Fire Insurance Under Indian Insurance Law

An agreement of Insurance comes into being each time a person seeking insurance protection enters into a contract with the insurer to indemnify him against lack of property by or incidental to fire and or lightening, explosion, etc. Professional Liability Insurance This is primarily a contract and hence as is governed by the typical law of contract. However, it has certain special features as insurance transactions, such as for example utmost faith, insurable interest, indemnity, subrogation and contribution, etc. these principles are common in every insurance contracts and are governed by special principles of law.

FIRE INSURANCE:

Based on S. 2(6A), "fire insurance business" means the company of effecting, otherwise than incidentally to another class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence, customarily included among the risks insured against in fire insurance business.

Based on Halsbury, it is a contract of insurance by that your insurer agrees for consideration to indemnify the assured up to and including certain extent and at the mercy of certain terms and conditions against loss or damage by fire, which may eventually the property of the assured during a particular period.

Thus, fire insurance is a contract whereby anyone, seeking insurance protection, enters into a contract with the insurer to indemnify him against lack of property by or incidental to fire or lightning, explosion etc. This policy was created to insure one's property and other items from loss occurring due to perform or partial damage by fire.

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: and

3. The insurer having no curiosity about the safety or destruction of the insured property independent of the liability undertaken under the contract.

LAW GOVERNING FIRE INSURANCE

There is no statutory enactment governing fire insurance, as in the event of marine insurance which will be regulated by the Indian Marine Insurance Act, 1963. the Indian Insurance Act, 1938 mainly dealt with regulation of insurance business as a result and not with any general or special principles of what the law states relating fire of other insurance contracts. So also the General Insurance Business (Nationalization) Act, 1872. in the absence of any legislative enactment on the subject , the courts in India have in coping with the main topic of fire insurance have relied to date on judicial decisions of Courts and opinions of English Jurists.

In determining the worth of property damaged or destroyed by fire for the goal of indemnity under a policy of fire insurance, it absolutely was the worth of the property to the insured, which was to be measured. Prima facie that value was measured by reference of the marketplace value of the property before and after the loss. However such approach to assessment was not applicable in cases where the marketplace value did not represent the true value of the property to the insured, as where the property was employed by the insured as a property or, to carry business. Such cases, the measure of indemnity was the expense of reinstatement. In case of Lucas v. New Zealand Insurance Co. Ltd.[1] where the insured property was purchased and held being an income-producing investment, and which means court held that the appropriate measure of indemnity for injury to the property by fire was the expense of reinstatement.

INSURABLE INTEREST

An individual who is so interested in home as to have benefit from its existence and prejudice by its destruction is said to have insurable curiosity about that property. Such a person can insure the property against fire.

The curiosity about the property must exist both at the inception as well as during the time of loss. If it does not exist at the commencement of the contract it cannot be the subject-matter of the insurance and if it does not exist during the time of the loss, he suffers no loss and needs no indemnity. Thus, where he sells the insured property and it is damaged by fire thereafter, he suffers no loss.

RISKS COVERED UNDER FIRE INSURANCE POLICY

The date of conclusion of a contract of insurance is issuance of the policy is different from the acceptance or assumption of risk. 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 in view of sub section (!) of Section 64 VB which enables the insurer to assume the danger from the date onwards. If the proposer did not desire a specific date, it absolutely was easy for the proposer to negotiate with insurer about that term. Precisely, which means Apex Court has said that final acceptance is that of the assured or the insurer depends simply on the way in which negotiations for insurance have progressed. Although following are risks which seem to have covered Fire Insurance Policy but aren't totally covered under the Policy. A few of contentious areas are as follows:

FIRE: Destruction or injury to the property insured by its own fermentation, natural heating or spontaneous combustion or its undergoing any heating or drying process cannot be treated as damage due to fire. For e.g., paints or chemicals in a manufacturer undergoing heat treatment and consequently damaged by fire is not covered. Further, burning of property insured by order of any Public Authority is excluded from the scope of cover.

LIGHTNING : Lightning may end up in fire damage or other types of damage, such as a roof broken by way of a falling chimney struck by lightning or cracks in a building because of lightning strike. Both fire and other types of damages caused by lightning are covered by the policy.

AIRCRAFT DAMAGE: The loss or injury to property (by fire or otherwise) directly caused by aircraft and other aerial devices and/ or articles dropped there from is covered. However, destruction or damage caused by 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 any person taking part along side others in just about any disturbance of public peace (other than war, invasion, mutiny, civil commotion etc.) is construed to be a riot, strike or an enemy activity. 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 types of violent natural disturbances which can be accompanied by thunder or strong winds or heavy rainfall. Flood or Inundation occurs when the water rises to an abnormal level. Flood or inundation should not just be understood in the normal sense of the terms, i.e., flood in river or lakes, but additionally accumulation of water due to choked drains will be deemed to be flood.

IMPACT DAMAGE: Impact by any Rail/ Road vehicle or animal by direct contact with the insured property is covered. However, such vehicles or animals should not fit in with or owned by the insured or any occupier of the premises or their employees while acting in the course of the employment.

SUBSIDENCE AND LANDSLIDE INCULUDING ROCKSIDE: Destruction or damage caused by Subsidence of part of the site on that your property stands or Landslide/ Rockslide is covered. While Subsidence means sinking of land or building to less level, Landslide means sliding down of land usually on a hill.

However, normal cracking, settlement or bedding down of new structures; settlement or movement of made up ground; coastal or river erosion; defective design or workmanship or usage 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 injury to property by water or otherwise on account of bursting or accidental overflowing of water tanks, apparatus and pipes is covered.

MISSILE TESTING OPERATIONS: Destruction or damage, due to impact or otherwise from trajectory/ projectiles in reference to missile testing operations by the Insured or other people, is covered.

LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS: Damage, caused by water accidentally discharged or leaked out of automatic sprinkler installations in the insured's premises, is covered. 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 proven to the insured, aren't covered.