Page 184 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 10: Fire Insurance

or (iii) contract. A person with a limited interest in a property or goods may insure them to Notes
cover not only his own interest but also the interest of others in them. Under fire insurance, the
following persons have insurable interest in the subject matter:
Owner
Mortgagee

Pawnee
Pawn broker
Official receiver or assignee in insolvency proceedings
Warehouse keeper in the goods of customer

A person in lawful possession e.g. common carrier, wharfinger, commission agent.
The term ‘fire’ is used in its popular and literal sense and means a fire which has ‘broken
bounds’. ‘Fire’ which is used for domestic or manufacturing purposes is not fire as long as it is
confined within usual limits. In the fire insurance policy, ‘Fire’ means the production of light
and heat by combustion or burning.

!

Caution “Fire” must result from actual ignition and the resulting loss must be proximately
caused by such ignition.

The phrase ‘loss or damage by fire’ also includes the loss or damage caused by efforts to extinguish
fire.

The types of losses covered by fire insurance are:
Goods spoiled or property damaged by water used to extinguish the fire.

Pulling down of adjacent premises by the fire brigade in order to prevent the progress of
flame.

Breakage of goods in the process of their removal from the building where fire is raging
e.g. damage caused by throwing furniture out of window.

Wages paid to persons employed for extinguishing fire.
The types of losses not covered by a fire insurance policy are:
Loss due to fire caused by earthquake, invasion, act of foreign enemy, hostilities or war,
civil strife, riots, mutiny, martial law, military rising or rebellion or insurrection.
Loss caused by subterranean (underground) fire.

Loss caused by burning of property by order of any public authority.
Loss by theft during or after the occurrence of fire.

Loss or damage to property caused by its own fermentation or spontaneous combustion
e.g. exploding of a bomb due to an inherent defect in it.

Loss or damage by lightening or explosion is not covered unless these cause actual ignition
which spread into fire.

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