Fire Insurance Under Indian Insurance Law

An agreement of Insurance makes being each time a person seeking insurance protection enters into a contract with the insurer to indemnify him against loss of property by or incidental to fire and or lightening, explosion, etc. Installation Floater That 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 instance utmost faith, insurable interest, indemnity, subrogation and contribution, etc. these principles are normal in every insurance contracts and are governed by special principles of law.

FIRE INSURANCE:

In accordance with 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 and other occurrence, customarily included one of the risks insured against in fire insurance business.

In accordance with Halsbury, it's a contract of insurance by which the insurer agrees for consideration to indemnify the assured up to a certain extent and at the mercy of certain terms and conditions against loss or damage by fire, which may happen to 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 loss of property by or incidental to fire or lightning, explosion etc. This policy was created to insure one's property and other things from loss occurring due to complete 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 definitely not 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 apart from the liability undertaken beneath the contract.

LAW GOVERNING FIRE INSURANCE

There is no statutory enactment governing fire insurance, as in case of marine insurance which is regulated by the Indian Marine Insurance Act, 1963. the Indian Insurance Act, 1938 mainly handled 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 topic of fire insurance have relied to date on judicial decisions of Courts and opinions of English Jurists.

In determining the worthiness of property damaged or destroyed by fire for the objective of indemnity under a policy of fire insurance, it absolutely was the worthiness of the property to the insured, that was to be measured. Prima facie that value was measured by reference of the market value of the property before and following the loss. However such approach to assessment wasn't applicable in cases when the market value did not represent the real value of the property to the insured, as where in actuality the property was used by the insured as a property or, to carry business. In such cases, the measure of indemnity was the price of reinstatement. In the event of Lucas v. New Zealand Insurance Co. Ltd.[1] where in actuality the insured property was purchased and held as an income-producing investment, and therefore the court held that the appropriate measure of indemnity for harm to the property by fire was the price of reinstatement.

INSURABLE INTEREST

A person who is so interested in a house as to have take advantage of 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 along with at 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 at the time of the loss, he suffers no loss and needs no indemnity. Thus, where he sells the insured property and it's 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 distinctive 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 because 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 certain date, it absolutely was feasible for the proposer to negotiate with insurer about this term. Precisely, therefore the Apex Court has stated that final acceptance is that of the assured or the insurer depends simply on the way by which negotiations for insurance have progressed. Although following are risks which seem to have covered Fire Insurance Policy but are not totally covered beneath the Policy. A few of contentious areas are the following:

FIRE: Destruction or harm to the property insured by its 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 isn't covered. Further, burning of property insured by order of any Public Authority is excluded from the scope of cover.

LIGHTNING : Lightning may result in fire damage and other forms of damage, such as a roof broken with a falling chimney struck by lightning or cracks in a building as a result of lightning strike. Both fire and other forms of damages due to lightning are covered by the policy.

AIRCRAFT DAMAGE: Losing or harm to property (by fire or otherwise) directly due to aircraft and other aerial devices and/ or articles dropped there from is covered. However, destruction or damage resulting from pressure waves due to 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 alongside others in just about any disturbance of public peace (other than war, invasion, mutiny, civil commotion etc.) is construed to be always a riot, strike or an enemy activity. Unlawful action would not be covered beneath the policy.

STORM, CYCLONE, TYPHOON, TEMPEST, HURRICANE, TORNADO, FLOOD and INUNDATION: Storm, Cyclone, Typhoon, Tempest, Tornado and Hurricane are typical various forms of violent natural disturbances which are followed closely by thunder or strong winds or heavy rainfall. Flood or Inundation occurs once the water rises to an abnormal level. Flood or inundation should not just be understood in the most popular sense of the terms, i.e., flood in river or lakes, but in addition accumulation of water due to choked drains would 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 shouldn't belong to 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 due to Subsidence of the main site on which the property stands or Landslide/ Rockslide is covered. While Subsidence means sinking of land or building to a lowered 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 constructed 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, are not covered.

BURSTING AND/OR OVERFLOWING OF WATER TANKS, APPARATUS AND PIPES: Loss or harm 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 experience of missile testing operations by the Insured or someone else, is covered.

LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS: Damage, due to water accidentally discharged or leaked out from automatic sprinkler installations in the insured's premises, is covered. However, such destruction or damage due to repairs or alterations to the buildings or premises; repairs removal or extension of the sprinkler installation; and defects in construction recognized to the insured, are not covered.