Dr.

Ram Manohar Lohia National Law University

Subject:- Banking and Insurance Law

Project On: - Principles and Practices of Fire Insurance in India

Submitted By:-Shubhangi Agarwal

B.A. LL.B. (6th Semester)
Enrollment No.-150101174

Submitted To: - Dr. Aparna Singh

Assistant Professor (Law)
Dr. Ram Manohar Lohia National Law University
 ACKNOWLEDGEMENT

I, Shubhangi Agarwal would like to put on record, my appreciation and gratitude to all who
have rendered their support and input. Without them, it would not have been possible for me to
make this project.

I would like to thank my professor for her immense guidance. Her suggestions proved very
useful in completing my project. The efforts taken by me in completing the project would not
have been possible without her kind support and help. I would like to convey my earnest thanks
to him.

I would like to thank my parents and all my family members for their kind cooperation and
appreciation and encouragement which helped me in the completion of this project I
wholeheartedly thank them all for sending me abundant love, encouragement and support all the
way from home from their hearts. I dedicate all my success to each one of them.

Finally, I would also like to thank my colleagues who have willingly helped me with all their
abilities.

Thanking You,

Shubhangi Agarwal

Enrollment No.-150101174
 INDEX

Acknowledgement .......................................................................................................................... 2
Introduction ..................................................................................................................................... 4
History of Fire Insurance ................................................................................................................ 5
Actual Cash value v. Replacement Value ....................................................................................... 6
Charecteristics of Fire Insurance .................................................................................................... 8
FEA Rules/Discount ....................................................................................................................... 9
Rules for Cancellation................................................................................................................... 11
Important Terms............................................................................................................................ 12
Fire Hazards and Fire Prevention ................................................................................................. 12
Hazard ........................................................................................................................................... 15
Perils Insured ................................................................................................................................ 16
Burden of Proof............................................................................................................................. 17
Conclusion .................................................................................................................................... 17
Bibliography ................................................................................................................................. 18
 INTRODUCTION

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, wharfing, commission agent.

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 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.
 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. The
policy is always subject to ‘Average Clause’
 Replacement or Re-instatement Policy- is a policy in which the insurer inserts a re-
instatement 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.

HISTORY OF FIRE INSURANCE

A year after the Great Fire, Nicholas Barbon set up a scheme which eventually became the fire
Office and soon, that of the City of London Corporation followed. During the next century more
similar schemes were established, but they varied in the way premiums were calculated and
losses compensated. It became the practice with a scheme to issue a plate or company emblem to
be displayed on the wall of the house at first floor level. These plates (called fire marks) not only
indicated the homes of those with insurance so that the company-owned fire brigade could locate
them when called, but they also provided free advertising.
In 1861, after a number of quite large conflagrations, a catastrophic fire took place on the south
side of the river Thames between London Bridge and Tower Bridge in Tooley Street where the
buildings were considered by the insurance companies to be among their best risks. The result
was a panic among insurers and the doubling or trebling of premiums. The merchants called a
meeting at which they founded their own insurance company (the Commercial Union) and asked
the Government to take over the London Fire Brigade. In 1865 the Metropolitan Board of Works
took it over while the insurers decided on more co-operations among themselves in regard to
premiums and rating.

The Industrial Revolution produced more complicated risks and it became apparent that there
was a need for more classifications than fire insurers had used previously. From 1829 the fire
office managers in Scotland met regularly to discuss these problems and the English offices soon
followed their example. A fuller agreement was reached after the Tooley Street fire and this
resulted in the founding of the Fire Offices’ Committee in 1868 where matters of common
interest were discussed.1

ACTUAL CASH VALUE V. REPLACEMENT VALUE

Most policies cover a fire loss with actual cash value or ACV instead of replacement cost. Actual
cash value pays the amount of the property less depreciation. This can be devastating if your
business relies upon high value equipment that has a long useful life, but would be prohibitively
expensive to replace. As examples: coolers, refrigerators, tow lifts, aircraft or anything that
would be prohibitively expensive to buy new. Replacement coverage pays the amount to replace
the property lost at whatever the replacement cost is today. Replacement coverage carries higher
premiums and can be purchased as a rider or endorsement.

 One’s business may be underinsured if it cannot replace critical facilities and equipment
at the depreciated value.
 Electronics such as computers frequently decline in real replacement cost such that actual
cash value may be a better option.
 Property valuations are frequent causes of conflict between insurers and insured. One can
avoid valuation problems by carrying replacement coverage.

Cash, valuable papers, certain types of inventory, some electronics, jewelry, and other items will
require separate coverage or will be excluded from coverage. These are generally items that are
impossible for the insurer to confirm and are prone to fraud.2

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http://www.insurance-times.net/article/history-fire-insurance
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PROPERTIES THAT ARE COVERED
All moveable/ immoveable properties of the proposer on land (excluding those in transit) broadly
Categorized as follows:

i. Building (including plinth and foundations, if required):

• Whether completed or in course of construction (excluding the value of land). Interiors,

Partitions and Electricals.
• Plant & Machinery, Equipments & Accessories (including foundations, if required)
• Bought Second hand.
• Bought New
• Obsolete Machinery3

ii. Stocks:

• Raw Material
• Finished Goods
• In process
• In trade belonging to Wholesaler, Manufacturer and Retailer.

iii. Other Contents such as:

• Furniture, Fixtures and Fittings

• Cables, Piping‘s
• Spares, Tools and Stores
• Household goods etc.

Specific Items such as bullion, unset precious stones, curios, work of arts, manuscripts, plans,
drawings, securities, obligations or documents, stamps, coins or paper money, cheques, books of
accounts, computer system records, explosives.

LOCATION OF RISK:
i. The proposer shall describe all locations where the properties are built or installed or
stored or kept at the inception.
ii. Any change of location of risk shall be covered on intimation of such change.
iii. Change of ownership in the insured property shall be intimated so that the new owner
may be covered be means of suitable endorsement.
iv. Any material change in the location of risk, trade or manufacturing activities shall be
intimated to the insurer so that the changes are endorsed to offer continuous cover.

PERIOD OF COVERAGE:
i. Fire Policy is an annual policy, generally, renewable each year.

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 ii. Long Term policy (for a minimum period of three years) can be considered for covering
"dwellings" only with suitable discounts in premium.
iii. Cover for STFI and RSMTD perils can be considered during currency (where they are
deleted at inception by choice) in special circumstances.
iv. Policy can be cancelled at any time during the currency with suitable refund of premium
for the unexpired period.

In addition to the perils/ expenses covered, the proposer can opt to seek cover in respect of the
following perils/ expenses at inception or during currency of the policy on payment of additional
premium:

PERILS:

Loss/ damage/ destruction of the property caused by-

 Deterioration of Stocks in Cold Storage premises due to power failure following damage
due to an insured peril.
 Forest Fire.
 Impact Damage due to Insured's own Vehicles, Forklifts and the like and articles dropped
there from.
 Spontaneous Combustion.
 Omission to insure additions, alterations or extensions.
 Earthquake (Fire and Shock).
 Spoilage material damage cover.
 Leakage and contamination cover.
 Temporary removal of stocks.
EXPENSES:

 Architects, Surveyors and Consulting Engineer's Fees (in excess of 3% claim amount)
 Debris Removal (in excess of 1% of claim amount)
 Loss of rent.
 Insurance of additional expenses of rent for alternative accommodation.
 Start up Expenses.

CHARECTERISTICS OF FIRE INSURANCE

1. Fire insurance is a contract of indemnity. The insurer is liable only to the extent of the
actual loss suffered. If there is no loss there is no liability even if there is a fire.
2. Fire insurance is a contract of good faith. The policy -holder and the insurer must disclose
all the material facts known to them.
3. Fire insurance policy is usually made for one year only. The policy can be renewed
according to the terms of the policy.
4. The contract of insurance is embodied in a policy called the fire policy. Such policies
usually cover specific properties for a specified period.
 5. Insurable Interest: A fire policy is valid only if the policy -holder has an insurable
interest in the property covered. Such interest must exist at the time when the loss occurs.
In English cases it has been held that the following persons have insurable interest for the
purposes of fire insurance -owner; tenants, bailees, including carriers; mortgages and
charge-holders.
6. In case of several policies for the same property, each insurer is entitled to contribution
from the others. After a loss occurs and payment is made, the insurer is subrogated to the
rights and interests of the policy -holder. An insurer can reinsure a part of the risk.
7. Fire policies cover losses caused proximately by fire. The term loss by fire is interpreted
liberally. Example: A women hid her jewellery under the coal in her fireplace. Later on
she forgot about the jewellery and lit the fire. The jewellery was damaged. Held, she
could recover under the fire policy.
8. Nothing can be recovered under a fire policy if the fire is caused by a deliberate act of
policy-holder. In such cases the policy-holder is liable to criminal prosecution.
9. Fire policies generally contain a condition that the insurer will not be liable if the fire is
caused by riot, civil disturbances, war and explosions. In the absence of any specific
expectation the insurer is liable for all losses caused by fire, whatever may be the causes
of the fire.
10. Assignment: According to English law a policy of fire insurance can be assigned only
with the consent of the insurer. In India such consent is not necessary and the policy can
be assigned as a chose-in-action under the Transfer of Property Act. The insurer is bound
when notice is given to him. But the assignee cannot be recovering damages unless he
has an insurable interest in the property at the time when the loss occurs. A stranger
cannot sue on a fire policy.
11. Payment of Claims: Fire policies generally contain a clause providing that upon the
occurrence of fire the insurer shall be immediately notified so that the insurer can take
steps to salvage the remainder of the property and can also determine the extent of the
loss. Insurance companies keep experts on their staff of value the loss. If in a policy there
is an international over valuation of the property by the policy-holder, the policy may be
avoided on the ground of fraud.

FEA RULES/DISCOUNT

Fire business is governed by All India Fire Tariff. Only standard Fire and special perils policy
with the permitted ―Add on‖ covers can be issued. Unless otherwise specifically provided for,
this Tariff is applicable to land-based properties only. Any risk, which has not been provided for
in the Tariff shall be referred to the Committee for rating, Provisional rate of Rs.2.50 per mile
shall be charged in such cases for covering the risks under Standard Fire and Special Perils
Policy. No discounts shall be allowed on this rate.

VALUE POLICIES
Valued policy (ies) can be issued only for properties whose market value cannot be ascertained,
e.g. Curios, Works of Art, Manuscripts, Obsolete machinery and the like subject to the valuation
certificate being submitted and found acceptable by the insurers.
LONG TERM POLICIES
Fire policies for a period exceeding 12 months shall not be issued ―”Except for Dwellings”.
Long term policies shall be issued to house/flat owners only based on either of the following 2
methods subject to the conditions below:

 The policy shall be issued for a minimum period of 3 years.

 No refund shall be allowed for mid-term cancellation of such policies.
 Mid-term inclusion of perils shall be not being allowed.
 Premium for entire policy period shall be collected in advance

Method A:
Premium shall be charged in full without any discount. However sum insured under the policy
shall be deemed to have increased by 10% of the original sum insured at the end of the every 12
month periods.

Method B:
There shall be not nay automatic increase in sum insured as in method A. however appropriate
discounts shall be allowed on applicable gross premium as per table below.

DURATION OF POLICY PREMIUM TO BE CHARGED

3 years policy 3 years premium in advance less 15% discount

4 years policy 4 years premium in advance less 20% discount

5 years policy 5 years premium in advance less 25% discount

6 years policy 6 years premium in advance less 30% discount

7 years policy 7 years premium in advance less 35% discount

8 years policy 8 years premium in advance less 40% discount

9 years policy 9 years premium in advance less 45% discount

10 years and above Entire premium in advance less 45% discount

MID TERM COVER:

Generally it is not permissible to grant mid-term cover for STFI and/or RSMD perils. The
following provisions shall apply, where such covers are granted mid-term.
  Insurers must receive specific advice from the insurance accompanied by payment of the
required additional premium in cash or by draft. This additional premium shall not be
adjusted against existing Cash deposits or debited to Bank guarantee.
 Mid-term cover shall be granted for the entire property at one complex compound
location covering the entire interest of the insured under the one or more policy (ies).
Insured shall not have any option for selection.
 Cover shall commence 15 days after the receipt of the premium.
 The premium rates as under shall be charged on short period scale on full sum insured at
one complex/compound/location covering the entire interest of the insured for the
balance period up to the expiry of the policy.

MID-TERM SECTION SECTION VI SECTION IV, V

INCLUSION OF III AND VII
MATERIALS MATERIALS
IN GODOWN IN OPEN

STFI 0.20% 0.35% 2.00% .35%

RSMD 0.15 0.15% 0.15% 0.15%

Midterm revision in sum insured shall be allowed as follows:

Increase in sum insured: on pro-rata basis. Decrease in sum insured on short-period scale

PAYMENT OF PREMIUM
Premium shall be paid in full and shall not be accepted in installments or by deferred payments
in any form.

MINIMUM PREMIUM
Minimum premium shall be Rs.100/- per policy except for risks ratable under Section III and
Tiny Sector Industries under section IV in which cases the minimum premium shall be Rs.50/-
per policy.

RULES FOR CANCELLATION

For cancellation of insurance policy at the option of the insured.

 Retention of premium shall be at short period scale for the period the policy has been in
force, subject of the retention of minimum by the insurer.
 During the currency, if a policy is replaced with the same insurer by a new annual one
covering the identical property, refund of the premium may be allowed on pro-rate basis
at the original rates for the sum insured replaced.
  For the sum insured not replaced, refund must be calculated after charging premium at
short period scale on such sum for the time the insurance has been in force subject to
retention of the minimum premium by the insurer.
 In case of short period policies, premium shall be retained at the applicable short period
scale.
 For cancellation of insurance policy at the option of the insurer, refund of premium shall
be on pro-rate basis for the unexpired term.4

IMPORTANT TERMS

"Additional premium provision"- in the context of finite risk insurance, a provision of an

insurance or reinsurance contract that requires or strongly encourages the insured to pay the
insurer some calculable amount as a result of losses paid or incurred under that insurance or
reinsurance contract, excluding provisions for additional premium due to changes in exposure or
policy audit.

“Commutation Provision”- means a verbal or written agreement, whether or not formally

incorporated into an insurance or reinsurance policy, that allows the policyholder to commute the
policy, usually implying that all liabilities and rights created by that contract are extinguished in
return for the balance of an experience account.

“Experience Account”- when used in the context of finite risk refers to a provision in an
insurance or reinsurance contract that, using some function of premium, insurer charges, losses
paid or payable under the contract, subrogation proceeds, and interest rates, forms the basis of an
explicit or notional fund that can then be used to calculate the amount due under a additional
premium provision.

FIRE HAZARDS AND FIRE PREVENTION

FIRE SAFETY
Fire safety refers to precautions that are taken to prevent or reduce the likelihood of a
Fire that may result in death, injury, or property damage, alert those in a structure to the presence
of an uncontrolled fire in the event one occurs, better enable those threatened by a fire to survive
in and evacuate from affected areas, or to reduce the damage caused by a fire. Fire safety
measures include those that are planned during the construction of a building or implemented in
structures that are already standing, and those that are taught to occupants of the building.

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Threats to fire safety are referred to as fire hazards. A fire hazard may include a situation that
increases the likelihood a fire may start or may impede escape in the event a fire occurs.

Fire safety is often a component of building safety. Those who inspect buildings for violations of
the Fire Code and go into schools to educate children on Fire Safety topics are fire department
members known as fire prevention officers. The Chief Fire Prevention Officer or Chief of Fire
Prevention will normally train newcomers to the Fire Prevention Division and may also conduct
inspections or make presentations.

KEY ELEMENT OF A FIRE SAFETY POLICY

 Building a facility in accordance with the version of the local building code
 Maintaining a facility and conducting oneself in accordance with the provisions of the
fire code. This is based on the occupants and operators of the building being aware of the
applicable regulations and advice.

Examples of these include:

 Not exceeding the maximum occupancy within any part of the building.
 Maintaining proper fire exits and proper exit signage (e.g., exit signs pointing to them
that can function in a power failure)
 Compliance with electrical codes to prevent overheating and ignition from electrical
faults or problems such as poor wire insulation or overloading wiring, conductors, or
other fixtures with more electric current than they are rated for.
 Placing and maintaining the correct type of fire extinguishers in easily accessible places.
 Properly storing and using, hazardous materials that may be needed inside the building
for storage or operational requirements (such as solvents in spray booths).
 Prohibiting flammable materials in certain areas of the facility.
 Periodically inspecting buildings for violations, issuing
 Orders To Comply and, potentially, prosecuting or closing buildings that are not in
compliance, until the deficiencies are corrected or condemning it in extreme cases.
 Maintaining fire alarm systems for detection and warning of fire.
 Obtaining and maintaining a complete inventory of fires tops.
 Ensuring that spray fireproofing remains undamaged.
 Maintaining a high level of training and awareness of occupants and users of the building
to avoid obvious mistakes, such as the propping open of fire doors.
 Conduct fire drills at regular intervals throughout the year.
FIRE HAZARDS
Electrical hazards

 Damaged wiring
 Damaged plugs
 Damp or wet wires
 Overloaded motors
  Broken switches, outlets or sockets
 Problems with lighting fixtures
 Faulty heating elements
 Overloaded circuits
 Liquids near computers
 Computers without surge protectors

Housekeeping hazards

 Piles of scrap, waste materials, and trash

 Sawdust, metal or plastic powder that can form an explosive mixture with air
 Obstructed aisles
 Blocked emergency exits
 Material covering up fire extinguishers, exit signs, and alarms
 Blocked sprinkler heads

Friction hazards

 Hot bearings
 Misaligned or broken machine parts
 Choking or jamming materials
 Poor adjustment of moving parts
 Inadequate lubrication

Process or operation-related hazards

 Cutting and welding operations, which use open flames and produce sparks
 Molten metal, which can ignite combustibles or fall into cracks and start a fire that might
not erupt until after the work is done
 Processes that heat materials to high temperatures
 Drying operations where materials in dryers can overheat
 Grinding operations that produce sparks and dust
 Processes in which flammable vapors are released

Storage hazards

 Materials stacked too high blocking sprinkler heads (need 18-inches clearance from head)
 Flammable or combustible materials stored too close to heat sources
 Flammable materials not stored in special containers and cabinets inadequate ventilation
in storage areas
 Materials that might react with one another stored together
 Materials stored in damaged containers
 Materials stored in unlabeled containers
 Containers not tightly sealed
Smoking hazards

 Ignoring "No Smoking" signs

 Smoking around flammable or combustible materials
 Throwing matches and cigarettes or cigars on tables or workbenches
 Tossing butts on the floor or grass without properly extinguishing them in an ashtray or
ash can
 Tossing lighted butts or matches out windows or doors
 Smoking in bed
 Leaving a cigarette/cigar unattended
 Smoking in areas where there is an accumulation of sawdust, plastic or metal powders
that may become explosives.

FIRE PREVENTION
Fire prevention is a function of many fire departments. The goal of fire prevention is to educate
the public to take precautions to prevent potentially harmful fires, and be educated about
surviving them. It is a proactive method of reducing emergencies and the damage caused by
them. Many fire departments have a Fire Prevention Officer. In the general sense of preventing
harmful fires, many aspects are discussed in the articles Fire protection and Fire safety. 5

HAZARD

HAZARD BASED RISK CLASSIFICATION

A hazard is a situation that poses a level of threat to life health, property, or environment. Most
hazards are dormant or potential, with only a theoretical risk of harm; however, once a hazard
becomes "active", it can create an emergency situation. A hazardous situation that has come to
pass is called an incident. Hazard and possibility interact together to create risk. For hazards in
the context of risk assessment.

MODE OF HAZARD
Hazards are sometimes classified into three modes

Dormant- The situation has the potential to be hazardous, but no people, property, or
environment is currently affected by this. For instance, a hillside may be unstable, with the
potential for a landslide, but there is nothing below or on the hillside that could be affected.

Armed- People, property, or environment are in potential harm's way.

Active- A harmful incident involving the hazard has actually occurred. Often this is referred to
not as an "active hazard" but as an accident, emergency, incident, or disaster.

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TYPES OF HAZARDS
Hazards are generally of five types:

1. Physical hazards are conditions or situations that can cause the body physical harm or
intense stress. Physical hazards can be both natural and human made elements.
2. Chemical hazards are substances that can cause harm or damage to the body, property
or the environment. Chemical hazards can be both natural and human made origin.
3. Biological hazards are biological agents that can cause harm to the human body. These
some biological agents can be viruses, parasite, bacteria, food, fungi, and foreign toxin.
4. Psychological hazards are created during work related stress or a stressful environment.
5. Radiation hazards causes harm to the human or damage body by affecting the cell
directly.

CAUSES OF HAZARDS
There are many causes, but they can broadly be classified as below.

Natural hazards include anything that is caused by a natural process, and can include obvious
hazards such as volcanoes to smaller scale hazards such as loose rocks on a hillside.

Man-made hazards are created by humans, whether long-term (such as global warming) or
immediate (like the hazards present at a construction site). These include activity related hazards
(such as flying) where cessation of the activity will negate the risk.

Deadly force or retribution it is that hazard involving any protective and responsive-ready threat
of harm or punishment that becomes active in the event of a breach of security or violation of a
boundary or barrier (physical, legal, and moral) intended to prevent unauthorized or unsafe
access or entry or exposure to a situation, to something, or to someone.

PERILS INSURED
The perils against which fire policy gives insurance cover are:-

1) Fire,
2) Lightning,
3) Explosion/Implosion but excluding loss of our damage
a) to boilers
b) caused by centrifugal forces
4) Riot, strike, malicious and terrorist damage as per clause printed in the policy
5) Impact by any Rail/Road vehicle or animal
6) Aircraft and or other aerial or space devices
7) Storm, cyclone, typhoon, tornado etc.
8) Subsidence and landslide resulting in collapse
 9) Earthquake Fire and Shock6

If the fire is the proximate cause of loss the insurer is liable. Lightning causes damage to
property and loss of livestock was due to lightning and not to natural causes by means of a
veterinary surgeon’s certificate.

The policy though does not cover any consequential loss due to an occurrence of fire, such as 1)
loss of profits, and 2) increase in cost of working such as rent of temporary premises, reduction
of turnover, payment of wages to employees not fully employed etc. Such losses can be covered
by separate standard profits policies.7

BURDEN OF PROOF
Sections 101 to 103, Evidence Act, 1872 regulate the burden of proof of facts. According to S.
103 ‘The burden of proof as to any particular fact lies on that person who wishes the court to
believe in its existence....’ Hence the burden of proof is on the insured to prove that the loss was
caused by an insured peril.8The claim will fail if he fails to discharge the burden.9 If conclusive
proof is not possible he should at least produce circumstantial evidence from which a reasonable
inference can be drawn regarding the same.10

CONCLUSION
The contract of fire insurance comes into play when a person seeking insurance enters into a
contract with the insurer to indemnify him against loss of property by or incidental to fire,
lightning, explosion etc. being a contract primarily it is governed by the general law of contract.
However, it has certain special features like insurance transaction, utmost good faith, insurable
interest, indemnity, subrogation and contribution etc. These features being common to all types
of insurance are governed by special laws.

Fire insurance in strict sense is concerned to give protection against fire and fire only. But in
practice, insurers include other perils against which protection is widely desired by the public
and designed some standard policies regarding the same. The standard fire policies, therefore,
expressly specify the risks covered and the risks excluded from the scope of the policy, so that
the insured may know the precise protection afforded by the policy.

But the perils generally included can be added by payment of extra premiums. Such risks are
called special perils and are included by placing endorsements on the policy or by issuing
separate contracts.
6
Principes of Insurance Law by MN Srinivasan.
7
Principes of Insurance Law by MN Srinivasan.
8
Marsden v. City and County assce. Co. (1866) LR1/CP 232.
9
Austin v. Drewe, (1816) (fire).
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Principes of Insurance Law by MN Srinivasan.
 BIBLIOGRAPHY

WEBSITES
1) http://niilmuniversity.in/coursepack/Insurance/Principles_&_Practices_of_Fire_Insurance.pdf

2) http://www.insurance-times.net/article/history-fire-insurance

3) https://securenow.in/insuropedia/what-are-different-types-fire-policies-available-india

4) http://www.nios.ac.in/media/documents/VocInsServices/m4-1f.pdf

BOOKS

1) Principles of Insurance Law by MN Srinivasan .

2) Insurance Law and Practice by Madhu Tyagi and C.L. Tyagi

ARTICLES

1) Perpetual Fire Insurance by William M. Howard

2) Fire Insurance by Hannah Benner Ogden.