FREDDY SAVIO DSOUZA T.Y.B.Com. Banking & Insurance Roll No.

45
Project Report On:

BANKING OMBUDSMAN SCHEME

Submitted To: Hema Tahilramani

GROUP MEMBERS:

1. 2. 3. 4. 5. 6.

DATTATRAY KOR. NIKHILESH KANE. FREDDY. S. DSOUZA. HARSHAVARDHAN MALANDKAR. VISHAL CHAUDHARY. SUJAY. S. SOLANKLI.

28 05 54 04 56 61

FIRE INSURANCE
Fire Insurance can be defined as, An Agreement whereby the insurer in return for consideration undertake to indemnify the insured against the loss to property to fire. Fire insurance provides protection against loss of property due to fire. There is always risk of goods or property being destroyed by fire. Fire insurance provides protection for accidental loss of property. Fire Insurance is governed by All India Fire Tariff effective from 31.3.2001 issued by Tariff Advisory Committee, a Statutory Body. It mitigates the risk of loss of customers arising from fire breakout. The insured should take all possible steps to minimize the loss.

TYPES OF FIRE INSURANCE POLICIES:

Valued Policy:In valued policy, valuation of property is done before obtaining the policy. This policy is necessary when calculation of loss becomes difficult after event. The insured is paid full amount and need not prove actual loss. It is done especially in case of museums or art galleries where actual loss calculation is impossible. Thus, the value of property is ascertained and agreed upon and insurer agrees to pay that much amount if loss takes place due to fire. Specific Policy:This policy covers risk of certain specific amount mentioned in the policy. The compensation payable will not be more than this specific amount. However, if actual loss is less than policy amount, entire loss will be compensated. Insurer will pay actual loss or amount of policy whichever is less. Average Policy:Under average policy, insurer will pay proportionate amount of loss due to Under-Insurance. In under-insurance, property is insured for amount less than its actual value. Floating Policy:Floating policy is a policy is one which covers one or several kinds of goods lying at different locations under one sum and for one premium. Some traders have their warehouses at different locations and they desire to have insurance cover for all goods lying at different places. Floating policy can provide for their need. A wholesaler may prefer such type of policy.

 Excess Policy:This policy is taken by the businessman whose stock fluctuates from time to time. He takes one policy below which the amount of policy would not fall, and another policy to cover maximum additional amount by which the stock may rise on certain occasions. The first policy is called First Loss Policy and the other one is called Excess Policy. Blanket Policy:Blanket policy is one common, integrated policy which covers all assets, fixed as well as current, of the policy holder. Reinstatement Policy:Under this policy, the insurer pays the amount which is required to reinstate the property or asset destroyed by fire. The destroyed asset is replaced by the insurer. The possession of destroyed or damaged asset is also taken by the insurer. Comprehensive Policy:This policy covers wide area of risks. Such policies are issued to cover risks such as fire, burglary, earthquakes, flood, explosion, lightning, thunderbolt, strikes, civil commotion and so on. It is one policy which gives protection in regard to various types of risks. Consequential Loss Policy:This policy indemnifies the insured against loss of profits, due to dislocation of business caused due to fire.

PROCEDURE OF OBTAINING FIRE INSURANCE POLICY

Selection of Insurer:This is the first step one has to take if he wishes to obtain fire insurance policy. There are many companies engaged in the insurance business. The person interested in taking an insurance policy has to select the company which is suitable and convenient to him. The company which is popular and offering efficient service should be selected. Submission of Proposal Form:In order to take policy, the person must submit the completed proposal form to insurance company. Such person has to obtain this printed proposal form from office of company or from its agent. This form has to be submitted with necessary details. The basic principles like insurable interest, utmost good faith etc. must be followed properly while submitting the proposal form. The proposal form should be accompanied by documents required by insurance company for inspection. Survey of Property:On the receipt of proposal form, insurance company makes the survey of the property to be covered by the fire policy. The surveyor visits the actual site and checks the risk involved and decides amount of premium. After that he has to submit his report. However, in case of policies of smaller amounts, survey is not required. Scrutiny of Proposal and Report:A careful examination of proposal and surveyors report is undertaken by the company. It is the basis of decision to accept or refuse the proposal. If the proposal is sound, it is accepted.

 Payment of Premium:If the proposal is accepted then the insurance company informs the same to the maker of proposal and he is asked to pay premium. Cover Note:On receipt of premium, the company will issue cover note. i.e. the receipt for the payment of premium. Cover note is the proof that goods are insured. If the fire takes place in the meanwhile, the insured must produce the cover note to get the compensation. Issue of The Policy:In the due course, the company will prepare a fire insurance policy and send it to the insured by registered post. The policy contains various details likeThe name and address of insured.

a. The description of goods insured. b. The value of the goods insured. c. The location of the goods insured. d. The rate of premium payable. e. The period and the type of policy. f. All the terms and conditions of policy.

PROCEDURE FOR SETTLEMENT OF FIRE INSURANCE CLAIM

Intimation to Insurer:The insured must give immediate intimation to the insurer regarding occurrence of fire. All possible details must be mentioned such as day, date time of the fire and cause of the fire, if known. Assessment of Loss:The insured makes an assessment of the actual loss. Such assessment is required to fill the claim form correctly in respect of loss of goods or property. Submission of Claim Form:With 15 days of the loss, due to fire the insured has to submit his claim in the prescribed claim form, full details about actual loss or damage must be stated in this form. Evidence for Claim:Along with the claim, the insured must send documents which may help the company in determining the actual loss occurred. If possible, an eye witness should be produced before surveyors.
Verification of Form:The claim form along with the supporting evidence is verified by the insurance company. The insurance company then appoints the surveyors to conduct an assessment of actual loss.

 Survey of Loss by Insurance Company:The insurance company appoints the surveyors to assess the actual loss. The surveyors conduct necessary investigations. They investigate into the cause of fire, the actual amount of property lost and other relevant details. The surveyors then make a report of their findings and assessment of loss. Appointment of Arbitrator:There may be a dispute regarding the amount of claim. In such a case, an arbitrator is appointed, acceptable to both the parties, to settle the amount of the loss. Settlement of Claim:On the basis of the claims made by the insured and actual loss as calculated by the surveyors, the company decides how much amount should be paid to policy holder as compensation. Accordingly, the necessary arrangements are made to pay the amount and settle the claim.

TYPES OF RISKS TO FIRE INSURANCE

The fire insurance policy has been renamed as Standard Fire Special Perils Policy. The Standard Fire Policy covers the following hazards:
1. FIRE:

This usually excludes : Destruction or damage to the property caused by its own fermentation, natural heating, or spontaneous combination, or It is undergoing any heating or dying process, or Burning of any property insured by order of any public authority.

2. EXPLOSION/ IMPLOSION:

Explosion is defined as a sudden violent burst with a loud report. An implosion means bursting inside or inward or collapse.
3. LIGHTNING:

It may result in the fire damage or other type of damage such roof broken by a falling chimney struck by lightning, or cracks in the building due to lightning strike. 4. IMPACT DAMAGE: Impact damage by any rail/road vehicle or animal by direct contact with the insured property is covered. However such vehicle or animals should not be occupied or belong to the insured owner of their employees while acting in the course of their employment. 5. STROMS, CYCLONE, TYPHOONS, ETC.: These are all various types of violent natural disturbance that are accompanied by thunder or strong winds or heavy rainfall.
6. SUBSIDENCE AND LANDSLIDE INCLUDING ROCKSLIDES:

Destruction and damage caused by subsidence of part of the site on hich the property stands or landslides/ rockslides is covered.

7. RIOTS, STRIKE, & TERRORISM DAMAGE: The act of any person taking part along with others in any disturbance of public peace other than war or civil commotions is constructed to be a riot, strike or terrorism attack. 8. MISSILE TESTING OPERATION: Destruction and damage caused due to impact or otherwise from projectiles in connection with missile testing operations by the insured or any one else is covered. 9. AIRCRAFT DAMAGE: The loss or damage to the property (by fire or otherwise) directly caused by aerial devices & articles dropped from there is covered. However destruction or damage resulting from pressure waves caused by aircraft traveling at supersonic speed is excluded from the scope of policy.

RIGHTS OF INSURER

1. Right to Avoid Policy : Where the subject matter is not

specified honestly or willful fire is caused by the insured or with his connivance then an insurer has a right to avoid the policy.
2. Right of Entry Control over Property: Where any losses

or damage of property insured arises due to outbreak of fire, the insurance company has the right to enter in the premises and take possession of the building or property. It is essential for the insurer to ascertain the cause of loss or damage or minimize the loss and protect the salvage.
3. Right of Reinstatement : An insurer has right to

reinstatement or replacement of the damage property instead of paying the amount of loss or damage in money.
4. Right of Subrogation: This right states that once the full

compensation is paid by insurance company it acquires all the right and remedies which is assured would have enjoyed regarding the said loss. When the compensation is paid for the total loss, all the right of the insured in respect of the subject matter of the insurance are transferred to insurer.
5. Right to contribution : According to this principle, in case

a person has taken out more than one policy against the same risk, the insurer are to share the loss in proportion to the amount assured by each.

6. Right to salvage : In case of any loss due to fire, it the

duty of assured to hand over the salvage to the insurance company. The insurer has right to ascertain the claim to be made for the exact value of goods damaged or destroyed at the date of fire.