Unforeseen calamities are increasing in the 21st century. The victims, who are normally unprepared for the catastrophe, get completely shattered after the catastrophe. Hence, it has become a regular feature among individuals and organizations to safeguard themselves against various events of calamities or sudden problems, such as fire, theft, ill-health, etc.
Taking insurance policies is a common measure adopted to deal with such events. One such policy known as fire insurance is taken to minimize the individual financial loss due to destruction of goods and property due to fire.
Fire insurance is a contract between two parties, the insurer and the insured. The insurer refers to the insurance company and the insured refers to the person taking the insurance policy. As per the contract, the insurer for an agreed amount (consideration) indemnifies the insured for the financial loss caused due to fire. At the same time, it is the duty of the insured to take all possible measures to save goods from destruction at the time of mishappening. He should not be careless and laid back thinking that he can claim his loss from the company.
Moreover, the insured will be compensated for the amount equal to the value of the loss. This is to ensure that the insured cannot make any profit out of the situation. The property or goods against which the compensation is paid will be taken by the company. Any profit made from the sale of destroyed goods belongs to the company and not to the insured.
Another important point is that to claim insurance money, the immediate cause of destruction should be fire only. That is, the loss must be caused by fire flames and not merely due to rising temperature. Even in a genuine case of fire, the company takes all possible measures to ensure that the fire was accidental and not deliberate. Only then, it begins with the claim proceedings.
The insured party can also enter into co-insurance to spread the consideration between different insurance companies. In such cases, all the companies will proportionately share the amount of loss in a manner that the consideration should not exceed the actual loss. Such contracts are ideal for large manufacturing organizations who take the policy of a very large amount.
In a contract of insurance, it is the moral duty of the insured to disclose all material facts that can affect the provisions of the contract.