This ppt is on law of insurance(fire & life ) it will give you complete information about the policies of these insurances.

1. SHRI VAISHNAV INSTITUTE OF MANAGEMENT
COURSE : MBA(FA) 1
SUBJECT : BUSINESS LAW
INSTUCTOR :Dr. Mamta Joshi Mam
SUBMITTED BY :Deepshikha Uprit
Muskaan Gupta
Raksha Agrawal
Muskan Upadhyay
1

2. TOPIC
LAW OF INSURANCE :-
LIFE INSURANCE
&
FIRE INSURANCE
2

3. CONTENT
• Introduction
• Life Insurance - Definition & History
• Principle’s & Types of life Insurance
• Various claim’s & Rating’s of Insurance companies
• Fire Insurance – Definition & History
• Scope’s & Insurable Objects
• Principle’s & Types of Fire Insurance
• Procedure for Fire Insurance
• Documents required for Fire Claim
• Difference between Life & Fire Insurance
• Conclusion
3

4. OBJECTIVES
• To understand the concept of Law of Insurance (Life & Fire).
• To develop understanding about the Principle’s of
• To know about the various Policies of Insurance.
4

5. OUTCOMES
• The learning will help to understand the meaning & definitions
of the Life and Fire Insurance .
• Helps to get the clear understanding of various principle’s &
policies of Insurance .
• To know the difference between the life and fire Insurance.
• Leads to attain the knowledge about the Insurance .
5

6. INTRODUCTION
Insurance is a means of protection from financial losses. It is a form of risk
management ,primarily used to hedge against the risk of a contingent or
uncertain loss. An entity which provides insurance is known as an insurer,
an insurance company, an insurance carrier or an underwriter.
A contract in which one party agrees to indemnify another against a
predefined category of risk in exchange for a premium.
Depending on the contract, the insurer may promise to financially protect
the insured from loss ,damage ,or liability stemming from some event.
6

7. LIFE INSURANCE
What is life insurance ?
UNDER SECTION 2(11) OF INSURANCE ACT, 1938,
Life insurance can be termed as an agreement between the policy owner and the
insurer, where the insurer for a consideration agrees to pay a sum of money upon
the occurrence of the insured individual’s or individual’s death or other event, such
as terminal illness ,critical illness or maturity of the policy ,whichever is earlier.
The person who agrees to identify is called the ‘Insurer’. The person whose life is
insured is called the ‘Assured’. The consideration paid to the insurer is called the
‘premium’. The written agreement of insurance is called the ‘policy’.
7

8. • The business of life insurance in India is governed by the Insurance Act,1938
and the Life Insurance Corporation Act,1956(as amended upto date).
• The life insurance business was nationalised on January 19,1956. Since
September,1956,Life Insurance Business is carried on exclusively by The Life
Insurance Corporation of India, formed and governed by The Life Insurance
Corporation Act, 1956.
• However, with the enactment of Insurance Regulatory and Development
Authority Act 1999,the exclusive monopoly of the LIC to carry on life
insurance business in India has ended. Hence forth, LIC and the other private
insurers will carry on life insurance business in accordance with the provisions
of the Insurance Act 1938 as amended by the First Schedule to the IRDA Act
1999.
8

9. HISTORY OF LIFE INSURANCE
* Insurance in India can be traced back to Vedas . For instance,
yogakshema , the name of Life Insurance Corporation of India’s corporate
headquarters, is derived from the rig Veda.
* Bombay Mutual Assurance Society, the first Indian Life Assurance
Society, was formed in 1870.
* Other companies like Oriental ,Bharat and Empire of India were also set up
in the 1870s-90s.
9

10. WHY TO HAVE A LIFE INSURANCE ?
• Protection
• Liquidity
• Tax Relief
• Money When You Need It
10

11. PRINCIPLES OF LIFE INSURANCE
 INSURABLE INTRERST :
* The object of insurance should be lawful. The person proposing for
insurance must have interest in the continued life of the insured and would
suffer pecuniary loss if the insured person dies. This is known as insurable
interest.
* In Life Insurance the presence of insurable interest is essential at the time
of effecting the contract of insurance.
* If there is no insurable interest , the contract becomes wagering and
hence illegal.
* Every individual has unlimited insurance interest on his/her life.
* Business partners have insurable interest in the lives of other partner to
the extent of their financial interest in the partnership.
11

12.  DOCTRINE OF UTMOST GOOD FAITH
* In life Insurance contracts, a very high degree of good faith is required to
exist between the parties to the contract, viz., the insurer and the insured. This
is called the principle of utmost good faith.
 DOCTRINE OF ADHESION
* The terms of the contract are most of the times fixed by one party( the
insurer) and with minor exceptions, must be accepted or rejected in total by the
other party(the proposer).
12

13.  PRINCIPLE OF INDEMNITY
* Insurance contracts other than life insurance contract are contract of
indemnity in the sense that the amount payable by the insurer in case of the
contingency stated in the policy occurring is limited to the loss that the insured
will suffer.
* The insurance contract promises to keep the insured indemnified against the
financial loss that he would suffer on account of the happening of the event
13

14. TERM
INSURANCE
WHOLE LIFE
INSURANCE
ENDOWMEN
T POLICY
MONEY
BACK
PLANS OR
CASH BACK
PLANS
CHILD
PLANS
ANNUITY
PLANS
UNIT
LINKED
INSURANCE
POLICY
TYPES OF
LIFE
INSURANCE
POLICIES
14

15. 1. TERM LIFE INSURANCE
 Sum assured is payable only in the event of death during the term.
 In case of survival, the contract comes to an end at the end of term.
 Term Life Insurance can be for period as long as 40 years and as short as
1 year.
 No refund of premium.
 Non-participating policies.
 Low premium as only death risk is covered.
15

16. 2. WHOLE LIFE INSURANCE
 Whole life plans are another type of endowment plan ,which cover death for an
indefinite period.
 When the policy holder dies, the face value of the policy, known as a death
benefit, is paid to the person or persons named in the life insurance policy (the
beneficiary or beneficiaries).
 It can be with or without profits.
 If you cancel the policy after a certain amount of the times has passed, the
insurance company will surrender the cash value to you.
16

17. 3. ENDOWMENT POLICY
 Endowment insurance plans is an investment oriented plan which not only
pays in the event of death but also in the event of survival at the end of the
term.
 Is a contract underwritten by a life insurance company to pay a fixed term
plus Accumulated profits that are declared annually.
 Premium includes 2 elements
-mortality elements & investment elements.
 Minimum age at entry:- 12 years
 Maximum age at entry:-65 years
 Maximum age at maturity:-75 years
17

18. 4. MONEY BACK POLICY
This type of policy provides money back at regular intervals before the policy
expires. For examples, on a 12 –years policy, one gets 20 percent of the sum
assured after four years, another 20 percent on the expiry of another next four
years and the balance at the end of 12 years.
In case death of the assured occurs during 2 years, the full sum assured is paid
irrespective on instalments already paid. Thus, the policy gives money in hand
plus insurance cover.
18

19. 5. CHILDREN POLICY
LIC issues several policies for the benefit of children. Two important policies are:
(i) The fixed term (marriage) endowment policy and
(ii) The education annuity policy
These policies are suitable for making provisions for the marriage or education of
children . premiums are payable for a selected term or till prior death. The
benefits are payable only at the end of selected term. In case of the marriage
endowment the sum assured is paid in lump sum, but in case of the educational
annuity, it is paid in equal half yearly instalments over a period of five years.
19

20. 6. ANNUITY PLANS
 It is a policy under which the insured amount is payable to the assured by
monthly or annual instalments after he attains a certain age. The assured may
pay a lump sum of money at the outset.
 These policies are useful to persons who wish to provide a regular income for
themselves and their dependents.
20

21. 7. UNIT LINKED INSURANCE POLICY
 It has emerged as one of the fastest growing insurance products.
 It is a combination of an investment fund (such as mutual fund) and an
insurance policy.
 The premium amount is invested in the stock market and returns better
income on the maturity period.
 Better for long term investment option and provides higher returns as large
portion of funds are invested in equities.
 There is also option of switching over from one fund to another if it does not
seem to be profitable.
 ULIPs can be classified as –equities, bonds, real estate & money market
instruments.
21

22. POLICY CLAIM
Life insurance claim can arise either:-
*on maturity of the policy-maturity claim
*on death of the policy holder- death claim
*survival up to specified period during the term-survival benefits.
22

23. MATURITY CLAIM
*In case of Endowment type of policies, amount is payable at the end of the policy
period.
*Discharge form and policy document. On receipt of these documents post dated
cheque is sent by post so as to reach the policy holder before the due date .
*The gross amount consists of BASIC SUM ASSURED AND BONUS if any.
23

24. SURVIVAL CLAIM
• Same as maturity claims, sum assured becomes payable on expiry of full
term but on survival of the insured.
• In policies like , money back plan for 15 years term , 1/4th of the sum assured
becomes payable on the life assured on surviving 5 year, further 1/4th
becomes payable after additional 5 years and rest balance at the end of 15
years.
24

25. DEATH CLAIM
2 TYPES:-
• Premature death claim- within 3 years
• Other claim - after 3 years
# INTIMATION OF DEATH is to be given by a proper person in writing.
1. Original Policy Bond
2. Death Certificate
3. Proof of relationship with the deceased person
In case of Accidental Death
Postmortern Report , FIR Copy, Final Police Report is also required.
25

26. INSURER APR 2016 TO
MAR 2017
APR 2017 TO
MAR 2018
APR 2018 TO
MAR 2019
APR 2019 TO
MAR 2020
NEW INDIA
ASSURANCE
1 1 1 1
STAR HEALTH 5 4 4 2
UNITED
INDIA
2 2 3 3
NATIONAL
INSURANCE
3 3 2 4
ORIENTAL
INSURANCE
4 5 5 5
Ratings Of Insurance Companies In India- Top 5
26

27. FIRE INSURANCE
WHAT IS FIRE INSURANCE ?
UNDER SECTION 2(6A) OF THE INSURANCE ACT,1938-
Defines a fire insurance contract may be defined as an agreement between the
insurer and the insured whereby the insurer undertakes to indemnify the insured
for destruction of or damage to property caused by fire or other specified perils
during a stated period , in return for payment in lump sum or by instalments.
“ the business of affecting, otherwise that incidentally to some other class of
insurance 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”. The document which contains the terms and conditions of
the fire insurance contract is called the FIRE POLICY.
27

28. HISTORY OF FIRE INSURANCE
The real establishment of fire insurance came only after the Great
Fire of London on 2 sept 1666-6 sept 1666. This fire lasted for 4 days
and nights burning over 436 acres of ground and destroying over
13,000 buildings was the most disastrous fire in history and forcibly
awakened the people to the necessity for a form of protection
against such calamities.
28

29. SCOPE OF FIRE INSURANCE
FIRE INSURANCE BUSINESS :-
Loss due to fire , lightening ,
Explosion , Implosion , Riots & Strikes ,
Impact By Rail , Aircraft Damage,
Earth Quake , Flood,
Storm , Tempest , Tornado ,
Typhoon , Cyclones & Land Slide .
29

30. WHO CAN AVAIL FOR FIRE INSURANCE ?
* Any person or firm that has a financial interest in the property to
be insured can avail this insurance . This means that owners of
property, firms that holds property in trust or on commission and
Financial Institutions which have a financial interest in a property
can avail this insurance.
30

31. INSURABLE OBJECT IN FIRE INSURANCE
• Building
• Electrical installation in buildings
• Machinery , Plant and equipment
• Goods in factories ( raw materials, stocks in process, finished
goods)
• Godowns , Goods in open
• Contents in dwellings
• Shops , Hotels etc.
• Furniture fixture and fittings , pipelines located inside or outside
the compound etc.
31

32. PRINCIPLES OF FIRE INSURANCE
 UTMOST GOOD FAITH
Insured must disclosed all relevant fact to the insurer.
 INDEMNITY
Underwriter agree to indemnity the insured against losses to
the extent of amount insured.
 INSURABLE INTEREST
The insurable interest must exist both at the time of effecting
the insurance as well as at the time of loss.
32

33.  SUBROGATION
The insurer after paying compensation to insured , become
entitled to claim all the right of the insured against third party.
 CAUSA PROXIMA
Losses resulting from fire , margin or some other related cause
, being the proximate cause of losses are covered.
33

34. Valued
policy
Floating
policy
Declar –
-ation
policy
Adjust-
-able
policy
Specific
policy
Average
policy
Replace--
ment
policy
TYPES OF
FIRE
INSURANCE
POLICIES
34

35. 1. VALUED POLICY
 It is usually taken where it is not easy to ascertain the value of the property.
 In this policy the indemnity is a fixed amount agreed upon at the time of
signing the contract.
 The insured is benefited when the market value of the property declines,
but suffer loss when the market value appreciates.
 The valued insurance policy is usually offered for such items like jewellery,
furs , or paintings , which value is difficult to estimate once they are
damaged or destroyed by fire.
35

36. 2. FLOATING POLICY
 It is taken to cover loss on goods , which are lying in different places and the
stock of which is almost continuously fluctuating.
 It is taken out for those goods which are frequently changing in a
warehouse.
 Floating policies are suitable to those traders or products whose raw-
materials or merchandise are lying at different localities or godowns.
 For example :- Some of the goods of other trader are kept in one godown ,
and few kept in another godown , some kept in railway godown or some at
the sea port open.
36

37. 3. DECLARATION POLICY
 This policy is taken in respect of stock of inventory of the policyholder.
 Since the level of stock which are subject to frequent fluctuations in value the
businessman takes a policy for a maximum amount considered to be at risk
and the premium is paid accordingly.
 On a fixed date of every month the policyholder declares the amount of
stock covered under the policy to the insurance company.
37

38. 4. ADJUSTABLE POLICY
 It is issued for existing stock.
 In this policy , premium rate shall be adjusted according to increase or
decrease in the value of stock , this change will be notified to the insurer by
the insured
 In case of loss by fire, the amount notified by the insured at the maturity of
the policy is taken as final and indemnified up to that limit.
 It is a contract limited to merchandise or stock in trade other than farming
stock.
38

39. 5. SPECIFIC POLICY
 A specific policy is a type of policy in which the property is insured for a
specific sum irrespective of its value.
 If there is loss , the stated amount will have to be paid to the policyholder .
 The actual value of the subject matter is not considered in this respect.
 For example :- If a property is insured for Rs. 10,000 though its actual
value is Rs. 20,000 . In the event of loss to property , not more than Rs.
10,000 can be recovered .
39

40. 6. AVERAGE POLICY
 Where a property is insured for a sum which is less than its value , the
policy 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.
 For example :- A value of the property is Rs. 1,00,000 . It is insured for Rs.
60,000 ( 60 % of the total value ) The amount of loss is Rs 60,000 . The
insurance company will not pay Rs. 60,000 to the policyholder but will pay
Rs.36,000 (60% of Rs. 60,000).
40

41. 7. REPLACEMENT POLICY
 Covers the cost of replacement of object according to its condition .
 Any technical improvements will go to the account of the insured.
 Reinstatement must be carried out by the insured in order to obtain the
benefits of the special basis of settlement .
 The work of reinstatement must be completed within 12 months from the
date of loss , failing which the claim will be settled on market value basis .
 The insured also needs to pay higher rate of premium .
41

42. PROCEDURE FOR FIRE INSURANCE
• Selection of insurer . (company)
• Presentation of proposal in the prescribed form .
• Evidence of goodwill.
• Recommendation by agent.
• Survey of the subject matter.
• Report by surveyors.
• Acceptance of proposal.
• Depositing of premium money.
• Issue of cover note.
• Issue of insurance policy.
42

43. FOLLOWING DOCUMENTS ARE REQUIRED FOR
FIRE CLAIM :-
• Copy of the policy.
• Survey report.
• Claim form duly completed by the insured.
• Police report (for riot claims) / Panchanama (fire loss).
• Fire brigade report.
• Meteorological report (in case of flood, cyclone etc. claims).
• Photographs.
• Detailed claim bill with necessary bills / voucher.
• Copy of enquiry committee report on cause of loss if enquiry is ordered by
insured .
43

44. DIFFERENCE BETWEEN LIFE &
FIRE
INSURANCE
BASIS
1. Nature of
Risk
2. Object
LIFE INSURANCE
-Risk is certain
- Object is to
secure future
and also make
investment.
FIRE INSURANCE
-Risk is not
certain.
-Object is to get
security or
compensation in
the event of loss
or damage.
44

45. 3. Time period
4. Premium
5. Insurable
Interest
-The policy is
generally for a
longer period.
-The amount of
premium is linked
to the age of the
insured and period
to the policy.
-Insurable interest
must exist at the
time of acquiring
policy.
-The policy is
gradually for one
year.
-Premium is fixed
as per the nature of
risk involved.
-Insurable interest
must exist at the
time of contract
and also at the time
of loss .
45

46. conclusion
Insurance is a large investment and you will most likely purchase multiple
policies throughout your lifetime. It is essential that you know what each
type of insurance covers and how it works so you can make the best
decision about what to buy. Do not base your decision on just what is
cheapest , but look at what it provides .
Take the time to shop around and find the right insurance for your situation.
People often say they cannot afford insurance, but the reality is that they
cannot afford not to have it. It can save them from thousands or more
dollars in unplanned expenses when unexpected situation arise. You do not
want to waste your money on policies that do not meet your needs, but the
right insurance policy can protect you and your family from unforeseen
disasters.
46

47. 47

48. THANK YOU !
48