Re-Insurance In Fire Insurance

Re-Insurance In Fire Insurance Explain deferment methods and advances of Re-insurance 7 Ans.: Meaning of reinsurance : In simple words, re-insurance means taking out another insurance policy again by the insurance.

company on the risk already insured by it. Thus, re-insurance is an ' agreement between two or more insurance companies by which the risk of loss is provisioned. The main object of re-insurance is to spread the loss between various insurance companies to reduce the burden of total loss of one company. When the amount of risk is very high which is beyond the limits of one insurer to carry, it becomes necessary to . effect re-insurance in order to spread such high risk among various insurers. definition : Prof. Lewis David has deemed re-insurance as ''the acceptance by an insurer called a re insure of all or part of the risk of loss of another insurers The main purpose of reassurance is exactly the same as that of the original contact of insurance. The acceptance of very large risks would call for heavy individual losses which may affect the insurer's financial position largely. This is because the insurer tries to encounter large risks by reducing their potential liability and by providing a greater bread of risk on the shoulders of a large number of insurers.In all types of insurance business, where the risk is high, reassurance is effected Re-insurance consists of specialized re insures who transact only reassurance business, such as Reinsurance Corporation of India.In case of reassurance there is a contact between two underwriters, the assured does not come into picture. The assured is concerned only watts original insurer and he recovers the loss from original insurer only.

  The original insurer the recovers such loss from other reissues. If the insurer fails to pay the loss, the insured has no access' to the reinsures. Thus, the insured is not involved in the process of     reassurance and there is no any kind of relationship between the insured and the reassures. The principles of insurance like utmost good faith, incurable interest, etc; are applicable to re Insurance A1l contacts of reassurance are contacts of indemnity only in which the reinsure undertakes to indemnify   the insurer.

Methods of Reassurance : Following are three important methods of reinsurance and the selection of these methods depends upon the

Practices of insurers and the scope of their resources. These three P methods are as under : 1. FACULTATIVE Reinsurance : It is the oldest method of reassurance and involves the consideration of each risk separately. The word facultative is taken from the word faculty which means 'power of doing things' or Special permission In this metro, the insurer has to make specific enquiry from the reassure, who may accept the over.

Thus, this type of reassurance is taken out for each risk separately and requires a separate contact for each individual risk. In this reassurance a slip is submitted to each reinsured giving details of the risk. Then the reinsurer initials the slip with the amount of his acceptance and this process is repeated until the whole of the risk has has been   placed. The a reinsurer then issues a take note which is stamped in order to avoid the necessity of the further issue of a formal guarantee policy In the same way, renewals are made by the issue of renewal statements on the part of the reinsurer but if any reinsurer does not wish to continue a risk after next renewal date, he must give due notice so as to enable , the insurer to find out other reassures. Under the method, the risk is spread over a wider field but the paper work and enquiries entail much (me. Similarly, there is uncertainty that each reinsurer will accept the   business or not. This method is also known as Specific reinsurance 2. Treaty Reinsurance : It is deemed as ''a formal, legally binding agreement's or ''treaty between the principal and reinsurer that the reinsurer shall accept without the option of rejecting, a specified of the excess of ANY risk over the reinsurer limit of retentions proportion of

Under this mean an agreement is entered between the insurered and the reinsurer whereby reinsurer agrees to accept all instances offered within the limits of the treaty Following are important treaty methods.

(a) Quota Share Treaty : In this method, the reinsurer undertakes to transfer a certain proportion of all risks written by the insurer. This method is very simple and widely used by new or small insurers who always need the substantial protection. the main disadvantage of this method is that the premiums are also paid on small risks. .

(b) Surplus Treaty : Under this methods an agreement is entered between the aired insurer and reassure by which the reindeer agrees to accept all instances offered within the LIMITS of the treaty Therefore, when the sum insured exceeds the retention limit, reinsurance becomes necessary.

Fire Insurance and Gambling Contracts

Fire Insurance and Gambling Contracts 2011 : Majority of people who do not know the basic principles of insurance consider that there is no deference between fire insurance contract and gambling or wagering contract But the people who are working in insurance profession, reject that the fire insurance and i being are similar. Following are the main points of distinction gambling between these two ' contract 1 The insurance contract can be enforced in court of law whereas     .

  wagers are hesitate of ultimate legal remedy because they are unenforceable at law.

2. Both the parties to fire insurance must exercise utmost good faith   while in case of gambling contracts there is no obligatory on both parties to disclose any material information.

3. Fire insurance contacts are subject to indemnity Le. there is restriction on maximum about which can be recovered from insurance company in the event of loss. But this is not in gambling contacts where stakes are paid and either of the parties must lose or gain.

4. In Insurance contact the insured event fire is a possibility and .not

certainty. On the other hands wagers involve a definite future event such as horse-racing, but nobody knows who will win or lose.

' 5. Before making fire insurance contracts the policy holder must - '   . possess insurable interest in the prams insured while in gambling , consorts this is not recess. .

6. If fire insurance neither the insured nor the insurer desires the occurrence of fire. In gambling contracts both parties initially want the event to take place, though the loser may change his mind subsequently.

   

Fire Insurance Claim Procedure 2011

Fire Insurance Claim Procedure 2011 ..     .

1. Notice of Loss : When the loss. occurs due to fare, the known should give notice to the insurer. There fore. insurer cannot be liable to meet a claim unless he receives a notice of claim from tie insured Hence the insurer immediately after the occurrence of a fire should give a notice of loss to the insurer to register the claim of loss by fare.

2. Evidence of Loss : The notice of loss should be accompanied by the evidence of loss, the time, place and circumstances under which the loss (inured. He should mention the role played by him to mitigate the loss. To claim the loss, the insured must have taken necessary stem to mitigate the loss.

3. Formal Claim Form : On receipt of notice, the and. sends a claim form to be insurer The insured should submit this form along with the details and evidence to be insurer to enable the insurer to determine the claim. This form contains all details of the damaged property and the market value of the damaged property sometimes the insured is required to send affidavit along with the claim form.

4. Inspection of Loss. : After receiving the claim form, the loss is inspected by the experts known as 'Surveyors' or 'Valuers'. The surveyors estimate tie value of loss and send their report to the insurer, regarding. the nature and causes of fire They also carry out salvage   .

Orations and after taking account the value of salvage is reduced from the about if claim of the insured agrees to retain the salvage with him.

        5. Ascertainment in Loss : After inspection of the site of loss and other information collected, the surveyors ascertain the total extant of loss to determine the liability of the insurer. While ascertaining the loss the surveyors take into account the time of fare, number of policies taken for the said subject-matter and cause of fire. then the surveyors calculate the loss according to the conditions of the fire policy.

6. Average Clause : In ascertaining the value of loss, the surveys ' have to see that whether the policy is subject to an average clause. If there is an average clause, the undamaged property is also to be valued.

In case of average policy the insurer is liable to pay the only such proportion of the loss as the so insured bears to the total value of the property. ' 

7. Estimation of Claim : If the fire occurs more the one time   ' the currency of one fire policy the insurer is not liable to pay more the the maximum amount insured unless the insured has paid .   extra premium. If the subject-matter of insurance has insured with more .

than one insurers, the the claim is to be settled through the use of contribution clause and the liability of each insurer is limited to a ratable proportion. Sometimes, there is a damage and destruction of account all and records due to fire and therefore, the claim cannot be determined In such cases, the value of stock and the value of loss is estimated by preparing Trading and Profit and Loss Account. the past ratio of boss profit is applied to current year also and the boss pas profit is estimated. On the basis of this the surveyors will assess the amount of loss.

. 8. payment of Claim : After ascertaining the amount of actual loss the surveyors take a declaration from the insured regarding the acceptance of claim and the send the she along watts their report to to: insurer. the insurer then verifies the claim as per the conditions of the policy nod settles the claim in accordance with the term of fee click. the claim may be settled by cash payment or replacement of insured property or reinstatement.

9. Rejection of Claim : In some cases the insurance company may reject the claim. Generally, in the following cases the claim may be rejected : (1) If there is no insurable interest at the time of loss or at the time of taking click, (2) When the principle of utmost go faith is not observed, (3) When he loss has arisen from the ills excluded   from the policy, (4) If the loss had occurs due to the defect in the insured property which has not disclosed at the time of taking a fire policy, (5) If the insured has not taken all the possible steps to mitigate the loss etc.

Effecting Fire Insurance policy 2011

 When as individual or businessman wants to insure his property and to obtain fire insurance policy, the following procedure is to be followed : 1. Selection of company :  The selection of insurance company is the first step in the procedure of obtaining fire insurance policy.
Therefore, a person who wants fire policy has to select the company or a broker with whom insurance is to be ejected. This selection is very important from the point of settlement of claims at the' time of loss. There are two types of fee insurance of organizations covering fire insurance Policies : (a) ban's once are those organizations which have combined for arranging liar premiums for different fire risks (b) Non- tariff ounces are insurance companies which function independently without joining any tariff companies. These companies offer policies at lower rate of premium to secure better business. At present fire insurance business is transacted only by the General Insurance Corporation of India and its for subsidiary companies.
2. proposal Farm : The second step is to 511 in a proposal form which furnishes the basis of the contract. This form contains the details like the name and address of the propose, nature of business, construction of building, amount of policy and other terms of the contact. All the details should be correctly filled up and none should be wrongly stated. Generally, the agent of the insurance company approaches the public and fills the form correctly. ne insured must observe the utmost good faith in disclosing the information and the insured must have insurable interest in the property to be insured. The proposer can take any types of policies, Le. specific lie, comprehensive policy, valued policy etc. On the basis of this PO information, the insurance company fmds out the risk and the amount of premium.
3. Evidence of Respectability : The insurance company before accepting the risk', ascertains the respectability of a proposer to know of insured, date of policy, amount of policy, description of property and other details and policy conditions. The policy contains proper a stamps and signatures of the owners concerned. The  policy is a proof of insurance and can be presented in case of any disputes. The  insured undertakes to pay the insured value of the property at the time of its loss by fee. The insurer's liability shall not exceed the amount need uP On in the policy. ' 9. Term of policy : The term of policy depends upon the requirements of an insured. Generally, lire policies are issued for a period of one year and therefore, they are also known as 'annual policies Short-terms policies may also be issued by the insurance company. Such policies are issued for a period shorter than oho year but its premium is higher than the Annual policies.
Q. 2 : act. different conditions of Fire Insurance Policy.
Ans.: Fire Insurance : Meaning : Fire insurance is one of the most popular form of insurance which has acquired an important position in all the industrial countries of the world. A contact of fire ' ' insurance is a contact whereby the insurer undertakes, in consideration of the premium paid, to make good any loss or damage caused by fire daring a specified period. Fire insurance is a device to compensate for The : loss inn destruction by fire. Thus, the fire insurer shifts the burden of fire losses from their actual victims over all the members of tulle society. It is a so-operative device to share the loss. It is the fact that the fire causes huge losses even year. The individual owner by taking lire insurance can prevent the lire waste to some extant. The insurer act: as a middleman between all the members of the society who are exposed to the fire one hand and the members who will be the actual victims of the fire losses on the other hand. The insurer a charges the premium from all the members and makes good the losses when they occur to any of them. Fire insurance is meant for indemnification of loss and not for prevention of loss. 'k Policy Condition : The policy conditions may be precedent to the contract conditions. The conditions must be fully complied with to make the insurer liable under the contract. The conniptions may be implied or expressed. We conditions which are set out in the policy are known as express conditions and they are printed on the policy. The implied conditions are not mentioned on the policy.

Explain Fundamental Principles of Fir Insurance

Explain Fundamental Principles of Fir Insurance 2011 : Just like other contracts, a fire insurance is a contact and is governed by the Indian Contract Act. Therefore, a fire insurance contact, in order to be valid must assess the sum essentials of a valid contract. In addition to these essentials, it must also possess the following fundamental principles of insurance.
1. Utmost good Faith : THE observance of utmost good faith by both the parties is of vital importance in lire insurance contract. In fire insurance, the insured and insurer feel that the fire should not occur and if it occurs both will be equally' unhappy. In all fire insurance

Fire insurance contacts there is an implied condition that there shall be the utmost good faith between the parties. Therefore, the insured and insurer must disclose all the material facts to each other which are known to them.
The insured must supply all the . Information regarding the subject- matter of insurance which can throw sufficient light in understanding the nature and extent of risk involved in its insurance. For this purpose the insured is required to 1111 proposal form to give the detailed information regarding the subject-matter of insurance. The insured must observe the utmost good faith at the time of taking policy and at the time of claiming the loss. When the policy is renewed for the further period, the insured must give necessary information regarding any changes in the insured property. If the insured conceals any material Information The insurer can avoid the contract in case of any loss. Thus, if insured has not observed good faith or is guilty of concealment or non disclosure of any material fact, the contact can be avoided. The duty of good faith is equally applicable to the insurer and he must disclose the information which is you'll to him regarding the contact of insurance.
Utmost good faith the insured has to sign a declaration regarding the correctness of information given in the proposal form. Thus, the principle of utmost good faith places duty on each party to disclose all the material facts to the other. Thus, insured must disclose all material facts to the insurer at the time of proposal for insurance.
2. Insurable Interest: In every lire insurance contract, insured must have insurable interest in the property insured. An insurable interest is an interest of such nature that the possessor would be financially injured by the occurrence of fire and would be benefited by its existence. The insured must be interested in the preservation of the subject-matter of insurance. Insurable interest is the prerequisite of fire insurance contract and without the presence of insurable interest, a fire insurance contract is void and no better the a wagering contract.
In lire insurance, the insured must have insurable interest in the subject- matter both at the time of the contract and at the time of the loss.
Following are some of the examples of insurable interest: (a) file opener or joint openers can insure their property.
(b) Agent can take Insurance policy on behalf of his principal.
(c) Administrators can insure property for which he is responsible.
(d) Bailiess have insurable interest in the goes held by them in trust.
(e) Husband and wife can insure each other's property to the extent of its full value.

Fire Insurance

Fire Insurance 2011 Fire Insurance 

1. Floating Policy : This policy is taken to cover one or more kinds of goods at one time under one sum assured for one premium.

This policy is useful to cover fluctuating stocks in deferent localities.

These policies are taken by big businessmen whose goods are spread at warehouse, port or railway station. It is occult for such businessmen to take specific policy for each type of goods. In this situation floating policy is very useful as it coves all goods at various localities..

 2. Average policy : This click contains the average clause, the amount of indemnity is determined with reference to the value of the property insured. If the policy is taken for the lesser amount than the value of the property, insured will get the lesser amount and will compensate the loss in that proportion. When the property is insured for the .|11 value of the proof, the insured is protected to the extent of his total loss.

3. Excess Policy : When the stack of business fluctuates from time to time, it is unable for him to take one policy or specific policy. Under this case, the insured may take two policies, namely 'first loss policy' and 'Excess policy. 'First loss policy' covers the stock below the minimum level and for the stock which exceeds the minimal level 'Excess Policy' is taken. value of excess. stock is declared even month average clause also applies to this policy.

4 Declaration Policy : It is the policy which gives better protection where the stock fluctuates from time to time. Under the declaration policy, the insured takes out an insurance for the maximum about which he considers necessary. On fixed date of every month the insured furnishes a declaration of the amount. ne great advantage of this policy is that the premium is limited to the actual amount at risk reflexive of the sum insured.

5. Adjustable Policy : This policy is nothing but an ordinary policy on the stock of the businessman with liberty to the insured to vary at his opinion. ne premium is adjustable pro-rata according to the variation of the stock. This policy is issued for a definite term on ti z existing stock. The premium is calculated in the ordinary manner alibi is paid in full at the inception of the policy. Whenever, there is variation in the stock, the insured irdbrms the insurer. When the insurer receives such information, the premium is adjusted on a pro-rata basis.

Thus, .the policy amount will be changeable from time to time.