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Fire insurance under Indian Insurance Law

An insurance contract arises when a person seeking insurance protection concludes a contract with the insurer to compensate him against the loss of property by or following a fire and / or a lightning, an explosion, etc. . It is mainly a contract and therefore as governed by general contract law. However, it has certain specific characteristics such as insurance operations, such as utmost faith, insurable interest, indemnity, subrogation and contribution, etc. these principles are common to all insurance contracts and are governed by special legal principles.


According to Article 2 (6A), "fire insurance undertaking" means the undertaking consisting in concluding, other than incidentally with another category of insurance, insurance contracts against loss or occurrence of a fire or other incident, usually included among the risks insured against in fire insurance business.
According to Halsbury, this is an insurance contract by which the insurer agrees, for consideration, to compensate the insured to a certain extent and subject to certain terms and conditions against loss or damage caused by fire, which can happen to the insured's property during a specific period.
Thus, fire insurance is a contract by which the person, seeking insurance protection, concludes a contract with the insurer to compensate him against the loss of property by or incidental to a fire or lightning, an explosion etc. This policy is designed to insure property and other items of loss arising from complete or partial damage caused by fire.
Strictly speaking, a fire insurance contract is:
1. The main object of which is insurance against loss or damage caused by a fire.
2. The extent of the insurer's liability being limited by the sum insured and not necessarily by the extent of the loss or damage suffered by the insured: and
3. The insurer having no interest in the security or destruction of the insured property apart from the liability incurred under the contract


There is no legislation governing fire insurance, as in the case of marine insurance which is governed by the Indian Marine Insurance Act, 1963. The Indian Insurance Act, 1938 deals mainly with the regulation of insurance activities as such and not of any general or special insurance. principles of the law relating to the fire of other insurance contracts. The same is true of the General Insurance Business (Nationalization) Act, 1872. In the absence of any law on the subject, Indian courts have hitherto relied on court decisions and the opinions of English jurists.

To determine the value of property damaged or destroyed by a fire for the purposes of compensation under a fire insurance policy, it was the value of the property for the insured that had to be measured. At first glance, this value was measured by reference to the market value of the property before and after the loss. However, this valuation method was not applicable in cases where the market value did not represent the real value of the property for the insured, such as when the property was used by the insured as a home or to carry on a business. In such cases, the measure of compensation was the cost of reinstatement. In Lucas v. New Zealand Insurance Co. Ltd. [1] when the insured property was purchased and held as an income-producing investment, and the court therefore held that the proper measure of compensation for the damage caused to the property by the fire was the cost of reinstatement.


A person who is interested in property to the point of benefiting from its existence and from the damage caused by its destruction is deemed to have an insurable interest in that property. Such a person can insure property against fire.
Interest in the property must exist both at the start and at the time of the loss. If it does not exist at the start of the contract, it cannot be the subject of insurance and if it does not exist at the time of the disaster, it does not suffer any loss and does not need any compensation. Thus, when he sells the insured property and is subsequently damaged by fire, he does not suffer any loss.


The date of conclusion of an insurance contract and the issue of the policy is different from the acceptance or assumption of risk. Article 64-VB only provides generally that the insurer cannot assume risk before the date of receipt of the premium. Rule 58 of the insurance rules of 1939 speaks of advance payment of premiums with regard to subsection (!) Of article 64 VB which allows the insurer to assume the risk from this date. If the applicant did not want a specific date, it was possible for the applicant to negotiate with the insurer over this period. Precisely, the Apex Court therefore declared that the final acceptance is that of the insured or the insurer simply depends on how the negotiations on insurance have progressed. Although the following are risks that appear to have covered the fire insurance policy but are not fully covered by the policy. Some of the disputed areas are:

FIRE: Destruction or damage to property caused by its own fermentation, natural heating or spontaneous combustion or its heating or drying process cannot be treated as damage due to fire. For example, paints or chemicals in a factory undergoing heat treatment and therefore damaged by fire are not covered. In addition, the burning of property insured by order of a public authority is excluded from the scope of coverage.

LIGHTNING: Lightning can cause fire damage or other types of damage, such as a roof broken by a falling chimney that fell under lightning, or cracks in a building due to a lightning strike. Fire and other types of lightning damage are covered by the police.

DAMAGE TO AIRCRAFT: Loss or damage to property (caused by fire or otherwise) directly caused by aircraft and other aircraft and / or objects that have fallen into it are covered. However, destruction or damage resulting from pressure waves caused by planes traveling at supersonic speed is excluded from the scope of the policy.

EMULSIONS, STRIKES, MALICIOUS DAMAGE AND TERRORISMS: The act of any person participating with others in any disturbance of the public peace (other than war, invasion, mutiny, civil unrest, etc.) is interpreted like a riot, a strike or a terrorist. activity. Illegal actions would not be covered by the police.

STORM, CYCLONE, TYPHOON, STORM, HURRICANE, TORNADO, FLOOD and FLOOD: Storm, cyclone, typhoon, storm, tornado and hurricane are all types of violent natural disturbances accompanied by thunder or strong winds or heavy precipitation. Flooding or flooding occurs when the water rises to an abnormal level. Flooding or flooding should not only be understood in the common sense of the terms, i.e. flooding in rivers or lakes, but also the accumulation of water due to clogged drains would be considered a flood.

IMPACT DAMAGE: The impact of any rail / road or animal vehicle by direct contact with the insured property is covered. However, these vehicles or animals must not belong to or be the property of the insured or of any occupant of the premises or their employees when they act in the course of their employment.

SUBSIDENCE AND LANDSLIDE INCLUDING ROCKSIDE: Destruction or damage caused by subsidence of part of the site on which the property is located or Landslide / Rockslide is covered. While subsidence means the sinking of land or a building at a lower level, a landslide means a landslide usually on a hill.

However, normal cracking, compaction or bedding of new structures; settlement or displacement of landscaped land; coastal or river erosion; defective design or execution or use of defective materials; and demolition, construction, structural modifications or repair of any property or earthworks or excavations are not covered.

FLOW AND / OR OVERFLOW OF WATER TANKS, APPARATUS AND PIPES: Loss or material damage caused by water or otherwise due to accidental bursting or overflow of tanks, devices and water pipes is covered.

MISSILES CONTROL OPERATIONS: Destruction or damage, due to the impact or otherwise of the trajectories / projectiles in the context of missile test operations by the Insured or any other person, are covered.
LEAKS FROM AUTOMATIC JET INSTALLATIONS: Damage caused by accidentally discharged water