Page 277 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes (v) Cancer Insurance
(vi) Sea Farers Health Insurance
(vii) Tertiary Care Policy
(viii) Bhavishya Arogya Insurance

(ix) Health quarter for non-resident Indian.
4. Liability Insurance Policy:
(i) Professional Indemnity Policy, for Different Professions
(ii) Adhikari Suraksha Kavach

(iii) Doctors Indemnity Policy.

13.4 Definition of Fire Insurance

Section 2(6A) of the Insurance Act, 1938 defines Fire Insurance as 'the business of effecting,
otherwise than incidental to some other class of insurances 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.'
V. R. Bhushan and Prof. R.S. Sharma: Fire insurance is defined as an agreement whereby one
party, in return for a consideration, undertakes to indemnify the other party against financial
loss which the later may sustain by reason of certain defined subject matter being damaged or
destroyed by fire or other defined perils to an agreed amount.'
T. R. Smith: Fire insurance may be defined as "a contract whereby the insurers in return for a
consideration, known as premium, undertakes to indemnify the insured against financial loss
which he may sustain, by reason of certain defined property, known as the property insured,
being damaged or destroyed by fire or other perils within a stated period of the liability of
insurer, being limited to a specified amount, called the sum insured". This definition is self-
explanatory and includes all aspects of fire insurance.
Fire insurance contracts cover the risks of damage by fire. They insure the risk of loss caused
whether by fire or incidental to fire. Thus fire insurance policies cover the insurance business in
which the risk to the asset is from fire or incidental to fire. A fire insurance policy covers the fire
and other occurrences as stated in the policy. The inclusion of various clauses to cover matters
related to fire in the policy is essential to cover the loss caused due to various reasons.
The policy should mention clearly the subject matter/assets insured. The contract of fire insurance
will not cover the assets, which are not mentioned in the policy document, though the loss is
caused to the assets because of the fire. The policy document is the evidence of conclusion of the
contract.
As such, presence of a physical asset is a must to have the risk of fire covered. The asset, which is
insured, becomes the subject matter of the insurance contract. Occurrence of fire is essential and
the damage should be caused to the asset due to fire. The damage has to be compensated and the
assured has to be indemnified. The origin or cause of origin of fire damaging the asset is not of
importance.
If the insurance company finds the malafide intentions of the assured, it can take it as a defense
to avoid the fire insurance claim settlements. As such fire insurance contracts are a part of
general insurance and are contracts of good faith.
The word fire should be construed in its simple meaning and sense without attributing any
technical or scientific concepts or meanings to the term. The risk of fire is simply an unforeseen

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