11. CONTENTS OF THIS Presentation
1.Introduction
2.Essential elements of fire insurance contract
3.Classification of Fire Insurance
4.Classification of Fire Risk
5.Material loss insurance
6.Consequential loss insurance
7.Steps to be taken to prevent fire
8.Steps to be taken to prevent morale hazards
9.Extent of loss by fire in Bangladesh
10.Problems faced by fire insurance in Bangladesh
11.Management of problems by Fire
13. Introduction
Fire insurance is a contract under which the insurer in return for a
consideration (premium) agrees to indemnify the insured for the financial
loss which the latter may suffer due to destruction of or damage to property
or goods, caused by fire, during a specified period.
It is A type of insurance in which an insurance company agrees to pay for
damage caused by fire, or the document in which the details of the
insurance are recorded.
15. Essential elements of a fire insurance
contract
1.Presence of the elements of general Contract: All the elements of a
general contract are also present in the fire insurance contract:
• Agreement
• Legal consideration
• Competent to make a contract
• Free consent
• Legal object
2. Insurable Interest: Insurable interest is the financial and actual interest
on the property of the insured person.
16. Essential elements of a fire insurance
contract
3. Principle of Utmost Good Faith: In case of fire insurance, both the parties who
concerned with an insurance contract must have same mind at the time of
contract.
4. Principle of Indemnity: According to this principle, insured person will get the
compensation for actual value of the losses due to the accident.
5. Doctrine of Subrogation: According to this concept, after receiving the
compensation For the loss or damages, the rights or ownership of such property
will be transferred to the insurer . the insurer to take legal action against the third
party in the name of insured.
17. Essential elements of a fire insurance
contract
6. Warranty: A warranty is a promise by an insured to do or not to do something.
7. Proximate Cause: It also known as Cause Proxima or Nearest loss. It is the real
and actual cause of loss.
19. Classification of fire insurance
1. Specific Policy: Under it, any loss suffered by the assured is covered
only up to a specific amount which is less than the real value of
property.
2. Comprehensive policy: It is also known as an all-in-one-policy. It covers
losses arising from many kinds of risks, such as, fire, theft, burglary,
third party risks, etc.
3. Valued policy: Under this, the insurer agrees to pay a fixed sum of
money irrespective of the amount of loss to the insured.
20. Classification of fire insurance
4. Floating policy: It covers the property lying at different places against
loss by fire. An average clause will always be there in a floating policy.
5. Average Policy: A fire policy containing an ‘Average Clause’ is called an
Average Policy.
6. Adjustable Policy: Adjustable policy is issued for a particular period on
the existing stock. The premium amount is paid in full at the time the
policy is taken.
22. Classification of fire insurance
7. Blanket Policy: Blanket policy is issued to cover more than one
named building or property, or all the contents of more than one named
building.
8. Consequential Loss Policy: It is a policy under which the insurer agrees
to indemnify the insured for the loss of profits which he suffers due to
the dislocation of his business caused by fire. It is also known as loss of
Profit Insurance.
9. Valuable Policy: The value of property insured is determined only at the time
of happening of risk. In case of risk, the market value of property would be
the basis for payment of compensation.
23. Classification of fire insurance
10. Reinstatement Policy: If the insurer undertakes to reinstate (replace) the
insured property in case of risk, it is called as reinstatement or replacement
policy.
11. Transit Policy: It covers risk due to fire during transit. The policy commences
with the loading of goods in the carriage and ends once the goods are
unloaded at the destination
12. Excess policy: When the stock of the insured fluctuates, the insured can take
a policy for an amount below the amount in which his stocks do not normally
fall under.
25. Classification of fire risk
Fires Can be classified in five different ways depending on the agent that
fuels them. There are five main types of fires. Such as :
• Class A
• Class B
• Class C
• Class D
• Class K.
26. Classification of fire risk
Class A Fires
Class A fires are the most common type of fire and the kind that most of us
are familiar with. They involve solid combustible materials such as wood,
paper, cloth, trash, or plastic.
Class B Fires
Class B fires involve ignitable liquids or gases like petroleum grease,
alcohol, paint, propane, or gasoline.
27. Classification of fire risk
Class C Fires
These fires are oftentimes deemed energized electrical fires. Class C fires
referred to as class E in Australia, involve electrical equipment.
Class D Fires
Class D fires are rare but can happen when a metal ignites. These fires
commonly occur in industrial settings but it is not as common as the other
classes.
28. Classification of fire risk
Class K Fires
Class K fires involve flammable liquids, similar to classifiers but are
specifically related to food service and restaurant industry. These common
fires start from the combustion of liquid cooking materials including grease,
oils and vegetable and animal fats.
30. Material Loss Insurance
• Material damage cover insures the physical assets of the business
against accidental loss or damage. It is often purchased as part of a
broader business insurance solution.
• Includes both indemnity and replacement cover.
• Theft and fraud cover can be included.
32. Consequential loss insurance
Business interruption insurance, also known as business income
insurance, covers consequential losses. These policies compensate a
business for loss of revenue after a catastrophic event, regardless of
physical damage to the property or equipment. Interruption insurance
coverage will typically begin from the time of the adverse event and
continue until the business is able to return to its normal operation.
33. Consequential loss insurance
Business interruption insurance can cover a loss of revenue due to events
such as an extended power outage, a flood, or a mudslide. Business
interruption insurance can also protect against loss of income during a
breach of contract dispute that leads to a temporary cessation of business,
such as a dispute with a supplier or other third party. Business interruption
insurance is peril-specific and often must be purchased separately.
35. Hazed !!!
Hazard: Anything that cause Harm.
Hazard vs Risk: Risk is the likelihood of a hazard causing harm.
36. Consequential loss insurance
What is moral hazard?
- Lack of incentive to guard against risk where one is protected from its
consequences.
Cause of moral hazard:
• Carelessness
• lack of sense of duty
• Lack of willingness
• Dishonesty
• Negligence
38. Steps to be taken to prevent fire hazards
• Accessible Equipment: Make sure all of your fire protection equipment
such as fire extinguishers, control panels are easily accessible.
• Proper Disposal: Hazardous waste, flammable and inflammable
materials should be properly disposed in order to prevent fire hazards.
• Regular Maintenance: Schedule regular maintenance services for all of
your fire protection equipment to make sure everything is up to date.
• Safe Storage: For chemicals, flammable materials or other hazardous
substance, they should be stored in a safe place.
• Clean Environment: when there’s a lot of clutter, especially flammable
materials such as paper, boxes, etc., then a fire can spread faster.
39. Steps to be taken to prevent fire hazards
• Precautionary Measures: Make sure to teach building occupants how to
react to a fire and how to use a fire extinguisher, along with the other fire
protection devices.
• Building Security: Building occupants should know to lock up the
building behind them and they should know how to report suspicious
behavior or people if they see something a little off.
• Designated Smoking Area: There should be a designated smoking area
that’s a safe distance away from the building.
• Emergency Plan: Emergency and evacuation plans are important to
prevent further damages or issues if there’s a fire.
41. Steps to be taken to prevent
morale hazards
Moral hazard is a situation in which on party gets involved in a risky event
knowing that it is a protected against the risk and the other party will incur
the cost.
It arises both the parties have incomplete information about each other.
42. Steps to be taken to prevent
morale hazards
There are some step to minimize morale hazards:
•The first is to encourage the risk-taking party to act more responsibly by
offering them incentives.
•The second Is to institute policies that discourage an immoral behavior by
making it a punishable offense.
•Finally, regular monitoring allows the at-risk party to remain aware of
whether or not the other party is taking advantage of them.
44. Extent of loss by fire in Bangladesh
The number of fire incidents has increased four times over the last two
decades, as the country’s urban areas continue to expand without basic
fire safety infrastructure.
According to data provided by the Fire Service and Civil Defense, around
285,000 fire hazards took place in the country between January 1, 1999
and December 31, 2020, causing an estimated financial loss of around Tk
6,900 crore.
Meanwhile, between 2004 and 2020, fire accidents killed at least 2,308
people. As recently as in 2020, 21,073 fire incidents were recorded, which
was the second highest of the period, only coming second to 2019, which
saw 24,074. The country witnessed as many as 19,642 fire incidents and
incurred a loss of Tk 3.85 billion last year, according to official data.
46. Extent of loss by fire in Bangladesh (2nd part)
Financial Loss: From 1999 to 2020, causing an estimated financial loss of
around Tk 6,900 crore. The country incurred a loss of Tk 3.85 billion last
year.
Death:
•In 2004-2020 – 2308 killed in fire by electric short-circuit, fire from burners,
thrown out ignited cigarettes.
•IN 2022- The accident happened near Chattogram, Bangladesh’s main
port and 49 people were killed.
47. Extent of loss by fire in Bangladesh (2nd part)
People get homeless: About 3,000 people in Bangladesh were left
homeless after a massive fire consumed several hundred shanties in
Dhaka in 2022.
Injuries and Disabilities:
•In April 2005, sixty-four workers at the Spectrum factory in Savar,
Seventy-four workers were injured, with many being permanently disabled.
•In February 2006, a fire caused by an electrical short circuit more than
1000 workers were injured.
•From 2010 to 2022, more than 3000 peoples got injured.
49. Problems faced by fire insurance in
Bangladesh
Fire insurance is a type of insurance to
protect your personal property such as
office, shop, home, factory, and
apartment buildings, from any losses or
damages caused by a fire.
Now there are some problems which are
faced by fire insurance:
•Poor knowledge of agents
•Illiteracy
•Religious superstition
•Low awareness
•Lack of continuity
•Shortage of fund
•Lack of reminder
•Negligence of policy holders
•Restriction
•Poor services to consumers
51. Management of problems by Fire
Fire insurance is a contract under which the insurer in return for a
consideration agrees to indemnify the insured for the financial lost which
the latter may suffer due to destruction of or damage to property or goods
caused by fire during a specified period.
52. Management of problems by Fire
Problems
•Poor Knowledge of agents.
•Illiteracy.
•Religious superstition.
•Low Aware ness.
•Lack of continuity.
•Shortage of fund.
•Lack of Remainder.
•Negligence of policy holder.
•Poor services to consumer.
53. If you have any questions
G-Mail - Mr.mahin@stud.cou.ac.bd
THANK YOU !
54. If you have any questions
G-Mail - Mr.mahin@stud.cou.ac.bd
THANK YOU !
