Vital forms of Fire Policies –
Fire insurance is a specialized form of insurance beyond property insurance and is designed to cover the cost of replacement, reconstruction or repair beyond what is covered by the property insurance policy. This insurance policy typically contains general exclusions, such as war, nuclear risks, and similar perils.
There are some conditions in the policy. They are:
(1) A Voidable Condition: This condition provides that the policy shall be voidable in the event of misrepresentation, misdescription or non-disclosure of any material particulars. This condition emphasizes the principle of utmost good faith.
(2) A Policy Ceasing Condition: All insurances under the policy cease to affect after 7 days from the date of fall of displacement of any building or part thereof. However, if the displacement/fall occurs due to an insured peril, and notice is given within due time, the insurer may agree to continue the cover subject to revised terms and conditions, or by endorsements.
(3) A This is known as the Material alteration Condition. Under the following conditions, the insurance ceases to attach as regards to the property affected.
- Changes in trade or manufacture or nature of occupation or other circumstances which increase the risk of loss or damage by insured perils,
- Un occupancy of the building for a period of more than 30 days,
- Transfer of insurable interest unless by will or operation of law.
(4) The insurance does not cover any loss or damage to property which at the time of loss is insured under any marine policy. However, the policy covers the excess beyond the amount payable under the marine policy. This is known as a Marine clause.
(5) Termination Condition: The insurance may be terminated at any point of time by the insured and the premium is refunded at short period scale on a fifteen days notice. The insurer term on pro-rata basis can also terminate the policy on a fifteen days notice and refund the premium for the unexpired term on pro-rata basis.
(6) This condition is divided into two parts. The first part of the condition plays down the duties of the insured in the event of loss /damage and the procedure to be followed by him. The requirements are –
- Immediate notification of the loss to the company,
- Submission of the written claim A statement giving detailed particulars of the loss/damage within fifteen days or within any extension period if granted.
- Submission of all reasonable information and proof in respect of the claim at the insured’s expense.
- A declaration, an oath or any other legal form of the truth of the claim.
This condition expressly provides that compliance with its terms is binding on the insured to fulfill the insurer’s liability.
(7) This is known as the right of the entry condition. This condition gives the company right to enter the premises where loss has occurred, take possession of the property and deal with it or sell such property. The condition further provides that –
- An exercise of these rights does not mean admission of his liability,
- Forfeiture of the benefit under the policy in case of non-cooperation of the insured.
The insured has no right to abandon the property whether taken possession by the insurer or not. This condition confers certain rights on the insures to ascertain the cause and extent of loss/damage to minimize the damage and to protect the salvage. The rights conferred by the condition are exercisable by the insurer, at any time until notice in writing is given by the insured declining claim or such claim is finally determined or withdrawn.
(8) Deals with fraud. According to this condition, all benefits under the policy shall be forfeited in the following circumstances:
- The claim is fraudulent.
- The claim is supported by a false declaration.
- Fraudulent means are used by the insured or any other person on his behalf.
- Loss or damage is caused by the willful act of the insured or any other person with his connivance.
These conditions reiterate the conditions under the common law. Utmost good faith is an implied condition in an insurance contract and places the duty of honesty on the insured when a claim arises. Both fraud and willful act make the policy void, however, an express condition is incorporated under the policy for emphasis.
(9) Reinstatement condition. The operative clause provides that the company may pay the value of the property at the time of its destruction or the amount of damage or at its option reinstate/replace such property.
