http://www.actuaries.org.uk/__data/assets/pdf_file/0017/35207/fire.

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(calculation of fire ins)

fire insurance history

After the Great Fire in 1666 that devastated one third of London, reducing to ruins
over 13,000 houses and 89 churches (including St. Paul’s) it was realised that
there was a need for the provision of compensation. At the time the only form this
took was a collection at the local church. There are various views on when a fire
insurance company started, from as early as 1667, but it is generally accepted that
Dr. Nicholas Barbon, M.D., son of the eccentric member of Cromwell’s Parliament,
Praise-God Barebones, was the first to promote a serious form of insurance
protection in the name of The Fire Office, later to be known as The Phenix, which
commenced underwriting fire insurance in 1680 and ceased about 1712. There are
no surviving examples of their fire mark. However, we do know that policies exist,
and their emblem is that of a Phoenix rising from the flames.

Mindful that few streets were named and the buildings were not numbered, some
form of identification was necessary, and the birth of the fire mark came about.
The first examples were made of lead, and some hundred years later followed by
copper, tinned iron, zinc, brass and ceramic. They bore the logo of the insurance
company, in many cases in the form of the county’s coat of arms. Greek mythology
played an important part in many designs, typically that of The Fire Office’s
emblem.

The emblems that were attached to buildings by the insurance company’s

employee were called Fire Marks; to mark the building indicating that they insured
it and/or the contents, for fire risks. This practice carried on for two hundred and
fifty years.

There were approximately two hundred insurance companies that issued over nine
hundred fire marks, some only one and others as many as forty-odd different
variants.

Fire Insurance Definition

Fire insurance means insurance against any loss caused by fire. Section 2(61 of the Insurance Act
defines fire insurance as follows: “Fire insurance business means the business of effecting,
otherwise than incidentally to some other class of business, contracts of insurance against loss by
or incidental to fire or other occurrence customarily included among the risks insured against in
fire insurance policies.”

What is ‘Fire’?

The term fire in a Fire Insurance Policy is interpreted in the literal and popular sense. There is
fire when something burns. In English cases it has been held that there is no fire unless there is
ignition. Stanley v. Western Insurance Co. Fire produces heat and light but either o them alone is
not fire. Lighting is not fire. But if lighting ignites something, the damage may be covered by a
fire-policy. The same is the case with electricity.
Characteristics of Fire Insurance

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

Types of Fire Policies

There may be various types of fire policies. The principal types are described below:

Specific Policy

A specific policy is one under which the liability of the insurer is limited to a specified sum
which is less than the value of property.

Valued Policy

A valued policy is one under which the insurer agrees to pay a specific sum irrespective of the
actual loss suffered. A valued policy is not a contract of indemnity.

Average Policy

Where a property is insured for a sum which is less than its value, the policy may contain a
clause that the insurer shall not be liable to pay the full loss but only that proportion of the loss
which the amount insured for, bears to the full value of the property. Such a clause is called the
average clause and policies containing an average clause are called average policies. The phrase
“subject to average” is equivalent to the insertion of an average clause. “Lloyd’s Fire Policies are
usually expressed to be “subject to average”.

Reinstatement or replacement Policy

In such policies the insurer undertakes to pay no the value of the property lost, but the cost of
replacement of the property destroyed or damaged. The insurer may retain an option to replace
the property instead of paying cash.

Floating Policy

When one policy covers property situated in different places it is called a floating policy.
Floating policies are always subject to an average clause.

Combined Policies

A single policy may cover losses due to a variety of cases, e.g. fire together with burglary, third
party losses, etc. A fire policy may include loss of profits, i.e. the insurer may undertake to
indemnify the policy holder not only for the loss caused by fire but also for the loss of profits for
the period during which the establishment concerned is kept closed owing to the fire.

Fire insurance is insured on the basis of some fixed principles

which are as follows
1. Principle of utmost good faith

The insurer and insured must have detailed information about the subject matter to be insured.
Insured must disclose all information regarding the subject matter. If the assured has not
observed good faith then the contract may be avoided by the insurer.

2. Principle of Indemnity

The main aim of indemnity is to compensate the insured for a loss sustained. The insured must
not claim anything excess of the amount to recoup the actual loss.

3.Principle of Insurable interest

The insurable interest must be present at the time of insurance contract and at the time of loss in
fire insurance.

Indian Fire Insurance, India Fire Insurance, Fire Insurance India

Indian fire insurance, like all other insurance policies

in India, is considered a federal issue. The Tariff Advisory Committee, which is a Statutory Body, issued
the All India Fire Tariff on March 31, 2001, which governs all India fire insurance policies

. The commercial fire insurance India policy provides protection to buildings, machinery, offices and
contents. The purpose is to alleviate the risk of loss borne by the insured due to the breakout of fire. The
insured is expected to minimize the loss as much as possible by taking all feasible steps.
How is India Fire Insurance Premium Calculated?

To calculate the amount of premium for an Indian fire insurance policy

, the property is evaluated to know its market value. There are a number of other factors that are taken
into consideration, such as the type of policy the insured has opted for.

What is the Procedure of an Indian Fire Insurance Claim?

 The insured is expected to inform the insurance company at the earliest and within 24 hours.

 The insurance company appoints a claim representative who surveys the fire damaged property.
The insured needs to provide the claim representative all the relevant information.

 The degree of actual loss is evaluated by the claim representative.

 The processing of the claim takes a maximum three weeks.

What Documents are Required for Indian Fire Insurance?

The documents that the policyholder is required to produce while claiming for the loss include a
report of the fire brigade, a true copy of the policy along with the schedule, past claims
experience, a claim form and photographs.

Indian Fire Insurance: What is the Concept of “utmost faith”?

Under this concept, the policyholder is expected to reveal the true details while filing the claim.
There should not be any misrepresentation of facts or figures, since incorrect information will
lead to the policy being declared as void.

To get a fire insurance India cover, an individual also needs to fill up the following information
in the policy form:

 Name, occupation and address.

 Subject matter description – which allows for identification in case of a fire.

 Information about the area where the property is situated.

 The purpose for which the property is being used.

 Whether the property is already insured.

 Personal insurance history.

BENEFITS OF FIRE INSURANCE:

If you are uninsured against your house or business burning down, you may not be able to recover, both emotionally
and financially. You could be paying for a home that is no longer there, all your possessions may be gone and very
often people do not have the money saved to replace all the possessions. Every home owner has a certain amount of
fire insurance, by law, any bonded home has to have fire insurance as part of its building insurance cover. However,
one needs to ensure that you are sufficiently covered. For most businesses it is vital to have this cover.

Replace Contents

It will include the replacement of a certain value of household and business contents.

Temporary Accommodation

Taking out fire insurance should protect you financially from the loss of your possessions, home & business . It will
include temporary accommodation, this helps to pay for the insured to move out and live somewhere else for the
period of time it takes to repair the structure before they can move back.

Rebuild the Damage 

Fires can devastate buildings and cause unbelievable damage to the structure of your home or business. This
policy covers you so that you can rebuild it or replace sections that are damaged. Make sure that your garage,
swimming pool and any outhouses are included.

 
Preventative Measures

The use of fire alarms, sprinkler systems, and other safety measures can decrease the cost of the policy.

Gather all necessary information - Confirm with your insurance company the requirements for
filing a fire insurance claim. Below is the standard necessary information needed:

 Date of loss
 Type of claim (loss)
 Location of damage
 Detailed list of any injuries incurred
 Full condition of home
 Complete list of all damages
 All estimates for repair or replacement
 Police report
NOTE: It is permissible to exclude the following two perils only at the inception of the policy.

RSMD- a discount of Rs.0.10% may be granted

STFI—a discount of 0.15%to 1.50% depending upon the risk.

Fire

Excluding destruction or damage caused to the property insured by

Its own fermentation, natural heating or spontaneous combustion.

its undergoing any heating or drying process.

Burning of property insured by order of any public Authority

LIGHTNING

Damage caused by lightning is payable whether fire follows or not.

EXPLOSION

Means a sudden increase in pressure in the atmosphere or surrounding gases resulting from a sudden
and violent expansion of any subject matter. However policy will not extend to cover the damage to the
boiler in which steam is generated. Such properties are insured by a separate policy issued by
Engineering Department.

IMPLOSION:Implosion means bursting inwards or collapse due to external pressure

AIRCRAFT DAMAGE:
Any damage caused by aircraft or space devices or caused by any articles dropped from such aircraft or
space devices. This excludes destruction or damage occasioned by pressure waves caused by such
devices.

RSMD-(RIOT, STRIKE, MALICIOUS DAMAGE):

Loss of or visible physical damage or destruction or by external violent means directly caused to the
property insured by excluding those caused by

Total or partial cessation of work or the retardation or interruption or cessation of any process or
operations or omissions of any kind.

Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or

destruction by order of the government or any lawfully constituted Authority.

Permanent or temporary dispossession of any building or plant or unit or machinery resulting from the
unlawful occupation by any person of such building or plant or unity or machinery or prevention of
access to the same.

Burglary, housebreaking, theft, larceny or any such attempt or any mission of any kind of any person
(Whether or not such act is committed in the course of disturbance of public peace)in any malicious act.

STFI-(Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado Flood and Inundation)

Loss, destruction or damage directly caused by storm, cyclone, Typhoon, Tempest, Hurricane, Tornado,
Flood and Inundation excluding those resulting from earthquake, volcanic eruption or other convulsions
of nature.

IMPACT DAMAGE:

The cover provides in respect of damage to the insured’s property by any Rail/Road Vehicle or animal by
direct contact not belonging to or owned by

The insured or any occupier of the premises or

Their employees while acting in the course of their employment.

SUBSIDENCE AND LANDSLIDE INCLUDING ROCK SLIDE:

Loss, destruction or damage directly caused bny subsidence of a part of the site on which the property
stands or land slide/Rock slide excluding:

The normal cracking, settlement or bedding down of new structures.

The settlement or movement of made up ground

Coastal or river erosion

Defective design or workmanship or use of defective materials.

Demolition, construction, structural alterations or repairs of any property or ground works or

excavations.

LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATION

Excluding Loss, destruction or damage caused by

Repairs or alterations to the buildings or premises.

Repairs, removals or extension or the sprinkler installation

Defects in construction known to the insured

BUSH FIRE:

It covers only Bush Fire. Forest Fire is excluded here.

GENERAL EXCLUSIONS

Excess under the policy:

The first 5% of each and every claim subject to a minimum of Rs.10,000/- in respect of Act of God only
perils such as lighting STFI subsidence Landslide and Rock slide.

The first Rs.10,00/- for each and every loss arising out of other perils.
The excess shall apply on the basis of per event per insured However this does not apply to policies
covering dwellings.

Excluded perils:

War and war like perils:- Loss, destruction or damage caused by war, invasion act of foreign enemy
hostilities or war like operations(Whether war be declared or not) civil war mutiny, civil commotion
assuming the proportions of or amounting to popular rising, military rising, rebellion, revolution,
insurrection or military or usurped power.

OTHER EXCLUSIONS

Loss or damage caused by ionizing radiation or contamination.

Loss or damage caused by pollution or contamination excluding:

Pollution or contamination which itself results from a perils hereby insured against.

Any peril hereby insured against which itself results from pollution or contamination.

Loss, destruction or damage to bullion or use precious stones, any curios or works of art for an amount
exceeding Rs.10,000/- goods held in trust or on commission, manuscripts, plans, drawings, securities,
obligations or documents or any kind, stamps, coins or paper money, cheques, books of accounts or
other business books of accounts or other business books computer system records, explosives unless
otherwise expressly stated in the policy.

Loss or damage to stocks in clod storage premises caused by change of temperature.

Loss, destruction or damage to any electrical machine, apparatus, fixture or fitting arising from or
occasioned by over running, excessive pressure, short circuiting, arcing, self hearing or leakage or
electricity from whatever cause. This exclusion shall apply only to the particular electrical machine,
apparatus fixture or fitting so affected and not to other electrical machine, apparatus, fixture or fittings
which may be destroyed or damaged by fire so set up.

Expenses necessarily incurred on

Architects, surveyors and consulting engineer’s fees.

Debris removal by insured following a loss destruction or damage to the property insured by an insured
peril in excess of 3% and 1%of the claim amount respectively

Loss or damage by spoilage

Loss by Theft during or after the occurrence of any insured peril except as provided under Riot, Strike,
Malicious and Damage cover.
Loss or damage caused by earthquake, volcanic eruption or other convulsion of the nature.

Loss or damage to property insured if removed to any building or place other than in which it is herein
stated to be insured except machinery and equipment temporarily removed for repairs, cleaning
renovation or other similar purposes for a period not exceeding 60 days.