3. Fire insurance is an insurance
against the risk of loss of a
property by fire. It is a contract
by which the insurer
undertakes, in return for a
consideration called the
premium, to indemnify the
insured for any loss or damage
to the insured property by fire
for an agreed period and up to a
certain amount.
4. Elements of Fire Insurance
Insurable interest must be present
both at the time of insurance and at
the time of loss.
It must be a contract of utmost good
faith.
It is a contract of indemnity
The insurance is liable to
compensate only when fire is the
nearest cause of damage or loss.
5. Kinds of Fire Insurance
1. Valued policy
2. Average policy
3. Specific policy
4. Floating policy
5. Declaration policy
6. Valued policy
It is a policy in which the value of the
propertty is ascertained or agreed
upon at the time of taking the policy ,
and the insurer undertakes to pay this
agreed value in the event of
destruction of property by fire .
E.g. work of art, painting, jewellery ,
etc
7. Average policy
Average policy is a fire policy with an
average clause included to check
under insurance , i.e., insuring for an
amount less than the actual value of
the property.
8. Specific policy
The property is insured for a specific
sum. In case of loss the insured will
pay the whole loss to the insured
subject to the maximum amount
specified in the contract.
9. Floating policy
A floating policy is a single policy
issued by the insurance company to
cover the goods lying at different
places in the same city or town without
declaring specific sum at each place.
10. Declaration policy
The insured make periodical
declaration of the maximum stock
held. Premium is calculated on the
average value of stock held during the
year and premium paid in advance is
adjusted accordingly.
