INTRODUCTION
TO
FIRE INSURANCE
1.
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4.
RISK
HAZARD
PRINCIPLES
CONTRACT VIS-VIS THE POLIY
RISK – MEANING
• The possibility of adverse results
flowing from any occurrence. That is
probability of loss
• Risk can be defined as a deviation from
an average /expected outcome
• The outcome could be financially
measurable in terms frequency and
severity in order to be handled
economically
RISK MANAGEMENT PROCESS
RISK ANALYSIS
• IDENTIFICATION
• EVALUATION
• HANDLING
RISK HANDLING
• AVOIDENCE
• REDUCTION
• RETENTION
• COMBINATION
• HEDGING
• TRANSFER
• RESEARCH
Classification of Risks
• Pure Vs Speculative
• Dynamic Vs Static
• Fundamental Vs particular
ESSENTIALS OF A VALID CONTRACTS
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All agreements are contracts
If made by free consent of the parties
Competent to contract
For a lawful consideration
With a lawful object
Not expressly declared by the Act to be
void
CONTRACT OF INSURANCE
IT IS A COMMERCIAL CONTRACT SPECIFING –
A.
B.
C.
D.
E.
F.
INSURER
INSURED
SUBJECT MATTER INSURED
PERIOD OF INSURANCE
SUM INSURED
TERMS OF COVER
IN ESSENCE AN INSURANCE CONTRACT IS FOUNDED
ON THE FOLLOWING FOUR PRINCIPLES
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2.
3.
4.
UTMOST GOODFAITH
INDEMNITY
INSURABLE INTEREST
PROXIMATE CAUSE
FIRE INSURANCE
THE NAME OF THE POLICY IS
STANDARD FIRE AND SPECIAL PERILS POLICY
THE SUBJECT MATTER OF INSURANCE IS
LAND BASED MOVABLE AND IMMOVABLE
PROPERTIES
SCOPE OF COVER UNDER SFSP
1.
2.
3.
4.
5.
Fire
Lightning
Explosion/Implosion
RSMD
Impact by Rail/Road
Vehicles /animals
6. Aircraft
7. STFI.
8. Subsidence and
Landslide
9. Bursting and
overflowing of water
tanks
10. Missile testing
operations
11. Leakage from
Automatic Sprinkler
Installation
12. Bush Fire
ADD ON COVERS
• Architects, Surveyors and
Consulting Engineers Fees
• Removal of Debris
• Deterioration of Stocks in
Cold Storage
• Forest Fire
• Impact Damage
• Spontaneous Combustion
• Omission to insure additions,
alterations or extensions.
• EQ (Fire and Shock)
• Spoilage Material Damage
• Leakage and Contamination
• Temporary Removal of
Stocks
• Loss of Rent
• Insurance of Additional
Expenses of Rent for
alternate accommodation.
• Start up expenses.
• Terrorism.
A FEW NEW ADD ON COVERS
• HOUSEBREAKING
• ELECTRICAL APPRATUS
• SPONTANEOUS COMBUSTION (INCLUDING
NON FIRE DAMAGE)
• INSURANCE OF JETTIES, DOCKS AND
PROPERTIES ERECTED IN WATER &
DAMAGE BY WATER BORNE BODIES
• BOILER EXPLOSION DAMAGE
• START UP AND SHUT DOWN EXPENSES
• ACCIDENTAL DAMAGE
GENERAL EXCLUSIONS
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2.
3.
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6.
7.
Excess
War perils
Nuclear perils
Pollution or contamination
Bullions, unset precious
stones work of arts etc,
Change in temperature in
cold storage premises
Electrical risks payable
under MBD
8.
9.
10.
11.
12.
13.
Architects’, surveyors’ fee
in excess of limits stated
Consequential and indirect
losses
Retardation, interruption or
cessation of any
process/operation
Theft following occurrence
of any insured peril
EQ, Volcanic eruption etc.
Property removed to other
locations
Policy Conditions
1.
2.
3.
4.
5.
6.
The policy is voidable in the event
of mis-discription /representation
The policy will cease after 7 days
of fall /displacement
The cover ceases to attach in case
there is alteration in the trade /
manufacture in insured premises
and un-occupied /passage of
ownership.
Marine policy should pay first.
Termination of contract subject to
15 days notice.
Duty of the insured following
claim: immediate notice /
furnishing account of loss /
particulars of other insurance and
a disclaimer option to insurer
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15.
Rights of the insurer following
claim: enter / take possession
and dispose as deem fit.
Forfeiture of all benefit of
policy in case of fraud / false
declarations
Option of the insurer to
reinstate or replace as deem
fit
Condition of average
Contribution
Subrogation
Arbitration
All notices in writing
Reinstatement of sum insured.
WISH YOU ALL THE BEST