operation of 1 or more insured perils on an unsecured property.
There may, additionally, one or more uninsured perils also operating simultaneously or within the succession of the property. so as that the claim should be valid the next conditions must be fulfilled:
1. The occurrence should happen because of the operation of an insured peril or where both insured and other perils operated, the dominant or efficient explanation for the loss must are an insured peril;
2. The operation of the peril must not come within the scope of the policy exceptions;
3. The event must have caused loss or damage to the insured property;
4. The occurrence must be during the currency of the policy;
5. The insured must have fulfilled all the policy conditions and can also suit requirements to be fulfilled after the claim had arisen.
MATERIAL FACTS IN FIRE INSURANCE: PREVIOUS CONVICTION OF THE ACCUSED
The record of an assured could affect the loss, which insurers had to assess, and thus the non-disclosure of a big criminal offense like robbery by the plaintiff would a cloth non-disclosure.
INSURED'S DUTY ON OUTBREAK of hearth, IMPLIED DUTY
On the outbreak of a hearth, the insured is under an implied duty to observe straightness towards the insurers and in pursuance of it, the insured must do his best to avert or minimize the loss.
For this purpose, he must take all reasonable measures to put out the fireside or prevent its spread, and assist the fireside brigade et al. in their attempts to undertake to so at any rate not are available their way.
With this object, the insured property could even be removed to a neighborhood of safety.
Any loss or damage the insured property may sustain within the course of attempts to combat the fireside or during its removal to a neighborhood of safety etc.
are getting to be deemed to be loss proximately caused by the fireside.
If the insured fails in his duty willfully and thereby increases the burden of the insurer, the insured is getting to be deprived of his right to revive any indemnity under the policy.
INSURER'S RIGHTS ON THE OUTBREAK of hearth
(A) Implied Rights
Corresponding to the insured's duties the insurers have rights by the law, given the liability they have undertaken to indemnify the insured. Thus the insurers have a right to-
Take reasonable measures to extinguish the fireside and to attenuate the loss to property, and
For that purpose, to return upon and take possession of the property.
The insurers are getting to be vulnerable to observe all the damage the property may sustain during the steps taken to put out the fireside and as long because of it in their possession because all that's considered the natural and direct consequence of the fire; it's therefore been held within the case of Ahmedbhoy Habibhoy v. Bombay Fire Marine Ins. Co that the extent of the damage flowing from the insured peril must be assessed when the insurer gives back and not as at the time when the peril ceased.
(B) Loss caused by steps taken to avert the danger
Damage sustained because of action taken to avoid an insured risk wasn't a consequence of that risk and wasn't recoverable unless the insured risk had begun to figure.
within the case of Liverpool and London and Globe Insurance Co. Ltd v. Canadian General Electric Co. Ltd., the Canadian Supreme Court held that "the loss was caused by the firefighters' mistaken belief that their action was necessary to avert an explosion, and thus the loss wasn't recoverable under the policy, which covered only damage caused by fire explosion., and thus the loss wasn't recoverable under the policy, which covered only damage caused by fire or explosion."
(C) Express rights
Condition 5- so on guard their rights well insurers have prescribed for better rights expressly during this condition according to which on the happening of any destruction or damage the insurer and every person authorized by the insurer may enter, take or keep possession of the building or premises where the damage went on or require it to be delivered to them and affect it for all reasonable purposes like examining, arranging, removing or sell or eliminate the same for the account of whom it's getting to concern.
When and therefore the way a claim is made?
In the event of a hearth loss covered under the fireside policy, the Insured shall immediately give notice thereof to the insurance company.
Within 15 days of the occurrence of such loss, the Insured should submit a claim in writing, giving the tiny print of damages and their estimated values. Details of other insurances on the same property should even be declared.
The Insured should procure and produce, at his own expense, any document like plans, account books, investigation reports, etc. on demand by the insurance company.
HOW INSURANCE MAY CEASE?
Insurance under a hearth policy may cease in any of the next circumstances, namely:
(1) Insurer avoiding the policy because of the insured making misrepresentation, misdescription or non-disclosure of any material particular;
(2) If there is a fall or displacement of any insured building range or structure or part thereof, then on the expiry of seven days wherefrom, except where the fall or displacement was due to the action of any insured peril; notwithstanding this, the insurance may be revived on revised terms if express notice is given to the company as soon as the occurrence takes place;
(3) The insurance may be terminated at any tie at the request of the insured and the option of the company on 15 days notice to the insured
CONCLUSION
Tangible property is exposed to numerous risks like fire, floods, explosions, earthquakes, riot, and war, etc. and insurance protection can be had against most of these risks severally or in combination.
The form in which the cover is expressed is numerous and varied. Fire insurance in its strict sense is concerned with giving protection against fire and fire only.
So while granting a fire insurance policy all the requisites need be fulfilled.
The insured is under a moral and legal obligation to be at utmost good faith and should be telling facts and not just fake grounds only with the greed to recover money.
Further, all insurance policies help in the development of a Developing nation.
Hence insurance companies have a burden to help the insured when the insured is in trouble.
REFERENCE:
1. (1983) VR 698 (Supreme Court of Vienna)
2. Callaghan v. Dominion Insurance Co. Ltd. (1997) 2 Lloyd's Rep. 541 (QBD)
3. Small v. U.K Marine Insurance Association (1897) 2 QB 311
4. (1925) AC 619
5. (1907) Case.
6. National Insurance Company v. Ashok Kumar Barariio
7. Devlin v. Queen Insurance Co, (1882) 46 UCR 611.
8. (1912) 40 IA 10 PC
9. (1981) 123 DLR (3d) 513 (Supreme Court of Canada)
Books Referred:
1. The Economics of Fire Protection by Ganapathy Ramachandran
2. Modern Insurance Law, by John Birds
3. The Handbook of Insurance Regulatory and Development Authority Act and Regulations with Allied Laws, by Nagar when was insurance fire in indiana
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