FIRE INSURANCE

Fire insurance is an insurance against the risk of loss of a property by fire. It is a contract by which the insurer undertakes, in return for a consideration called the premium, to indemnify the insured for any loss or damage to the insured property by fire for an agreed period and up to a certain amount.

Elements of Fire Insurance

Insurable interest must be present both at the time of insurance and at the time of loss.

It must be a contract of utmost good faith.

It is a contract of indemnity

The insurance is liable to compensate only when fire is the nearest cause of damage or loss.

Kinds of Fire Insurance

1.Valued policy2.Average policy3.Specific policy4.Floating policy5.Declaration policy

Valued policyIt is a policy in which the value of

the propertty is ascertained or agreed upon at the time of taking the policy , and the insurer undertakes to pay this agreed value in the event of destruction of property by fire .

E.g. work of art, painting, jewellery , etc

Average policyAverage policy is a fire policy

with an average clause included to check under insurance , i.e., insuring for an amount less than the actual value of the property.

Specific policyThe property is insured for a

specific sum. In case of loss the insured will pay the whole loss to the insured subject to the maximum amount specified in the contract.

Floating policyA floating policy is a single policy

issued by the insurance company to cover the goods lying at different places in the same city or town without declaring specific sum at each place.

Declaration policyThe insured make periodical

declaration of the maximum stock held. Premium is calculated on the average value of stock held during the year and premium paid in advance is adjusted accordingly.

AssignmentWrite a short note on fire

insurance.