A fire insurance contract just like any other contract is
governed by the Indian Contract Act. In order to be valid it must posses the
usual elements namely, offer and acceptance, competent parties,
free consent and legal object and so forth. But in addition to these essentials it must also posses additional
characteristics of fundamental
principles: The fundamental principles
of fire insurance are : (1) Insurable
Interest: (2) Utmost good faith: (3) Indemnity: (4) Causa proxima : (5)
Doctrine of Subrogation : (6) Warranties and
(7) Contribution.
(II) INSURABLE INTEREST: An insurable interest of such a nature that the possessor
would be that financially injured by the
occurrence of fire and would be benefitted by its existence. The insured is not
the property but the interest of the insured in the property. Thus what is
insured in a fire policy is not the bricks wood, steel, cement, lintel and other material used in a building the house but the interest of the
assured in the subject
matter house of insurance: not to the
legal interest but the beneficial
interest. Without insurable
interest the contract will be
regarded as a gambling policy and therefore
void. A sentimental interest is not sufficient to maintain a contract of fire
insurance. In short three essential conditions
must be fulfilled to constitute an insurable interest in the property
viz., (a) There should be a physical object
capable of being damaged or destroyed by fire: (b) The object must be
the subject matter of insurance:
( C )
The insured must stand in such relationship as recognized by the insured is benefitted by
the safety of the subject matter or be prejudiced by its loss. The insurable interest in fire insurance must
be a present at the time of offecting
contract and the at the time of loss . But exceptions are there. A
businessman expect a consignment of goods. The time of arrival is not known. If
they goods on arrival are under his risk, he can be insurer the goods. He can
arrange insurance in advance . If the goods are lost before arrival are lost
before arrival there is a no liability of insurer at all because the insured no
insurable interest in the goods. Insurable interest is a personal right of insured so it does not pass
automatically with the property which means the buyer of insured goods does not
get cover secured by the original owner.
But the legal heirs of insured get the insured’s right automatically .
Insurable interest in fire insurance may aries as follow: (a) OWNERSHIP:
Obviously this is the most common from but in additional as full ownership
joint ownership gives the right to
insurer: (b) AGENTS: An agent may effect an
insurance on behalf of his
principal if he possesses an insurable interest. ( C ) ADMINISTRATORS:
Executors and Trustees: They have a
right to insurer the property entrusted to them: (d) BAILEES:
Bailees are person legally in possession of goods belonging to other as for example repairman of a
television set while awaiting payment
for his service charges or launderers
cobblers, pawn broken etc., They have insurable interest in goods left
in their care and custody. (e)
HUSBAND
AND WIFE: Wife and husband have a mutual
insurable interest in each other’s
property: (f) MORTGAGEE: A
mortgagee has an insurable interest in the property pledged as security for the
debt. (g) PARTNER: A partner has an insurable interest in the
firm’s property. (h) OFFICIAL RECEIVER OR ASSIGNEE: A official
receiver or assignee has an insurable interest in case of insolvency of an
individual or firm and.