FIRE INSURANCE
BY
DR. Y. PAPA RAO
COURSE TEACHER

INTRODUCTION
• The term fire insurance refers to a form of property insurance that
covers damage and losses caused by fire. Most policies come with
some form of fire protection, but homeowners may be able to
purchase additional coverage in case their property is lost or
damaged because of fire.
• A fire insurance is an agreement between two parties, i.e., insurer
and insured, whereby insurer undertakes to indemnify the loss
suffered by the insured in consideration for his (insured) paying of
certain sum called 'Premium’.
• Castellain v. Preston (1833) It means a contract whereby one person
undertakes in return for the agreed consideration to indemnity another
person against loss of damage occasioned by fire up-to the agreed amount.

MEANING OF FIRE INSURANCE CONTRACT
• Its ordinary meaning of fire, there must be ignition or combustion.
• Ignition means start to burn: Combustion means: the process of burning
• Essentials: It is a contract of Insurance, there must be consideration, the
object of the contract should be to indemnify the assured from loss caused
by damage or destruction of property by fire.
• It is a personal contract, and the cause of fire is immaterial generally.
• The great fire of London was a major fire accident took place from 2nd
September to 6th September 1666 in a Baker’s shop in Pudding Lane of
London belonging to Thomas Farynor. Six people died, nearly 70,000
houses burnt in which some of the Churches (St. Paul’s) also burnt.

NATURE OF FIRE INSURANCE
• This is a contract of Indemnity: make good the actual loss and subject
to the policy amount. This is the controlling principle for fire
insurance. Dalby vs. India and London Life Assurance Co.,(1854).
Castellain vs. Preston(1883).
• It is a contract of uberrima fides: Utmost good-faith. Both the parties
to the contract have duty to disclose the material facts.
• It must be distinguished from a wagering contract and a contract of
guarantee.
• It is a Personal Contract between insurer and the assured.

COVER NOTE AND POLICY
• The cover note is an unstamped document issued to provide evidence
of cover till the time the policy issued. The cover
note/slip provides insurance against specified perils on the usual terms
and conditions of the company's policy.
• The insurance company on payment of the premium gives a deposit
receipt called the cover note.
• Case: Indian Trade & General Insurance Co v. Bhailal (1954).
• Policy: It is a printed document containing the terms and conditions of the
contract. It is a standardized/standard form of contract.
• In insurance, the insurance policy is a contract (generally a standard
form contract) between the insurer and the policyholder, which determines
the claims which the insurer is legally required to pay.
• General Assurance Society vs. Chandmull, AIR 1966 SC 1644.

CONTENTS OF THE POLICY
• Recitals, the heading
• Name of the insured
• Description of the subject-matter
• Amount of the insurance
• Contract of the insurer to indemnify the insured
• Conditions
• Perils insured against
• Amount of Premium
• Extent of the Insurer’s Liability.

CLAIMS
• Approach the Insurance Provider and File a Claim: On the
happening of any destruction or damage the insured shall forthwith
give notice thereof in writing to the insurer.
1.Date of loss.
2.Type of loss or damage.
3.Any related injuries.
4.Condition of the home or office.
5.Description of damaged contents.
6.Location of damage.
7.Others involved.
8.Police FIR copy in case Police is involved.

DOCTRINE OF REINSTATEMENT
• Reinstatement means replacement of what is lost.
• the insurance company reinstates the damaged property or
asset by paying its replacement value as the claim amount to
the policyholder.
• Case: Anderson v. Commercial Assurance Co (1855).
• Either to pay the assured in money or to
• Reinstate the property.
• Case: Young v. New Zealand Insurance Co (1910)
• A standard policy will have the “Reinstatement clause”.

DOCTRINE OF SUBROGATION
• “Subrogation is a term describing a legal right held by
most insurance carriers to legally pursue a third party that
caused an insurance loss to the insured.
• Case: Yorkshire Insurance Co v. Nisbet Shipping Co (1962).
• Remedies against third party in respect of the subject-matter of
the loss.
• This doctrine will not apply to Life and applies to Fire and
Marine and other Non-Life policies:
• Conditions: Insurer must pay the claim first. Secondly the
assured must have been able to bring action.

DOCTRINE OF CONTRIBUTION
• Contribution arises only in property insurance.
• In such a case, the total payable claim for the loss is
proportionately divided among all the insurers based on
their Contribution Agreement or conditions.
• Case: North British and Mercantile v. Liverpool and London Globe
(1877).
• Contribution exists where the thing is done by the same person, same
property, against same loss, and to prevent a man first recovering
more than the whole loss or if he recovers the whole loss from one
which he could have recovered from the other/others, then to make
the parties contribute ratably (proportional).