PROCEDURE FOR SETTLEMENTS OF CLAIMS UNDER FIRE INSURANCE

 When the subject matter of insurance  is lost or damaged in fire, the insured victim looks towards the insurance company  for rehabilitating himself. Generally  the following procedure  is adopted  while settling the claims under fire insurance. (1) NOTICE OF LOSS: First of all the insured , immediately  after the occurrence of a fire, has to send a notice of loss to the insurance company. This notice enables the insurer to take such measures  to determine the cause of loss, estimate the extent  of loss and deal with the salvage. This notice need not be in writing, it may be verbal i.e by telephone or personal call. The notice need out be given by the insured personally and may be given by on his behalf.

Notice given to agents does not discharge the insured from his duty unless expressly  allowed to do so and the failure  of the agents to transmit the message to  insurers, may give grounds for repudiation of liability.  (2) EVIDENCE OF LOSS: If possible the evidence of loss and other details such as time, place and circumstance under which the loss occurred, may be sent along with the notice of loss to the insurer. Besides  he should send particulars about the preventive measures  taken by the him during fire to mitigate  the loss. The duty of providing  full particulars and proof of loss  rests entirely upon the insured.  (3) POLICE REPORT IN CASE OF ARSON: In case, the loss or damage due to fire   is caused by arson (I e act of setting something on fire intentionally and unlawfully by an unscrupulous person), the matter will have to be brought to the knowledge of the nearby Police Station. Even if there is a slight  suspicion of anybody’s involvement in this arson, the same should be mentioned in the complaint  report submitted  in the police Station. The Police officials  will after making proper  investigation issue  a report. Such report has to be submitted to the insurer. If the fire-brigade was summoned, the brigade records should  also be produced with the insurer .

  

FORMAL CLAIM FROM: After having received the notice of fire loss a claim from is issued by the insurer to the insured and he is a requested  to return it after completing  and giving therein all the information about the loss. The claim form contains  the following information. (a) Name of the insured, Policy number and address. (b) Date, time cause and circumstances of the fire.  ( C ) Details of damaged property.  (d) Sound value of the property at the time of fire, where the insurance consists  of several  items, a declaration is required  of the values of each item under which the claim is made.  (e) Amount claimed after deduction  of salvage value. (f) Situation  and occupancy  of the premises in which the fire occurred. (g) Capacity in which the insured claims whether  as owner mortgage the like.  (h) If any others person is the interested in the property damaged, and. (I) If

any other insurance is in force upon such property. In case the amount of the loss is small and the claim issimple and straight  forward,. the insurer will admit the claim and send the cheque  in full settlement without  further enquiry.  (5) INSPECTION OF LOSS: If the loss is know or expected to be large and serious the  insurer will depute a independent loss surveyor  to ascertain the cause and extent  of loss. the surveyor, would inspect the damaged property or goods at the scene of fire and contact the insured his neighbours, employees and other persons connected with the fire and collect  the desired information .

This investigation  enables the surveyor  to have an idea of the nature and a extent of loss and origin and cause of fire. The surveyor  also prepares a detailed item wise list of the property or goods left at the scene of fire and get it attested by the insured  in order to avoid any attempt of exaggerated claim by the insured at  some large  stage. Besides the surveyor also carry out salvage  operations. I. e , the wreckage of the property or goods having some scrap value, will be taken into  the account to reduce the net cost of the claim. If the insured  wants to retain the salvage an appropriate amount is subtracted  from the amount of the claim. The damage and undamaged goods have to be separated in order to avoid   any further loss due to fire.

PRINCIPLE OF FIRE INSURANCE

 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.