Laws & Jurisprudence
FIRE INSURANCE
11:34 PM
Fire
Insurance is
a contract of indemnity by which
the insurer, for a consideration, agrees to indemnify the
insured against loss
of or damage
by fire, lightning, windstorm,
tornado or earthquake and their allied risks, when such risks are covered
by extension to
fire insurance policies
or under separate policies. (Sec. 167)
The
liability of an insurer is to pay for direct loss only. The insurer may be liable to pay for
consequential losses if covered by extension to such fire policies or insured
under separate policy
In order that the insurer may rescind a contract
of fire insurance for any alteration made in the use
or condition of the thing
insured, the following requisites must be present:
1. The use
or condition of
the thing is
specially limited or
stipulated in the
policy;
2. Such use or
condition as limited by the policy is altered;
3. The
alteration is made without the consent of the insurer;
4. The
alteration is made by means within the control of the insured; and
5. The
alteration increases the risk.
A contract
of fire insurance is not affected by any act of the insured subsequent to the
execution of the policy, which does not violate its provisions even though it
increases the risk and is the cause of the loss. (Sec. 170)
DISTINCTIONS OF OCEAN
marine and fire policies
Ocean Marine is a policy
of insurance on a vessel
engaged in navigation is a contract of
marine insurance although
it insures against fire risks only. Whereas in Fire Insurance, the hazard is fire alone and the subject is an
unfinished vessel, never afloat for a voyage, the contract to insure is a fire risk, especially in the absence
of an express
agreement that it
shall have the
incidents of marine policy, or where it insures
materials in a
shipyard for use
in constructing vessels. Also
where a policy
insures against fire,
a vessel while moored and in use as a hospital
THE
IMPOSTANCE OF THE DISTINCTION
1. In marine insurance, the
rules on constructive total loss (Secs. 131, 139) and abandonment (Sec. 138) apply but not
in fire insurance;
2. In case of
partial loss of a thing insured for less
than its actual value, the insured in a marine policy is a co‐insurer of
the uninsured portion (Sec. 157),
while the insured may only become a co‐insurer in fire
insurance if expressly
agreed upon by the parties. (Sec.
172)
Measure of indemnity in open and valued policies in fire insurance
In Open
Policies, the expense necessary to
replace the thing
lost or injured
in the condition
it was at
the time of
the injury. While in Valued Policies, the parties are bound by the valuation, in the
absence of fraud.
co‐insurance clause
It
requires the insured
to maintain insurance
to an amount
equal to the
value or specified percentage of the value of the insured property under penalty of becoming
coinsurer to the extent of such deficiency.
The insured
is not a co‐insurer under fire policies in the absence of stipulation.
fall of building clause
It provides that, in a fire insurance policy,
if the building
or any part
thereof falls, except as a result
of fire, all insurance by the policy
shall immediately cease.
option to rebuild clause
It gives the insurer the option to rebuild the
destroyed property instead
of paying the
indemnity. This clause
serves to protect
the insurer against unfair appraisals
friendly to the
insured. (Sec. 172)
The author takes no responsibility for the validity, correctness and result of this work. The information provided is not a legal advice and it should not be used as a substitute for a competent legal advice from a licensed lawyer. See the disclaimer
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