Necessary Elements of Fire Insurance Contract

 

Necessary Elements of Fire Insurance Contract

1)Necessary Elements of General contract:

A) Two party: There have two party for  A insurance contract. One is insurer (who take the risk in exchange of premium) & another is policy holder(whose property is insured).

B) Proposal: The proposal for fire insurance can be made either verbally or writing. Insurer gives proposal to Policy Holder for insured his/her property.

C) Acceptance:  If the insurers proposal is in favor of policy holder, the he will accept this, otherwise he reject it.

D) Eligibility: In Bangladesh, peoples whose age is above 18 can make insurance contract.

E) Definiteness:  There should have clearness for insurance contract like for how much time it insured or for the proportion of asset that is insured.

F) Commencement of risk: The risk is commences as soon as the contract is made.

2)Contract of recompense/ indemnity:

Fire insurance is the contract of Compensation. So Insurer have to give recompense for the fire damages.

3)Insurable Interest:

Insurable interest means the financial interest of policy holder in insured assets.

4)Damages for “Causa Proximita”:

Insurer gives recompense for the damages of fire. If the fire occurred for other reason, insurer do not give recompense.

5)Proportionate Contribution:

 If policy holder insured his same asset from different insurer, then each insurer gives his proportionate damages if damages occur.

6)Fiduciary Relationship:

In fire insurance contract, there creates relationship of good faith between insurer & policy holder. So policy holder have to clear all pros & corns to insurer. If policy holder hides any object from insurer, then insurer can reject the insurance contract.