Elements of Fire Insurance Contract


1. Features of General contract

All the features of general contract are also applicable to the fire insurance contract.

a) Proposal:- There must be.a proposal for every valid contract. The information in the proposal form must be given correctly. No material facts should be concealed as the proposal form and declaration is the basis of this agreement.

b) Acceptance:- On receipt of the proposal form, the insurer after assessing the risk may or may not accept the risk. lf the proposal is accepted intimation to this effect is sent to the insured

c) Consideration:-There must be consideration for every legal contract, otherwise the contract would be a wagering contract. The premium is the consideration for such contract.

d) Capacity of Parties to Contract:- The parties to the contract must be competent, ie. the person entering the contract must be major, of sound mind and has not been disqualified from making contract with others.

e) Free consent:- There must be free consent to the contract, by both parties. If the consent is not free, the contract may become voidable.

f) Lawful Object: The object of the contract must be lawful. If the object is unlawful, the contract is void.

g) Period of Policy:- It is a contract from year to year. It comes to an end after the expiry of the year. It can however be renewed if the assured pays the premium during the days of grace. Long term policies are rarely used except in case of buildings. Alteration in the policy will be made according to the change in building and terms of insurance. 

Comments

Post a Comment

Popular posts from this blog

Insurable Interest

Image
In simple words, insurable interest means monetary Insurable Interest interest. No person can enter into a valid contract of insurance unless he has insurable interest in the subject matter of insurance. A person is said to have insurable interest in the subject matter, if he suffers financially, by its loss or destruction. Thus a person has insurable interest in his own life, in the life of his spouse or child or debtor. Similarly the owner of a property has an insurable interest in it. It is also important, to know the time at which the insurable interest must exist to execute a valid contract of insurance. It depends on the branch of insurance. In the case of life insurance, the insurable interest must exist at the time when the policy is taken. It may not be in existence at the time of the death of the person whose life is insured. For eg. A creditor can insure the life of his debtor to the extent of the debt. Even if the debtor dies after paying off the debt, the creditor ca...
Read more

Definition - Fire Insurance

Image
Definition A fire insurance may be defined as "a contract by which the insurer undertakes, for a money consideration, to indemnify the insured against the consequences of a fire during an agreed period upto the amount stated in the policy.'  According to V.R. Bhushan and Prof. R S. Sharma, a fire insurance may be defined as "an agreement whereby one party, in return for a consideration, undertakes to indemnify the other party against financial loss which he may sustain, by reason of certain defined subject-matter being damages or destroyed by fire or other defined perils upto an agreed amount." The main purpose of a fire insurance contract is to protect the insured against the loss of his property by fire. A fire insurance contract is a contract of indemnity. It indemnifies the insured against any loss caused by fire. To get compensation for loss of property under fire insurance, it must be proved that the loss of property has arisen due to fire. It is also...
Read more

Requirements as to Capital Structure and Voting Rights and Maintenance of Registers

Image
According to section 6A of the Insurance Act, 1938, the following provisions should be made with regard to the requirements as to capital structure and voting rights and maintenance of registers: 1 . A public company limited by shares having its registered office in India, shall carry on life insurance business only, if it satisfies all the following conditions, namely: i. that the capital of the company consists only of ordinary shares each of which has a single face value ii. that the paid-up amount is the same for all shares whether existing or new, except during any period not exceeding one year allowed by the company for payment of calls on shares; 2 . The voting right of every shareholder of any public company as aforesaid shall in all cases be strictly proportionate to the paid-up amount of the shares held by him. 3 . A public company which carries on life insurance business shall not issue any shares other than ordinary shares of the nature specified in sub-sectio...
Read more