FIRE INSURANCE

A contract of fire insurance is a contract by which the insurer undertakes, for a consideration in the form of a payment of money either in lump sum or installments, to indemnify the insured against the consequences of a fire, or the loss or injury as arising therefrom during an agreed period and up to a certain amount. The contract is to be found embodied in a document known as the "policy of the fire insurance " and usually for a period of one year and renewed each year.

A few notable definitions are reproduced below :

1. " A contract whereby the insurer in consideration of the premium paid undertakes to compensate the insured for any loss that may result due to occurrence of fire ".
2. " Fire Insurance is a contract of indemnity against loss or damage to property arising from fire during  an agreed period of time. Here the insurer undertakes to indemnify the insured against financial loss caused directly as a result of fire".
3. " A contract of fire insurance is a contract by which the insurer undertakes, for a money consideration, to indemnify the insured against the consequences of a fire during an agreed period up to the amount stated in the policy".

Fire : The term "fire" is a contract of fire insurance is used in its popular and literal sense. It means the production of light and heat by combustion. Combustion occurs only at the actual ignition point. Hence, there is no fire without ignition. Loss or damage which occurs as a result of putting out the fire would also be covered by the fire risks. Fire policies are not covered through fire caused by earth qu akes, riots, civil commotion, foreign enemy, rebellion etc.

Example: A, B, and C are three continuous houses insured against fire. An earthquake caused A to fall and as a consequence fire broke out and spread to B where an explosion occured whereby C was wrecked.

In the insurer liable for the loss caused to C ?

Answer : Fire risks don not cover loss caused only by explosion. However, where explosion actually causes ignition which spread into fire, the loss would be taken as a loss by fire. A simple fire insurance, policy covers loss by explosion incidental to fire unless specifically excluded.

In the instant case, the insurer will be liable for the loss caused to house C if (i) the explosion was caused by fire and (ii) the insurer has not excluded his liability for explosion by a special clause in the fire policy.