HOW A FIRE INSURANCE POLICY IS AFFECTED

The following procedure is adopted in taking a fire insurance policy.

1. Selection of Insurance Company: A person who wants to get his property insured against fire is to select the insurance company which has a sound financial backing and enjoys a goods reputation in the early settlement of claims in the event of a loss.
2. Rates o Premium: The companies which give coverage to insurance normally combine and do not compete among themselves in cutting down the rates of premium. The premium rates, therefore, usually do not differ.
3. Proposal Form: The person who wants to get his property insured against fire or wants a “package” insurance, will furnish the facts in ‘Utmost Good Faith’. There will not be any concealment of facts on the part of the insure as well as incurred.
4. Survey of the Property: Before insuring the property against fire, the expert surveyors engaged by the company inspects the property and prepares an estimate of the risk involved.
5. Acceptance of Proposal: If the company is satisfied that the person is not insuring the property for any profit motive, it on the basis of proposal from and the surveyor’s report, premium is paid by the insured, the property is insured from that date.
6. Rate of Premium: The rate of premium is not uniform for all kinds of property. The rate of the premium is determined by the types of premises where the goods are kept. If the building is fire proof, the rate of premium will be low. In case, the goods kept in a building are of such a nature that they can catch fire easily, the rate of premium will be high.
7. Cover Note: On receipt of the premium, the company issues a Cover Note to the insured stating that the contract has been completed and the property has been insured.
8. Issuance of Policy: The company after the completion of all formalities prepares the fire policy, giving their in full detail of the property and sends it to the insured.

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