FIRE AND MARINE INSURANCE

FOR BBA COURSES

 FIRE INSURANCE
• Fire insurance policies are usually issued for
one year or later period.
• Insurable interest in the object must exist at
the time of loss and also at the type time of
taking policy.
• Premium is determined according to the type
of risk involved.
• Premium is paid in lump sum at the time of
taking the policy
 Cont.
• Fire insurance contract is a contract of indemnity
as the actual loss caused by uncertain event.
• Protection from the risks but not investment is
the object
• Fire insurance policies cannot be surrendered at
all.
• Though the facility of double insurance is
available but nothing more than total actual loss
can be obtained from the insurers.
• Moral and physical risks are involved as the
insured may himself set property or goods on
fire.
 RISK COVERED UNDER THE FIRE
INSURANCE
• Fire or ignition.
• Blasting of boiler used for household purposes
• Blast of gas cylinders used for household cooking.

• Blast of gas etc; used for the purposes of lighting

and heating in any building. ( Not being an
industrial concern or factory using gas for
purposes other than lightning and heating )
 Risk not covered under fire insurance
• Some goods and properties are not eligible for
insurance under the fire insurance policies such as,
- precious stones and materials
- artistic goods and articles,
- maps,
- stamps
- chequ
- goods or properties kept under trust
- account books and records,
- archives and rare documents or writings/ manuskript
 Cont.
• Losses caused by certain uncertain events
- riots,
- civil disturbances
- revolutions,
- war
- internal emergency
- martial law
- natural calamities such as earthquakes, storms,
cyclones, floods, drought, excessive heat or
waves
 Cont.
• Spontaneous fire in jungle or bushes
• Spontaneous combustion caused by chemicals
• Theft during or after the break out of fire
• Compulsorily burning of goods or properties
by the orders of government or courts
decision.
 SCOPE OF FIRE INSURANCE
• Fire insurance business is different from other
insurance business in operation and covers
the risks caused by fire
• In addition to the risks caused by fire, it also
includes other reasons and occurrences which
can customarily be included among risks
insured under fire insurance contracts.
 Cont.
We can divide the scope of fire insurance into two
parts .
1. Ordinary scope of fire insurance.
Ordinary fire insurance policy includes only
those risks which are caused by fire only.
As such under the fire insurance contracts the
claim for loss by fire must fulfill two basic
condition a) The fire must be accidental not
incidental b) There must be ignition or actual
fire
 Cont.
• Property damaged by heat or smoke without ignition is
not compensated

2. Comprehensive or broader scope of fire insurance:

various types of policies are available in the form of fire
insurance policies, which cover various types of risks
allied to the risks of fire.
coverage of such risks has widened the scope of fire
insurance,
some special policies have helped in a great way in
producing the scope of fire insurance in the following
manner.
 Cont.
1. By including the excluded perils and risks
2. By including consequential losses and other
indirect fire risks.
 MARINE INSURANCE
• Historical background:
- History of Marine insurance is very old
- The first insurance firm was started in 13th
centaury by a person called LOMWARDS
- During 1766 the businessmen of Italy and London
started their business.
- Lord Edward Lloyed started the publication of a
newspaper “ Lloyeds News”.
- In which the information regarding the arrival and
departure of ships used to be given.
- In 1774 Lloyeds association and syndicate was
also registered legally.
 Pioneer business
• The oldest form
• Started in 13th centaury
• All insurance product developed on the basis
of Marine insurance
• It has developed many fundamental of
principles
• Make safe the business in ancient also.
• Leader of the insurance sector.
 Contribution of Marine insurance
• Insures all type of risks which can occur during
transit period.
• It make safe to the ship owner
• Make safe to the exporter / importer and
export insurer
• Develop marine business
• Promote International trade
 Cont.

• Make business profitable

• Peace full mind
• It help to economic development of the
country
 Types of Marine Insurance
• Hull insurance : Insurance covered the risk of ship itself,
that is partially, total, constructive total loss, due to
collision against rock, storm, sinking, burning,
It is special policy for only ship
• Cargo insurance: goods insurance
it is also called Reporting or Open cargo policy. It covers all
types of shipments made by an exporter over a long period
of time
a) goods in transit
b) In-land-transit
( Perils on the sea and perils of the sea )
• Freight insurance: charge of emergency