There are various types of insurance that are present today.

However,
unfortunately many of us are not aware of how to settle claims after the loss has
occurred. Many a times, they are exploited by the agents. The article provides a
complete detail on the procedure for the settlement of claims in case of fire and
marine insurance.

Fire insurance
Fire insurance may be defined as the contract in writing whereby the insurance
company in consideration for a small sum of money ( the premium) undertakes to
indemnify the insured for any loss or damage to the insured property in case of a fire.
Remember that the term 'fire' must satisfy the following conditions:

 There must be actual fire or ignition. If the property is damaged by smoke or excessive heat,
the insurance company will not be liable to pay any compensation as per the principle of causa
proxima.

 The fire should be accidental and not intentional. Loss covered by mere negligence is
covered but loss due to any malicious act is not.

Kinds of fire insurance policies

 Valued policy: Under this policy, the value of the property insured is agreed upon at the time
of taking up the policy. The insurance companies agrees to pay a pre-determined price if the
property is damaged. valued policies are generally issued for the policy whose value cannot be
determined easily like paintings, works of arts, antique jewelery etc.

 Average policy: This type of policy contains an average clause. This implies that if the value
of the property insured is more than the sum insured at the time of the fire, the insurance
company will be liable to pay a rateable proportion of the loss.
Suppose, person insures his house against fire for Rs 10 lakh whereas the value of the house is
Rs 15 lakh. The house is damaged by the fire and the loss suffered is Rs 6 lakh. He can claim
only Rs. 4 lakh form the insurance company.

 Floating policy: This policy is taken to cover the risk of goods lying at different places the
stocks of which are changing. The premium charged is generally the average of the total amount
of premium he would have paid if he has taken the different policies. Such policies are very
useful for the businessman whose stocks of good keep no changing.

Methods of taking fire insurance policies

 Insurance agents: A person who want to insure his property against fire may do so through an
insurance agent or directly through the insurance company. Generally, the policy is taken
through an agent as his expert advice is available free of cost but one should be careful against
fraudulent activities and must pay the amount only after seeing all the proper documents.

 Selection of the policy: Now, an appropriate policy must be chosen from the list of the
policies described above which shall depend on your needs.

 Proposal form: Whenever a person wants to get a policy, he has to fill a prescribed form. Full
detail regarding the policy must be stated in the form, location, contents and value of the
property.

 Investigation of the property: On receipt of the proposal form, the insurance company sends a
surveyor to evaluate the property. After examining the property, the surveyor submits his report
to the insurance company.

 Fixation of the premium: The nature and amount of premium is fixed on the basis of value of
the property and report of the surveyor.

 Payment of the premium: The insurance company informs the applicant that his form has
been accepted. The insurance pays the premium and gets a cover note form the company. The
risk covers starts from the date mentioned in the cover note or the day of payment of first
premium.

Procedure for settlement of claims

 Notice of fire: As soon as the fire occurs, the insured must send a notice of loss in writing to
the insurance company. If possible, he must submit the evidences of loss and the evidence he did
everything to mitigate the loss. If deliberate arson is suspected, an FIR must be lodged with the
police and a copy of FIR must be submitted along with the notice.

 Submission of claim: After receiving the notice of fire, the insurance company sends a claim
form to the insured. The insured should carefully fill the form as the details given in the form can
affect the amount of the claim. Any wrong information can result in the refusal of the claim.

 Inspection of the property: The insurance company may send an examiner or an inspector to
examine the loss. The inspector makes an inspection and submits it to the company.

 Assessment of the loss: After getting the report, the insurance company appoints an agent or
an assessor to determine the value of the loss that has to be compensated.

<liPayment of the claim: The insurance company makes payment to the insured on the basis of
the report of the assessor.
It may also reject the claim on the following grounds:
</li
 The claim is fraudulent.

 The loss was not covered by the fire.

 The loss occurred due to defect in the insured property not disclosed at the time of taking up
the policy.

 The loss was not intentional.

 The insured has no insurable interest at the time of the loss.

We will study the above in detail below:

The claims process is generally referred to as the time that a policyholder notifies his or her insurer
of the occurrence until the problem has been fixed. Here's the basic process:
Reviewing your policy – what to look for and where to find it. The very first thing policyholders should
do is review their insurance policy to determine how much and what type of coverage they have,
what is covered, what is excluded and to determine how their claim must be filed and any deadlines
that might apply. Much of this information can be found on the declaration's page of the policy which
is usually located at the very beginning of the policy. If you can't locate your policy, contact your
broker or insurance company immediately to obtain a copy.
When to contact your insurance company. You should contact your insurance company as soon as
possible to notify them of the type of loss you've suffered. In fact, they may require you to contact
them within a certain amount of time after a loss has occurred. Your policy will detail this information,
including whether that notification must be in writing.
What information your insurance company will need to start the claims process. Your insurance
company may require you to submit certain information / documentation to start the claims process.
That generally consists of a statement from you on what happened and the extent of damage you
suffered. They may require more and you, as a policyholder, have a duty to provide them with
whatever information / documentation they need – as long as it is reasonable. Be thorough in all of
your documentation as you won't be reimbursed for something that has not been documented.
What your insurance company should do. Once you've notified your insurance company of your loss
and provided the information needed to start the claim, your insurer will generally assign the case to
a claims representative who will analyze your policy to determine what type of policy you have, your
policy limits, what is covered, what is excluded, your deductibles and any other information that
might be needed.
Once completed, the claims rep will send you a letter that details that information. California law
requires insurance companies to send that letter within 30 days after being notified of the loss. If you
do not agree with your insurer's analysis of your policy, it's important to contact them immediately
and resolve those issues.

When both parties are in agreement, the claims rep will either pay the claim or decide to investigate
the claim depending on the size and circumstances surrounding the claim. If an investigator is hired,
he or she will come to your home to do the investigation and will prepare a report for the insurance
company detailing what they found. Assuming that the insurance company doesn't suspect fraud, a
plan will be put in place to obtain cost estimates for rebuilding or repairing your home.

Payment process. Payment processes will differ depending on the type of loss you have. For a small
loss, your insurer may simply write you a check. For a larger loss, your insurer may advance some
of the costs needed to rebuild or repair your home throughout the process. It's important to ask your
claims adjuster how the payment process will occur in your situation, and more importantly, to get
that in writing.
A note of caution: Cash checks from your insurance company carefully. Make sure that you are not
signing away any rights by cashing the check. If the check has a notation that it is 'payment in full'
(when it isn't) or that by cashing the check, the policyholder waives any rights, don't cash it until you
understand the consequences.
Time line. While the time line for every claim differs depending on the nature of the claim, most
claims can generally be completed within a few months. That may not be the case with the Southern
California fires as there is likely to be a shortage of investigators and adjusters. In extreme cases like
this, the process could take several months. It's important to keep in close contact with your claims
representative to make sure that your claim doesn't fall through the cracks and that you'll be able to
get back into your home as soon as possible.
 Marine insurance
Marine insurance is a contract of indemnity whereby the insurance company undertakes to indemnify
the insured for the loss or damage to the cargo or ship or freight on account of marine insurance.
Marine insurance is one of the oldest type of the insurance which plays a vital role in the foreign trade.

MARINE INSURANCE
CONTRACT

"A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured,
in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to
marine adventure."

Gaming and Wagering Contracts :

►Gaming Contracts: The Assured has no insurable interest or expectation of acquiring such an interest;

►Wagering Contracts: Policies which declare that the policy itself is proof of interest (“honour“ or “ppi“
policies).

Classification of Subject Matter to be insured in Marine

Insurance:
The marine insurance may cover three types of things:
(i) Cargo Insurance:
The person who is importing the goods and the person who is sending
them are interested in the safety of goods during the sea journey. The
goods to be insured are called ‘cargo’. Any loss of goods during journey
is indemnified by the insurance company.

ADVERTISEMENTS:
The goods are generally insured according to their value but some
percentage of profit can also be included in the value. The cargo
policies may be special, reporting and floating. The special policy is
only for one shipment. Reporting or open cargo policy, on the other
hand, covers all shipments made by an exporter over a long period of
time.

The floating policy is just similar to open cargo policy but differs from
it only in respect of the method of paying the premium. In floating
policies the value of the future shipments is estimated and premium is
deposited with the company. Later on, actual shipments are compared
with the estimates and the premium is adjusted.

(ii) Hull Insurance:

When the ship is insured against any type of danger it is called Hull
Insurance. The ship may be insured for a particular trip or for a
particular period.

(iii) Freight Insurance:

The shipping company has an interest in freight. The freight may be
paid in advance or on the arrival of goods. The shipping company will
not get freight if the goods are lost during transit. The shipping
company may insure the freight to be received which is known as
freight insurance.

The features of Marine Insurance Contract are as follows:-

Insurable Interest

For effecting marine insurance like any other insurance, the assured must have
an insurable interest. If there is no such interest, the policy would be a
wagering contract and thus it will be void.  Any person does have an insurable
interest who is interested in a marine journey or who can get affected due to
the losses and damages caused in the marine journey or adventure. The
interest must subsist either at the time of effecting the insurance or at the time
of loss. Any interest which is defeasible or contingent or partial can be insured.
A lender under a bottomry bond or respondentia bond has insurable interest as
well as master’s and seamen’s wages, advance freight are insurable, a
mortgagee has also insurable interest.

Proposal and Acceptance

A contract of insurance becomes concluded when there is a proposal to the

assured and as insurer accepts the contract, irrespective of issue of policy.
Though a contract is concluded without issue of policy but it cannot be treated
as an evidence if marine policy is not issued with respect to the contract. The
policy must specify

1. Name of the assured or of some person who effects the insurance on

his behalf
2. Subject matter insured and the risk insured against
3. Voyage or term of policy or both agreed by the parties
4. Sum assured e. Name of the Insurer.
Consideration

Here the premium is called Consideration which is captured in the contract and
is computed on the basis of assessment of proposal form and is paid at the time
of executing the contract.

Issuance of Policy

Policy can be considered as effective legal evidence in a court of law when it is

prepared, stamped and signed and finally issued to the assured party. Although
the policy is issued it can be rectified by the order of court to express the
intention of parties stated in the contract.

Floating

Marine insurance contract can be a floating policy which means where a policy
through which insurance only mentions the general terms and names of the
ships are left out and other details to be defined by subsequent declaration to
be made by endorsement on the policy or otherwise.

Assignment

It can be transferred by assignment unless there is a term prohibiting transfer

and it can be assigned before or after loss. Assignment can be effected through
a customary manner or any other manner as agreed between the parties. The
party cannot assign the policy after losing interest in the subject matter.
Doctrine of subrogation

This doctrine means that the assured shall not get more amount than the actual
loss or damage caused. The insurer has the right to receive compensation from
the third party from whom he is actually liable to receive the amount after the
payment of the loss/damage amount. In marine insurance the right of
subrogation arises only after the payment. The assured shall assist the insurer
in every possible manner to receive money from the third party.

Utmost good faith

The doctrine of utmost good faith is covered in section 19, 20, 21 and 22 of the
Marine Insurance Act 1963. Contracts regarding insurances are based on the
principle of uberrimae fides which means utmost good faith. If any party to the
contract fails to comply with this principle then contract can be avoided by the
other party.

The duty of the utmost good faith applies also to the insurer. He may not urge
the proposer to affect an insurance which he knows is not legal or has run off
safely. The obligation of utmost good faith and disclosure of correct facts is
more on assured as compared to insurer because he is aware of the material
common in other branches of insurance are not used in the marine
insurance.The assured shall disclose all the material information which may
affect the contract in any manner. Any non-disclosure of a material fact enables
the underwriter to avoid the contract, irrespective of whether the non-disclosure
was intentional or inadvertent. The assured is expected to know every
circumstance which in the ordinary course of business ought to be known by
him. He cannot rely on his own inefficiency or neglect.
Doctrine of Indemnity

Marine insurance is an indemnity policy under which an insurer agrees to

compensate for losses or damages in consideration of the timely payment of
premium. The contract of marine insurance shall cover the clause for indemnity
as in no case Assured shall be allowed to make profits out of claim amount.
There is a possibility of making profits by the party in the absence of indemnity
clause in the marine insurance contract.

The insurer agrees to indemnify the assured only to the extent agreed upon.
Marine insurance contract does not often includes complete indemnity due to
large and varied nature of the marine voyage.

This value may be either the insured or insurable value. If the value of the
subject matter is determined at the time of taking the policy, it is called
‘Insured Value’. When loss arises the indemnity will be measured in the
proportion that the assured sum bears to the insured value. Transportation cost
and anticipated profits are added to the original value so that in case of loss the
insured can recover not only the cost of goods or properties but a certain
percentage of profit also.

Indemnity applies where the value of subject-matter is determined at the time

of loss.Where the value for the goods has not been fixed in the beginning but is
left to be determined the time of loss, the measurement is based on the
insurable value of the goods. However, in marine insurance insurable value is
not common because no profit is allowed in estimating the insurable value.
However Indemnity clause has exceptions which are as follows:

1. Profits Allowed

The market value of the loss should be indemnified and no profit is allowed in
general commercial contracts, but in marine insurance contract a certain profit
margin is also allowed as covered in the Marine Insurance Act.
 2. Insured Value

The doctrine of indemnity covers the insurable value, wherein the marine
insurance covers insured value. The purpose of the valuation is to determine the
value of insured in advance.

Warranties

A warranty means that assured shall abide by and shall fulfill certain condition
as covered in contract. If in case any of the warranty is breached, contract shall
stand terminated.

Warranties are of two types: Express Warranties, and Implied Warranties.

1. Express Warranties: It is expressly included in the Marine insurance

contract.
2. Implied Warranties: It is not covered in the contract but it is
assumed to be binding on the parties.
3. Seaworthiness of Ship – Ship should be seaworthy at the time of the
journey of the ship begins, or if the voyage takes place in stages,
during the beginning of each stage. Seaworthiness is not calculated on
the basis of physical condition of ship, but it is calculated on many
other important aspects which includes the suitability and adequacy of
the parts of the ship, experience and quality of the officers and crew.
At the commencement of the journey, the ship must be take the
ordinary strain and stress of the sea on which factors the
seaworthiness is calculated and looked upon.
4. Legality of Venture; – This warranty concludes that the journey
insured shall be legal and that the assured can control the matter it
shall be carried out in a lawful manner of the country. Violation of
foreign laws does not necessarily involve breach of the warranty.
Implied warranty for the nationality of a ship is not covered in the
contract.