FIRE AND MARINE

INSURANCE LAWS IN INDIA

LECTURE

TO

TRAINEES OF TATA MOTORS

ON

3 FEBRUARY, 2012

MAJ. GEN. NILENDRA KUMAR

DIRECTOR

AMITY LAW SCHOOL

NOIDA

BASIC LAWBASIC LAW

CONCEPTCONCEPT

Pooling of resources capable of being

distributed in times of calamities such as

fire, floods, epidemics and famine etc.

INSURANCEINSURANCE

It is the act of providing against a possible

loss, by entering into a contract with one

who is willing to give assurance, that is, to

bind himself to make good such loss,

should it occur.

POLICY

means

the instrument by which the contract is made

PREMIUM

means

the stipulated consideration

The interest of the insured must exist

a) Life at the time of effecting the insurance

b) Marine Insurance at the time of loss

c) Fire throughout the period insured

Insurance is a method of sharing financial

losses of few from a common fund who are

equally exposed to the same loss.

Insurance is a federal subject in India

Indian Marine Insurance

Act, 1963

Indian Insurance

Act, 1938

The General Insurance Business (Nationalisation) Act, 1972

100 general insurance companies merged

into four companies.

The General Insurance Corporation of India

(GIC)

1. Oriental Insurance Co. Ltd.

2. New India Assurance Co. Ltd.

3. National Insurance Co. Ltd.

4. United India Insurance Co. Ltd.

Insurance Regulatory

and

Development Authority

Act, 1999

REGULATORY BODIES

IRDA - Insurance Regulatory and Development Authority

TAC - Tariff Advisory Committee

Absence

of

any statutory enactment

governing fire insurance

Legal terms commonly used

ASSURANCEASSURANCE

Assurance in contract means “making

secure”, insure. It means the act of

assuring, a declaration tending to inspire

full confidence.

ASSURANCE AND INSURANCEASSURANCE AND INSURANCE

There is a tendency to use “Assurance” for

contracts of “life insurance” and “insurance”

for risks upon property.

An assurance represents the principle and

insurance the practice.

INSURABLE PROPERTYINSURABLE PROPERTY

means

any ships, goods or other movable which

are exposed to maritime perils.

IMPORTANT ELEMENTS IN INSURANCEIMPORTANT ELEMENTS IN INSURANCE

1. Subject matter of insurance

2. The peril or risk

3. The likely financial loss

RISK

is

the unforeseen element which may impede

one’s progress in achieving the objective.

PARTIESPARTIES

1. Insured. Party effecting insurance (individual, company, firm or corporate body etc.).

2. Insurer. Party granting the protection under an insurance policy.

3. Policy. It is the evidence of contract.

INDEMNITY

is

the compensation for loss or injury

sustained or to make good the loss or

damage.

UTMOST GOOD FAITHUTMOST GOOD FAITH

Since insurance shifts risk from one party

to another, it is essential that there must

be utmost good faith and mutual

confidence between the insured and the

insurer.

WARRANTY

means

an assurance by the assured that he will not

do some particular thing or will fulfil any

condition that are decided in advance.

ASSIGNMENT

means

transfer of rights and liabilities of an

insured to another person who had

acquired insurable interest in the property

insured.

INSURABLE INTERESTINSURABLE INTEREST

A person who is so interested in a a property

as to have benefit from its existence and

prejudice by its destruction is said to have

insurable interest in the property. Such a

person can insure the property against fire.

Usual Types of General Insurance

1. Marine

2. Fire

3. Miscellaneous

MARINE INSURANCEMARINE INSURANCE

It is an agreement whereby the insurer

undertakes to indemnify the assured, in the

manner and to the extent thereby agreed,

against marine losses, that is to say, the

losses incidental to marine adventure.

A large proportion of marine insurances

is made at the risk of individuals called

underwriters.

MARINE INSURANCEMARINE INSURANCE

1. Hull Insurance. The loss associated with the floating crafter.

2. Cargo Insurance. Loss or damage to goods during transit by rail, road, sea or other.

Marine insurance covers the loss or

damage of ships, cargo, terminals and

any transport or property by which cargo

is transferred acquired or held between

the points or origin and final destination.

Ship

includes every description of vessel used in

navigation.

Maritime Perils

means

the perils consequent on, or incidental to,

the navigation of the seas that is to say,

perils of the sea, fire, war perils, pirates,

rovers, thieves, captures, seizures,

restraints and detainments of princes and

people.

MARINE INSURANCEMARINE INSURANCE

Almost all policies are agreed value policies.

The insured and the insurer agree that the

sum insured is the value of the property

insured so that the agreed amount is

payable in case of total loss.

Mixed Sea and Land Risks

Section 4

A contract of marine insurance may, by

its express terms, or by usage of trade,

be extended so as to protect the assured

against losses on inland waters or on any

land risk which may be incidental to any

sea voyage.

FIRE INSURANCE BUSINESSFIRE INSURANCE BUSINESS

A contract of insurance by which the insurer

agrees for consideration to indemnify the

assured upto a certain extent and subject to

certain terms and conditions against loss or

damage by fire, which may happen to the

property of the assured during a specific

period.

FIRE INSURANCE CONTRACTFIRE INSURANCE CONTRACT

Principle Object. Insurance against the loss

or damage occasioned by fire.

Insurer’s Liability. Limited by the sum

assured and not necessarily by the extent of

loss/damage sustained by the insured.

Insures. Has no interest in the safety or destruction

of the insured property apart from the liability

undertaken under the contract.

RISKS COVERED UNDER FIRE RISKS COVERED UNDER FIRE INSURANCEINSURANCE

1. Fire

2. Lighting

3. Aircraft damage

4. Riots, strikes, malicious and terrorism damage

5. Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation

6. Impact damage

7. Subsidence and landslide including rockslide

8. Bursting and/or overflowing of water tanks apparatus and pipes

9. Missile testing operations

10.Bus fire

RISKS NOT COVERED BY FIRE RISKS NOT COVERED BY FIRE INSURANCE POLICYINSURANCE POLICY

1. Theft during or after the occurance of any insured risk

2. War or nuclear peril

3. Electrical break downs

4. Ordered burning by a public authority

Sub terranean fire

APPROACHAPPROACH

Fire policies have to be assigned with the

consent of the insures.

Marine cargo policies can be freely assigned

without the consent of the insurer, the logic

being that the ultimate buyer is usually not

known at the time of taking the cover.

MOTOR VEHICLEMOTOR VEHICLE

If the vehicle is a total loss, the sum insured or the value of the vehicle, whichever is less is paid.

If the vehicle is damaged, the cost of repair is paid.

If the parts are replaced, the cost of new parts will be subjected to the depreciation.

In all cases, the age and general maintenance of the vehicle is considered.

SUMMARY

The losses against which a merchant or ship owner is not protected by insurance.

a) Acts of own governmentb) Breaches of the revenue lawsc) Breaches of the law of nationsd) Consequences of deviatione) All losses arising from unseaworthinessf) All loss arising from unusual protraction of the

voyageg) All loss to which the ship owner is liable when

his vessel does damage to others

ANY QUESTIONS