Fire in insurance contract has some distinct features such as insurable interest, utmost good faith and personal contact which make it different from other forms of contracts.
The following are the main features of fire insurance:
The following are the main features of fire insurance:
1. Insurable Interest
The insured party should contain insurable interest in the property which he/she wants to insure. It should exist both at the time of taking the policy and also at the time of claiming loss. The insurable interest means the insured is benefited by the survival of the things insured and suffers a loss by their destruction.
2. Utmost Good Faith
A contract of insurance is understood as a contract of utmost good faith. The insured should make clear all the important points with regards to the subject-matter of the insurance so that the insurer may correctly estimate the risks involved. The insured should provide information regarding construction of the house, environment, possibility of catching fire and possible measures that can be taken in the case of any events. The insurance company may terminate the contract when it comes to know that the facts are not disclosed.
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3. Personal Contact
A fire insurance contract is a personal contract. The insured is involved in this contract with his property. Therefore, the insurance company should have detailed and full knowledge about the behavior and character of the insured. As it is a personal contract, the insurance policy cannot be transferred without the permission of the insurance company. If the possession of the insured goods or property is transferred to the third person, the company has a right to terminate the contract of insurance.
