Fire Insurance Under Indian Insurance Law

A contract of Insurance comes into being when an individual 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. this is often primarily a contract and hence as is governed by the overall law of contract. However, it's certain special features as insurance transactions, like utmost faith, interest , indemnity, subrogation and contribution, etc. these principles are common altogether insurance contracts and are governed by special principles of law.

FIRE INSURANCE:

According to S. 2(6A), "fire insurance business" means the business of effecting, otherwise than incidentally to another class of insurance business, contracts of insurance against loss by or accompanying fire or other 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 particular extent and subject to certain terms and conditions against loss or damage by fire, which can happen to the property of the assured during a selected period.
Thus, insurance may 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 insure one's property and other items from loss occurring thanks to complete or partial damage by fire.

In its strict sense, a fireplace 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 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 regulation of insurance business intrinsically and not with any general or special principles of the law relating fire of other insurance contracts. 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 of the market price of the property before and after the loss. However such method of assessment wasn't applicable in cases where the market price didn't represent the important value of the property to the insured, as where the property was employed by the insured as a home or, for carrying business. In such cases, the measure of indemnity was the value of reinstatement. within the case of Lucas v. New Zealand Insurance Co. Ltd.[1] 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 value of reinstatement.

INSURABLE INTEREST

A person who is so curious about a property on have enjoy its existence and prejudice by its destruction is claimed to possess interest therein property. Such an individual 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 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 sight 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 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. Though the subsequent are risks which seem to possess covered insurance Policy but aren't totally covered under the Policy. a number of contentious areas are as follows:

FIRE: Destruction or damage to the property insured by its own fermentation, natural heating or ignition or its undergoing any heating or drying process can't be treated as damage thanks to fire. For e.g., paints or chemicals during a factory 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 canopy .

LIGHTNING : Lightning may end in fire damage or other sorts of damage, like a roof broken by a falling chimney struck by lightning or cracks during a building thanks to a lightning strike. Both fire and other sorts 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 there from 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 along side others in any disturbance of public peace (other than war, invasion, mutiny, civil commotion etc.) is construed to be a riot, strike or a terrorist 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 sorts 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 accumulation of water thanks 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 roofed . 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 within the course of their employment.

SUBSIDENCE AND LANDSLIDE INCULUDING ROCKSIDE: Destruction or damage caused by Subsidence of a part of the location on which the property stands or Landslide/ Rockslide is roofed . While 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.