Indeed, while fire under control is a magnificent servant, it is equally true that out of control, fire is a terrible and merciless master ; It does not hesitate to destroy and to kill, this is why the invention of fire insurance is a great blessing to mankind, it protects us against the terrifying losses that can be caused by a “hostile’ fire.
1. Definition of Fire Insurance Contract :
A contract whereby one party, called the insurer, in return for a consideration called the premium, undertakes to indemnify another party, called the insured, against loss, damage or liability, proximately caused by fire or lightning to the property insured during the period of the policy.
2. Description of Hostile Fire :
“Fire” under a fire insurance policy refers to a “hostile” fire gone out of control. To constitute “fire” which is covered under the policy, there must be actual ignition and the origin must be accidental of fortuitous.
a) a situation where there is ignition
b) a fire while confined to its natural, normal or proper limits and
c) a fire intentionally set by the insured or upon his secret instructions, Ex. arson.
3. Lossess or damage normally covered under the Fire Policy are :
a) Ordinary fire loss.
b) Lightening damage.
c) Damage by water or chemicals used by firemen to extinguish a fire.
d) Damage caused by firemen in the execution of their duties. Ex. Damage caused by firemen when foreced to “ax down” a door, window or partition in order to get to extinguish a fire.
e) Property blown up to prevent the disastrous spread of the fire.
f) Damage caused by smoke or scorching.
g) Damage caused by falling fire-damaged walls.
h) Loss or damage to insure property when, in an honest effort to save it from the fire, it is damaged by the very efforts to remove it or by rain or lost due to theft.
4. Excepted perils:
Under an ordinary fire insurance policy, the following perils are, among others, “excepted” perils or perils specifically mentioned as not covered:
a) Spontaneous combustion.
b) Earthquake fire or shock.
c) Under ground fires (sub-terranean).
d) Riot and) or strike damage.
e) War risks or rebellion risks.
0 Nuclear risks damage.
g) Ordinary theft.
h) Natural heating or drying process.
i) Deliberate turning of property by order of public authority.
j) Typhon or flood.
k) Consequential loss.
1) Legal liability.
5. Policy period of coverage 4 p.m. or 12 O’clock midnight expiration.
6. Principal Clauses and Warranties:
a) Warranty-”a written statement or stipulation inserted on the face of the policy itself, or clearly incorporated therein as a part thereof by proper words of reference, whereby the insured expressly contracts as to the existence of certain facts, circumstances or conditions, the literal truth of which is essential to the validity of the contract of insurance.”
b) Clause- is a wider application to a policy as a part of the agreement on the extent and manner of coverage and must also be complied with.
7. The Average Clause and its significance:
“If the property hereby insured shall, at the breaking out of any fire, be collectively of greater value than the sum insured thereon, then the insured shall be considered as being his own insure for the difference, and shall bear a ratable proportion of the loss accordingly. Every item, if more than one, of this policy shall be separately subject to this condition.”
8. The Study of Hazard (a condition which tends to create or increase the chance of loss) in Fire Insurance -There are two general types of hazard, physical and moral or morale.
Physical” hazard is normally something that can be checked by the sense of sight, taste, touch, hearing and smell. The following are some examples of “physical hazard: i) Timber constructs of the building to be insured or in which the property to be insured is kept or stored;
ii) The absence of even the most basic firefighting equipment “moral or morale” care, porfitability, changes in fashion, quality of management of business (order, labour management relationship, house-keeping, electrical installations, fire fighting facilities.
9. Policy conditions:
Conditions can be divided into two groups-implied conditions and express conditions:
A) That both the insurer and the insured observe good faith in all material particulars both in the making of the proposal and in connection with any claim.
ii) That the insured has an insurable interest in the property insured.
iii) That the subject-matter of insurance is in existence at the time the policy is effected.
iv) That in case of loss the property destroyed is the property intended to be insured.
Expressed conditions are those which are expressed or set- forth in the policy.
They may be divided into two categories:
These printed on the policy and therefore, common to all contracts written on that form.
Those applicable to a specific contract and embodied in the policy wording.
Definition of Fire Insurance under the Insurance Act, 1938:
10. “Fire Insurance Business” means the business of effecting, otherwise than 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.