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A Report On Fire insurance and its Coverage and Benefits

A Report on Fire insurance Coverage and Benefits

Course Name: Insurance and Risk Managment Course code: 224 Submitted to:
Shahin Ahmed Chowdhury Lecturer Department of Marketing University of Dhaka

Submitted by:
CATALAN
BBA, 16th batch, sec-B Department of Marketing University of Dhaka

Date of submission: November 2, 2011

Group Profile:

01. Tahsib Ahmed (Group Leader-08) 02. Md. Roman Al Mamon (60) 03. Shaikh Md. Rasel (82) 04. Shuvashish Dey (102) 05. Md. Mokaram Hossin (134) 06. Hasan Mahmud (142) 07. Md. Murshedul Alam (172) 08. Md. Asaduzzaman (162)

Shahin Ahmed Chowdhury

Lecturer Department of Marketing University of Dhaka

Dear Sir, Subject: Submission of a report.

With due regards we state that we are very thankful to you as you assigned us this report on Fire Insurance . It is a great opportunity for us to acquire theoretical and practical knowledge about Insurance and Risk management. We have tried our best to gather what we believe to be the most complete information available. Your kind acceptance and any type of appreciation would surely inspire us. We would always be available and ready to explain further any of the contexts whenever asked.

Sincerely yours, Members of the Catalan

Acknowledgements

Any comprehensive work such as report making owe credit to multitude of people. Certainly, we should acknowledge the contributions of the pioneers in the field of management, especially those whose teachings have become a part of our thinking.

First we commit ourselves grateful to almighty Allah who gives us power and knowledge to complete the report. Then we acknowledge our honorable course teacher Mr. Shahin Ahmed Chowdhury;who has opened the door of knowledge in front of us. Through the whole semester he has broaden our outlook in Insurance and related sector.

Next we acknowledge the Writer of the book who has helped a lot by writing a core book on elementary psychology. -George E. Rejda

Without the direct and indirect support of these dear people this report would not exist.

Contents:

No:
1. 2. 3. 4. 5. 6. 7. 8.

Chapter Name
Meaning of Fire Insurance Significance of Fire Insurance Essential Features/elements of fire insurance Scope of Fire insurance & its safety measures Classification/ fire insurance policy Distinction between Marine and Fire Insurance Phraseology of the Fire Insurance Policy Conclusion

Page
11 12 13 14-16 17-18 19 20-21 22

EXECUTIVE SUMMARY

In our report, we have discussed basically with different fire insurance companies in Bangladesh. Fire insurance is a form of property insurance which protects people the costs incurred by fires. Fire insurance can be classified into two categories- natural and physical hazard; moral hazard. They are almost 14 types of fire insurance policy. They are : Valued Policy, Unvalued Policy, Specific Policy, Average Policy, Floating Policy, Excess Policy, Declaration Policy, Adjustable policy, Maximum Value with Discount Policy, Replacing Policy, Consequential Loss Insurance, Blanket Policy,Insurance for Sprinkler Leakage Damage, Comprehensive Policy. We tried to contrast between different companies and their policies.

Introduction

Fire insurance is a form of property insurance which protects people the costs incurred by fires. In the modern world the importance of fire insurance is increasing day by day. Fire insurance not only protects people from unwanted loss caused by fire but also keeps them tension free. It also helps people to practice ethical behavior.

Origin:
As a marketing student it is necessary to know different insurance policies available in our country. Our Insurance course teacher Mr. Shahin Ahmed Chowdhury assigned us to organize a presentation program and prepare a full report on Fire insurance on 1 November, 2011. Our teacher thought that it would be very helpful for us to know the terms of Fire insurance very deeply. Group presentation also would be helpful to know Fire insurance. Presentation also will affect our efficiency in our future job which will make us a good executive and a handsome entrepreneur.

Objectives

Every report has some objectives. There are one broad objective and some specific objectives in their respective field. Our report on Fire insurance has some specific objectives and broad a broad objective.

Broad objective
To know the different terms, classifications and various policies related to fire insurance.

Specific objectives :
To inform about underwriting and ratemaking policy To inform about coverage To inform about the benefits To inform about various causes of fire.

Methodology

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We prepared one third of our report from secondary sources. We collected all the required information from different general insurance companies, journal and related papers. All the members of our group worked hard in seminar for preparing this report. We also followed our text book for collecting some necessary information. The sheets provided by our course teacher also helped a lot for preparing report.

Limitations
We face some specific problem while preparing this report. These problems created some barriers to go ahead. Those specific problems are 1. We didnt get enough time to prepare this report, thats why we prepared the report in a hurry. 2. We also had some financial problems to prepare the report. 3. We didnt get all the required materials for enhancing the report.

Chapter-01 Meaning of Fire Insurance

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Fire insurance is a contract between two parties. The aim of this contract is to provide coverage to the policy holder against Fire risk of his property. For a certain amount of premium, Insurer assures the insured to cover the risk of the property damaged by fire. M.N.Mishra says about insurance: Fire insurance is a device to compensate for the loss consequent upon destruction by fire. Ghos and Agarwala said: Fire insurance may be defined as a contract whereby one party undertakes in exchange for a premium to indemnify the other against a loss or damage caused to specified property by fire during a particular period to the extent of a definite sum. Professor R.S. Sharma says: A fire insurance contract may be defined as an agreement whereby one party in return for a consideration, undertakes to indemnify the other party against financial loss which the later may sustain by reason of certain defined subject matter being damaged or destroyed by fire or other defined perils up-to an agreed amount. In Bangladesh Insurance Act 1938 clause 2(6b) it is stated that: Fire insurance business means the business of effecting, otherwise than incidentally to some other class of insurance business, contact of insurance against loss by or incidental to fire or other occurrence.

Chapter-02

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Significance of Fire Insurance:

There are some significances of fire insurance. These are given below:
Safe guard of Personal Property Helps in Industrialization Establishment of Security and Relief Accumulation of Resources and Its Investment Creation of Awareness Helps in Distribution of Risk

Helps in Creating Employment.

Chapter-03

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Essential Elements/Features of Fire Insurance

1) Necessary Elements of general Contract:
Minimum two parties Offer and Acceptance Legal Consideration Capacity to Contract Certainty Others

2) Contract of indemnity 3) Insurable interest 4) Fiduciary relationship 5) Damage for Causa Proxima 6) Proportionate Contribution 7) Subrogation

Chapter-04

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Scope of Fire Insurance And its Safety Measures

A A A A

Material Loss Insurance Consequential Loss insurance

A) Material Loss Insurance 1. Standard Fire Policy:

I. Insured Risk or Policy cover

All damage invented from Fire Loss caused by thunder Loss from domestic used broiler Damage caused by domestic explosion caused by fire

II.

Exclusions or policy not cover

If the explosion is not caused by fire

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Accept the covered property the loss of additional property caused by fire It is not applicable for money, manuscript, design, books, stamp, pattern etc. If a property is covered by both Marine and Fire insurance than Marine insurance counts first.

2. Including Special Perils:

Applying Excessive heat Earthquakes Mutiny War or attack by foreign enemies

3. Insurance for material damage by declaration policy 4. Insurance for material damage by blanket policy 5. Insurance for material damage by re-instatement policy 6. Insurance for material damage by house hold policy 7. Insurance for sprinkler leakage damage.

B) Consequential Loss Insurance:

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1.

For the time of losses the business deprived from the profit and earning for not keep the firm in action

2. During the closed period the expenses paid 3. For continuing the business in a small scale during the loss.

Chapter-05

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Classification of Fire Insurance or Fire insurance Policy

1. Valued Policy 2. Unvalued Policy 3. Specific Policy 4. Average Policy 5. Floating Policy 6. Excess Policy 7. Declaration Policy 8. Adjustable policy 9. Maximum Value with Discount Policy 10.Replacing Policy 11.Consequential Loss Insurance 12.Blanket Policy 13.Insurance for Sprinkler Leakage Damage 14.Comprehensive Policy

Classification of Fire Risk

1) Natural or Physical Hazard or Risk:

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Fire phobic nature of the property Defective Construction Defective Heating System Unsafe procedure of doing work The nature of the business Faulty Classification Lack of Fire Extinguishing measures

2) Moral Hazard or Risk: Setting Fire by enemies Intentionally Fire setting Intentional negligence of the policy holder

Chapter-06

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Distinction between Marine Insurance and Fire Insurance:

Subject 1.Contents Marine Insurance Ship in voyage, the goods carrying and frights are the content of this contract To protect the ship and the carried goods of the voyage It is usually 1 year termed or for a certain voyage time period When occurring the damage the insured has to have insurable interest on the property Only monetary indemnity is given Fire Insurance All types of property or assets are the content of this policy To protect the property losses caused by fire. It is one year termed

2. Objective 3. Period of Contract 4. Insurable Interest

During proposing the policy and occurring the loss there has to be insurable interest.

5. Way of compensation 6.Assignment

Here with monetary indemnity re placing is also done

In this case without the Here the assignment is not done so easily consideration of the policy holder assignment can be done

7.Alteration or For alteration or replacing the For any alteration of the assets the removal of asset insured assets the permission permission has to be taken from the of the insurance company is insurance company not needed 8. Moral hazard The moral hazard is comparatively low here 9. Character certificate The character certificate for proposing and receiving the policy in not required The amount of moral hazard is very high in this policy Here the character certificate has to be submitted to the insurance company

Chapter-7

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Phraseology of the Fire Insurance Policy:

1. Misrepresentation

2. Alteration Removal Change of subject matter Change of interest

3. Exclusions Fire Phobic nature of the object Fire caused by Earthquakes Mutiny War and attack by the enemies

4. Claims 5. Fraud

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6. Replacement 7. Insures right after fire 8. Contribution and average 9. Subrogation 10. Arbitration 11. Electric clauses 12. Purchasers interest clause 13. Insured risk.

The above mentioned points are the phraseology of fire insurance.

Chapter-8

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Conclusion
Fire insurance plays a significant role in our day to day life in case of safety & protection of liability and property.by using this insurance policy we can easily protect or reduce our possibility of fire risk which helps us to go forward as well as increasing productivity. So it has to be acknowledged that today without fire insurance none of us can be fully satisfied about their home, industry and other valuable properties.

References

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1. Mr. Ataur Rahman

Executive Vice President Green Delta Insurance Co. Ltd

2. Mr. Arif Khan

Senior GM Phoenix Insurance Co. Ltd

3. Md. Imran Rouf

Senior GM Bangladesh General Insurance Co.

4. Nahida Rahman
Manager Rupali Insurance Co. Ltd