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Introduction A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the

insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period. The contract specifies the maximum amount , agreed to by the parties at the time of the contract, which the insured can claim in case of loss. This amount is not , however , the measure of the loss. The loss can be ascertained only after the fire has occurred. The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy. A fire insurance policy cannot be assigned without the permission of the insurer because the insured must have insurable interest in the property at the time of contract as well as at the time of loss. The insurable interest in goods may arise out on account of (i) ownership, (ii) possession, or (iii) contract. A person with a limited interest in a property or goods may insure them to cover not only his own interest but also the interest of others in them. Under fire insurance, the following persons have insurable interest in the subject matter:

Owner

Mortgagee

Pawnee

Pawn broker

Official receiver or assignee in insolvency proceedings

Warehouse keeper in the goods of customer

A person in lawful possession e.g. common carrier, wharfinger, commission agent.

The term 'fire' is used in its popular and literal sense and means a fire which has 'broken bounds'. 'Fire' which is used for domestic or manufacturing purposes is not fire as long as it is confined within usual limits. In the fire insurance policy, 'Fire' means the production of light and heat by combustion or burning. Thus, fire, must result from actual ignition and the resulting loss must be

proximately caused by such ignition. The phrase 'loss or damage by fire' also includes the loss or damage caused by efforts to extinguish fire.

The types of losses covered by fire insurance are:

Goods spoiled or property damaged by water used to extinguish the fire.

Pulling down of adjacent premises by the fire brigade in order to prevent the progress of flame.

Breakage of goods in the process of their removal from the building where fire is raging e.g. damage caused by throwing furniture out of window.

Wages paid to persons employed for extinguishing fire.

The types of losses not covered by a fire insurance policy are:

loss due to fire caused by earthquake, invasion, act of foreign enemy, hostilities or war, civil strife, riots, mutiny, martial law, military rising or rebellion or insurrection.

loss caused by subterranean (underground) fire.

loss caused by burning of property by order of any public authority.

loss by theft during or after the occurrence of fire.

loss or damage to property caused by its own fermentation or spontaneous combustion e.g. exploding of a bomb due to an inherent defect in it.

loss or damage by lightening or explosion is not covered unless these cause actual ignition which spread into fire.

A claim for loss by fire must satisfy the following conditions:

The loss must be caused by actual fire or ignition and not just by high temperature.

The proximate cause of loss should be fire.

The loss or damage must relate to subject matter of policy.

The ignition must be either of the goods or of the premises where goods are kept.

The fire must be accidental, not intentional. If the fire is caused through a malicious or deliberate act of the insured or his agents, the insurer will not be liable for the loss.

Types of Fire Insurance Policies:

Specific policy:- is a policy which covers the loss up to a specific amount which is less than the real value of the property. The actual value of the property is not taken into consideration while determining the amount of indemnity. Such a policy is not subject to 'average clause'. 'Average clause' is a clause by which the insured is called upon to bear a portion of the loss himself. The main object of the clause is to check under-insurance, to encourage full insurance and to impress upon the property owners to get their property accurately valued before insurance. If the insurer has inserted an average clause, the policy is known as "Average Policy".

Comprehensive policy:- is also known as 'all in one' policy and covers risks like fire, theft, burglary, third party risks, etc. It may also cover loss of profits during the period the business remains closed due to fire.

Valued policy:- is a departure from the contract of indemnity. Under it the insured can recover a fixed amount agreed to at the time the policy is taken. In the event of loss, only the fixed amount is payable, irrespective of the actual amount of loss.

Floating policy:- is a policy which covers loss by fire caused to property belonging to the same person but located at different places under a single sum and for one premium. Such a policy might cover goods lying in two warehouses at two different locations. This policy is always subject to 'average clause'.

Replacement or Re-instatement policy:- is a policy in which the insurer inserts a reinstatement clause, whereby he undertakes to pay the cost of replacement of the property damaged or destroyed by fire. Thus, he may re-instate or replace the property instead of paying cash. In such a policy, the insurer has to select one of the two alternatives, i.e. either to pay cash or to replace the property, and afterwards he cannot change to the other option.
Types of Fire Insurance :Following are the important policies of fire insurance : 1. Valued Policy :Under the policy agreed value of the property is mentioned in the policy. In the event of loss by fire the insurer pays the admitted value of property. So in this policy value of property is predetermined. 2. Undervalued Policy :Under this policy the value of the property is not predetermined. In case of loss the value is computed by assessment. 3. Floating Policy :It is issued to cover the risk of various goods laying in different places. In this policy the insured amount may be changed with the rise and fall in the quantity of goods in the store. 4. Specific Policy :Under this policy the property is insured for a definite amount. In case of loss the stated amount will be paid to the policy holder. 5. Average Policy :Sometimes the insured insures the property less than the value of property. In that situation insurance company compensates the loss according to the proportion of original value of the property and insured amount.

6. Schedule Policy :Some people property is situated in various locations. So the policy which insure, the many properties in different areas under collective terms and conditions is called scheduler policy. Rate of premium and details are given in the same policy. 7. Standard Fire Policy :Such policy covers all the loss caused by lighting burning, earthquakes and floods. 8. Replacement Policy :Under this policy insurance company pays more than the actual value of the property destroyed by fire and also covers the cost of replacement. 9. Transit Policy :Transit policy is issued to transfer the goods carefully on its destination. If the subject matter is destroyed due to fire then company compensates the loss. 10. Profit Insurance Policy :Sometimes due to business closes for few days or for few months. Businessman looses the profit due to close of business. So this policy covers the profit which sustains due to fire. Insurance Company pays the profit on the basis of previous years average. 11. Rent Insurance Policy :Some times due to fire one shop or store damages. Now the owner of shop had already given.

. Valued Policy: This is a type of fire insurance policy where the value of the subject-matter of insurance is agreed upon at the time of making the contract. The insurer is liable to pay the amount specified or valued irrespective of the amount of loss caused due to fire. In this policy the principles of indemnity has no application. The insurer pays a fixed sum and does not indemnify for the losses. Valued policy is taken for those goods whose value becomes difficult to calculate in case of loss by fire. This type of policies are suitable for insuring works of art, jewellery and paintings where the value of the damaged articles becomes difficult to measure. II. Valuable Policy: Valuable policy is a type of policy where the amount of loss is not valued at the time of undertaking contract of insurance. It is determined at the time and place of loss on the basis of market value of the property. It is generally based on the basis of principle of indemnity. III. Specific Policy: A specific policy is a type of policy in which the property is insured for a specific sum irrespective of its value. The value of the whole subject matter is immaterial and as such it becomes a under insurance policy. For example, if a property is insured for Rs. 10000 though its

actual value is Rs. 20000. In the event of loss to property, not more than Rs. 10000 can be recovered. IV. Floating Policy: Floating policy is taken out for those goods which are frequently changing in a warehouse. This policy can be taken on those goods which are lying on different localities or godowns. Since quantity of goods lying in the warehouse or at different places fluctuate from time to time, it becomes difficult for the owner to take a specific policy. Floating policies are suitable to those traders or products whose raw-materials or merchandise are lying at different localities or godowns. V. Average Policy: It is a type of policy where the average clause is inserted. Under this policy the indemnity is determined on the basis of the value of the property insured. In average policy under insurance contracts are penalized. If a policy is taken for Rs. 10000 against a real value of the property Rs. 50000. The loss is 800. The claim for the loss will be restricted to the proportionate of sum assured to the actual value of the property. VI. Comprehensive Policy: It is a type of fire policy where all types of risks like fire, burglary, riot, explosion and strikes are covered. This policy is otherwise called as all in one policy or all Insurance policy. Since this type of policy covers a wide range of perils, these are very popular in England. VII. Blanket Policy: It is a type of fire insurance policy which covers fixed and current assets of the assured in one policy. VIII. Loss of profit policy: This is a type of policy where the insured is indemnified for the loss of profit due to outbreak of fire. IX. Re-instatement policy: This is a type of fire insurance policy where the insurer undertakes to replace the property or goods lost by fire. In this policy instead of paying compensation for the goods lost by fire, the property is replaced in totality. X. Excess policy: When the value of stock in trade fluctuates, a insured may take out a policy for an amount below which stock should not full. This type of policy is termed as "First Loss policy". In case of

excess policy, the additional amount the stock will rise is considered. If the stock of a trader ranges between 70000 and 50000. He may take first loss policy for Rs. 40000 and an excess policy for Rs. 50000.

The procedure for making a claim for fire losses. A successful claim for the losses by fire can e made when the following procedures are resorted: I. Intimation of the occurrence of fire and losses: Immediately after the fire takes place, it is necessary to give notice of fire to the insurer. Giving notice is a condition precedent and it is incorporated in the policy that the insured must intimate the occurrence of fire to the insurer. II. Filling up claim form: The insurer sends a claim form to the insured. The insurer fills up the claim form with a great deal of caution and care. This form states full description of the circumstances of loss, the date and time of fire, the place where fire originates and the other perils in connection with fire. The claim form complete in all respect is sent to the insurance company for making necessary arrangement for payment. III. Appointment of Surveyors: When the amount of loss under fire policy is very small the insurer admits the claim and makes necessary arrangement for payment by cheques. When the claim amount is of big or serious nature, the insurer will appoint an expert called a surveyor or velour or assessor. The surveyor gives two report called a preliminary report and final report. He has a right of entry and inspect the place and the property. IV. Appointment of arbitrator: When there is any dispute with regard to the claim, both the insured and the insurer can appoint one arbitrator each. When the arbitrators differ, an umpire may be appointed to look after the loss. In order to avoid conflict sometimes an affidavit of the court for the proof of claim is obtained. V. Making Payment and Provision for replacement: On the receipt of claim form duly completed in all respect and the report of the surveyor, the claim is processed. A discharged voucher is signed by the insured and after the receipt of signed discharged voucher, a cheque is drawn in favour of the insured. If there is re-instatement clause in the policy, the insurer makes necessary provision for the replacement of the property lost.

The procedure for effecting fire insurance. The term fire denotes a condition of burning or visible flame accompanied by heat. Fire insurance contract is an important and popular form of insurance for the business world. A fire insurance contract is an agreement whereby one party in return of a consideration, undertakes to indemnify the other party against financial loss suffered by the insured as a result of damage or

destruction of the insured property by fire. A claim for the loss by fire can be entertained if there must be actual fire and the fire must be accidental but not intentional. A fire insurance policy covers actual fire losses and any of the following losses consequent upon fire: i. Damages caused to property because of collapse of roof or side wall due to fire. ii. Damages caused to property by sprinkling of water to put out the fire. iii. Damages caused to property at the time of removing it in the hot haste from the building under fire. All losses caused due to efforts in extinguishing fire. iv. Damages by lighting are not covered under fire policy but if lighting cause ignition of fire, it will be included in the policy of fire insurance. v. It does not cover losses due to explosion but if it causes actual ignition which ultimately spreads into fire, it will be covered by fire insurance policy. A fire insurance contract is a contract of indemnity and as such the insured cannot claim more than the actual amount of losses. The property so covered under fire insurance policy must be clearly described. Property held in trust are not covered under fire insurance policy. When a house is insured under fire insurance policy, it does not cover household goods. The following steps are observed while effecting fire insurance policy: I. Filling up Proposal Form: A person desiring of taking a fire insurance policy has to select and contact a fire insurance office. He will obtain a proposal form from the office and fill up the proposal form. While filling up the proposal form of principles of good faith must be observed and he has to fill up the form with utmost good faith. II. Associating Evidence of Responsibility: The insurer will ascertain that the proposer is a respectable person and is undertaking the policy in utmost good faith. This consideration should be viewed before accepting the proposal. Since the insurance policy covers a high degree of moral hazards, these considerations are to be kept in mind. III. Survey of the Property: The proposed property to be insured is surveyed by an expert called the surveyor. The surveyor inspect the property and estimate the degree of risks involved in such property. On the basis of the surveyor's report the insurer accepts or rejects the policy.

IV. Accepting Proposal and Issuing of cover note: After the receipt of surveyor's report, it is scrutinized to see whether risks is acceptable or not. When the insurer is satisfied with regard to the report of the surveyor, he accepts the proposal and gives intimation to the proposer accordingly. The rate of premium is decided and on acceptance of appropriate premiums a cover note is issued. A cover note is an interim policy till the final policy is issued. A cover note serves as an evidence of insurance when losses to property are caused before the issue of final policy but after the issue of cover note. V. Issue of Final Policy: After the issue of cover note, policy document is prepared. It is duly stamped document which contains terms and conditions of the insurance. The policy serve as an evidence of insurance between the insured and the insurer.

Documents Required for Fire Insurance Claim:


True copy of the policy along with schedule. Report of fire brigade. Claim Form Photographs Past claims experience

Case study he Travelers Indemnity Company Reaches Settlement with Policyholders Who Owned Property in Louisiana Damaged by Hurricane Katrina or Rita Apr 8 13 A proposed Settlement has been preliminarily approved by the court in Arthur v. The Standard Fire Insurance Co. and The Travelers Indemnity Co., No. 09-7332 in the U.S. District Court for the Eastern District of Louisiana. The Complaint alleges that Travelers' handling of claims arising out of the events above caused Class Members to receive fewer benefits than those to which they were entitled. Travelers denies all claims and liability stated in the Complaint. Class Members are included they had any loss, damage, destruction, or harm to property in Louisiana, the loss or damage was related to Hurricane Katrina and/or Rita, and at the time of the loss, they had an insurance policy with Travelers. Travelers will pay $2 million into a Settlement Fund that will provide money to eligible Class Members as described in the Settlement Agreement. Travelers also will pay separately attorneys' fees and expenses, and the costs for notice and administration. Class Counsel will request that the Court award attorneys' fees and expenses of $425,000. Some Class Members will receive a detailed notice in the mail about the Settlement and don't need to do anything to participate in the Settlement. Class Members who do not receive a notice in the mail must submit a claim by June 8, 2013. Class Members who wish to be excluded from the Settlement must submit a written request postmarked by June 8, 2013. If they exclude themselves, they will not receive any money and keep the right to sue Travelers at their

own expense. Class Members who do not exclude themselves give up the right to sue Travelers. Class Members who want to object but stay in the Settlement must submit a written objection postmarked by July 3, 2013. If the Settlement is approved and the objection is rejected, they will be bound by all Court orders. Class Members may attend the Fairness Hearing on August 2, 2013, at 9:30 a.m. at the U. S. District Court for the Eastern District of Louisiana, 500 Poydras Street, New Orleans, LA 70130. Class Members who want to speak at the hearing must submit a written request postmarked by July 3, 2013.

Fire Insurance Coverage and Premium Rate of HSBC Bank


The following table outlines the comprehensive features available and Premium Rate of Fire Insurance Type of Cover Standard Cover Event Covered - Fire and lightning - Explosion - Typhoon, windstorm and flood - Landslip and subsidence - Earthquake - Fire and lightning - Explosion - Typhoon, windstorm and flood - Landslip and subsidence - Aircraft - Earthquake - Vehicle impact (by third party vehicle) - Riot and strike - Malicious damage - Water tanks, apparatus & pipes Premium Rate 0.11%

Comprehensive Cover

0.15%

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Major Exclusions

Fire and explosion resulting from an earthquake, volcanic eruption or other convulsion of nature The insured property's own spontaneous fermentation or heating or undergoing any process involving the application of heat

War, rebellion, revolution, riot, civil commotion, strikers or locked-out workers Ionising radiation or contamination by radioactivity Theft during or after the occurrence of a fire Damage to any electrical machine, apparatus, or any portion of the electrical installation Damage to property which at the time of the happening of such damage is covered by another insurance policy Goods held in trust or on commission unless the Insured is legally liable Consequential loss or damage of any kind or description

SBI Life is full of surprises. Some are pleasant and some are not. Disasters like Fire and special perils can put a break in your growth plan.They also put huge financial burden on you. SBI General Insurance can help successfully overcome these situations and put you firmly in control of your business. SBI General Insurance can help successfully overcome these situations and put you firmly in control of your business. With SBI General Consequential Loss (Fire) Insurance Policy, you can now safeguard your business profits against possible loss due to business interruption. Insurance policies generally cover the costs of repairing or replacing damaged property. But, the financial loss suffered due to an interruption in your business operation is not covered under these material damage policies - you need a Consequential Loss policy. SBI General's Consequential Loss (Fire) Insurance Policy offers the solution, by covering profit lost following an interruption to your business which inevitably results from damage to insured property. This Policy can be taken only in conjunction with a policy that insures your assets (such as an SBI General's Standard Fire and Special Perils policy), and triggers only if the loss is admissible under that policy. Indemnity period - The indemnity period commences with the date of damage and lasts till such time as the business is restored to its pre-damage level or the end of the indemnity period is reached whichever comes first. A consequential loss insurance policy insures earnings end of the indemnity period is reached, indemnity period. Hence, selection of the indemnity period is of utmost importance

This Policy covers various assets like Building, Plant and Machinery, Stock, Furniture, Fixtures and other immovable and movable assets against loss or damage due to, Fire,lighting,explosion/implosion,aircraft damage,