Wednesday, 2 February 2022

Definition of Fire Insurance

 ACThe fire insurance business has been defined under Section 2(6A) of the Insurance Act,1938. Fire insurance can be defined as a contract of insurance with an agreed consideration with the objective to indemnify the assured from loss caused by damage or destruction of property by fire.

1. Contract of Insurance-. From the above definition, it is clear that like other insurance fire insurance also satisfies and possesses all the essentials of a valid contract. Any other insurance might look like fire insurance because one of the clauses in such insurance covers loss against the fire. But a contract of Insurance will be treated as fire insurance only when the main objective of such insurance is to cover or insure against loss or damage caused by the fire and the peril which has been insured is fire and nothing else.

2. Consideration- Consideration plays an important role in fire insurance like other insurance. Without consideration, the contract of fire insurance becomes nudum pactum which means it’s a bare promise. Consideration like other insurance has to be paid in the form of a premium whether one time or periodically as per the contract of Insurance. It is to be noted that until and unless a premium has been fixed by the insurer and accepted by the insured the contract cannot be called as concluded. Before the finality of the fire insurance, the insurer ascertains and analyses all the matters affecting the risk. Accordingly, the rates differ depending upon the extent of risk sought to be protected. 

3. Subject-matter of Insurance- Subject matter of the contract of insurance is different from the subject matter of the contract. The subject matter of the contract is solely money only but the subject matter of insurance is different depending upon the kind and type of insurance. The sole purpose of the insurer is to indemnify the property of assured against the loss caused by any damage or destruction by the fire. Thus, the contract of fire insurance pre-supposes the existence of a physical object which can or is capable of being insured. This physical object is termed as the subject matter of fire insurance which can be insured. It is important to note that the objective of the fire insurance contract is to minimize the loss but not to prevent accidents.

Law Governing Fire Insurance-

As we see the statutes, we can observe that there are no statutory laws that govern fire insurance, unlike marine insurance which is regulated by the Indian Marine Insurance Act,1963. The closest statute which defines the fire insurance business is The Insurance Act,1938. But the Insurance Act doesn’t lay any specific provisions regarding fire insurance but the act deals with various regulations regarding the insurance business in general. Insurance Business (Nationalisation) Act,1872 also doesn’t specify anything regarding fire insurance. Thus, it is difficult to deal with fire insurance when the laws are not clear about it. And as a result, the Indian Courts are dealing with fire insurance with the general laws of Contract and various Judicial decisions and to a great extent by referring to English case laws and various opinions of jurists. 

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