Fire Insurance and Marine Insurance
Fire insurance is most important type of insurance which provides the security against the risk of fire. In the history of fire insurance, it is said that first fire insurance was done in London. In fire insurance, there is contract between insured and insurer. The insured has to pay the premium at a fixed rate to insurer and insurer compensates the insured amount to the insured party if the property of insured is lost due to reason of fire. The insurer doesn’t compensate the insured amount if the insured property is damaged by less than the insured amount. The insurer doesn’t compensate more than insured amount even if the loss is estimated more than insured amount. The concept of fire insurance was developed before the concept of life insurance.Procedures of affecting fire insurance policy
- Filing up proposal form: Insurance company provide proposal form which must be filled by the client. Many questions are included in it. Generally name, age, address, occupation, father’s name, gender, nominee’s name etc. are expressed in the proposal form. Besides them value and nature of property, method of paying premium is also listed.
- Survey of subject matter of insurance: All people are not honest therefore insurance company appoints the survey. To survey about the property server evaluate the proposed property in the form of amount and server prepares a survey report. This report is submitted to office of insurance company.
- Evidence of respectability: Evidence of respectability recommends that an individual is respected personnel and has a good character. The proposer may submit this report only if necessary.
- Acceptance of proposal: The insurance companies make the decision about accepting or rejecting the proposal only after studying all the information about the proposal from report of survey etc. It must be doe very carefully. If any negative information is found they should be rejected.
- Payment of first premium: The rate of premium is then determined and is paid b proposer to insurance company. It is compulsory step. Only after the payment of premium the insurance is considered valid.
- Comprehensive policy: Fire insurance is called a comprehensive policy when it covers all other kinds of risks like riots, arson, loot, civil commotion, wars, strikes, accidents and others in single insurance.
- Blanket policy: A blanket policy is that fire insurance policy in which a single policy is used to insure properties at one or different locations against the risk of fire. Sometimes an organization or a person can have properties at various locations and this type of insurance is useful fore covering the risk generated by fire for these all properties.
- Consequential loss policy: A consequential loss policy is meant for compensating the loss not directly b fire but incidental to the fire event. Loss of fire is also covered but addition to that other kinds of losses due to expenses on salary, interest, inflation or hiring of temporary premises are also covered.
- Valued policy: A fire insurance policy the value of property is fixed at the time of inspection is called valued policy. So in case of loss of property by fire, the insurance company pays the full of policy amount at the time of taking policy whether the property is fully damaged or not.
- Valuable fire insurance policy: Under this policy, the value of claim is determined at the actual market price of the damaged property only after the destruction of the policy. The value is not fixed earlier as in valued policy.
- Specific fire insurance policy: Under this policy, if the damage is less than the insured amount, insurance company compensates up to the mount damaged. If the damage is more than the insured mount insurance company compensates only equal to insured amount or identify loss to the extent of specific amount.
- Floating fire insurance policy: If a single fire insurance policy is conducted for different property located at different place, then that type of policy is called floating fire insurance policy. For the convenience of client this policy is undertaken. An entrepreneur may have some of his goods and other at other storable places. Insuring them under separate policy can be very chaotic. That’s why floating fie insurance policy is done to offer financial security that can occur at different places through single policy.
- Average policy: It can be defined s the policy in which losses born by both insurance and owner of insurance property. It is calculated under the following formulae.
Claim= (insured amount / value of property) * actual loss
- Adjustable fire insurance policy: According to the changes of stock the insured amount is also changed. The premium is calculated according to the insured amount and the insured amount changed. Under this policy, the insured amount is based on the value of existing stock in the beginning and late exited according to information received on the changes of stock. For example, if the client has stock worth Rs. 100000 then insurance for the same amount is made. Later on if the same stock is worth Rs. 80000 or rRs. 110000 than the insured amount may increase or decrease as the situation may be. The information about stock receive from the insured is the base for limiting the liability of the insurance policy.
- Reinstatement policy: Under this policy, the insurance company undertakes to replace the property damaged by fire. In this policy, the actual loss is no indemnified in monetary terms but the insured goods are replaced.
- Declaration policy: This policy is issued for the maximum value of stock to be insured. At the beginning of the contract, three-fourths of the premium payable is charged from the insured in advance. Every month the policyholder is required to declare the value of present stock. In case of any loss by fire, the compensation is made on the basis of declared value. At the end of the insured period, based on the values stock declared, the total of premium payable is worked out as average.
- Excess policy: An excess policy is supplementary fire insurance policy, which is purchased to cover additional risks beyond the coverage of original first loss policy. The kind of fire policy is purchased by such merchants whose stock fluctuates from time to time. In such a case, first loss policy is purchased for minimum stock value and additionally an excess policy is purchased for an anticipated increase in the total value of stock.
Marine insurance is the first ever developed concept of insurance. It was introduced before the introduction of fire or life insurance. It provides financial security against the risk of ship traveling from one place to another. Ships can face many types of risk in the traveling route. Sometimes the conditions of storm collision, robbery, ship sinking etc may be created. These hazards are known as marine perils. In marine insurance, insurance company provides financial security against the risk of marine perils. It is also agreement between insurer and insured. Generally marine insurance is done for 1 year but if there is agreement on the subject of renewal the time of insurance can be renewed or more than year. Renewal however must e done every year.
- Perils of the sea: Insurance company provides the financial security when the insured property is damaged due to reason of perils of the sea. The unexpected or sudden accidents such as storm, collision, robbery, ship sinking, bad weather, typhoon or cyclone etc. are the perils of the sea.
- Fire: Many kinds of energy are used in the operation of the ship. When it is used faultily there may be possibility of fire in form of which the cargo and the ship may be damaged. The insurance company pays the compensation when the insured property is damaged by fire.
- War: Sometimes condition of war may arise inside the nation or two or more nations. At such a situation the enemy may capture the ship and the cargo. The insurance company pays the compensation when the insured party claims or the destruction of the property by the action of enemy.
- Pirates and thieves: When sea pirates and thieves destroy cargo and ship, insurance company pays the compensation. Sometime pirate create a big problem in sea traveling. The insured party thus has to receive the compensation if the insured property is damaged due to the reason of pirates.
- Jettison: If it is considered that the part of the ship should be disposed off in the ship due to its heavy weight and unbalance then to save the ship some parts are thrown off. This disposing function is called jettison. The loss from jettison also is compensated by the insurance company.
- Strikes: Sometimes strikes may be conducted by the employees. The damage and loss due to the reason of strikes should be compensated by the insurance company.
- Barratry: It is a kind of mischievous and willful action performed by the navigator, captain, crews and employees of the ship to cause loss and damage to the ship and the cargo of the shipping company and the parties respectively. Here mischievous act may be of any nature, such as theft of ship or cargo, setting ship cargo on fire, fraudulent sale of cargo and so on. These are addition risk. The insurance company can compensate the losses arising from his type of risks too.
- Time policy: This type of policy provides the insured to cover all type of marine risk for a specified period of time but not exceeding 12 months. Under this policy subject matter inured for a specified period of time such as from 12.00 pm of 1st April 2005 to 6:00 pm of 2nd June 2006 and so on. This type of insurance is generally taken for 1 year but it can be done for less than a year too. It is basically suitable for hull insurance rather than cargo insurance. It also may cover vessel during its sail in or in the time of construction.
- Unvalued policy: A marine insurance policy in which the value of property is fixed at the time of inspection is called valued policy. So in case of loss of property, the insurance company pays the full of policy amount paid at the time of taking policy whether the property is fully damaged or not.
- Valuable marine insurance policy: Under this policy, the value of claim is determined at the actual market price of the property only after the destruction of the policy. The value is not fixed earlier as in unvalued policy.
- Voyage marine insurance policy: In this policy, the insurance company pays the compensation if the insured property is damaged in the ship while traveling from a certain place to another place. In this policy, the insurance company takes the responsibility when the ship leaves the port for a new voyage and is free from its responsibility when the ship arrives at its destination. In short, when a policy issued for particular voyage from one port to another port or from one place to another is called voyage policy.
- Mixed policy: Under this policy, the feature of both marine insurance policy i.e. time and voyage policy are included. The insurance company is responsible for both traveling and also for certain duration. It is more useful while insuring the cargo.
- Floating policy: The entrepreneurs who have to supply the cargo regularly, their cargo might be insured at different period. At that condition to provide the facility to the clients floating marine insurance policy is very important. It is more appropriate for those who have to supply cargo on a regular basis. There is no tension to do marine insurance time to time when this policy is taken into consideration.
- With cargo freight policy: It is a contract between the shipping company and the insurance company for the protection as well as freight from any unseen loss. Therefore it is called cargo freight policy. Under this policy, the insurance company indemnifies the loss of cargo as well as freight of the cargo to the shipping company.
- Without cargo freight policy: It is a contract between the shipping company and the insurance company only for the protection from any unseen loss. Therefore it is called without cargo freight policy. Under this policy, the insurance company indemnifies the loss of cargo but not the loss from freight of the cargo to the shipping company.
- Single vessel policy: It covers only one ship. Shipping company possessing many ships should take different policy from each type of ship. If company has 5 ships then 5 different policy is to be taken.
- Fleet policy: It covers only number of ships owned by the shipping company. Shipping company possessing many ships should take same and single policy for all of ship. If company has 5 ships then one policy is sufficient
- Construction policy: The ships under construction are insured under this policy. This policy undertakes the ship that is under construction in the yard and is not allowed for normal sailing in the sea except for trail sailing one or two time. If any loss occurs to the ship during its construction or trail the insurance company compensates the loss.
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