Unit IV

4.0 Introduction
4.1 Meaning, Characteristics or nature, Significance, Principles, Scope
4.1.1 Meaning
4.1.2 Characteristics or Nature of Fire Insurance
4.1.3 Significance of Fire Insurance
4.1.4. Important Principle of Fire Insurance
4.1.5 Scope of Fire Insurance
4.2 Procedure of ffecting !ire Insurance
4.2.1 Haar!s in Fire Insurance
4.2.2 Perils insure! an! Pro"imate Cause
4." #ifferent $eneral Insurance Polices
4.3.1 Househol!ers Comprehensi#e Insurance
4.3.2 Crop Insurance Policies
4.3.3 $i#estoc% Insurance
4.3.4 &urglar' Insurance
4.3.5 Personnel (cci!ent Insurance
4.4 C(S) S*+,I)S
4.4.1 Fire -hether Manipulate! . )ffect
4.4.2 Fire in Militanc' /peration
4.4.3 Fire !uring 0iot
4.4.4 $oss 1' Stri%e co#ere! un!er Fire Polic' ha#ing en!orsement of 0iot an! Stri%e
4.% I&portant 'eference (oo)s
1
Introduction
(uthorities trace the origin of Fire insurance since 23I centur'. (ccor!ing to them it starte! in
4erman' 5here the fire #ictims 5ere in!emnifie! against a small amount of premium. From there it
sprea! in other countries. It is sai! that this t'pe of insurance gathere! momentum after the 4reat Fire
of $on!on in the 'ear 1666. Initiall' 7 such t'pe of insurance co#ere! the loss !ue to fire as commonl'
un!erstoo!. $ater7 the area an! scope 5i!ene! an! it em1race! perils li%e loss !ue to e"plosion7 loss
cause! 1' spontaneous7 loss !ue to fire cause! 1' chemical reactions7 an! the li%e.
*he 5or! 8fire9 has not 1een !efine! in the Insurance (ct. *he !efinition of Fire Insurance 1usiness
an! 4eneral Insurance 1usiness 5as initiall' missing from the (ct. *hese terms 5ere inserte! 1'
Section 3 of (ct 4: of 1;5< 5ith effect from 1=6=1;5< 1' intro!ucing Sections 2>6=(? an! 2>6=&?
5hich run as un!er.
@2 >6=(? 8fire insurance 1usiness9 means the 1usiness of effecting7 other5ise than inci!entall' to
some other class of insurance 1usiness7 contracts of insurance against loss 1' or inci!ental to fire or
other occurrence customaril' inclu!e! among the ris%s insure! against in fire insurance policies
2 >6=&? 8general insurance 1usiness9 means fire7 marine or miscellaneous insurance 1usiness7 5hether
carrie! on singl' or in com1ination 5ith one or more of themA.
Insurance in general an! fire insurance in particular7 are contracts of in!emnit' an! therefore7
go#erne! 1' the general la5 of contract ha#ing some special features of insurance 7 namel'7 principle
of utmost goo! faith7 insura1le interest7 in!emnit'7 su1rogation an! the li%e. *he In!ian Insurance (ct7
1;3B !oes not !eal specificall' 5ith fire or life insurance. (s a matter of fact7 the (ct !eals 5ith the
regulation of the insurance 1usiness in general. *herefore7 the courts 5hile !ealing 5ith the cases
arising out of fire insurance !eci!e the same on the soun! principles of la5 of contract. In the a1sence
of co!ifie! la5 on the su1Cect7 this la5 has 1een enlarge! to much e"tent 1' Cu!icial !ecisions.
-here it 5as pro#e! that the insure! properties 5ere gutte! in fire an! there 5as also no !ispute that
the fire 1ro%e out 5hile the insurance 5as su1sisting the Insurance Compan' 5as hel! lia1le to
compensate the o5ner of the propert'. *he o5ner of the polic' 5as also a5ar!e! interest for the !ela'
in settling the claim.
4.1 Meaning , Characteristics or *ature of !ire Insurance
( fire insurance is a contract to in!emnit'7 to the insure! for !estruction of or !amage
to properl' cause! 1' fire. *he insurer un!erta%es to in!emnif' the insure! against loss !ue to fire
cause! to the propert' insure! against7 not in e"cess of the ma"imum amount state! in the polic'. (
contract of fire insurance is essentiall' a contract of in!emnit'7 an! not against acci!ent7 1ut against
loss cause! 1' fire. For e"ample7 if a person has insure! his house of 0s. 1.<< la%h against loss 1'
fire7 the insurer is not lia1le to pa' the sum7 unless the house is !estro'e! 1' fire7 1ut actual loss
su1Cect to the ma"imum limit of 0s. 1.<< la%h.
4.1.2 Characteristics or *ature of !ire Insurance
1. It is a means of securit' against ris% of fire on an' material or propert'.
2. It is an in!emnit' contract.
3. *he insurer un!erta%es to in!emnit' the insure! against actual loss su1Cect to the
ma"imum limit of sum insure!.
4. It is a contract of utmost goo! faith7 the insurer an! the insure! must !isclose all
material facts relating to the su1Cect matter of insurance.
2
5. ( fire insurance polic' is usuall' issue! for one 'ear onl' 5ith the option to the
parties to nene5 it for a further perio! on pa'ment of stipulate! premium.
6. If the propert' is insure! 5ith more than one insurer an! on loss 1' fire7 all the
insurers are calle! upon to contri1ute to5ar!s the claim.
:. *he insurer is not lia1le for pa'ment of m' claim if the fire is cause! !eli1eratel'.
B. In &ritish $a57 the fire insurance policies can 1e assigne! onl' 5ith prior permission
of the insurer7 1ut un!er In!ian $a5 the consent of the insurer is not necessar' to ma%e #ali!
assignment of polic'7 onl' a notice of information is sufficient.
;. /n occurrence of fire7 a notice of fire shoul! 1e gi#en to the insurer so that the insurer
ma' ta%e prompt steps forth 5ith to safeguar! his interests7 in !ealing 5ith sal#age an! also Cu!ge the
cause an! nature of fire7 an! 1e e"tent of the loss.
1<. It is the !ut' of the insure! to act as a man of or!inar' pru!ence to ta%e necessar'
steps to sa#e the propert' from loss of fire7 as in the a1sence of an' insurance against the propert'.
11. Sometimes7 the insurer issues a 8Co#er Note9 or 8Interim Polic'9 to the insure!. In the
case of loss 1' fire 1efore the (1solute Polic' is issue!7 the claim is pai! in #ie5 of 8Co#er Note9.
12. *he ris% commences as soon as the insurer accepts the proposal7 1ut the insurer has
the right to fi" the !ate of commencement of ris% at a future !ate also.
13. *he rate of premium #aries accor!ing to the !egree of haar! or ris% in#ol#e!.
14. It is 1ecoming #er' common in fire insurance policies to insert a con!ition calle! the
8a#erage clause9 1' 5hich the insure! is calle! upon to 1ear a portion of the loss himself. *he
con!ition is calle! the pro=rata con!ition of a#erage.
15 *he insure! must ha#e insura1le interest in the su1Cect matter 1oth at the time of
affecting the polic' an! at the time of the loss.
16. *he 5or! fire refers to @loss 1' fireA.
1:. In conseDuential loss polic'7 the insure! is in!emnifie! for the loss of profits 5hich
he sustains through interruption or cessation of his 1usiness as a result of fire.
1B. In case of loss 1' fire7 is more than once7 the in!emnit' can 1e claime!. Ho5e#er7 the
total claim shall not 1e more than the sum assure!.
1;. Fire Insurance is also 1ase! upon certain principles7 #i7 insura1le interest7 utmost
goo! faith an! principle of in!emnit' etc.
2<. Fire Insurance is !ifferent from life insurance an! marine insurance. It is an
in!emnit' insurance 5here as life insurance in#ol#e! the elements of securit' an! in#estment. In
marine insurance7 insura1le interest must 1e present at time of loss7 1ut in fire insurance7 insurance7
insura1le interest must 1e present at the time of affecting the polic' as 5ell as of the time of loss7
1oth.
4.1.1 Meaning of !ire in contract of Insurance
*he 5or! fire means @loss 1' fireA an! in literal sense means a fire 5hich has 1ro%en 1oun!s.
*herefore7 fire 5hich is use! for or!inar' !omestic purposes or e#en for manufacturing is not fire.
8Fire9 is fire insurance must ha#e the follo5ing t5o features.
1. Pro!uction of Ignition7 light an! heat.
2. Fire 1' acci!ent.
1. Pro!uction of Ignition light an! heat E (ccor!ing to Fustice &o'les >in )#erett 3Gs
$on!on (ss. Co. 1B;5? @Fire means the pro!uction of light an! heat 1' com1ustion an! unless there
is actual ignition7 there is no fire 5ithin the meaning of the term in or!inar' polic'.A
$/SS C(+S), &H FI0).=
3
Heating unaccompanie! 1' ignition is not fire. @$oss or !amageA occasione! 1' fire means loss or
!amage either 1' ignition of the articles consume! or 1' !amage either 1' ignition of the articles
caucuse! or 1' ignition of that part of the premises7 5here the article is. In one case there is loss7 in
the other case7 a !amage occasione! 1' fire. *hus7 it can 1e state! that no claim possi1le 5ithout
flame.
In the follo5ing cases7 the loss 1' fire is not consi!ere!.
>1? $oss of goo!s 1' e"cessi#e heat !ue to the closure of !oors an! #entilations.
>2? *he !amages of goo!s !ue to hea#' humi!it'.
>3? Changes of particles >Sugar? in liDui!it' form !ue hea#' sun shines.
>4? )#aporation of items 1' chemical reactions or heat.
>5? ,amage of articles !ue to hea#' temperature.
>6? ,amage 1' e"plosi#e pro#i!e! the e"plosion causes no actual ignition.
>:? ,amage from lightning pro#i!e! it !oes not cause actual ignition.
>B? $oss or !amage 1' earth Dua%e7 riot7 militar' po5er or ci#il commotion.
>;? ,amage to uses of articles as a result of smo%e 5ithout flame.
>1<? *he loss or !amage cause! 1' electricit'.
(ll these situations !o not fall un!er the !efinition of 8fire9 an! therefore to the loss !ue to
such things !o not 1e co#ere! 1' the fire insurance polic'.
*he losses 1' the follo5ing instances or losses su1si!iar' to fire are as follo5s.
>1? ,amage 5hich occurs as a result or smo%e or of putting out the fire 5oul! 1e co#ere!
1' the fire ris%s.
>2? (n' loss resulting from apparentl' necessar' an! 1ona fi!e efforts to put out a fire7
5hether it 1e 1' spoiling goo!s 1' 5ater or thro5ing articles of furniture out of 5in!o57 are co#ere!
1' the fire ris%s.
>3? )#en 1' !amages to a neigh1oring house 1' e"plosion !one for the purpose of
arresting fire7 5oul! 1e co#ere! 1' the fire ris%s.
>4? )#er' loss !irectl' or if not !irectl' at least conseDuentl' resulting from the fire is
5ithin the polic' >In Stanle' 3Gs -estern Ins. Co.7 1;6B?.
>5? $oss the theft !uring a fire is co#ere! as a fire ris% >In Stanle' 3Gs &aile'7 1B31?.
>6? )#en loss 1' fire cause! 1' the insure!9s negligence is co#ere! 1' the polic' >IN
Harris 3Gs Polan!7 1;41?.
>:? (n' loss occure! 5hile putting out the fire.
2. FI0) &H (CCI,)N*.=
In the case of fire insurance7 the occurrence of fire is acci!ental7 then onl' it is
co#ere! 1' the polic'. In case the fire is the !eli1erate act of the insure!7 the insurer is not lia1le to
compensate. *he fire 5hich is use! for or!inar' !omestic purposes or e#en for manufacturing is not
fire as long as it is confine! 5ithin the usual or proper limits. *hus7 fire 1' acci!ent means the
pro!uction of light an! heat 1' com1ustion an! 5ith actual ignition an! heating unaccompanie! 1'
ignition is not fire.
4.1.3 SI$*I!IC+*C ,! !I' I*SU'+*C
*he in!ustr'7 tra!e an! commercial articles ha#e 1een !e#eloping an! !i#ersif'ing at
faster rate in In!ia. (long 5ith the gro5th of in!ustrial an! commercial articles the infrastructural
fiel!s li%e transport7 communication7 finance7 a!#ertising7 stoc% mar%eting etc.7 ha#e also 1een
!e#eloping continuousl' so as to cope 5ith the pace of economic !e#elopment. *he importance of
foreign tra!e also has 1een #er' much for a !e#eloping countr' li%e In!ia. (ll these !e#elopments in
#arious fiel!s 1rought in much ris%s an! uncertainties in 1usiness acti#ities. Insurance is the onl'
4
fiel!s that pro#i!e securit'7 against 1usiness ris%s. *he role of the fire insurance has 1een increasing
!a'=1'=!a' as a means against !estruction or !amage of 1usiness propert' cause! 1' fire.
*he significance of fire insurance can 1e !iscusse! un!er the follo5ing points.
>1? (s a source for minimiing losses. Fire can !estro' propert' in goo!s an! fi"e! assets
of core of rupees or can create !amages to the 1usiness propert'. Fire Insurance
in!emnifies losses or !amages !one to fire an! resources the mental 5orries of
1usinessmen.
>2? ,ecreases in pro1a1ilities of fire losses. *he increasing uses of energ' petrol li%e
electricit'7 gas an! other such items ha#e increase! the pro1a1ilit' of losses or
!amages to goo!s an! propert'. In or!er to minimie this calamit'7 #arious t'pe of
fire e"tinguishing !e#ices ha#e 1een !estro'e! throughout the 5orl!. Moreo#er7 the
fire insurance is another !e#ice to in!emnit' the losses thus remo#es mental 5orries
1' e"ten!ing financial support.
>3? Increase in pro!uction of fire proof materials. Fire Insurance cannot pre#ent
occurrence of fire7 1ut can re!uce the losses. *o!a' #arious !e#ices are pro!uce! in
the countr' li%e fire e"tinguisher. Fire 1riga!es are set up at e#er' cities an! to5ns to
e"tinguish fire 1' the go#ernment an! local 1o!ies.
>4? ,ecrease in social loss of fire. Social a5areness has 1een create! in the countr' to put
out fire an! to re!uce the effect of fire. *he social organiations pro#i!e training to
the people in the use of the fire e"tinguishing !e#ices an! caution them in the use of
such items 5hich causes or pro!uces fire.
>5? (sset #aluation. (ssets are #alue! for o1taining a fire insurance polic'. it reDuires the
insure! to 1e more cautious in protecting his propert' or goo!s.
>6? $oss pre#enting efforts an! a!#ice 1' the insurer. (n insurer not onl' in!emnit'
against fire losses7 1ut also a!#ises the insure! to re!uce the inci!ence of fire. Fire
Insurance companies esta1lish7 8sal#age corps97 to e"tinguish fire so that the e"tent of
loss can 1e minimie!.
>:? Helpful in 1usiness progress. ,ue to the facilities pro#i!e 1' the fire insurance
companies7 the 1usiness enterprises un!erta%e large scale pro!uction an! in#ests in
1usiness an! mar%eting acti#ities 5ithout an' 1otheration. *his lea! to continuous
progress in in!ustrial an! commercial acti#ities7 lea!ing to economic gro5th.
>B? &eneficial for ne5 in!ustries. *he ne5 in!ustrial units usuall' face comple"
pro1lems of pro!uction7 finance7 competition an! sales etc. In such a situation7 the'
cannot affor! the lossesG!amages !ue to fire. *he fire insurance relie#e such
entrepreneurs from 5orries 1' in!emnif'ing the lossG!amages7 if an'7 from the
occurrence fire.
>;? Cre!it facilit'. -here the assets are secure! 1' fire insurance7 it 1ecomes easier for
such enterprises to get cre!it from 1an%s an! other financial institutions. *his 5ill
increase the cre!it 5orthiness of the enterprise.
>1<? ,istri1ution of ris%s. Fire insurance is an effecti#e !e#ice to !istri1ute the ris%s in a
group7 ena1ling the in!i#i!ual or the institution to maintain its efficienc'.
>11? /ther importance. *he' inclu!e the follo5ing.
>1? ,e#elopment of small in!ustries 1ecomes easier.
>2? Contri1ution to5ar!s timel' completion of national plans.
>3? *here 5ill 1e regularit' in national income an! the 5a's for national !e#elopment.
5
>4? *here can 1e continuit' in the pro!uction program of 1usiness enterprises an! the
operating e fficienc' 5ill increase.
4.1.4 IMP,'-+*- P'I*CIP.S ,! !I' I*SU'+*C/=
>1? I*SU'+(. I*-'S-/
In the case of fire insurance7 the insure! must ha#e insura1le interest in the su1Cect matter
1oth at the time of affecting the polic' an! at the time of loss. In the case of goo!s7 insura1le interest
arises on account of o5nership7 possession an! control. /5nership onl' 1e a1solute or limite!. It ma'
1e legal or eDuita1le. In the case of immo#a1le propert' such as insurance of 1uil!ings ma' 1e
affecte! 1' an' one intereste! in them. *he o5ner can al5a's insure. *he principle of insura1le
interest reDuires that the insure! must ha#e an actual interest in the su1Cect matter of insurance. *he
insure! must 1e @so situate! 5ith regar! to the things insure! that he 5oul! ha#e 1een 1enefite! 1' its
e"istence7 loss from its !estruction.A >In $ucena 3Gs Cra5fore!7 1B<6?. (n' person ma' 1e sai! to
ha#e an interest in the su1Cect matter of insurance 5ho ma' 1e inCure! 1' the ris%s to 5hich the
su1Cect matter is e"pose!.
>2? U-M,S- $,,# !+I-0/
( contract of insurance is a contract 1ase! on utmost goo! faith an! if the utmost
goo! faith is not o1ser#e! 1' either partl'7 the contract ma' 1e a#oi!e! 1' the other. Since insurance
transfers ris%s from one part' to another7 it is essential that there must 1e the utmost goo! faith an!
fran%ness 1et5een the insure! an! the insurer. *he 5hole truth must 1e !isclose! a1out the su1Cect
matter of insurance an! all circumstances surroun!ing it7 in or!er that un!er5riters ma' %no5 the
e"tent of his ris% an! ho5 much he must charge for the insurance. *he 5illful or innocent 5ithhol!ing
of an' rele#ant information is a most serious matter7 an! the insurer can !eclare the contract #oi! on
!isco#ering the truth. *his o1ligation to ma%e full an! true !isclosure applies to all t'pe of insurance
such as life insurance7 marine7 fire etc. In the case of fire insurance the insure! shoul! act in goo!
faith in all the matters such as presenting the claim for pa'ment an! similarl' act as a man or or!inar'
pru!ence 5hen there is a fire 1' ta%ing necessar' steps to put out the fire so that the e"tent of loss
coul! 1e minimie!.
>3? P'I*CIP. ,! I*#M*I-1/2
( contract of fire insurance is a contract of in!emnit'. *his means that the assure! in
the case of loss against 5hich the polic' has 1een ma!e shall 1e full' in!emnifie! 1ut su1Cect to a
limit of the polic'. *he insurer un!erta%es to in!emnif' the insure! 5hat the actuall' loses 1' the
happening of the e#ent upon 5hich the insurerIs lia1ilit' is to arise7 an! in no case is the insure!
entitle! to ma%e a profit of his loss.
In a!!ition to the lia1ilit' of actual loss7 the insurer also un!erta%es to 1ear the
conseDuential loss the polic'7 for the loss profits 5hich the insure! sustains through interruption or
cessation of his 1usiness as a result of fire.
4.1.5 SC,P ,! !I' I*SU'+*C/2
*he scope of fire insurance is much 5i!er. *his can 1e un!erstoo! from Section 2 of
In!ian Insurance (ct7 1;3B. (ccor!ing to this pro#ision7 the scope of fire insurance in#ol#es the
follo5ing t'pes of ris%s.
1. *he ris%s !irectl' in#ol#e! 1' fire.
2. *he ris%s in!irectl' in#ol#e! >that ha#e 1een tra!itionall' inclu!e! 5ithin the fire insurance
polic'?.
For the con#enience of stu!'7 the scope of fire insurance can 1e classifie! on the follo5ing
1asis.
6
i. /r!inar' Scope
ii. Special Scope7 an!
iii. Comprehensi#e Scope
I. ,'#I*+'1 SC,P/=
&efore Ma'7 2<<< three t'pes of fire insurance policies >(7 & an! C policies? 5ere
issue! in In!ia. *herefore7 the scope of fire insurance policies is classifie! on these criteria. (fter
Ma'7 2<<<7 onl' single t'pe of fire insurance polic' is issue! in In!ia 1' fire insurance companies7
5hich is %no5n as JStan!ar! an! Special Peril Polic'J. *he polic' co#ers the follo5ing t'pes of
perils.
Perils co#ere!
1. $oss cause! 1' fire.
>a? )"clu!ing loss7 !estruction or !amage cause! to the propert' insure! 1' =
>i? its o5n spontaneous fermentation of halting7 or
>ii? its un!er going an' heating or !r'ing process.
>1? &urning of propert' insure! 1' or!er of an' Pu1lic (uthorit'.
2. $ightening.
3. )"plosionGImplosion. )"clu!ing loss7 !estruction or !amage cause! to the propert'
insure! 1' 1ursting of 1oilers >other than !omestic 1oilers?7 economiers or other
#essels in 5hich steam is generate!7 machiner' or apparatus su1Cect to centrifugal
force.
4. (ircraft ,amage. $oss7 !estruction or !amage cause! 1' aircraft7 other aerial or
space !e#ices an! articles !roppe! there from e"clu!ing those cause! 1' pressure
5a#es.
5. 0iot Stri%e7 Malicious an! *errorism. 3isi1le ph'sical loss7 !estruction or !amage 1'
e"ternal #iolent means cause! to the propert' insure! 1ut e"clu!ing those cause! 1'.
>1? *otal or partial cessation of an' process or operations or commission of an' %in!K
>2? Confiscation7 comman!eering7 reDuisition or !estruction 1' or!er of the 4o#ernment
or an' la5full' constitute! authorit'.
>3? Permanent or temporar' !ispossession of an' 1uil!ing or plant or unit or machiner'
resulting from the unla5ful occupation 1' an' person of such 1uil!ing or plant or unit
or machiner' or pre#ention of access to the same.
6. Storm7 C'clone7 *'phoon7 *empest7 Hurricane7 *orna!o7 Floo! an! Inun!ation.
:. Impact ,amage. Impact 1' an' railGroa! #ehicle or animal 1' !irect contact not
1elonging or o5ne! 1' =
>1? *he insure! or an' occupier of the premises7 or
>2? *heir emplo'ees 5hile acting in the course of their emplo'ment.
B. Su1si!ence an! $an! sli!e inclu!ing 0oc% sli!e. $oss7 !estruction or !amage cause!
1' su1si!ence of part of the site on 5hich the propert' stan!s or lan! sli!eGroc%
sli!e e"clu!ing.
>1? *he normal crac%ing7 settlement or 1e!!ing !o5n of ne5 structuresK
>2? *he settlement or mo#ement or ma!e up groun!K
>3? Coastal or ri#er corrosionK
>4? ,efecti#e !esign or 5or%manship or use or effecti#e materialsK an!
>5? ,emolition7 construction7 structural alternati#e or repair of an' propert' or groun!
5or%s or e"ca#ations.
;. &ursting an!Gor o#erflo5ing of 5ater tan%s7 apparatus an! pipes.
:
1<. Missile *esting operations.
11. $ea%age from (utomatic Sprin%ler Installations. )"clu!ing loss7 !estruction or
!amage
cause! 1'.
>1? 0epairs or alterations to the 1uil!ings or premisesK
>2? 0epairs7 remo#al or e"tension of the sprin%ler installationK an!
>3? ,efects in construction %no5n to the Insure!.
12. &ush Fire. )"clu!ing loss7 !estruction or !amage cause! 1' forest fire.
B
C,*C.USI,*/2
*he general conclusions arri#e! from the a1o#e !escription are that the losses arising
out of the follo5ing ris%s !o not come un!er pur#ie5 of the fire insurance.
1. $osses !ue to 1' the acts of the 4o!GNatural calamit'.
2. $osses arising out of 5ar attac%s >!eclare! 5ar or other5ise?.
3. $ossG!amage out of poultr' effects.
4. ,amage to goo!s store! in col! storage !ue to fluctuations in temperature7 etc.
II. SPCI+. SC,P/2
Certain special %in! of ris%s is also inclu!e! in the fire polic'. &' pa'ing e"tra
premium7 the insure! can inclu!e such special ris%s as gi#en 1elo5 5ithin the scope of fire insurance
polic'.
1. *he fees pai! to the architect7 sur#e'or or consultant engineer7 if such fees e"cee!
more than 3 percent of the claim mone'.
2. *he e"penses incurre! in connection 5ith remo#al of 5astages from the construction
site7 if that amount e"cee!s more than I per cent of the claim mone'.
3. loss to the goo!s %ept in the col! storage !ue to fluctuations in electricit' G po5er 1ut
5ithin the causes state! in the polic'.
4. $oss arising out of earth= Dua%e7 fire of com1ustion.
5. Forest fire.
6. $oss !ue to falling the goo!s from for% lifts7 or form o5n #ehicle of the insure! etc.
:. $oss !ue to spontaneous com1ustion.
III. Co&prehensi3e Scope
(lmost all the insura1le ris%s are inclu!e! in the comprehensi#e scope of fire
insurance. It inclu!es not onl' the or!inar' an! !irect ris%s7 1ut also the conseDuential losses. *his
5a' the follo5ing ris%s are inclu!e! 5ithin the comprehensi#e scope.
1. 0is%s of stan!ar! policies.
2. Special ris%s 5hich can 1e insure! 1' pa'ing e"tra rate of premium.
3. )"clu!e! perils in the stan!ar! polic'.
4. ConseDuential losses or ris%s arising conseDuent to fire.
*he first three t'pes of ris%s ha#e 1een !iscusse! in the or!inar' scope of fire
insurance an! no5 the conseDuential lossesGris%s are !iscusse! 1elo5.
Conse4uential losses/ *he conseDuential lossesGris%s are those ha#e 1een create! 1' the fire. Such
ris%s are also %no5n as J$oss of ProfitJ loss. -hen fire ta%es place in a factor'7 not onl' its
assetsGproperties >machine7 ra5 material7 finishe! goo!s7 1uil!ing7 etc.? are !amage! or lost7 1ut the
pro!uction 5or% in the factor' also hel! up for a consi!era1le time. ConseDuentl'7 the profits from the
factor' is stoppe!7 1ut 1ur!en of fi"e! costs an! a!!itional e"penses also are to 1e 1orne. *hus7 the
follo5ing t'pes of losses are inclu!e! in conseDuential losses.
>i? $oss of net profit.
>ii? $oss of fi"e! e"penses7 e.g.7 salaries to emplo'ees7 1uil!ing rent7 interest on loans7
etc.
>iii? Increase! cost on account of pro1lems arising out of fire.
>i#? 0ent of the 1uil!ing ta%en on hire7 till the time on getting the !amage! 1uil!ing
repaire! or reno#ate!7 etc.
(ll these t'pes of losses can 1e inclu!e! in the Comprehensi#e Scope of fire insurance polic'7 the
premiums of such policies are much higher than the or!inar' policies.
4.2 Procedure of ffecting !ire Insurance
;
*he steps to 1e follo5e! in connection 5ith affecting fire insurance are as un!er.
1. Selection of insurer. *he selection of the insurance compan' is the first step. *he
insure! is reDuire! to select a suita1le compan' for this purpose amongst a large num1er of companies
engage! in this 1usiness. (fter the nationaliation of general insurance 1usiness in In!ia7 the first
insurance 1usiness is un!erta%en 1' four su1si!iar' companies of the 4eneral Insurance Corporation
>4IC? of In!ia7 #i.. >1? *he National Insurance Co. $t!.7 Lol%ataK >2? Ne5 In!ia (ssurance Co. $t!.
>3? /riental Fire an! 4eneral Insurance Co. $t!. >4? +nite! In!ia Fire an! 4eneral Insurance Co. $t!.
Chennai. *hese companies ha#e 1ranches all o#er In!ia.
*he proposer can selecte! an' of these companies accor!ing to his con#enience7
rationalit'7 goo!5ill of the compan'7 its financial soun!ness7 premium rates7 policies an! ser#ice
pro#i!e! etc.
2. Presentation of proposal in the prescri5ed for&/ (fter the selection of the
insurance compan' a proposal form is o1taine! an! furnishe! 5ith the insurer or his agent. *he
particulars a1out the name7 a!!ress7 occupation of the proposer7 #alue an! nature of the su1Cect matter
of insurance7 t'pe of polic' reDuire!7 amount of sum insure! etc. are to 1e furnishe! 5ith care an!
utmost goo!=faith. (ll the facts a1out the su1Cect matter shoul! 1e clearl' !isclose!.
3. 3idence of good6ill/ *he proposer is reDuire! to furnish a certificate as e#i!ence
of his goo! 5ill along 5ith the proposal. *he format of this certificate is gi#en 5ith proposal form
itself. +suall'7 the insurance agent certifies that he %no5s the proposer for a perio! time an! his
reputation is goo! in the societ'. In case the proposer is not %no5n personall' to the agent or of
!ou1tful integrit'7 the proposer 5ill 1e as%e! to furnish such n e#i!ence from an' repute! person in
the societ'.
4. 'eco&&endations 57 +gent/ *he agent also gi#es his recommen!ations in the
proposal form at the place pro#i!e! for this purpose. *he insurer ta%es the !ecision to accept a
proposal %eeping in #ie5 of the recommen!ations gi#en 1' the agent.
5. Sur3e7 of the su58ect &atter/ -hen a proposal for fire insurance is recei#e! in
the office of the compan'7 it ma%es a thorough stu!' of the proposal an! if necessar'7 a sur#e' of the
su1Cect matter of insurance is con!ucte!. Such a sur#e' is con!ucte! 1' e"pert sur#e'ors7 5ho 5ill go
into enDuire a1out the con!itions of the su1Cect matter7 surroun!ing situations of the su1Cect matter7
ris%s in#ol#e! etc. *he sur#e'ors also #erif' the accurac' of the !etails furnishe! in the proposal.
6. 'eport 57 Sur3e7ors/ (fter the sur#e'7 the sur#e'ors present a report to the
insurance compan'. *his report 5ill state the ph'sical an! moral haar!s in#ol#e! in the proposal.
*his report ser#es as an important 1ase for !etermining premium.
:. +cceptance of proposal/ (fter !etermination of premium on the 1asis of ris%
in#ol#e!7 the proposal is accepte! an! an intimation is sent to the proposer as%ing him to pa' the
premium 5ithin a specifie! perio! of time. If the sur#e'ors present an a!#erse report7 the proposal is
reCecte! an! a regret letter is sent to proposer.
B. #epositing of pre&iu& &one7/ ( la5ful contract 1et5een the insure! an! the
insurer is entere! into7 5hen the premium mone' is !eposite! 1' the insure!. *he ris% commences as
soon as the premium is remitte!.
;. Issue of Co3er *ote/ (s soon as the premium mone' is !eposite!7 the insurer
issues a co#er note >a pro#isional polic'? in!icating there is that the insure! has !eposite! the
premium an! the insurer has accepte! the proposal. /n issue of a1solute polic' the legalit' of the
co#er note en!s. ( co#er note can also 1e insure! pen!ing the process of sur#e' of the su1Cect matter
an! the premium has not 1een !etermine!.
1<
1<. Issue of Insurance Polic7/ -hen all the reDuirements un!er the ris%s ha#e 1een
complie! 5ith7 the insurer issues the polic' !ul' stampe! an! containing all terms an! con!itions.
*hese terms an! con!itions !efine the mutual rights an! lia1ilities 1et5een the insurer an! the
insure!.
Haar!s in Fire Insurance
Haar!s in fire insurance means the 5hole causes an! circumstances that create loss
or increase the Duantum of losses. Certain haar!s create loss 1' fire or certain haar!s increase
chances of ta%ing place of fire.
*he haar!s in fire insurance can 1e groupe! into.
I. Ph'sical Haar!s7 an!
II. Moral Haar!s
I. Ph'sical Haar!s
Ph'sical haar!s are concerne! 5ith material features or arises from the su1Cect
matter of fire insurance can 1e 1uil!ing7 shops7 factor'7 go!o5ns or an' houses or an' materials etc.
)#er' one of these can 1e insure!. From the proposal form itself7 ph'sical haar!s can 1e estimate!.
For this purpose7 the follo5ing aspects of the su1Cect matter are to 1e consi!ere!.
1. Construction of 5uilding/ %no5le!ge a1out the structure of the 1uil!ing is to 1e
estimate! first. *he materials use! for construction of 5alls of the 1uil!ing its terrace7 floors7 !oors
etc. are to 1e consi!ere! for this purpose. In a!!ition to this the age of the 1uil!ing G house7 its height7
num1er of floors in the 1uil!ing Dualit' an! use of 5oo!s in the 1uil!ing7 etc. are also to 1e #erifie!.
From each of these factors7 the ph'sical haar!s can 1e estimate!.
2. Use of the 5uilding or pre&ises/ *he fire insurance haar!s also influence the
1uil!ing or its premises for 5hat purposes. *he 1uil!ing or its premises can 1e use! for housing7 shop7
go!o5n7 office7 hotel7 school7 hospital etc. *he nature of materials %ept in the 1uil!ing or the purpose
for 5hich the 1uil!ing is use!7 ma' increase or !ecrease the chances of fire insurance haar!s. For
e"ample7 the 1uil!ing or premises 5hich are use! for %eeping e"plosi#e items7 or inflamma1le
materials7 etc. increases the haar!s.
3. location of the 5uilding or pre&ises. *he location of the 1uil!ing or the
premises influence the occurrence of fire insurance haar!s. *he use of the house ma' not increase
the haar!s7 1ut the location of the 1uil!ing can increases the chance of fire haar!s. For e"ample7
e"plosi#e shop near to a cloth shop. *here is #er' rare chance of fire from the cloth shop. 1ut its
nearness to an e"plosi#e shop increases the chances of fire.
4. lectrification/ *he metho! of electrification or its nature can increase or
!ecrease the fire insurance haar!s.
5. Interior #ecoration/ (t the present time of mo!ern st'le of li#ing7 interior7
!ecoration of the houseG 1uil!ing is a usual matter. *he interior !ecoration is !one 5ith the materials
li%e 5oo!7 cloth7 paper7 an! paper 1oar!7 s'nthetic insulating materials etc. (ll these materials
increase the chances or fire haar!s.
II .Moral Haar!s.
Moral haar!s are the outcome of nature7 1eha#iour an! attitu!e of people.
Carelessness7 !ishonest'7 negligence7 insanit'7 loc% of proper e!ucation7 social an! economic structure
of the societ' etc. are the causes of moral haar!s. *he #arious causes of moral haar!s are.
1. ,ishonest'. -ith this intention7 the insure! propert' sets on fire. *his is !one
to claim higher amount for less costing propert'. In man' occasions such people ma%e efforts in
charging claim for higher amount.
11
2. Negligence. In man' occasions7 !ue to negligence of the insure! or his
emplo'eesK the fire ta%e places in the 1uil!ing or the goo!s. &' hi!ing the truth7 the claim is recei#e!
from the insurer.
3. +ncor!ial In!ustrial 0elations. In man' occasions7 !ue uncor!ial relations
1et5een the emplo'er an! emplo'ees7 the insure! propert' set on fire. *he insure! then claims the
loss from the insurer.
4. Mean Mentalit'. Sometimes the insurer %eeps mean mentalit' to5ar!s the
insurer7 an! in or!er to e"ploit the reputation of the insurer claims are ma!e for such losses also.
5. Ci#il ,istur1ances. Sometimes certain 1a! elements in the societ' puts fire
on the insure! propert'. *he insure! 1ecomes successful in getting compensationG claim for the
insurer.
6. Non= taste for re!ucing ris%s. It is the !ut' of the insure! to ta%e necessar'
steps to re!uce the effects of fire7 5hen a fire7 5hen a fire is 1ro%en in the premisesG 1uil!ing. &ut
man' insure!Is ne#er ta%e an' suita1le step to re!uce the ris%.
*hese t'pes of ris%s are categorie! as moral haar!s in fire insurance.
12
4.2.2 Perils insured against and pro9i&ate cause/
In a fire polic' it is necessar' that fire must 1e the pro"imate cause of the loss. ( shop
5as insure! against loss from an' cause 5hatsoe#er e"cept fire. ( fire 1ro%e out on the a!Coining
premises an! sprea! to the rear of the plaintiffIs shop 1ut no further. -hile the plaintiff 5as shifting
his stoc% to safet'7 a mo1 attracte! 1' the fire7 tore !o5n the shop shutters an! 1ro%e the 5in!o5s for
the purpose of plun!er. It 5as hel! that the pro"imate cause of the !amage 5as not fire7 1ut the
la5less act of the mo1. 33
Fire means actual ignition an! not merel' generation of heat. Certain propert' 5as
insure! against fire. ( Duantit' of gunpo5!er 1elonging to a person at some !istance from the
plaintiffIs propert' e"plo!e!7 the shoc% of 5hich shattere! the 5in!o5s an! !amage! the plaintiffIs
propert'. It 5as hel! that as the pro"imate cause of the !amage 5as a concussion of air7 an! not fire7
the plaintiff coul! not reco#er. 34= &H$)S sai!.
J*he e"pression in the polic' 5hich 5e ha#e to construe is7 I loss or !amage
occasione! 1' fireI. *hose 5or!s are to 1e construe! as or!inar' people 5oul! construe them. *he'
mean loss or !amage either 1' ignition of the article consume!7 or 1' ignition of part of the premises
5here the article is in the one case there is a loss7 in the other !amage7 occasione! 1' fire. $or! &acon
sa'. I It 5ere infinite for the la5 to Cu!ge the causes of causes7 an! their impulsions one of another7
therefore it contente! itself 5ith the imme!iate cause7 an! Cu!ge! of acts 1' that7 5ithout loo%ing to
an' further !egree.I If that 5ere not so7 a ship in the neigh1orhoo! of Mount )tna or 3esu#ius !uring
an eruption7 an! recei#ing !amage from su1stances proCecte! there from7 might 1e sai! to 1e
!amage! 1' fire. So7 a falling amongst croc%er' 5are might in one sense 1e sai! to occasion a loss 1'
fire. &ut neither of these case! 5oul! fall 5ithin these 5or!s7 5hich must 1e un!erstoo! in their plain
an! or!inar' senseJ
-here a ser#ant7 !ue to his negligence7 faile! to open the co#er of an o#en7
concentrate! smo%e an! heat escape! !amaging some sugar 5hich 5as 1eing refine!K this 5as hel! to
1e not a loss !ue to fire. 35 *he court sai! that there 5as no more fire than al5a's e"iste! 5hen the
manufacturing 5as going on. Nothing 5as consume! 1' fire. *he loss 5as !ue to the negligent
management of the machiner'. *he sugar 5as chiefl' !amage! 1' the heatK an! 5hat pro!uce! that
heat7 not an' fire7 1ut the fire7 1ut the fire for heating the pans 5hich 5as usual. *he ser#ant forgot to
open the register 1' 5hich the smo%e ought to ha#e escape!7 an! the heat to ha#e 1een tempere!.
4i11s CF sai!. 36
JIf there is a fire7 it is no ans5er that it 5as occasione! 1' the negligence or miscon!uct of
ser#antsK 1ut in this case there 5as no fire e"cept in the sto#e an! the flue7 as there ought to ha#e
1een7 an! the loss 5as occasione! 1' the confinement of heat. Ha! the fire 1een 1rought out of the
flue7 an! an'thing ha! 1een 1urnt7 the compan' 5oul! ha#e 1een lia1le. &ut can this 1e sai!7 5here
the fire ne#er 5as at all e"cessi#e7 an! 5as al5a's confine! 5ithin its proper limitsM *his is not a fire
5ithin the meaning of the polic'7 nor a loss for 5hich the compan' un!erta%e. *he' might as 5ell 1e
sue! for the !amage !one to !ra5ing E room furniture 1' a smo%' chimne'J
an' loss resulting from an apparentl' necessar' an! 1one fi!e effort to put out a fire7
5hether it 1e 1' spoiling the goo!s 1' 5ater7 or thro5ing the articles of furniture out of a 5in!o57 or
e#en the !estro'ing of a neigh1oring house 1' an e"plosion for the purpose of chec%ing the progress
of the flames7 in a 5or% e#er' loss that clearl' an! pro"imatel' result7 5hether !irectl' or in!irectl'
from the fire7 is 5ithin the polic'. *he e"penses cause! in shifting the 1usiness to some other place
after a fire an! the loss of profits resulting from the loss of 1usiness are not losses cause! 1' the fire.
If there is a fir7 it is no ans5er that is 5as occasione! 1' the negligence or miscon!uct of the
ser#ants or of the o5ner himself. *hus7 5here a 5omen ha#ing insure! her Ce5eller' un!er a
13
comprehensi#e co#er7 inclu!ing fire7 hi! it in the sitting room grate. Su1seDuent to that an!
completel' forgetting the Ce5eller'7 she ignite! the fireplace an! the Ce5eller' 5as !amage! 1' the
fire. *he insurer 5as not permitte! to escape lia1ilit'. 3; It 5as a loss 1' fire an it mattere! not
5hether the fire came to the insure! propert' or the insure! propert' came to the fire. (t%inson F sai!.
JI can see no reason 5hate#er for limiting the in!emnit' gi#en 1' the polic' in the
5a' claime! 1' the !efen!ant. In m' Cu!gment7 the ris%s against 5hich the plaintiff is insure! inclu!e
the ris% of insure! propert' coming unintentionall' in contract 5ith fire an! 1eing there1' !estro'e!
or !amage!7 an! it matters not 5hether that fire comes to the insure! propert' or the insure! propert'
comes to the fire. *he 5or!s of the polic' are Cust as !escripti#e of one as the' are of the other7 an! I
cannot rea! into the contract a limitation 5hich is not there. *o ena1le me to accept the contention of
the un!er= 5riters. I shoul! ha#e to rea! something into the contract some such 5or!s as Junless the
insure! propert' is 1urne! 1' coming in contact 5ith fire in a place 5here fire is inten!e! to 1e.J -h'
shoul! IM -hat Custification can there 1e for so !oingM *o 5hat a1sur!ities 5oul! it lea!M ( rea! hot
cin!er Cumps from the fire an! sets 5in!o5 1lo5s the same paper of #alue. (!mitte!l'7 there is
lia1ilit'. ( !raught from the 5in!o5 1lo5s the same paper into the same fire. Is that an' less an
acci!ental loss 1' fireM (re the 5or!s in the polic' an' less applica1le to the latter than the' are to the
formerM ( !raught 1lo5s the flame of a can!le against a curtain. (!mitte!l'7 there is lia1ilit'. 5hat if
there curtain is 1lo5n against the flame of the can!le7 ho5e#erM Surel' the result must 1e the same. If
it is not the same7 the result is an a1sur!it'. if it is the same7 5h' shoul! the result 1e !ifferent if one
su1stitutes a fire in a grate for the lighte! can!le in a can!lestic%M +nless I am 1oun! 1' authorit' to
the contrar'7 or unless I can fin! a consensus of opinion to the contrar' among te"t1oo% 5riters
in!icating a generall' accepte! opinion to the contrar' among te"t1oo% 5riters in!icating a generall'
accepte! interpretation of these 5or!. I must gi#e effect to the #ie5 I ha#e forme!.J
>(? 9cepted perils/
Fire policies often pro#i!e that there 5oul! 1e no lia1ilit' for loss cause! 1' gas7
e"plosion7 rior7 ci#il commotion or 5ar. Such ris%s constitute the e"cepte! perils. Sometimes an
e"plosion lea!s to a fire or a fire to an e"plosion. *he court has to !etermine 5hether the loss 5as !ue
to fire of !ue to an e"cepte! peril. In a polic' of fire 5hich e"cepte! Je"plosion 1' gasJ7 L)$$H C&
sai!. 4<
I thin% 5e must construe the 5or!s use! in the polic' accor!ing to their usual an!
popular signification7 not to their strictl' philosophical an! scientific meaning. *he polic' goes on to
sa'. JNeither 5ill the compan' 1e responsi1le for loss or !amage 1' e"plosion7 e"cept for such loss of
!amage as shall arise from e"plosion 1' gasJ. *he parties7 5hen the' use! the e"pression Je"plosion
1' gasJ7 must ha#e contemplate! an e"plosion arising from a cause that is no5 freDuentl' a cause of
acci!ents= namel' the ignition of gas use! for illuminating purposes. It is Duite clear that this 5as not
an e"plosion 1' gas of that character. It appears that in the process of the plaintiffs manufacture a
highl' E inflamma1le pro!uct 5as generate!7 5hich7 on coming into contact 5ith the atmosphere
ignite!. *he Duestion is 5hether that pro!uct 5as gas 5ithin the meaning of this polic'7 an! I thin% it
5as not7 It ma' 1e I gasJ7 using the term in its strict philosophical an! scientific senseK the 5ater of the
ocean is compose! of gases in the strict sense of the 5or!K 1ut this is not 5hat is meant in popular
parlance 1' the 5or! JgasJ.
In a polic' of insurance against fire there 5as a pro#ision that the insurer shall not 1e
lia1le in case the house 5as 1urnt 1' reason of an' in#asion7 foreign enemies7 or an' militar' or
usurpe! po5er. ( mo1 protesting against high prices !amage! the house an! later in another mo1
5ai#e the house 5as 1urnt. *he insurer 5as hel! lia1le7 for the acti#ities of a la5less mo1 5ere not
co#ere! 1' the a1o#e state! e"ception an! the house 5as lost 1' fire. J-hat is the true i!ea7J sai!
14
-I$M/* CF7 Con#e'e! to the min! 1' the 5or!s Jusurpe! po5erJM *he rule to fin! it out7 is to
consi!er the 5or!s of the conte"t7 an! to atten! to the popular use of the 5or!s. M' i!ea of the 5or!s
1urnt 1' usurpe! po5er7 from the content7 is7 that the' mean 1urnt7 or set on fire 1' occasion of an
in#asion from a1roa!7 or of an internal re1ellion7 5hen armies are emplo'e! to support it.
*he 5or!s Jmilitar' po5erJ in a fire polic' ha#e 1een hel! to inclu!e !amage cause!
1' a foreign militar' po5er. In this case a 1om1 from an enem' Neppelin !uring an air rai! !amage!
a 1uil!ing 5hich 5as insure! un!er a fire polic' e"clu!ing !amage from Jinsurrection7 riots7 ci#il
commotion or militar' or usurpe! po5erJ. It 5as hel! that Jmilitar' po5erJ inclu!e! foreign militar'
po5er7 an! that therefore the insurer 5as not lia1le un!er the polic'.
-here the insurance compan' too% possession of the premises in or!er to minimie
the !amage 1' sal#aging operation 1ut instea! aggra#ate! it 1' allo5ing 5ater to remain on the
premises for a longer time than 5as necessar' for putting out the fire7 the compan' 5as hel! lia1le for
the increase! !amage.$or! Moulton sai!.
JIt raise!7 therefore7 the plain an! simple issue 5hether the loss !ue to fire an! 5ater
un!er such a polic' is to 1e !etermine! at the moment 5hen the fife is e"tinguishe!7 or 5hen the
companies gi#e up possession of the premises to the o5ner after e"ercising the po5ers gi#en to them
1' the polic' for the purpose of ena1ling them to minimie the !amage. It is7 ho5e#er7 scarcel'
necessar' that their lor!ship shoul! formall' negati#e the contention of the companies in this respect7
for it so o1#iousl' unreasona1le that the eminent counsel 5ho appeare! for them on the appeal !i! not
attempt to support it. *he fun!amental error..... seems to ha#e arisen from a misapprehension of the
position of an insurance compan' ta%ing an! hol!ing possession of propert' !amage! 1' a fire un!er
the pro#ision in #irtue of 5hich it !oes so are for the purpose of ena1ling it to minimie the !amage.
Inasmuch as it has to 1ear the loss there is no one so !irectl' intereste! in !oing e#er'thing that is
5ise for the purpose of ma%ing the 1est of the situation. It !oes so in its o5n interest7 not 1ecause it is
un!er a !ut' to the assure!. Its po5ers are of the nature of a pri#ilege to !o that 5hich is most for its
o5n 1enefit un!er the circumstances so as to re!uce the loss. In the present case7 therefore7 there is no
Duestion of tort on the part of the companies. *he' ma' ha#e thought that its 5as not 5orth= 5hile to
e"pen! mone' in !r'ing the machiner'. In this #ie5 the' ma' ha#e 1een right or 5rong 1ut the'
unDuestiona1l' ha! full po5er to ta%e the course 5hich in fact the' !i! ta%e. &ut 5hen the' ha#e thus
ta%en possession of the premises an! !one 5hat in their opinion 5as 5isest to minimie the !amage7
the' cannot sa' that the actual !amage is not the natural an! !irect conseDuences of the fire.
Proce!ure an! 1ur!en of proof.
*he insure! has onl' to sho5 that loss 5as cause! 1' fire. *his ma%es out a prima
facie case on his part. *he insurer ma' then sho5 in !efense that the fire 5as cause! 1' the insure!
himself or that it 5as !ue to his conni#ance. *his principle 5as applie! in a case in 5hich a 'acht 5as
totall' !estro'e! 1' fire. *he court !i! not accept the plea of the insurer that it 5as for the incurre! to
!ispro#e that the fire 5as not cause! 5ith his consent or conni#ance. S($/M/N $F state! the
principle thus.44
J *he Point 5hich I ha#e to !eci!e !epen!s on 5hether the principles enunciate! in
the cases to 5hich I ha#e referre! put the onus on the plaintiff7 5here the claim un!er the polic' is for
Iloss 1' fireI7 to e"clu!e a fire cause! 1' his o5n act. *he point as far as I %no5 has ne#er 1een
!eci!e!7 an! counsels ha#e 1een una1le in their researches to fin! an' case 1earing !irectl' on this
point. In m' Cu!gment7 the onus of proof in cases such as the one 1efore me is !ifferent from the onus
of proof in the Iperils of the seaI cases. *he ris% of fire insure! against is Duite o1#iousl' not confine!
to an acci!ental fire. If the ship ha! 1een set alight 1' some mischie#ous person 5ithout the plaintiffIs
conni#ance7 there coul! 1e no !ou1t that the plaintiff 5oul! 1e instille! to reco#er. /f course the
15
plaintiff cannot reco#er if he 5as the person 5ho fire! the ship r 5as a part' to the ship 1eing fire!M
*his result7 ho5e#er7 !oes not
16
Interpretation of Jreasona1le careJ pro#isions.
Pro#isions as to the !ut' of the insure! to ta%e reasona1le care of the thing insure!
came into policies o1#iousl' 1ecause no un!er5riter 5ishe! that his polic' shoul! 1ecome a license
for la"it'. *he Duestions arose as to 5hat meaning is to 1e gi#en to the 5or!s Jreasona1le careJ. If
the' are ta%en to mean simple negligence7 the #er' purpose of ta%ing out an insurance polic' 5oul!
1e !efeate!. ( situation of theft 5ithout negligence 5oul! reDuire the state of ro11er'. *he courts
ha#e 1een of the #ie5 that simple negligence shoul! not 1e ta%en as ousting the insurerIs lia1ilit'.
*here must at least 1e a state of rec%lessness.
J&ene#olent Cu!icial construction a#oi!e! that conseDuence7 1' rea!ing the
pro#isions not to !en' lia1ilit' 5here the insure! has 1een onl' or!inaril' negligent7 1ut onl' if there
has 1een pro#en !isregar! of or!inar' stan!ar!s7 a measure of rec%lessnessJ 65
In Fraser # &.N. Furman >Pro!uctions? $t! 66 ,IP$/CL $F state! the reDuirement for the
insurer to repu!iate lia1ilit' to 1e sho5n affirmati#el' that the failure to ta%e precautions 5as !one
rec%lessl'7 J that is to sa' 5ith actual recognition of the !anger.....an! not carting 5hether or not that
!anger 5as a#erte!J. In -.F. $ane # Spraft6: the court hel! the insurer lia1le 1' restricting the !ue
care o1ligation to steps relating to the ph'sical safeguar!ing of the goo!s7 not the ta%ing of
precautions in emplo'ing the participant !ri#er7 5ho a1scon!e! 5ith his first loa!. *he case !i! not
thus in#ol#e consi!eration of the le#el of care an! the polic'K co#ere! commercial ris%s.
In ,e#co Hol!er $t!. # $egal an! 4eneral (ssurance Societ' $t!. 6B the !ri#er of the
insure! care left it7 5ith %e's in the ignition an! unloc%e!7 in a car par% at a station 5hile he 5ent to
his office across the roa!. He 5as some5hat !ela'e! an! the care 5as stolen. *he natural !efense
raise! 1' the insurer 5as that lea#ing the %e's in the ignition an! the car unloc%e! 5as !eli1erate. In
the chosen passages from the Cu!gment of ,IP$/CL $F ha! lai! consi!era1le stress on not so
construing the con!ition so as to frustrate of largel' emasculate the commercial purpose of the polic'7
5hich in the conte"t of the earlier case meant Jit is not enough the emplo'erIs omission .... shoul! 1e
negligent7 it must 1e at least rec%less.....J... *he thrust of the appellantIs case 5as that the rec%less test
5as misapplie! 1' the trial Cu!ge in the present case 1ut that !efense 5as reCecte!. *he' sai! that the
!ri#er ha! 1een J!eli1eratel' courting a !angerJ S$(,) $F sai!.
JIf the %e's ha! 1een left in the ignition merel' 1' ina!#ertence the position 5oul!
ha#e 1een Duite !ifferent on the facts7 an! might 5ell ha#e 1een !ifferent on the la5===e#en on the
assumption that the test applie! in Fraser 5as the right test to appl'....the learne! Cu!ge..... reache! the
right conclusionJ
*he insure! lost the case.
In another case7 6; a famil' set out for a car trip to France 5ith fi#e pac%e! suitcases
an! a leather pouch containing Ce5eller'7 insure! for some O 4<.<<<. *he' 5ere loc%e! in the glo#e
compartment. *he' ha! some time to spare at a mi!!le place an!7 therefore7 !eci!e! to #isit a castle at
that place. *he' par%e! the car at small par% 5hich 5as meant for staff. *he' too% out some O 3<<<
5orth of cash an! some tra#ellersI cheDues 5ith them. *he Ce5eller' 5as allo5e! to remain in the
loc%e! car. *he' !i! not reach their !estination. *he' 5ere a5a' from the car for Cust a1out 15
minutes of 5hich for onl' 5 minutes the car 5as out of their sight. /n coming 1ac%7 the' foun! that
their suitcases7 three ha! 1ags an! the Ce5eller' pouch ha! 1een stolen. *he theft 5as committe! 1'
smashing a 5in!o5. *he Duestion 5as 5hether reasona1le care ha! 1een e"ercise!. *he trial Cu!ge
hel! that the plaintiff !i! act 5ithin the 1oun!s of reasona1le pru!ence...an! there 5as not a !egree of
rec%lessness 5hich 5oul! Custif' the e"clusion of lia1ilit'. *he court of appeal 5as of the #ie5 that
the same te"t 5oul! appl' to propert' cases as much as it applies to lia1ilit' cases. *hus the uni#ersal
test of rec%lessness 5as to appl' throughout an! 1' reference to it7 the !efense of the insurer faile!.
1:
*hese principles 5ere also applie! to a case:< in 5hich the insure! 1ecome the
#ictim of a frau!. *he 1rother of the insure! too% a #alua1le JClassicJ car to France to allo5 it to 1e
#ie5e! 1' a potential customer of an interme!iar' 5ho turne! out to 1e a consummate frau!ster. He
ha! sho5n consi!era1le %no5le!ge of the specialist mar%et an! ha! gi#en a plausi1le e"planation for
not operating from a fi"e! office. *he' !ro#e to &elgium 5here the car7 5orth O 357<<<. 5as par%e!
in a restaurant forecourt. *he frau!ster in!icate! he 5ante! to #isit his customer to !iscuss the !eal
5ith him an! the 1rother han!e! him the %e's7 e"plaining that the car must not 1e !ri#en as it 5as
onl' insure! for him to !ri#e7 1ut assuming the %e's 5oul! 1e nee!e! to allo5 a static inspection.
(fter 3< minutes frau!ster telephone! to report goo! progress7 so he 5oul! return to the restaurant
shortl'. *5ent'= fi#e minutes later7 the 1rother 5ent outsi!e7 an! foun! the care goneK he assume! a
short test !ri#e 1ut 15 minutes on realise! it ha! gone an! contacte! the police. It 5as ne#er seen
again. *he insure!Is claim 5as reCecte! for 1reach of a routine con!ition. J the insure! must ta%e all
reasona1le steps to safeguar! an' propert' insure! an! to a#oi! acci!ents 5hich ma' lea! to !amage
of inCur'J.
*he court foun!e! its !ecision on the soft case. In particular the Cu!ge cite! the
citation 1' $$/H, $F in that case of the !ictum of ,IP$/CL $F in Fraser # Furman.:1
J0easona1leI !oes not mean reasona1le as 1et5een the emplo'er an! the emplo'ee. It
means reasona1le as 1et5een the insure! an! the insurer ha#ing regar! to the commercial purpose of
the contract7 5hich is inter alias to in!emnif' the insure! against lia1ilit' for his >the insure!Is?
personal negligenceJ
It is not enough that the emplo'erIs omission ....Shoul! 1e negligentK it must 1e at
least rec%lessJ. *he Cu!ge in this case !i! not fin! the 1rother rec%less7 so e allo5e! the insure!Is
claim.
*he &ureau reCecte! a case in 5hich a han! 1ag containing a ring #alue! at O 2;5<
5as left in full #ie5 on the passenger sent in a loc%e! car. :2 *he o5ner 5as a5a' for half an hour.
*he 1ag 5ith the ring 5as stolen. In a re#ie5 petition7 the follo5ing passage of ,IP$/CL $F 5as
relie! upon as reiterate! in the Soft case.
J*he legal position is that the insure!...must IcourtI a !anger the e"istence of 5hich he
recognies. He courts !anger 1' ta%ing measure 5hich he %no5s are ina!eDuate to a#ert it of in!ee!
no measures at all. 0ecognition of the !angers is su1Cecti#e as is %no5le!ge of the a!eDuac' >or lac%?
as the steps ta%en so a#ert the ris%J
*echnical legal 5or!s ha#e to 1e ta%en in their strict technical meaning. In this
case.:3
( 1urglar' polic' relating to premises use! as a 1a%er' e"clu!e! the lia1ilit' of
insurance compan' if loss or !amage resulte! from a IriotI. Four arme! men hel! up the emplo'ees
5ith re#ol#ers an! seie! mone' in a cashierIs office. *here 5as no other !istur1ance at all in the
neigh1orhoo!. It 5as hel!7 1' the House of lor!7 that the 5or! IriotI 5as use! in its technical legal
meaning an! the action of the arme! men constitute! a IriotI ConseDuentl' the insure! coul! not
reco#er un!er the polic'. $or! Sumner sai!K :4 JIt is true that the uninstructe! la'man pro1a1l' !oes
not thin% un!er the 5or! IriotI of e#en such a scene7 as is !escri1e! in the case state!. Ho5 he 5oul!
!escri1e it I %no5 not7 1ut he pro1a1l' thin%s of something7 if not more picturesDue7 at an' rate more
nois'. &ut there is no 5arrant here for sa'ing that 5hen the pro#iso uses a 5or! 5hich is emphaticall'
a term of at7 it is to 1e confine!7 in the interpretation of the polic'7 to circumstances 5hich are onl'
5ith the popular notions on the su1Cect an! are not 5ithin the technical meaning of the 5or!. *hat
clearl' must 1e so 5ith regar! to marital la5K that7 I thin% must 1e so 5ith regar! to acts of foreign
1B
enemiesK an! I see no reason at all 5h' the 5or! IriotI shoul! not inclu!e its technical meaning as
clearl' as 1urglar' or house= 1rea%ing !oJ
( polic' of insurance against acci!ental loss of 1aggage containe! a clause statingK
JFe5eller'7 5atches7 fiel!=glasses an! other fragile or speciall' #alua1le articles must 1e separatel'
!eclare! an! #alue!J. *he insure! claime! for the loss of a persian lam1 fur coat7 5hich 5as not
separatel' !eclare! an! #alue!. It 5as hel! that7 that the eCus!em generis rule applie!. ( fur coat 5as
not a Jfragile of speciall' #alua1le articleJ reDuiring to separatel' !eclare! an! #alue!. (ccor!ingl'
she 5as entitle! to claim for its loss. 0/-$(**7 F sai!. :5
J*he Duestion I ha#e to as% m'self is 5hether furs are speciall' #alua1le articles in
the same sort of sense as Ce5eller'7 5atches fiel! glasses an! cameras are fragile or speciall' #alua1le
articles. I thin% that the mo!ern an! plain )nglish translation of the !octrine of eCus!em generis. I
other 5or!s7 are the' speciall' #alua1le articles in the senses e"emplifie! 1' the particular instances
name!M *hat is the natural 5a' of putting it. I !o not thin% the' are Furs are a commonplace article of
!ress in the case of nearl' e#er' 5oman of scope for e"tra#agance an! #anit'7 so that 'ou can get furs
of fantastic price7 !oes not7 to m' min!7 sho5 that 1eing commonplace articles of !ress the' are
speciall' #alua1le in the same sort of 5a' that Ce5eller'7 5atches7 fiel! glasses an! cameras are.
H/+S)H/$,)0IS C/MP0)H)NSI3) INS+0(NC)
,amage 1' tree roots.
-here tree roots e"tru!e! to the a!Coining house from the house of the assure! an!
cause! !amage for 5hich the assure! ha! to compensate7 he 5as allo5e! to reco#er in!emnit' from
his insurer un!er a polic' 5hich co#ere! the assure! in respect of all sums of mone' 5hich the
assure! as off pier ma' 1e hel! legall' lia1le in respect of claims ma!e 1' an' person for !amage to
propert' causes 1' acci!ent. *he !amage in Duestion 5as hel! to 1e an acci!ental !amage. :6 P(+$C
sai!.
JI 5oul! as% an! see% to ans5er t5o Duestions. /ne. has there 1een at an' moment of
time >or at particular moments of time? some e"pecte! e#ent >or e#ent? 5hich has >or ha#e? le! to
!amageM M' ans5er to that Duestion is7 Hes. It is true that foun!ation settle7 that is ten! to !rop a little
at one of more points7 an! tat that settling ma' 1e gra!ual. In this case7 ho5e#er7 there has come a
point of time 5hen the mo#ement has o#ersteppe! the safet' limit7 if I ma' use that e"pression7 an! a
crac% in the concrete of in the 1ric%5or% at or near the south=east corner of the house has starte!. *his
ma' ha#e happene! se#eral times7 that is7 there man' ha#e 1een more than one crac%. In humans7 the
o#erstepping of mo#ement m' cause a fracture or a hemorrhage. In a 1uil!ing7 it ma' cause a fracture
of the concreter or of the 1ric%5or%. *here is no acci!ent until the o#erstepping ta%es place. *he
secon! Duestion isK 5hat 5as the cause of the o#erstepping of the safet' limitM M' ans5er is tat the
cause is the nuisance of the roots the penetrating into the plaintiffIs soil an! !raining a5a' the
moisture necessar' to %eep the mo#ement of the house from o#erstepping that safet' limit. In m'
Cu!gment7 these ans5ers result in Cu!gment in fa#our of the !efen!ant for a !eclaration that the
insurers are 1oun! to in!emnif' him against an' sums 5hich he m' ha#e to pa' the plaintiff 1' reason
of m' Cu!gment in the action.J
/CC+PI)0.
*o 1e an JoccupierJ in an essential con!ition of lia1ilit'. It is not a mere ascription of
the person to 5hom lia1ilit' attaches. *he facts of the case 5ere. ::
( person 5as insure! un!er a househol!erIs comprehensi#e polic' 5hich co#ere! him
in respect of Jall sums to 5hich the assure! >as occupier? .....ma' 1e hel! legall' lia1leJ. he 5as the of
occupier of a flat in a manor house7 an! attempte! to smo%e out some 1ir!Is nests in the ea#es outsi!e
1;
the flat 5ith the ai! of a pole to 5hich 5as attache! a 1urring paraffin soa%e! reg. ( fire resulte!7 an!
the 5hole house 1urnt !o5n an! the assure! has to pa' its o5ner O 517<<< 1' 5a' of !amages. He
claime! an in!emnit' from the insurers.
It 5as hel! that he 5as entitle! to an in!emnit' as he 5as an occupier of the premises
concerne!7 an! these inclu!e! the ea#es outsi!e the flat. ,IP/CL $F. sai!.
J-e are7 therefore7 of opinion that upon the facts as he ha! foun! them the learne!
Cu!ge 5as 5rong in la5 in hol!ing that no part of the !ecorati#e cornice 5as inclu!e! in the premises
!emise! to Pthe assure!Q. In our #ie57 all that part of it 5hich 5as fi"e! to the eternal 5all at a le#el
1elo5 the un!ersi!e of the floor Coists of the attic flat forme! part of the !emise! premises an! 5ere
in the occupation of Pthe assure!Q. *he sparro5Is nest in 5hich the rele#ant fire starte! 5as against the
cornice 1elo5 that le#el an! 5ithin the 5ire fi"e! to an! enclosing the cornice. *he fire 5hich cause!
the !amage starte! on an! escape! from premises of 5hich he 5as occupier. It 5as starte! negligentl'
an! as such occupier he 5as lia1le for !amage cause! 1' its escape7 Duite apart from his lia1ilit' as
the actual person 5hose o5n negligent act starte! the fire.J
Storm.
*he meaning of storm 5as e"plaine! in /!!' # Pheoni" (ssurance co. $t!.:B
J( 1ungalo5 5as insure! un!er a househol!erIs comprehensi#e polic'. (mongst the
ris%s insure! against 5as loss 1' IstormI of tempestI. ( 5all on a!Coining lan! 1ecomes su1Cecte! to
pressure 1ecause of 5ater 1uil!ing up 1ehin! it o#er a long perio!. *here 5as 1ecause of persistent
hea#' rain in the area. *he 5all Icollapse! on the 1ungalo5. *he insure! claime! that the loss 5as
cause! 1' IstormI or ItempestI.J
*he action faile!. *he court sai! that the 5all 5as insufficient in !esign an! collapse!
from the pressure of 5ater. No. #iolent 5in! cause! an' part of in to fall. JstormJ meant a #iolent
5in!. It !i! not mean hea#' persistent rain7 an! JtempestI meant a #iolent storm.
3)($)7 F sai!K It is in all these circumstances that I ha#e to as% m'self. JHas
the plaintiff sho5n that the cooapse occurre! 1ecause of storm or tempest of floo!MJ It is certainl' not
floo!. J*empestJ7 in m' #ie57 onl' means a se#ere storm. *herefore the operati#e 5or! is JstormJ. I
must approach this Duestion much as a Cur' 5oul! approach it. JStormJ means Storm7 an! to me it
connotes some sort of #iolent 5in! usuall' accompanie! 1' rain or hail or sno5. Storm !oes not mean
persistent 1a! 5eather7 nor !oes it mean hea#' rain of persistent rain 1' itself. I !o not thin% that an'
#iolent 5in! cause! an' part of this 5all to fall. It fell for the reasons that I ha#e state!7 an! finall'7
1ecause of the 1uil!=up of pressure form the percolation of 5ater through the crac%s. In those
circumstances I can onl' conclu!e that the plaintiff has not 1rought herself 5ithin the 5or!ing of the
polic' an! I thin% her claim must fail.
Miscellaneous insurance.
In a!!ition to fire an! Marine insurances7 man' other t'pes of insurance policies are
popular in 4eneral Insurance 1usiness. In recent 'ear7 a large num1er of non=tra!itional policies ha#e
also 1een !e#elope! to pro#i!e more securit' to human life an! propert'.
*he !escription of all those t'pes of miscellaneous policies cannot 1e ma!e here.
/nl' the follo5ing t'pes of policies are !escri1e! 1elo5.
1. Crop Insurance Policies.
2. $i#estoc% Insurance policies.
3. &urglar' Insurance Policies7 an!
4. Personal (cci!ent Insurance policies.
Crop Insurance policies.
2<
In!ia is 1asicall' an agricultural count' an! !ifferent #arieties of crops ha#e 1een
culti#ate! here. Culti#ation of agricultural an! commercial crops ha#e 1een face! 5ith man'
pro1lems7 such as.
1. (!#erse climaticall' con!itions causing !raughts7 floo!s7 untimel' rains7 storms7 col!
5in!s7 fog7 freDuent changes in temperatures7 etc.
2. Pests an! insects causing !amages to crops.
3. -il! animals7 etc.
*he important agricultural culti#ate! in the countr' inclu!e.
1. Foo! Crops= such as 5heat7 Ca5ar7 millet7 pa!!'7 etc.
2. Plantation crops=such as coffee7 tea7 ru11er7 etc.
3. Fruits orchar!s= such as apples7 oranges plantains7 etc.
4. Commercial crops= such as cotton7 Cute7 to1acco7 groun!nuts. etc.
*he farming an! agricultural acti#ities ha#e 1een in#ol#e! 5ith #arious t'pes of ris%s7
such as >i? ris%s arising from the en#ironment of nature7 >ii? social ris%s7 >iii? economic ris%s7 an! >i#?
ris%s to5ar!s agricultural 5or%ers. &ecause of larger an! e"tensi#e ris%s of lossK efforts ha#e 1een
ma!e in In!ia since a long time in the past to intro!uce crop insurance.
)fforts to5ar!s Crops= Insurance In!ia
)fforts ha#e 1een continuousl' ma!e in In!ia since last si" !eca!es to implement the
crop insurance plan more successful. Man' agricultural an! institutions of farmers ha#e 1een acti#e in
this !irection.
(s the first time in 1;3;7 the crops insurance >foo! crops? plan 5as formulate! 1' the
M'sore 4o#ernment. *his effort 5as follo5e! 1' the erst5hile &aro!a state also. In 1;:37 a
compulsor' crop insurance scheme 5as !e#elope! in ,e5as >M.P.?. ,uring this perio!7 certain
committees 5ere also set up 1' the go#ernment to assess the losses of crops gro5n 1' farmers an! to
e"ten! assistance to them. In 1;467 a crop insurance proposal 5as presente! to the 4o#ernment of
Ma!ras. *he (gricultural 0esearch Institute of In!ia ha! also !e#elope! a crop insurance plan for
certain selecte! corps for intro!ucing it in selecte! !i#isions of ma!ras7 &om1a' an! Ma!h'a
Pra!esh. Su1seDuentl'7 in 1;5<7 another crop insurance scheme 1ase! on the +.S. mo!el 5as prepare!
an! presente! to the go#ernment 1' 4.S. Pri'ol%ar.
(ll these efforts in the fiel! of crop insurance coul! not 1e implemente! successfull'
!ue to some or other !ifficult rues. It 5as then felt that the state 4o#ernment is the appropriate
agenc' for intro!ucing crop insurance7 1ut the state go#ernments coul! not implement this plan !ue to
the economic crisis.
In the 'ear 1;5<7 the Central 4o#ernment prepare! a Ipilot SchemeI for
implementation 1' the state go#ernments. &ut none of the state go#ernments 5as prepare! to
implement it 1ecause of the ina1ilit' to un!erta%e the financial lia1ilit'. It 5as after the nationalisation
of 4eneral insurance &usiness7 special efforts ha#e 1een ma!e to5ar!s the implementation of crop
insurance plan. finall'7 !uring the perio! 1et5een 1;:4 an! 1;:67 the 4eneral Insurance Corporation
implemente! the crop insurance in foo! crops >cotton7 5heat an! potatoes? in the states of 4uCarat7
(n!hra Pra!esh7 Larnata%a7 *amil=Na!u an! 5est &engal7 Ho5e#er7 !ue to the follo5ing reasons7 the
foo! crop insurance plan ha! to 1e 5ith!ra5n later.
1. Pro1lems relating to collection of premiums an! calculation of crops output.
2. Incurring of more e"penses in management of the scheme7 than the premiums
collecte!.
3. Intro!uction of scheme in limite! num1er of crops.
4. $arger ris%s follo5ing large num1er of claims.
21
5. Ina1ilit' of the state go#ernment to support the plan.
6. Ina!eDuate facilit' to minimie ris%s.
:. ,epen!enc' on large fertilier companies.
B. $ac% of coor!ination 1et5een the functioning units.
In 1;:B= :;7 the 4eneral Insurance Corporation intro!uce! a Jpilot Crop Insurance
planJ an! continue! this plan till 1;B5=B6 5hen this plan 5as 5ith!ra5n an! in its place7 a
Jcomprehensi#e crop Insurance PlanJ has 1een intro!uce! throughout the countr'.
/1Cects of Crop Insurance.=
Ne5 metho!s culti#ation an! high 'iel!ing crops ha#e 1een !e#elope! in countr' in
the areas of foo! corps an! commercial corps. in spite of these !e#elopment7 the In!ian farmers still
ha#e to 1ear hea#' losses from unfa#ora1le climaticall' con!ition. Most of the agricultural 1ase!
countries !o not ha#e suita1le means of resources to o#ercome such losses arising out of failure of
crops. *he o1Cecti#es of crop insurance is to in!emnif' the farmers from the losses occurring !ue to
the follo5ing causes.
>1? Climaticall' uncertainties li%e !raughts7 floo!s7 hea#' storms an! c'clones7 etc.
>2? ,iseases sprea! in crops an! plants.
>3? ,amages to corps form the sprea! of insects an! pests.
>4? 0iots an! stri%es7 etc.
(!#antages of crop insurance.
*he important a!#antages of crop insurance are.
>1? Pro#i!e securit' for agricultural pro!uction. *he crop insurance not onl' protects the
of corps 1ut also caution the farmers to %eep a5a' the crop from !iseases7 1' using pestici!es.
>2? Pro#i!es rights to farmers. *he crop insurance pro#i!es in!emnit' against !amage or
losses to crop7 5hich no5 1ecomes a right of farmers.
>3? Certaint' of pa'ment. 5here the loss arises7 the insurance compan' 1oun!s to ma%e
the pa'ment of claims7 5hereas the go#ernment e"ten!s assistance to the farmers !epen!ing on the
economic con!itions of farmers.
>4? Sta1ilit' to agriculture econom'. Crop insurance is a 4o! gift to the agricultural
econom'7 5hich helps su1stanti#e Pro!uction in the agriculture sector.
>5? Strength to 1asic structure of agriculture. *he crop insurance pro#i!es strength to
1asic structure of agriculture since it gi#es strength to irrigation schemes an! 5ater suppl' sources7
conser#ation of soils7 forests etc.
>6? Increase in income . In the case of !amages to crops7 the farmers cannot 1ear the
e"penses on culti#ation an! for pa'ing rents an! ta"es. &ut crop insurance pro#i!es a regular income
an! e"ten!s support to increase purchasing po5er of the farmers.
>:? (ssistance to in!ustries . In!irectl'7 the crop insurance is a support to agriculture
1ase! in!ustries. In the a1sence of crop insurance7 these in!ustries 5oul! ha#e 1een facing !ifficult'
in getting the regular suppl' of ra5 materials.
>B? 0efun! of agricultural cre!it . Crop insurance is an important source of income to the
farmers. *his sources of incomes has facilitate! in returning the loans an! ta"es to some e"tent.
>;? (cts as a coor!inating agenc' of the go#ernment . Crop insurance is a step for5ar! to
increase the agricultural pro!uction. It acts as a coor!inating agenc' of the go#ernment in the
!e#elopment of agriculture in the countr'.
Plans of crops insurance.
*he important plans of crop insurance are as follo5s .
22
>1? Pilot Crops Insurance plan . *his plan 5as first intro!uce! 1' the 4eneral Insurance
Corporation in 1;:B=:;7 an! it 5as in operation till 1;B4=B5 an! thereafter 5ith!ra5n.
>2? Comprehensi#e Crop Insurance Plan . *his scheme 5as implemente! 1' the Central
4o#ernment for the Lharif season of 1;B5 at the national le#el after the 5ith!ra5al of Pilot Crop
Insurance Plan. *his scheme is manage! 1' the 4eneral Insurance Corporation on 1ehalf of the
Central 4o#ernment.
/1Cects. *he o1Cects of this scheme are .
*he pro#i!e economic assistance to farmers in case of loss to crops 1' floo!s !raughts etc.
*o re=!etermine the eligi1ilit' criteria for loans for the ne"t crops7 5here the farmers suffere! losses at
the present season.
*o e"ten! assistance to the farmers for the culti#ation of foo! crops7 spices an! oil see!s.
Features of the scheme . *he important features of this scheme are as follo5s .
>1? Insure! Crops . Insurance co#er is pro#i!e! for the culti#ation of rice7 5heat7 millet7
oil see!s an! spices.
>2? Securit' to farmers . Crop insurance is pro#i!e! to all the farmers 5ho o1tain cre!it
from cooperati#e cre!it societies7 commercial 1an%s an! regional rural 1an%s for the purpose of
increasing agricultural pro!uction.
>3? Crop insurance ma!e essential for o1taining cre!it . -here the agricultural cre!it is
a#aila1le for increasing pro!uction7 it 5as ma!e essential for the farmers to get their crops insure!
5hile recei#ing cre!it from the a1o#e state! financial institutions.
>1? partnership in sharing ris% . *he ris% in#ol#e! in crop insurance is 1orne 1' the
central an! state go#ernments in the proportion of 2.1 &ut the e"penses to5ar!s the management of
the scheme are eDuall' !istri1ute! 1' the central go#ernment an! 4eneral Insurance Corporation.
>2? Creation of Iinsurance Fun! . *he central go#ernment has create! a fun! calle!
IInsurance Fun!I for the crop insurance plan. Similarl'7 such a fun! 5as create! 1' e#er' state
go#ernment.
>1? Premium . *he premium rates are too minute. *he present rates are as follo5s .
In the case of 5heat7 pa!!' an! millet7 sun eDuals to 2 percent of the sum insure!.
In the case of oil see!s an! spices7 sum eDuals to 1 percent of the sum insure!.
>:? (ssistance to5ar!s premium .5< percent of the premium is pro#i!e to small
an! marginal farmers 1' the go#ernment to5ar!s economic assistance. *his
e"pen!iture is met out the 1' the central an! state go#ernments eDuall'.
Minimum pro!uction . +n!er the scheme7 the minimum agricultural pro!uction shall 1e
eDui#alent to B< percent of the a#erage pro!uction of prece!ing fi#e 'ears.
)"tension of the scheme . *his scheme at present is operati#e in 15 states an! 2 centrall' rule!
pro#inces of the countr'.
State $e#el ICrop Insurance cellI . In or!er for effecti#e implementation an! 1etter coor!ination
1et5een state go#ernments an! relate! institutions the 4eneral Insurance Corporation has set up a
state le#el ICrop Insurance CellI at e#er' state capital.
*he functions of Central Insurance Fun! .
*o collect the crop insurance premiums of the policies 1eing issue! an! from financial institutions.
Settlement of claims imme!iatel'
4i#ing all technical gui!ance an! super#ision of the state fun!s.
Collection an! !issemination of statistical information
*o moti#ate the state go#ernment for nee!ful mar%eting an! pu1licit' matters.
*o esta1lish coor!ination 1et5een crop insurance an! agriculture !e#elopment programmes.
23
>12? 0ole of State 4o#ernments . *he role of state go#ernments in the crop insurance
scheme is as un!er .
>a? *o !elegate po5er to State Crop Insurance Fun! to act as co=insurer for all the crop
insurance policies issue! in the state.
>1? *o e"ten! 25 per cent assistance to all insure! small an! marginal farmers against
insurance premiums.
>c? *o pro#i!e managerial assistance in respect of ma%ing a#aila1le information relating
to agricultural pro!uction an! pu1lication of such information etc.
>13? Monitoring an! Fee! 1ac% . *he crop insurance scheme monitore! from time to
time an! e#aluate! its progress e#er' 'ear. *he (gricultural Ministr' prepares its reports.
Progress of comprehensi#e Crop Insurance plan K
In the 1eginning >1;B5=B6? this plan 5as implemente! 1' 16 states an! has 1enefite!
1' 26 la%h farmers. ( total of B3;1 la%h claims 5ere settle!. *he polic' amount collecte! 5as a tune
of 0s.54.2 crore. *his plan has 1een progressing continuousl' as is e#i!ent from the latest progress
report a#aila1le for 1;;4=;5. ,uring the 'ear 1;;4=;57 the go#ernment has recei#e! from the farmers
a total premium of 0s. 166.66 crore against a total claim of 0s.;63.42 crore. (s per the report of
ministr' of (griculture7 since 1;B5 to 1;;57 a total of 414.41 la%h farmers ha#e 1een 1enefite! 1'
insuring for a total a :1;.B4 la%h Hectare agriculture lan! to a total sum of 0s.1<7<<4 crore. (gainst a
total of 0s.166.66 crore collecte! from the farmers to5ar!s premiums7 claims ha#e 1een pai! for 0s.
;63.62 crore (t present this scheme is operating in 1; states an! 4 Centrall' rule! pro#inces in the
countr'.
$i#estoc% Insurance.
*he importance of li#estoc% insurance is increasing gra!uall' in In!ia 1efore the
nationaliation of 4eneral insurance. Some insurance companies at the pri#ate sector ma!e efforts to
intro!uce li#estoc% insurance in the countr'7 1ut !ue to increasing num1er of claims than the
premiums this programe coul! not 1e succee!e!.
In 1;:47 after the nationaliation of 4eneral insurance 1usiness in In!ia li#estoc%
insurance scheme 5as intro!uce! at the national le#el. ,uring this 'ear itself nearl' 3< thousan!
li#estoc% insurance 5ere ma!e. +n!er the li#e stoc% insurance7 the insurance of co5s7 o"es7 1uffaloes7
camels7 horses7 !ogs etc can 1e ma!e. *he main o1Cect of these insurances is to pro#i!e economic
assistance to farmers in the case of !eath or acci!ent of these animals.
*he premium rates7 con!itions of insurance7 an! restrictions relating to li#estoc%
insurance 1et5een insurance companies necessitate! the general insurance compan' to start IMar%et
ContractI for the li#e= stoc% insurance. *he purpose 5as to 1ring uniformit' in the premium rates7
con!ition an! other restrictions in the fiel! of li#estoc% insurance. *he I mar%et ContractI 5as
intro!uce! from (pril 17 1;:6 un!er 5hich all the su1si!iar' companies of the 4IC7 ha#e !e#elope!
practica1le plans of li#estoc% insurance7 1' follo5ing uniform insurance7 stan!ar!s 1' follo5ing
uniform premium rates7 con!ition an! other prohi1itions 1et5een the su1si!iar' companies.
Main elements of IMar%et Contract.
>1? Contract. (ll the su1si!iar' companies ha#e to follo5 the premium rates7 con!itions
of insurance an! the restriction !etermine! 1' the contract 1et5een them.
>2? Setting up of a Central li#estoc% Committee. ( Central li#estoc% committee
consisting of 4eneral Insurance Corporation an! its four su1si!iar' companies ha#e 1een set up to
ensure the effecti#e operation of mar%et contract.
>3? (ge limits for insurance. ,ifferent age limits ha#e 1een accepte! for !ifferent
categories of animals to 1e insure!.
24
>4? Insurance Co#er. +n!er the li#estoc% polic'7 the insure! shall 1e i!entifie! for the
reasons of !eath7 in#ol#ing acci!ent7 surgical operation7 riot an! stri%es. Insurance co#er is also
pro#i!e! for permanent !isa1ilit' of the animals7 1' pa'ing little more rate of premium.
>5? 0is%s not co#ere! 1' the polic'. *he follo5ing ris%s are not co#ere! 1' the polic'
an!7 therefore7 the insurance compan' shall not lia1le to in!emnit'.
,eath of animal arising out of.
-ar an! allie! ris%s7 stri%es7 riot an! ci#il connotation.
Slaughter of the animals 5ithout prior consent of the insurers.
Fire7 lightening seagoing transit7 surgical operators an! 1ree!ing.
>6? Sum insura1le an! #aluation. *he mar%et #alue of the animal shall 1e !etermine!
from time to time %eeping in #ie5 of the categor' of the animal an! the area.
>:? Premium 0ates. *he premium rates shall 1e !iffer at 6 per cent gross rate to a
minimum of 2.25 per cent per annum.
>B? )"ception from premium. Pa'ment of premium is e"cepte! to the li#estoc% 5hich is
un!er the assistance of the integrate! 0ural ,e#elopment Programme.
>;? Minimum Premium. *he minimum premium for a co5 is 0s. 25 pe annum an! o" 0s.
2<.
>1<? Me!ical e"amination 1' me!ical practitioner. Me!ical e"amination of the cattle is
necessar' 1' appro#e! me!ical practitioner.
>11? I!entification mar%. Pro#i!ing 5ith i!entification mar% ma!e for the cattle insure! is
#er' important.
>12? ,uration of polic'. *he li#estoc% insurance is usuall' ma!e for a 'ear onl'. *he
in!emnit' principle is applica1le in e#er' polic'.
>13? Con!itions attache! 5ith li#estoc% polic'. *he con!itions regar!ing utmost goo!
faith.7 me!ical fitness7 efforts 1' the insure! to minimie the loss as a man of or!inar' pru!ence an!
the pa'ment of claim 1' the insurer7 etc. are state! in the polic'.
Insurance plan for li#estoc% assiste! un!er Integrate! 0ural ,e#elopment Programme.
*he aim of integrate! 0ural ,e#elopment programme >I0,P? is to uplift the small
an! marginal farmers7 lan!less la1ourers7 rural artisans sche!ule! tri1es an! castes7 as economicall'
1ac%5ar! people an! to ma%e a#aila1le the source of emplo'ment to them. +n!er the I0,P7
purchases of co57 camels7 o"7 sheep an! goats7 1uffaloes etc. are ma!e pro#i!e them to poor families.
*he cattle so purchase! are co#ere! 1' the follo5ing three special insurance plansK such as.
Insurance of mil% gi#ing cattles >*his plan 5as starte! from 1;::?.
Insurance of special 1ree! ca1s >*his plan 5as starte! from 1;B<?.
Insurance of o"en use! for agricultural purposes.
&urglar' insurance
&urglar' insurance 5as !e#elope! to pro#i!e securit' against theft7 !ecoit'7 house
1rea%ing etc. to 1usiness enterprises. &an% !ecoit'7 theft of #alua1le propert' from the shops7 1rea% of
loc%s of 1usiness enterprises an! houses7 etc. are the part an! parcel of cit' life in mo!ern !a's.
&urglar' insurance has the follo5ing characteristics.
>1? It is a part of propert' insurance.
>2? It is an in!emnit' insurance.
>3? It is a non=tariff insurance that means the tariff is not uniform in all the
policies. *he tariff >premium rate? is !etermine! %eeping in #ie5 of #arious factors that 5ill !iffer in
in!i#i!ual cases.
25
>4? *he claim can 1e pai! in the form of cash7 repairing of the propert'7
replacement7 etc.
>5? *he principle of utmost goo! faith has much importance.
>6? It also co#ers 1' the principle of su1rogation an! contri1ution.
>:? &urglar' insurance can 1e.
>a? &urglar' insurance >&usiness premises?7 an!
>1? &urglar' insurance >Pri#ate !5ellings?.
Proposal from.
*he proposal form is !ifferent in the case of &urglar' insurance for 1usiness premises
an! for pri#ate !5ellings. *he information to 1e furnishe! in 1oth7 are uniform7 namel'.
>1? Name an! a!!ress of the proposer.
>2? &usiness or occupation of the proposer.
>3? $ocation of the premises.
>4? *'pe of construction.
>5? Propose! sum to 1e insure!.
>6? Histor' of the past insurance7 if an'7 an! its claim.
>:? Full !etails of present 1urglar' insurance proposal.
+n!er=5riting consi!erations in &urglar' Insurance.
( num1er of consi!erations are there 1efore the insurer7 1efore the proposal of
1urglar' insurance is accepte!7 5hich can 1e !i#i!e! into three categories.
>1? 4eneral factors.
>2? 0eport of inspection of ris%s.
>3? Securit' chec%ing
>1? 4eneral Factors. *he factors inclu!e nature of insure! propert'7 surroun!ings of the
insure! propert'7 usual thorough= fare in the 1uil!ing7 histor' of an' pre#ious insurance of the same
1uil!ing etc.
>2? 0eport of inspection of ris%s. &urglar' insurance is not accepte! unless the propert'
is properl' sur#e'e! an! a fa#ora1le report is presente! to the insurer.
>3? Securit' Chec%ing. Securit' chec%ing is essential 1efore the proposal in accepte! 1'
the insurer. *he ris%s factors are stu!ie! thoroughl' in this chec%ing.
&urglar' Insurance policies.
*he maCor 1urglar' insurance policies are as 1elo5.
1. &urglar' >&usiness premises? polic'.
2. &urglar' >Pri#ate resi!ence? polic'
3. Fe5eller' an! #alua1le insurance polic'.
4. (ll ris%s polic'.
5. &aggage insurance polic'.
1. &urglar' an! House 1rea%ing 1rea%ing polic' >&usiness premises?.
*his polic' e"ten!s securit' against the ris%s an! losses if forcea1le entr' of house
1rea%ing. It is in!emnit' insuranceK the claim is pai! to the e"tent of sum insure!. +nless e"pressl'
state! 1' the insure!7 certain ris%s are not co#ere! 1' the polic'7 such as7 !amage to the propert'
5hile e"ecuting an' legal acti#it'7 the ris%s that can 1e co#ere! 1' fire insurance or motor insurance
polic'7 ris%s relating to 5ar perils7 earth=Dua%es7 etc.
26
*hese are certain special con!itions un!er 5hich the insurer is not lia1le to in!emnit'
the losses. *he circumstances inclu!e.
>1? -here the 1uil!ing is %ept aloof for : !a's an! nights.
>2? -here some maCor alterations ha#e 1een ma!e in the 1uil!ing7 5hich increases the
ris%s.
>3? -here the insure! propert' is ta%en out from the 1uil!ing
*he polic' can 1e full #alue! polic'7 >non=!eclaration polic' or stoc% !eclaration polic'? an!
IFirst lossI 1urglar' insurance.
Proce!ure of claim. *he follo5ing proce!ure is follo5e! for settlement of claim un!er this
t'pe of polic'.
( notice of loss 5ithin : !a's to the insurance
>2? Inspection of the 1oo%s of accounts 1' the insurer 5ith the help of chartere!
(ccountant or professional #aluers as soon as the notice of loss in reco#ere! 1' him.
>3? 3aluation of the stoc% 1' comparing the polic' an! claim.
>4? (n enDuir' a1out the financial position of the insure!7 5ith regar! to his financial
position7 1usiness7 #alue of the goo! lost 1' 1urglar' etc.
>5? In a!!ition to the 1oo%s of accounts7 other !ocuments such as #ouchers7 in#oices an!
certificates are !eman!e! from the insure!.
>6? *he insurer then satisfie! himself 1' consi!ering the follo5ing facts.
>a? 5hether the propert' lost 5as the same that all the proof relating to #aluation of the
propert'.
>1? -hether the compan' has recei#e! all the proof relating to #aluation of the propert'.
>c? -hether the claim is 5ithin the polic' limit7 etc.
If satisfie! 5ith all these facts7 the claim is pai! to the insure!.
2. &urglar' >Pri#ate resi!ence? Insurance Polic'. *he su1Cect= matter to 1e
co#ere! un!er this polic' inclu!e furniture7 general househol! goo!s7 personal articles7 Ce5ellear'
an! other #alua1les.
(ll these things can 1e insure! at their total cost. In the case of Ce5eller' an! other
#alua1les7 the limit is one=thir! of the total polic' &' pa'ing e"cess premium7 this can 1e e"cee!e!.
*he follo5ing things are not co#ere! 1' 1urglar' insurance.
>1? ,ee!s7 1ill of e"change7 promissor' notes7 cheDues7 securities7 Stamp !uties7 me!als
an! li%e articles.
>2? Fe5eller' 5hich ha#e 1een 5earing on the 1o!' or 5hich is in the process of
ma%ing7.
>3? /ther items 5hich ha#e 1een e"clu!e! from 1urglar' >1usiness premises? polic'.
3. Fe5eller' an! #alua1le insurance polic'. (ll the restrictions an! limitations
applie! to &urglar' >pri#ate resi!ence? Insurance polic' are eDuall' applica1le to this polic'. *his
polic' pro#i!es securit' against theft. &ut the Ce5eller'K 5hich is in he process of ma%ing of 5hich is
5earing on the human 1o!' shall not 1e co#ere! 1' this polic'.
4. (ll 0is%s insurance Polic'. *he polic' also co#ers the ris%s of theft an!
house 1rea%ing. ,ecision is ta%en for J(ccepte! 3alue PrincipleJ of the insure! #alue of the polic'7
for the pa'ment of claims. &ut the #aluation is !one 5ith the help of professional #aluers.
5. &aggage Insurance Polic'. *his polic' co#ers all the #alua1le materials in
transit7 e"cept the Ce5eller' an! other #alua1les. *his polic' pro#i!es securit' against losses
happening !uring the course of transit 1' acci!ent7 fire or theft7 or !amages. *he securit' un!er this
2:
polic' is entitle! 5ithin the territor' of In!ia onl'. Ho5e#er7 1' pa'ing a!!itional rate of premium7
the scope of the polic' can 1e e"ten!e! throughout the 5or!.
Personal (cci!ent Insurance
Personal acci!ent insurance is the insurance !esigne! to replace a su1stantial part of
earne! income lost 1' !isa1ilit' to a person cause! the loss !ue to !eath7 lea!ing to the acci!ental
inCur'.
Nature of personal acci!ent insurance
1. It is categor' of !ifferent t'pe of insurance.
2. It is a polic' !esigne! for an in!i#i!ual or a group of persons.
3. It is a part of the non=tra!itional insurance.
4. It is a supplement to life insurance7 since it in!emnifies the loss in case of inCur'
lea!ing to !eath.
5. It is tariff insurance un!er 5hich the rate in!emnit' or e#er' t'pe of acci!ent an!
ph'sical ina1ilit' ha#e 1een !etermine!. From Fanuar'7 1;::7 personal acci!ent insurance 5as
1rought un!er tariff insurance.
6. It is an insurance 1ase! on the principle of utmost goo! faith.
:. Strictl' spea%ing7 it is not a contract of in!emnit'. Firstl'7 the ph'sical or life
in!emnit' cannot 1e in!emnifie! in terms of mone'7 since the life is an in#alua1le asset.
Secon!l'7 the polic' un!er personal insurance is issue! as a 1enefit polic'. *his
means that a specifie! amount of claim is pai! to the insure! on happening of e#ent7 5ithout
consi!ering the actual monetar' loss. *his pre!etermine! amount usuall' can 1e more than the actual
monetar' loss. It !oes not mean that the insurer is not a5are of this fact7 he 5ill see that the principle
of in!emnit' is full' o1ser#e!.
B. *he principles of su1rogation an! contri1ution !o not appl' to personal acci!ent
insurance. *his means that an insure! can get an' num1er of acci!ent policies an! are 1enefite!.
*'pes of personal acci!ent insurance.
Some Important t'pes of policies are as 1elo5.
1. Fanta in!i#i!ual t'pes of policies are as 1elo5.
2. *hir! part'G passengerG !ri#er acci!ent polic'.
3. (cci!ental polic' issue! 1' a#iation !epartment.
4. 4roup insurance personal acci!ent polic' for school chil!ren.
5. 0ural personal acci!ent polic'.
6. Personal acci!ent famil' pac%age polic'.
:. Me!ical >Hospital an! house? treatment polic'.
Classification of ris%s.
*he amen!e! rules in regar! to personal acci!ent polic' ha#e 1een implemente! from
(pril 17 1;;4. (ccor!ing to this !irection7 the personal acci!ent ris%s are classifie! into four
categories.
1. 0is% 4roup I. It inclu!es accountants7 !octors7 a!#ocates7 artisans7 Consultant7
engineers7 teachers7 1an%ers a!ministrati#e officers an! others form professional fiel!.
2. 0is% group II . It inclu!es architects7 contractors7 superinten!ent engineers7 #eterinar'
!octors7 #ehicle !ri#ers7 an! others from the same tra!e7 1ut not !oing an' manual 5or%.
3. 0is% group III. (ll such persons7 e"clu!ing the ris% group I37 engage! in ph'sical
la1our7 such as garage an! motor mechanics7 machine operators7 !ri#erIs of truc%s7 or other hea#'
#ehicles7 sportsmen an! athleticsI carpenters an! others engage! in this t'pe of ris%s.
2B
4. 0is% group I3. Person engage! in un!ergroun! mines7 an! armor'7 persons engage!
in electricit' generation7 circus7 horse race hun!ers7 mountaineers7 5inter sports7 ice hoc%e'7 han!
gli!ing7 polo=pla'ers7 an! other 1elonging to such fiel!.
*he insurance co#er pro#i!es for all o#er the 5orl!.
Insurance co#erG1enefits in personal acci!ent polic'
1. In case of !eath Full sum assure!
2. Permanent ,isa1lement >!amages Full sum assure!
to 1oth han!sGlegs7 or 1oth e'es7
or one e'e an! one leg?
3. In the case of !amages to one 5< per cent of the sum assure!
hangGleg or one e'e
4. /ther %in! of permanent 1<< percent
!isa1lement in a!!ition to !amages
happene! 1' inCur'
5. *emporar' or total !isa1lement Pai! on 5ee%l' 1asis an!
1enefits Current rate is I per cent of the
sum assure! per 5ee%
6. *emporar' or partial !isa1lement Pai! on 5ee%l' 1asis an! the c
1enefits Current rate is 3 percent of the
sum assure! per 5ee%
&enefit >5? an! >6? are together pa'a1le for a ma"imum of 1<4 5ee%s.
Premium rates on 1elo5 one 'ear polic'
-here a personal acci!ent polic' is issue! for less than one 'ear perio! the follo5ing rates
are applica1le .
= +pto one month= R of 'earl' rate
= +pto three months = S 'earl' rate
= +pto si" month = R 'earl' rate
= (1o#e one 'ear = 'earl' rate
(ge limit .
*he minimum age limit is fi#e 'ears of age at the time of entr' an! the ma"imum :<
'ears. Ho5e#er7 the insurance compan' has the po5er to grant e"emption from minimum an!
ma"imum age limits %eeping in #ie5 the stan!ar! of the case7 pro#i!e! higher rate of premium is
pai!. In the case of JFamil' Pac%age Co#erJ polic' the minimum age limit of chil!ren can 1e 5 'ears
an! the ma"imum 25 'ears.
(ssure! Sum
or!inaril' for a person the sum assure! shall not 1e more than the sum eDui#alent to
his :2 months salar' or income recei#e! from occupations. For e"cee!ing this limit7 the prior
appro#al of the hea! of regional office of the insurer is reDuire!.
)"tension of Insurance co#er
In or!er for e"pansion of insurance co#er to meet the e"penses on me!ical treatment
either 1' 25 percent of the claim mone' or 1' 1< percent of the sum insure! ;5hich e#en is less? an
a!!itional 1< percent more of the original premium is reDuire! to 1e pai! to the insurer.
)"clusion from claims .
2;
*he !eath7 inCur' or !isa1lement occurre! !ue to the follo5ing are not in!emnifie! 1' the
insurer .
-hile in the !uties or ser#ices of !efense ser#ices of the countr'.
InCur' occasione! 1' or contri1ute! to 1' #enereal !iseases or pregnanc'
Consciousl' committing inCur'7 stu!ies or efforts to commit suici!e.
InCur' sustaine! un!er the influence of 5ine or into"icants
Me!ical an! surgical treatment >5hich are not co#ere! 1' the polic'?
InCur' 1' atomic energ' materials
(ir tra#el for the purpose of an' tra!e or technical operation or as an air cre5 e"cept in a license! air
craft
(n' action ta%en 1' the appropriate authorit' against the #iolation of legal pro#isions !one 5ith the
o1Cect of committing criminal act.
/ther special 1enefits .
*he follo5ing t'pes of special 1enefits are gi#en in the case of personal acci!ent insurance
5ithout pa'ing an' a!!itional rate of premium. *hese are .
*he e"penses to 1e ma!e for 1ringing the !ea! 1o!' to home of the insure! in case of !eath. 2 percent
of the insure! sum of 0s.25<<.<< 5hich e#er is less
Cumulati#e 1onus. )#er' 'ear 5hen the polic' is rene5e!7 5 percent of the insure! #alue is incurre!
5hich can 1e upto 5< percent of insure! #alue
)!ucational grants . In case of !eath or permanent !isa1lement of the insure! the follo5ing
e!ucational grants are sanctione! .
,epen!ant single chil! 1elo5 the age of 25 'ears 4rants upto 1< percent of the insure! sum su1Cect to
a limit of 0s. 5<<<
,epen!ent chil!ren >More than one? 1elo5 the age of 25 'ears. 1< per cent of the sum assure! or
0s.1<<<< 5hich e#er is less.
*he minimum premium pa'a1le in the case of a!ult person is 0s73< an! in the case of group
acci!ental polic' the minimum is 0s.1<<
Famil' pac%age co#er
*he famil' pac%age co#er in the personal acci!ent polic' is as un!er .
Miscellaneous Insurance
1. In the case the insure! an! +pto fill sum assure!
hisGher spouse are earning
mem1ers
2. In case the spouse of insure! 5< per cent of the total sum assure! or
is not an earning mem1er *!. 1.<< la%h 5hiche#er is less
3. Chil!ren from 5 to 25 'ears of 25 per cent of total sum assure! to
(ge e#er' chil! or 0s. 5<<<< 5hiche#er is less.
Tuestions
,escri1e the crop insurance plan 5ith its a!#antages to farmers
-hat !o 'ou mean 1' J$i#estoc% InsuranceMJ )"plain the main elements of mar%et contract on cattle
insurance
,escri1e in !etails the pro#isions relating to &urglar' insurance
-hat !o 'ou un!erstan! 1' personal acci!ent insuranceM State its scope7 an! 1enefits
-rite short notes on .
$i#estoc% insurance
&urglar' insurance
3<
Crop insurance
Personal acci!ent insurance
FI0) -H)*H)0 M(NIP+$(*), . )FF)C*M
Sometimes the claims are repu!iate! 1' the Insurance Companies on the groun! that
either the complainant himself manipulate! the fire7 or someone else manipulate! the same on his
1ehalf7 or that some one in retaliation put the propert' of the complainant on fire. In essence7 the plea
of the Insurance companies in such cases in that the fire 5as not acci!ental. Sometimes fin!ing the
contention correct7 such pleas are accepte! 1ut at times these are not accepte! on the groun! that such
pleas 5ere ta%en Cust to ma%e out a groun! for repu!iation of the claim. *he follo5ing Cu!icial
!ecisions 5oul! ma%e it clear.
>a? Fire 1' neigh1our in retaliation.
In a case 1efore Lerala State Commission B1 the complainant ha! insure! his printing
press7 accessories7 stoc%=in process7 inclu!ing stoc% of papers an! t'pes for a total sum of 0s.
274<7<<< 5ith the opposite parties. It 5as allege! 1' the complainant that on 1:=12=1;;1 the
neigh1ouring tenant of the same 1uil!ing came along 5ith fe5 ro5!ies an! !estro'e! the separating
5all of the rente! rooms an! entere! into the press room an! cause! serious !amage to the press
against the neigh1our. *he Inci!ent 5as also reporte! to the first opposite part' 5ho !epute! a
sur#e'or for assessing the !amage. *he matter 5as not settle! an!7 therefore7 a complaint 5as ma!e to
the thir! opposite part' on <6=<4=1;;2 on 5hich the secon! opposite part' appointe! another
sur#e'or to assess the loss. Ho5e#er7 after recei#ing the report of the sur#e'or7 the secon! opposite
part' informe! that since a criminal case 5as pen!ing against the allege! erring tenant7 the matter
shall 1e ta%en up after finaliation of the sai! case. *he secon! opposite part' also informe! though a
letter that the claim 5as repu!iate! on the groun! that the acci!ent occurre! !uring the course of
action 1' the complainantIs neigh1ouring shop o5ner in retaliation of altering an! constructing a
common 5all of the shop. *hus7 a complaint 5as file! claiming 0s. 557<<< along 5ith compensation
for mental agon'7 etc.
*he contention of the opposite part' 5as that a sur#e'or 5as imme!iatel' appointe!
5ho reporte! that a trespass 5as committe! 1' a neigh1ouring tenant along 5ith his henchmen 5ith
5hom the complainant ha! some !ispute regar!ing a common 5all. *he police ha! registere! t5o
cases regar!ing the inci!ent an! those cases 5ere pen!ing in the competent court. *he Insurance
Compan' also !epute! another sur#e'or an! 1oth the sur#e'ors reporte! that the complainant ha!
!emolishe! the partitions 5all of a!Cacent shop an! the later in reappraisal encroache! upon the
premises of the complainantIs printing press. *he reports also re#eale! that 1oth parties unla5full'
remo#e! the goo!s an!7 therefore7 the opposite part' repu!iate! the claim of the complainant.
*he ,istrict Forum foun! that the loss sustaine! 1' the complainant 5as co#ere! 1'
the polic' an!7 therefore7 allo5e! the complainant. Feeling aggrie#e! 1' the sai! or!er7 the Insurance
Compan' preferre! an appeal 5here it 5as conten!e! that the claim 5as repu!iate! un!er )"clusion
Clause >!? of para 15 of the polic'. *his e"clusion clause sa's that loss or !amage occasione! 1'
permanent or temporar' !ispossession of an' 1uil!ing or plant or unit or machiner' resulting from the
unla5ful occupation 1' an' person of such 1uil!ing or plant or unit or machiner' in pre#ention of
access to the same. *he #ie5 of the Commission 5as that the case of the complainant !i!=not=fall
un!er the aforesai! into the premises of a!Coining tenant an! it 5as in retaliation that that
neigh1ouring tenant committe! the !amage. In #ie5 of the Commission7 a mere entering into the
premises of the complainant an! causing loss an! !amage coul!nIt 1e 1rought un!er the aforesai!
clause >!? 1ecause un!er the sai! clause it 5as necessar' that loss or !amage shoul! occasion 1'
31
permanent or temporar' !ispossession of an' 1uil!ing or point or unit or machiner' resulting from the
unla5ful occupation 1' an' person of such 1uil!ing or plaint or unit or machiner' in pre#ention of
access to the same7 5hich 5as not present in the case. It 5as further argue! that pen!enc' of the
criminal procee!ing 1et5een the complainant an! his neigh1nour also cannot 1e consi!ere! a #ali!
groun! to repu!iate the claim un!er an' e"clusion clause of the polic'. *hus7 the appeal of the
Insurance Compan' 5as !ismisse!.
>1? Fire allege!l' set 1' insure! himself.
*he complainant7 in a case 1efore the National commissionB27 5as engage! in
manufacture of ru11er chappals an! ha! a fire polic' for 0s. ;75<7<<< against the factor'7 caught fire
!estro'ing the 5hole stoc% of ra5 material7 finishe! goo!s an! other material l'ing in the factor'
premises 5hich 5ere re!uce! to ashes. *he machiner' 5as 1a!l' !amage!. *he Insurance Compan'
5as imme!iatel' informe! 1ut it too% to notice7 nor e#en !epute! an' sur#e'or. +n!er these
circumstances7 the complainant himself got the loss assesse! through a sur#e'or 5ho assesse! the loss
at 0s. 37:<7B6<. ,espite repeate! reDuests the Compan' too% no steps e#en after recei#ing the report
of the complainantIs sur#e'or. *herefore7 a complaint 5as file!.
*he Insurance Compan'7 in their repl'7 conten!e! that the claim alrea!' repu!iate!
after a thorough in#estigation an!7 therefore7 there 5as no !eficienc' in ser#ice. It 5as also conten!e!
that there 5as ample circumstantial e#i!ence to sho5 that the complainant himself ha! set his
factor' a1lae an! ha! foiste! a false claim. It 5as further conten!e! tat on the !a' of fire the
complainant ha! lo!ge! a report 5ith the police 5here he ha! state! that the fire 5as cause! 1' the
famil' mem1er of the lan!lor! 1' pouring %erosene oil o#er the ru11er material of the complainant
an! set them on fife 5hereas in the anticipator' 1ail mo#e! 1' the mem1ers or the lan!lor!7 the' ha!
state! that the complainant himself set his factor' on fire an! ha! lo!ge! a false report 5ith the
police. /n merits7 it 5as allege! that a sur#e'or 5as appointe! an! the sur#e'or7 as 5ell a the &ranch
manager of the Insurance Compan'7 ha! gone to #isit the factor' 1ut the 5ife of the complainant !i!
not permit them to enter the factor' premises. *herefore a letter 5as 5ritten to the complainant 5hich
the complainant manage! not to recei#e. *his accor!ing to the insurance Compan' ampl' pro#es the
1a! intention of the complainant. *he insurance Compan' then appointe! t5o more sur#e'ors an!
their unanimous reports 5ere that the factor' 5as put to fire 1' the complainant himself.
&efore the state commission the complainant ha! !eli1eratel' suppresse! that he ha!
lo!ge! a report 5ith the police to the effect that the famil' mem1ers of the lan!lor! ha! lo!ge! a
report 5ith the police to the effect that the famil' mem1er of the lan!lor! ha! poure! %erosene oil on
the ru11er material an!7 thus7 he 5as guilt' of suppressing material facts. *he complainant also chose
not to appear in the 5itness 1o" though 1e 5as the 1est 5itness to !epose regar!ing the allegations
ma!e 1' him. *he state Commission also 5ent through the report or the sur#e'or an! then raise!
serious !ou1ts a1out the correctness or the complainantIs #ersion. *hus7 the complaint 5as !ismisse!.
*he complainant then file! an appeal 1efore the National Commission 5here he
mentione! that the famil' mem1ers of the lan!lor! cause! the fire. *he National Commission
o1ser#e! that it 5as not un!erstan!a1le 5h' this fact 5as not !isclose! in the complaint. *he National
Commission foun! no !eficienc' in ser#ice on the part of the Insurance Compan' an! foun! that the
repu!iation 5as after full application of min!. *hus7 the appeal 5as !ismisse!.
In 'et another case 1efore the National CommissionB3 the Complainant firm ha!
insure! its stoc% of pa!!'7 rice 1ar!ana7 etc. +n!er Fire polic' ICI for an amount of 0s. 3< lac%s.
-hile the polic' 5as in force7 a fire 1ro%e out on 2B=<6=1;;4 at ;=3< P.M. in 5hich the entire stoc%
5as 1urnt. *he Insurance Compan' 5as informe! the ne"t !a'. (ccor!ing to the complainant7 the
!amage 5as to the part' !epute! t5o sur#e'ors an! one in#estigator. *he report of the in#estigator
32
5as that the fire 5as not acci!entalK instea!7 it 5as manage! 1' the complainant to co#er up their
loses through the false claim. *hus7 on the 1asis or the report7 the claim 5as repu!iate!. *he
complainant then file! a complainant.
*he state commission foun! that the repu!iation of the claim 5as after application of
min! an!7 therefore7 !ismisse! the complaint. *he complaint preferre! an appeal 5here it 5as
o1ser#e! that the Insurance Compan' ha! material to repu!iate the claim. *he sur#e'ors an!
in#estigator foun! that the sprea! of fire 5as not continuous an! appears to ha#e Cumpe! from one
place to other. *here 5as smell of %erosene oil in the !amage rice. It 5as conten!e! 1' the
complainant that the fire 5as !ue to short circuit of electricit' 1ut the electric connection 5as
!isconnecte! from the factor' long 1ac%. *he repu!iation or the claim7 accor!ing to the National
Commission7 5as is goo! faith after appl'ing min! to the matter containe! in the reports of the
sur#e'ors an! in#estigator. *herefore7 the appeal 5as !ismisse!.
*he Complainant7 in a case 1efore Lerala State CommissionB47 ha! an automo1ile
5or%shop 5hich 5as insure! un!er fire polic' ICI for 0s. :7 5<7<<< 5here1' the 1uil!ing machiner'7
accessories7 stoc%s an! stoc%=in=process 5ere co#ere!. *he machiner' 5as also insure! un!er
Machiner' Insurance Polic' for 0s. 17 5:745<.
( fire 1ro%e out in the 5or%shop at 1.3<a.m on 15=:=1;;5 in 5hich the 1uil!ing or
the 5or%shop7 machiner' an! a 1us garages for repairs 5ere completel' 1urnt an! !estro'e!. *he Fire
Force imme!iatel' come an put the fire un!er control. *he loss an! !amage 5ere intimate! to the
Insurance Compan' an! police authorities. *he assessment or the loss accor!ing to the complainant
5as at 0s. :7 237<:5 in respect of the 5or%shop an! the machiner'.
( sur#e'or 5as !epute! 1' the Insurance Compan' 5ho assesse! the loss 1ut the
claim 5as not settle! the police registere! a case7 in#estigate! the matter7 foun! the cause of fire as
electrical short circuit an! su1mitte! a report 1efore the concerne! Court. *he o5ner of the 1us ha!
also file! a case against the complainant. -hen the claim 5as not settle!7 a complaint 5as fiel!.
In its #ersion the opposite part' conten!e! that accor!ing to the sur#e'or the fire
originate! from some other source an! not !ue to short circuit. He also reporte! that the fire occurre!
!ue to 5illful act or the complaint himself. ( retire! superinten!ent of police also ma!e in#estigation
an! foun! that the fire occurre! as a result of planne! an! 5ilful action of the complainant in or!er to
claim huge compensation from Insurance Compan'. *he ne"t contention of the opposite part' 5as
that an (ssistant )"ecuti#e )ngineer7 )lectrical MaCor Section7 sent a report to the Su1=Inspector of
police to the effect that the fire acci!ent cannot 1e attri1ute! to electrical short circuit. It 5as also
conten!e! that the 5or%shop 5as house! in a !ilapi!ate! she! that 5as not running.
*he Insurance Compan' in#ite! the attention or the Commission to the fact7 that
initiall' the complaint ha! state! that the cause of fire 5as Inot %no5nI 1ut after5ar!s he state! that it
m' 1e !ue to electrical short circuit. *he Commission coul! not ta%e an' a!#erse inference from this
fact 1ecause it 5as not possi1le for the complaint to %no5 the real cause of fire. It 5as after ma%ing
enDuiries that he state! that the fire might 1e !ue to short circuit. Further7 the complaint ha! state! that
fire Ima'I 1e !ue to short circuit. He 5as not sure that short circuit 5as the reason. *herefore7 in #ie5
of the commission it 5as not such a fact 5hich coul! a!#ersel' 1e ta%en note of.
Further7 the in#estigator7 5ho 5as e"amine! in the case7 ha! state! that it 5as not on
the 1asis or his report that the Insurance Compan' state! that the complainant cause! the fire 5hereas
such mention 5as in the report (fter consi!ering all the e#i!ence an! circumstances of the case the
commission reache! the conclusion that it cannot 1e accepte! that the fire 5as 5illful act of the
complainant 1ecause there 5as no con#incing opinion in support of that fact. *hus it 5as foun! that
the repu!iation of the claim 5as not Custifie! an! therefore7 the complaint 5as allo5e!.
33
In a case 1efore +.P. State Commission the complainant 5as carr'ing on the 1usiness
of manufacturing pencils. He o1taine! an insurance polic' for 5<<:<< for fire plant an! machiner'
ra5 materials finishe! pro!ucts chemicals electric fittings furniture an! fi"tures7 etc ( fire 1ro%e out
in the factor' in the night 1et5een 24th an! 25th of Ful' 1;;< -hich !estro'e! practicall' e#er'thing
in the factor' causing a loss of 0s. 57 B272B4. *he insurance Compan' 5as informe! an! a claim 5as
lo!ge! on 5hich the insurance Compan' !epute! a sur#e'or 5ho #isite! the spot. (fter sometime
another sur#e'or 5as !epute! for the same purpose 5ho ne#er contacte! the complainant. *he claim
5as not settle! for a long time an! 5hen the complainant met the officers of the Compan' the claim
5as repu!iate!. *hus a complaint 5as file! claiming the loss interest an! compensation.
*he contention of the Insurance Compan' 5as that the loss allege!l' suffere! 1' the
complainant fell un!er the e"clusion clause or the polic'. *he factor' 5as not 5or%ing since long an!
there 5as not e#en a 5atchman poste! there. *here 5as no material insi!e the factor' premises 5hich
coul! ha#e 1een lost in fire. *he repu!iation letter ha! mentione! that the fire 5as the o5n
maneu#ering of the complainant himself in or!er to ma%e a 5rong claim. No electric connection
e"iste! in the factor' an!7 therefore7 there 5as no occasion or fire 1' short circuit.
*he e"clusion clause un!er 5hich the claim 5as repu!iate! ran as un!er.
J2. $oss or !amage to propert' occasione! 1' its o5n un!ergoing an' heating
or !r'ing process.
3. $oss or !amage occasione! 1' or through or in conseDuence of.
>a? *he 1urning or propert' 1' an' pu1lic authorit'7
>1? Su1=terranean fireJ
*he report or the ,istrict Fire /fficer 5as that the reason for the fire 5as un%no5n.
*he Station /fficer ha! estimate! the loss at 0s. 357<<< that inclu!e! 0s. 157<<< as #alue or the roof.
*he sur#e'or7 5ho ha! #isite! the spot7 reporte! that the insure! ha! not suffere! an' loss !ue to fire
as the fire in the insure! premises 5as of #er' small nature an! 5as cause! 1' the insure! himself.
*he Commission o1ser#e! that the e"clusion clause mentione! a1o#e 5as not
attracte!. It seems that the Commission also !i! not fin! that the insure! himself ha! cause! the fire.
*hus7 after consi!ering the reports of the Sur#e'or7 Fire /fficer an! others7 the Commission allo5e!
the claim for 0s. 4B71<< onl'.
$i%e5ise7 in another case 1efore the National CommissionB6 the 1oat of the
complaint 5as insure! 5hich ha! caught fire. *he claim 5as repu!iate! 1' the Insurance Compan' on
the groun! that the fire 5as not acci!entalK instea!7 it 5as intentional. *he ,istrict Forum allo5e! the
complaint an! a5ar!e! 0s. 27 <<7<<< 5hich 5as affirme! 1' the State Commission o<n appeal. (
re#ision file! 1efore the National Commission 5as !ismisse! as no groun! for interference in those
or!ers 5as foun!.
>C? -hether fire 5as engineere!M
( fire 1ro%e out in factor' !ealing 5ith oil see!s. *he claim 5as repu!iate! on the
groun! that the 5as engineere!. Sur#e'ors 5ere appointe! 5hose reports 5ere challenge!. *he
Commission o1ser#e! that the Sur#e'ors ha! 5rongl' an! ar1itraril' !ou1te! the cause or fire. *here
5as no Custifia1le reason for arri#ing at the conclusion that fire might not ha#e 1een cause! !ue to
electrical short circuit. It 5as too much to !iscar! the reports su1mitte! 1' the Police /fficer7 the Fire
&riga!e an! the )ngineer from the state )lectricit' &oar!. *he fire &riga!e ha! ta%en a1out 14 hours
2< minutes to e"tinguish the fire. (fter in#estigation the police arri#e! at the conclusion that it 5as an
acci!ental fire. *he Commission further o1ser#e! that some o1ser#ation in Sur#e'orsI preliminar'
report to the effect that Sur#e'ors ha! not come across an' specific e#i!ence to conclu!e that the
cause of fire 5as or electrical origin 5oul! har!l' 1e a groun! for hol!ing that cause of fire 5as not
34
short=circuits. *he Final Sur#e' 0eport 5as su1mitte! after a1out 2 'ear of the inci!ent. Further7 the
reports coul! not 1e relie! upon. /ne of the sur#e'ors #isite! the spot the ne"t !a' of the inci!ent7
remaine! at the spot for a1out half=an=hour an! su1mitte! his un!ate! report after goo! 14 months
an! that too to 0espon!ent 1 5hile he 5as appointe! 1' 0espon!ent 2. In that report it 5as mentione!
that the Sur#e'or ha! #isite! the spot on 5th (ugust 5hile the inci!ent too% place on 6th (ugust.
0espon!ent I ha! also !epute! a Sur#e'or 1ut its report ne#er sa5 light of the !a'7 presuma1l'
1ecause the fin!ing 5as against the Insurance Compan'. *here 5as7 therefore7 no Custifia1le groun! to
hol! that the fire 5as engineere! one. *hus the repu!iation 5as foun! unCustifie!.B:
>!? &ur!en on insurer to pro#e fire 5as intentional.
/nce the insure! ha! sho5n that the loss 5as cause! 1' fire7 he ha! ma!e out a prima
facie case an! the onus shifts on the insurer to sho5 on a 1alance of pro1a1ilit' that the fire 5as
conni#e! 1' the assure!.BB
In Slatter' 3. ManceB; also7 a similar o1ser#ation 5as ma!e. It 5as o1ser#e! that
once the insure! ha! sho5n that the loss 5as cause! 1' fire7 he ha! ma!e out a prima facie case an!
the onus shifte! on the insurer to sho5 on a 1alance of pro1a1ilit' that the fire cause! 5as conni#e! at
1' the assure!. *his authorit' 5as follo5e! 1' the National Commission in Murari -oollen Mills
$t!. # +nite! In!ia Insurance Co. $t!.7;< 5here also the contention or the Insurance Compan' 5as
that the fire 5as manipulate!. *he complainant ha! prima facie pro#e! his case an!7 therefore7 the
1ur!en 5as shifte! on the insurer to pro#e that it 5as manipulate! fire7 an! in that attempt the insurer
faile!.
In another case 1efore the National Commission;1 a fire ha! 1ro%en out in the
generator room of the mill that 5as insure! 5ith the respon!ent Insurance Compan'. *he claim 5as
repu!iate! 1' the insurance Compan' on the groun! that the fire 5as !eli1eratel' cause! 5ith a
moti#e to ha#e illegal financial gain. *hus7 the Duestion 5as 5hether the fire 5as acci!ental or
manipulate! to get financial gain. (fter going though the entire e#i!ence7 the Commission reache! the
conclusion that the fire 5as cause! !ue to short circuit. *hus7 the repu!iation 5as foun! unCustifie!.
FI0) IN MI$I*(NCH /P)0(*I/N
( case came up 1efore Fammu U Lashmir state commission;B 5here the complainant
ha! insure! his househol! goo!s for 0s. 457<<< 5hich co#ere! the loss 1' fire an! malicious !amage
inclu!ing terrorist action. ,ue to militanc' he ha! to migrate from the #alle'. /n 15=;=1;;1 5hile the
Insurance polic' 5as in force7 his house 5as ransac%e! an! the militants too% househol! goo!s. /n
#isiting his house he foun! the loc%s an! !oors open an! the house 5as !amage! an! nothing 5as left
in the house. *he !amage 5as also !one to sanitar' 5are an! 5ater taps. *he mater 5as reporte! to
the police an! an FI0 5as registere! un!er Sections 45: an! 3;<7 IPC 5hich 5as su1seDuentl' a!!e!
1' section 3 of the terrorist (ct as e#i!ent 1' the letter or the S.P. Ho5e#er7 the case 5as close! as not
tracea1le.
It transpires that a claim 5as preferre! to the Insurance Compan' 5here the !efense
5as that the terms an! con!itions of the polic' 5ere not #ali! for theft an! 1urglar'. ( report 5as
sought from a pri#ate in#estigating agenc' 5hich reporte! that the FI0 !isclose! a case in respect of
house 1rea%ing an! theft 5hich !i! not fall in the categor' of offences un!er *(,(. *hus the file 5as
close! as Ino claimI.
It seems that one Sri Fas5ant Singh7 a retire! ,I47 ha! gi#en some report an! 5as
e"amine! to pro#e the sai! report as the repu!iation or the claim ma!e 1' the Insurance Compan' 5as
1ase! on that report. (fter going through this report an! hearing the su1mission or the parties7 the
Commission o1ser#e!.
35
J....the testimon' ten!ere! 1' Sri Fas5ant Singh 5as in the nature of an opinion... It is
#er' sa! that the Insurance Compan' is la1oring un!er the impression that opinions are 1in!ing on us
also. -hat is reDuire! is that in the first place the Insurance Compan' shoul! ha#e in!epen!entl'
applie! its min! to the case 5hich in fact has not 1een !one. If the legal opinion 5as reDuire! then the
proper course 5as to see% opinion from some highl' place! an! recognise! legal luminar'. It is a
common %no5le!ge that fro their o5n purpose the insurance Companies are approaching some
pri#ate agencies 5ho are ten!ering opinion against pa'ment of fees. Such opinions are al5a's
suspecting in the e'es of la5 1ecause the' are ten!ere! 1' people 5ho are neither e"perts in the fiel!
nor the' are ten!ering such opinion gratis. In an' case it has no #alue e"cepting that of an opinion
authorit' can close its e'es to the facts or the case.J
*he ransac%ing of the house7 looting or the propert' an! the e"tent of !amage cause!
5ere not !ispute! 1' the insurance Compan'. -hat 5as !ispute! 5as that it ha! no lia1ilit'. /n this
point the Commission o1ser#e!.
J..........the FI0 clear goes to sho5 that the !amage has ta%en place !uring the perio!
5hen the insurgenc' in the 3alle' 5as on its pea%. *he complainant ha! migrate! from the place. In
the state of this gun culture 5here e#er'1o!' 5as fleeing for safet' an'thing 5as possi1le at an'
moment of !a' or night. *he facts sho5 that it is not a case or normal theft or 1urglar' 5hich usuall'
ta%e place 5hen the people are fast asleep in their houses an! the thie#es ma%e their entr' either 1'
1rea%ing open the house or someho5 succee! in remo#ing the goo!s from some1o!'Is possession. In
a situation li%e this as a matter or fact there is no nee! for criminals to !o things of this nature in the
stealth of !ar%ness. *he gun 'iel!ing people ha#e 1een !oing it open in the 1roa! !a' light an! there
is no Duestion of offering an' resistance to it. *he facts mentione! in the application 5hich 5as ma!e
1' the complainant to the police clearl' sho5s that its 5as not a case of normal theft or 1urglar' 1ut
is a case of forci1le remo#al of goo!s of the house an! also causing !amage to the house inclu!ing
sanitar' 5ere7 etc. *hie#es or 1urglars ha#e no time for all these things. *he' Cust ma%e entr' into
house an! steal the goo!s 1efore an'1o!' 5a%es in the house. In this state of things it is unfair to
argue that the goo!s 5ere left 1ehin! uncare!.... It 5as in these circumstances that the case 5as not
treate! as a of the ran% of Superinten!ent of police foun! it to 1e a case co#ere! 1' the pro#isions of
*(,(. Mr. Fas5ant Singh 5ho has ten!ere! the opinion seems to ha#e ta%en a simplest #ie5 of the
matter 5ithout ta%ing into consi!eration all these facts. ,e#io! of these facts no1o!' can ta%e such a
#ie5. It is for this reason that 5e ha#e right in the 1eginning sai! that this opinion part from 1eing the
opining of an in!i#i!ual cannot 1e gi#en too importance as a piece of e#i!ence. Since the reCection of
the claim is also 1ase! on the report of Shri Fas5ant Singh 5e fin! it a1solutel' unsustaina1le.J
*hus7 the Commission allo5e! the claim of the complainant along 5ith a5ar!ing 0s.
1<7<<< as compensation for loss an! inCur'.
In 'et another case 1efore Fammu U Lashmir State Commission1 the complainant
ha! insure! his househol! goo!s for 0s. 17<<7<<<. In a militanc' relate! e#ent the house 5as set on
fire in the night 1et5een 23r! an! 24th /cto1er7 1;;1. ( claim 5as ma!e to the Insurance Compan'
5hich !epute! a sur#e'or an! on his report the claim 5as !eclare! as Ino claimI. *he complainant7
therefore7 file! a complaint. *he opposite part' file! its #ersion conten!ing that accor!ing to the
report of the sur#e'or the complainant7 5hile migrating7 ha! remo#e! his househol! goo!s an! !i!
not co=operate 5ith the sur#e'or in remo#al of !e1ris in or!er to assess the loss. It 5as also conten!e!
that since the claim 5as !eclare! as Ino claimI the commission ha! no Curis!iction to entertain the
complaint as there 5as no !eficienc' in ser#ice. In support of this contention7 reliance 5as place! on
the case 0aC!eep $icense an! Finance #. +nite! In!ia Insurance Compan'2 !eci!e! 1' the National
Commission 5here it 5as hel! that if it appears that the Insurance Compan' after application of its
36
min! an! after !ue in#estigation reaches to the conclusion that the claim is to 1e repu!iate! the onl'
course a#aila1le to the complainant is to approach the ci#il courts.
*he commission !i! not fin! fa#our 5ith this argument. It o1ser#e!.
J-e ma' not sa' that 5e are not su1Cect to the Curis!iction of National Commission.
*he +nion Consumer Protection (ct is not applica1le to the state of Fammu U Lashmir. /ur (ct
creates a separate! hierarch' an! unli%e the +nion (ct the appeal Curis!iction has 1een conferre! o#er
the FU L High court. Ho5e#er7 there is no harm if a citation is ta%en into account for purposes of
proper a!Cu!ication of the complaints. -e !o not agree 5ith the proposition of la5 as conten!e! 1'
the learne! counsel as it 5oul! negate not onl' the Curis!iction of Consumer Forums 1ut 5oul! !istort
the pro#isions of Consumers (ct. /ur reasons are #er' simple. If such a state or la5 is allo5e! to
ha#e a s5a' it 5ill ena1le the Insurance Companies to repu!iate claims 1' simpl' appointing an
in#estigator an! then sa'ing that it has applie! its min! an! repu!iate! the claim. In that e#ent
naturall' if this state of la5 is allo5e! to e"ist the Curis!iction or the consumers commission 5ill 1e
practicall' ta%en from it. *he !efinition of ser#ice as gi#en in the Consumers protection (ct is #er'
5i!e an! the !eficienc' in ser#ice 5oul! naturall' mean e#en the lac% of proper application of min!
1' the Insurance Compan'. In an' case e#en a repu!iation of claim 1' Insurance Compan' 5ill
amount to !eficienc' in ser#ice if this repu!iation is not supporte! 1' an' material. )#en in the case
cite! supra the o1ser#ations ma!e 1' the National Commission are such that it must 1e sho5n to the
satisfaction of the Commission that there ha! 1een proper application of min! 1' the Insurance
Compan'. *he Proper application of min! 5oul! al5a's mean that it must pass a reasona1le or!er
in!icating the material on 5hich the or!er has 1een passe!. It is not entitle! to sa' in one 5or!
I!eclare! as no claimI as this 5oul! neither sho5 that there is application of min! nor 5oul! it in!icate
that the repu!iation is 1ase! on some cogent an! relia1le material. It is not to suggest that the
Insurance Companies cannot repu!iate the claims 1ut the repu!iation in no case can 1e mechanical
nor can it 1e capricious or ar1itrar'. (r1itrariness can ne#er 1e part of goo! a!ministrationJ
*he commission ha! recor!e! the statement of a neigh1our 5ho supporte! the
#ersion of the complainant that nothing 5as remo#e! from the house 1' the complainant 5hile
migrating. *here is no e#i!ence in its re1uttal from the si!e or the Insurance Compan' e"cept the
report of the sur#e'or that enDuiries on the site ha! re#eale! that the complainant ha! remo#e! his
goo!s. It 5as not spelt out in the sai! report that 5hat 5ere the %in! an! Dualit' of enDuiries an! 5ho
5ere the persons from 5hom the enDuir' 5as ma!e an! it 5as %ept a close guar!e! secret. *he
sur#e'or 5as also e"amine! 5ho totall' negate! the o1ser#ations ma!e in his report an! simpl' state!
that the 5hole report 5as 1ase! on the fact that the complainant !i! not co=operate 5ith him in
remo#ing the !e1ris so as to ena1le him to see 5hether there 5as an' remnant of goo!s. He ha! ta%en
all photographs from a !istance an! not from insi!e the house as the !e1ris ha! fallen on the first floor
of the house. *he commission also o1ser#e! that it is not %no5 ho5 the Insurance compan' reache!
the conclusion that the goo!s 5ere remo#e! from the house. In fact7 there 5as no material 1efore the
Insurance Compan' to come to that conclusion. *he Commission also o1ser#e! that no such rule 5as
sho5n to it that is 5as the !ut' of the complainant to remo#e !e1ris in or!er to facilitate the sur#e'or
to con!uct the enDuir'. *hus7 the Commission allo5e! the component.
*he Fammu U Lashmir State Commission in 'et another case 5as again face! 5ith a
situation 5here the militants ha! set a1lae the house of the complainant. *he complainant ha!
insure! his !ou1le storie! house for 0s.5 la%hs. -hile the polic' 5as in force the militants set the sai!
house a1lae in the night 1et5een 13th an! 14th Fe1. 1;;:. *he complainant file! a claim on 5hich
the Insurance Compan' !epute! a sur#e'or 1ut he preferre! not to file his report for more than a 'ear.
3:
*he Insurance Compan'7 therefore7 !epute! another sur#e'or in (ugust 1;;B 5ho assesse! the loss at
0s.2 la%hs 5hich amount 5as pai! to the complainant imme!iatel' after filing of the complaint.
*he complainant 1eing !issatisfie! 5ith this amount urge! that the sur#e'or ha!
assesse! the #alue of the house at 0s.47237B6< 1ut ar1itraril' !e!ucte! 5<V as !epreciation. *he
commission o1ser#e! that accor!ing to 1e complainant the house in Duestion 5as constructe! in the
'ear 1;B;. *he sur#e'or ma!e no attempt to assess the age of the house. *hus7 there 5as nothing in
re1uttal of the complainantIs contention >ma!e on affi!a#it? that the house 5as constructe! of the 'ear
1;B;. *hus the 1uil!ing 5as ; 'ears ol! 5hen it 5as set on fire. *he complainant referre! to the
gui!elines >)stimating an! costing in Ci#il )ngineering 5ritten 1' &.N. ,utta? accor!ing to 5hich if
the 1uil!ing 5as less than 1< 'ears ol!7 !epreciation at the rate of 2.5V shoul! 1e ma!e. *hus7 placing
reliance on the sai! gui!eline7 the complaint 5as allo5e! an! a sum of 0s.36<2B1 5as a5ar!e!.
(nother case came 1efore the Fammu U Lashmir State Commission 5here the
militants ha! put the resi!ential house on fire. *he complainant ha! his resi!ential house insure! an!
5hile the insurance polic' 5as su1sisting it 5as gutte! 1' the militant firing. ( claim 5as preferre!
5here a sur#e'or 5as !epute! to assess the loss. *he loss assesse! 1' the sur#e'or 5as to the tune of
0s. 35B112 It seems that the Insurance Compan' 5as not satisfie! 5ith this report an! therefore7
another sur#e'or 5as !epute! in the 'ear 1;;; to in#estigate the matter especiall' regar!ing the
insura1le interest. He reporte! that he ha! seen the insure! house 5hich 5as totall' gutte! 1' the
militant firing. ( claim 5as preferre! 5here a sur#e'or 5as !epute! to assess the loss. *he loss
assesse! 1' the sur#e'or 5as the tune of 0s. 35B112 It seems that the Insurance Compan' 5as not
satisfie! 5ith this report an! therefore7 especiall' regar!ing the insura1le interest. He reporte! that he
ha! seen the insure! house 5hich 5as totall' gutte! an! there 5as nothing on the spot to assess the
loss. He further conten!e! that no useful purpose shoul! 1e ser#e! 1' getting the loss reassesse! as
three 'ears ha! lapse! since fire. *he Insurance Compan' 5as not satisfie! 5ith this report as 5ell
an! therefore7 it appointe! 'et another >the thir!? sur#e'or to reassess the loss. (ccor!ing to his
assessment the loss 5as to the tune of 0s.264<25. *he ,istrict Forum allo5e! the complaint on the
1asis of the report of the first sur#e'or7 therefore the Insurance Compan' came up in appeal 1efore the
State Commission.
*he Commission o1ser#e! that the secon! sur#e'or coul! fin! an'thing on the spot to
assess or reassess the loss7 still the Insurance Compan' !i! an e"ercise in futilit' 1' appointing a thir!
sur#e'or 5ho ha! re!uce! the #alue of the loss consi!era1l'. *he Commission also o1ser#e!.
JIt is consi!ere! opinion of the High Court an! the commissions that sur#e'or after
sur#e'or cannot 1e appointe! 5ithout an' logic an! sur#e'or report fa#ora1le to the consumer is to 1e
ta%en into account. *herefore 5e are con#ince! that the ,istrict forum has passe! his or!er on the
report of the first sur#e'or.II
In a case 1efore National Commission5 the truc% or the complainant 5as
comprehensi#el' insure! for 0s. 3<< lac%s. -hile the truc% 5as going from $u!hiana to Lan!la7 it
5as not settle!. Hence7 the complaint 5as file!. *he contention or the Insurance Compan' 5as that
5hen the truc% 5as 1urnt its 5as o#erloa!e! 5hich 5as #iolation of the terms of the polic' an!7
therefore7 the loss 5as assesse! on non=stan!ar! 1asis for an amount of 0s. 2724725<.*he state
Commission7 on the 1asis of material a#aila1le on recor!7 o1ser#e!.
JIt is clear from the a1o#e facts that the #ale of the truc% 1urnt 5as 0s. 3 la%hs an!
accor!ing to the sur#e'orIs report there 5as total loss. He assesse! the loss at 0s. 27;;75<< on account
of polic' clause. (!mitte!l'7 the opposite part' assesse! the loss no non=stan!ar! 1asis. It has not
1een esta1lishe! 1' the opposite part' that the truc% 5as o#erloa!e!. No 1asis 5as lai! !o5n for
3B
assessing the loss on non=stan!ar! 1asis. *he complainant 5as entitle! to get 0s. 27;;75<< as assesse!
1' the sur#e'or. /f course the complainant 5as to han! o#er the sal#age to the Insurance Compan'.
*hus the State Commission allo5e! the complaint an! !irecte! the Insurance
Compan' to pa' a sum of 0s. 27;;75<< along 5ith interest in the rate of 12V per annum. Feeling
aggrie#e! the Insurance Compan' come up 1efore the National Commission in appeal. It seems that
the onl' point raise! 1efore the National Commission 5as that the truc% at the time of fire 5as
o#erloa!e! an!7 therefore7 the claim 5as assesse! on a#erage 1asis an! the fin!ing of the State
Commission contrar' to it 5as 5rong. *he National commission o1ser#e! that the' coul! not fin!
an' relia1le material to hol! that the truc% 5as o#erloa!e!. *hus agreeing 5ith the fin!ings of the
State Commission7 the appeal 5as !ismisse!.
*he National Commission 5as again face! 5ith a case6 5here t5o houses 5ere
1urnt in terrorist #iolence. *he complainant has t5o houses in Srinagar 5hich 5ere insure! 5ith the
opposite part'. &ecause of terrorist #iolence against Hin!us in Srinagar7 the complainant migrate! to
other part of the countr' in March 1;;<. In the night 1et5een Bth an! ;th Ful'7 1;;17 5hile the
policies 5ere still in force7 his houses 5ere gutte! 1' the terrorists 5hich 5ere 1e'on! repairs.
( claim 5as ma!e to the Insurance compan' 5here the loss 5as assesse! at 0s.
;57<<< onl'. &eing !issatisfie!7 the complainant file! a complaint 1efore the ,istrict Forum for
enhancement of the compensation 5here it 5as enhance! 1' 0s. 1<742; along 5ith interest at the rate
of 12V p.a. an! 0s. 25<< as costs of the procee!ings. *he complainant 5as not satisfie! 5ith this
enhancement also an!7 therefore7 an appeal 1efore the state commission 5as file! conten!ing that
5hole of the loss as assesse! 1' the sur#e'or shoul! ha#e 1een a5ar!e! 1' the ,istrict Forum. *he
Sate Commission7 5hile partl' allo5ing the appeal7 o1ser#e!.
JIn the facts an! circumstances 5e hol! that the sur#e' report !ate! 15=<4=1;;37
(nne"ure 0=47 5here 5<V !epreciation has 1een allo5e! !oes not contain appropriate re1uttal of the
claim of the complainant7 especiall' 5hen the occurrence too% place 5ithin si" months of the
commencement of the Insurance Polic'. *he mere fact that the amount assesse! 1' the insurance
Compan' has 1een !is1urse! !oes not go against the appellant in the circumstances of the case. *he
respon!ent 5as not Custifie! in re!ucing #aluation 1'5<V especiall' 5here occurrence too% place
5ithin si" months of the polic'. -e thus partl' accept the appeal an! hol! that onl' a !epreciation of
25V shoul! ha#e 1een !e!ucte! an! not more. *his 1rings us to the conclusion that a sum of 0s.
175B71437.5< les 0s. ;57<<< recei#e! 1' the complainant un!er protest shoul! ha#e 1een allo5e! an!
not merel' 0s. 1<742; as or!ere! 1' the ,istrict Forum=II an! 5e hol! accor!ingl'. *hus7 5e or!er
that the sum of 0s. 6371437.5< is pa'a1le 1' the respon!ent to complainant 5ithin t5o months failing
5hich the respon!ent shall 1e lia1le to pa' interestW 12V per annum from the !ate of this !ecision.
Costs 0s. 1<<<. *he appeal stan!s !ispose!7 of.J
*he complainant 5as not satisfie! 5ith this or!er as 5ell an!7 therefore7 he preferre!
a re#ision 1efore the National commission 5here a reference of a !ecision of the National
commission7 #i7 sitha #e!ana'agam #. Ne5 In!ia (ssurance Co. $t!.: 5as ma!e5here it 5as
o1ser#e! that 5hen there 5as no allegation of frau! in the plea!ings an! there 5as no e#i!ence to
in!icate that an' frau! 5as practice! 1' the complainant 5hen he fi"e! the #alue of the propert'7
insurance compan' 5as preclu!e! from conten!ing that the mar%et #alue of the 1oat as on the !ate of
occurrence of the loss 5hich 5as a !a' #er' pro"imate to the !ate on 5hich the contract of insurance
5as entere! into7 5as an'thing other than 5hat 5as mentione! in the contract of insurance. In #ie5 of
this !ecision it 5as argue! 1efore the National Commission that there 5as no Custification to gi#e
!epreciation of 5<V or e#en 25V on the loss as assesse! 1' the sur#e'or. *he National Commission7
3;
after hearing the su1mission of the parties7 o1ser#e! that in the instant case a !epreciationW1<V
5oul! meet the en!s of Custice. *hus7 the or!er of the State Commission 5as mo!ifie! to that e"tent.
FI0) ,+0IN4 0I/*
(n appeal against the or!er of the (n!hra Pra!esh State Commission came up 1efore
the National CommissionB 5here the insure! lorr' or the complainant 5as !i#erte! 1' some persons
5ho 5ere agitating the e"ploitation of tri1al people an! then set it on fire. *he claim 5as repu!iate!
1' the Insurance compan' on the groun! that un!er the polic' con!itions an' loss or !amage cause!
1' 5ar7 in#asion7 the act of foreign enemies7 hostilities or 5ar li%e operation >5hether 5ar 1e !eclare!
or not?7 ci#il 5ar7 mutin' assuming the proportion of or amounting to popular rising7 militar' rising7
re1ellion7 re#olution7 insurance7 militar' usurpe! po5er or an' act of an' person acting on 1ehalf of
or in connection 5ith an' organiation 5ith acti#ities !irecte! to5ar!s the o#erthro5 1' force of the
4o#ernment !e Cur' of !e facto or to the influence of it 1' terrorists or #iolence or 1' the !irect of
in!irect conseDuences of the sai! occurrences is not pa'a1le. *he state commission accepte! this
contention of the Insurance Compan'. Feeling aggrie#e! 1' the sai! or!er the complainant came up
1efore the National Commission is appeal.
*he National Commission Duote! the clause relating to riot an! stri%e an! o1ser#e!.
JIt is clear from the rea!ing of the con!itions of this polic' that the act of an' person
ta%ing part together 5ith others in an' !istur1ance of the pu1lic peace >5hether in connection 5ith a
stri%e or loc%=out or not? or the action of an' la5full' constitute! authorit' suppressing or attempting
to suppress an' such !istur1ance or in minimiing the conseDuences of such !istur1ance in not
co#ere! 1' the 5or! Iriot an! stri%eI. Ho5e#er7 one of the e"ceptions in this con!ition7 namel'7
e"ception >1? referring to mutin'7 assuming the proportion of or amounting to popular rising7 militar'
rising7 re1ellion7 re#aluation7 insurrection7 militar' or usurpe! po5er or an' act of an' person acting
no 1ehalf of or in connection 5ith an' organiation 5ith acti#ities !irecte! to5ar!s the o#erthro5 1'
force of the 4o#ernment !e Cur' or !e facto or to the influence of it 1' terrorism or #iolence or 1' the
!irect or in!irect conseDuences of the sai! occurrences7 pro#i!es an e"clusion from the riot an! stri%e
clause an! the conseDuent ris% therefore. From the or!er of the State Commission 5e fin! that 5hile
lo!ging the FI0 5ith the police7 the loss cause! to the truc% 5as attri1ute! to Na"alite acti#it'7
5hereas the fact is that fi#e persons claiming themsel#es as them 4irCiCan mem1er of ,an!%aran'a
4iriCanna 0'otu Cooli Sangram of 3isa%ha Nilla 1ranch7 ha! set fire to the lorr'... -e are of the
opinion that the agitation 1' the coli Sangram cannot 1e !escri1e! as mutin' or a popular rising
assuming the proportion of re1ellion etc. as mentione! in clause >1? of e"ceptions un!er II.M.*.21.
0iot an! Stri%e in the polic' !ocumentI. In our #ie5 it is co#ere! 1' Con!ition 17 #i.7 Ithe act of an'
person ta%ing part together 5ith others in an' !istur1ance of the pu1lic peace >-hether in connection
5ith a stri%e or loc%=out or not? or the action of an' la5full' constitute! (uthorit' in suppressing or
attempting to suppress an' such !istur1ance or in minimiing the conseDuence of such !istur1anceI.J
*hus7 the National Commission 5as of the opinion that the stan! ta%en 1' the
Insurance Compan' that the polic' !i! not co#er the ris% of riot7 stri%e an! fire 5as not consistent
5ith the polic' con!itions7. *herefore7 the appeal 5as allo5e! an! the claim of 0s. 27 4<7<<< as
assesse! 1' the sur#e'or 5as a5ar!e!.
In a case 1efore 4uCarat State Commission; the complainant farm 5as carr'ing on
1usiness in fruits. /pposite part'2 i.e. &om1a' Mercantile Co=operati#e &an% $t!. grante! loan to
complainant firm against h'pothecation of stoc% of fruits. *he complainant ha! ta%en t5o insurance
policies for 0s. 4 la%hs an! 0s. 6 la%hs respecti#el'. *he policies co#ere! the goo!s store!G stoc%e! in
the go!o5n7 shop an! open place as also furniture an! fi"tures against the ris% of riots7 communal
riots7 fire earthDua%e7 floo! etc. /n or aroun! B=12=1;;2 communal riots 1ro%e out in the cit' an! the
4<
goo!s set on fire 1' the rioters an! the goo!s 5ere !estro'e!. ( claim appointe! sur#e'or an! the
claim 5oul! 1e finalie! after receipt of their reports. *he sur#e'ors 5ere !ela'ing the matter an!7
therefore7 a legal notice 5as gi#en to the Insurance Compan' 5hich remaine! unrealie!. *hus7 a
complaint 5as file! 5hich 5as resiste!7 inter alias7 on the groun! that the claim 5as not 1ona fi!e7 not
maintaina1le an! concocte!. *he complainant !i! not furnish all the information sought from him. It
5as also conten!e! that there 5as no fire in the go!o5n an! no !amage insi!e the shop. Certain other
pleas 5ere ta%en.
*he ,istrict Forum allo5e! the complainant against 5hich an appeal 5as preferre!
1efore the State Commission. *he Commission Consi!ere! all the e#i!ence on recor! an! o1ser#e!.
J*here is no !ela' on the part of the opponent insurance compan' in consi!ering the
complainantIs claim un!er the polic'Gpolicies in Duestion. It 5oul! 1e legitimate for it to call for
particulars an! e#i!ence of stoc% of fruits an! #alue thereof l'ing in the shop7 go!o5n an! in the she!
in open space >footpath? a!Cacent to the shop since the initial e#i!ence an! account of the inci!ent in
Duestion refer onl' to the she! in open space >footpath? 5hich is a!mitte!l' not co#ere! un!er either
of the policies. *he circumstances 5hich might 1e note! from the a1o#e inci!ent also in!icate that
there is some loss of fruits an! furniture in the shop on account of rioting an! resultant fire cause! 1'
the mo1 on <B=12=1;;2 1ut the claim e#en 5ith regar! thereto clearl' appears to 1e !isproportionatel'
tall. )#en if the Forum or the Commission 5ants to help the cause of the complainant7 it has no
material to !o so. /nl' the 1ills of purchase of fruits of <4=<1=1;;2 5ill not lea! to a conclusion that
stoc% of fruits on <B=12=1;;4 remaine! the same. Clarification regar!ing separate particulars of stoc%
of fruits left out after sales as on <B=12=1;;2 in the shop an!G or go!o5n as !istinct from the stoc%
l'ing in the she! on the footpath 5as a sine Dua! non for consi!eration of claim of loss for the
opponent insurance compan' an! for that matter for an' authorit'. *hat has precisel' not 1een !one
1' the complainants e#en till this !ate.
*his opponent 1an% has also not come for5ar! 5ith the particulars of stoc% of
aforesai! there places or t5o places7 as the case ma' 1e7 as on <B=12=1;;2. For the pre#ious month it
ha! sho5n stoc% of fruits 5orth 0s. 11la%hs 5hich 5oul! mean that the stoc% is %ept at more than one
place. *he 1an% also appears to 1e not serious 5ith regar! to the claim of ha#e 1een atten!e! to 1' the
opponent 1an%7 no5 one of the complainants.J
*hus7 the Commission foun! no !eficienc' in ser#ice on the part of the Insurance
Compan' an! the appeal 5as allo5e!.
$/SS &H S*0IL) C/3)0), +N,)0 FI0) P/$ICH H(3IN4 )N,/0S)M)N* /F 0I/* (N,
S*0IL)
*he plaintiff appellant7 carr'ing on manufacture an! e"port of cashe5 nuts7 ha! 2
insurance policies for fire7 containing riot an! stri%e en!orsement.1< *he 5or%ers 5ere not pai! for
the months 5hen there 5as no 5or%7 !ue to 5hich the 5or%ers 5ent on stri%e an! o1structe! the
mo#ement of goo!s. *his o1struction continue! for a sufficientl' long time !ue to 5hich the %ernels
got !amage! 1ecause of e"posure. ( claim 5as preferre! 5ith the insurer that 5as repu!iate! on the
groun! that the loss sustaine! 1' the appellant 5as not co#ere! un!er J0iot an! Stri%e !amageJ in
#ie5 of clause 5>1?>1? of the polic'. In the suit file! 1' the appellant7 the contention of the insurer7
inter alias7 5as that the appellant !i! ta%e timel' an! effecti#e steps to a#oi! the !amage. It 5as also
conten!e! that the goo!s 5ere !amage! !ue to inherent #ice.
ClauseG Con!ition 5>1?>1? of the polic' state! that loss or !amage resulting from total
or partial cessation of 5or% or the retar!ing or interruption or cessation of an' process or operation
shall not 1e co#ere! un!er polic'. *he Court o1ser#e! that from a rea!ing of the special con!itions it
5as clear that 5hat the contracting parties inten!e! 5as that if an' loss 5as cause! !ue to cessation of
41
5or% or interruption of 5or% an! for that reason loss 5as cause! that 5oul! not 1e co#ere! 1' the
polic'. If the cessation of interruption of 5or% coul! 1e !irectl' attri1ute! to the stri%e 1' 5or%ers7
that 5oul! not e"clu!e the lia1ilit' of the Insurance Compan'. If such an interpretation is accepte!7
un!er no circumstance the loss7 if an'. Sustaine! 1' the insure! !ue to riot an! stri%e coul! 1e sai! to
1e un!er the co#er of the insurance polic'. /r!inaril'7 the stri%e 1' the 5or%ers 5oul! cause cessation
or interruption of 5or%. If the loss sustaine! !ue to such cessation or interruption of 5or% is not
co#ere! 1' the stri%e en!orsement. *herefore7 the special con!itions state! in con!ition No. 5>1?>1?
are not applica1le to the facts of the case. Here7 the loss sustaine! 1' the appellant 5as !irectl'
attri1uta1le to the stri%e 1' the 5or%ers. If the cessation or interruption of 5or% 5ere cause! 1' an'
1rea%!o5n of machiner' or other reasons7 such loss 5oul! not 1e co#ere! un!er the polic'.
*he Court further o1ser#e! that it is 5ell accepte! that in a contract of insurance if
the terms of the same are am1iguous or !ou1tful it is to 1e interprete! in fa#our of the insure!. *hat
has 1een hel! 1' the Supreme Court in 4eneral (ssurance Societ' $t!. #. Chan!mull Fain711 5here it
5as o1ser#e!.
JIn other respect there is no !ifference 1et5een a contract of insurance an! an' other
contract e"cept that in a contract of insurance there is a reDuirement of u1errima fi!es i.e. goo! faith
on the part of the assure! an! the contract is li%el' to 1e construe! contra proferentem7 that is7 against
the Compan' in case of am1iguit' or !ou1t.
0I/*IN4 M/& S)* FI0) */ 4/,/-N
-oo! of !ifferent #arieties 5as store! in si" go!o5ns of the Forest !epartment 5hich
5ere insure!.12 /n a !a' hun!re!s of hooligans an! unsocial elements entere! the central !epot an!
set fire to the go!o5ns an! stoc% insi!e the go!o5ns causing e"tensi#e !amage. ( claim 5as
preferre! that 5as repu!iate! on the groun! that the polic' !i! not co#er the fire cause! 1' mo1
#iolence. *hus7 a suit 5as file! 5here the stan! of the Insurance Compan'7 inter alias7 5as that in
#ie5 of clause 6>!? of the polic' the loss 5as not co#ere!. *he Sur#e'or ha! gi#en a report that the
!amage 5as not to the e"tent claime! 1' the plaintiff. *he suit 5as !eci!e! in fa#our of the Insurance
Compan' an!7 therefore7 an appeal 5as file! in the High Court 5here the contention of the appellant
5as that since the inci!ent 5as 1e'on! the control of the insure!7 it shoul! 1e treate! as an acci!ent
co#ere! 1' the polic'.
*he Court !i! not accept this contention an! o1ser#e! that the plain !ictionar'
meaning of the 5or! Iacci!entIs is the occurrence of things 1' chance an! an e#ent that is 5ithout
apparent cause or is une"pecte!. *he Court further o1ser#e! that it is the car!inal principle of
interpretation of statutes that the plain meaning of the 5or!s shoul! 1e ta%en into consi!eration. *hus
ta%en. *here shoul! not 1e an' me!iation of an' human agenc' to 1ring it into the am1it of the 5or!
Iacci!entI. In the instant case the rioting mo1 set fire to the go!o5ns an! the 5oo! therein. *his action
coul! not 1e terme! as Iacci!entI. +n!er clause 6>1? of the polic' the cases of arson an! !estruction
!ue to rioting 5ere e"clu!e!. *hus7 the fin!ing of the lo5er court on this count 5as not interfere!
5ith.
( case also came up 1efore the National Commission 5here the mo1 ha! set fire to
the factor' as a seDuel to post &a1ri MasCi! inci!ent.13 *he complainantG respon!ent7 5ho 5as ha#ing
the 1usiness of cotton siing7 ha! ta%en insurance policies co#ering stoc% of ra5 material7 cotton7
cotton 'arn an! goo!s l'ing in the factor'. /n <B=12=1;;2 some 5<< persons came to the factor' an!
set it on fire in 5hich the factor'7 ra5 material7 finishe! pro!ucts7 etc. 5ere full' !estro'e!. *he
1oo%s of account 5ere also !estro'e! in the sai! fire. ( claim 5as preferre! on 5hich the Insurance
Compan' ha! appointe! a sur#e'or to asses the loss. *hus7 a complaint 5as file! 5here it 5as
o1ser#e! that the Insurance Compan' 5as lia1le to ma%e goo! the loss.
42
I&portant 'eference (oo)s
1. Singh7 &ri!ge (nan!7 Ne5 Insurance $a5 >2<<<? +nion &ool Pu1lishers7 (llaha1a!.
1. I#am'7 case &oo% on Insurance $a5 >1;B4?7 &utter5orth9s.
2. I#am'7 4eneral Principles of Insurance $a5 >1;B4?7 &utter5orth9s.
3. Fohn &ir!s7 Mo!ern Insurance >2<<B? uni#ersal la5 pu1lishing 4. P#t. $t!.
4. Murth' U Sarma7 Mo!ern la5 of Insurance >Fourth )!ition?7 $e"is ne"is7 &utter5orth
-a!h5a7 Nagpur.
5. Srini#asan7 M.N. Principles of Insurance $a5 >2<<6? -a!h5a U compan'7 Nagpur.
6. Mishra7 M.N. la5 of Insurance >2<<6?7 Central la5 (genc'7 (llaha1a!.
:. Fais5al7 F.3.N.7 $a5 of Insurance >2<<B?7 )astern &oo% Compan'7 $uc%no5.
B. Singh7 (otar7 $a5 of Insurance >2<<B?7 )astern &oo% Compan'7 $uch%no5
;. Mathe57 M.F. Insurance. Principles U practice >2<<5?7 0&S( Pu1lishers7 Faipur.
43