Cancel the Contract - Alterations must be Notified - Duratio'n of Policy
Fire insurance is a contract of indemnity, the insurance office undertaking to make good within certain limited amounts the losses sustained by the persons effecting the insurance on their buildings and property. The latter, therefore, is protected for a certain stipulated time, generally for a year or less, upon the payment of an agreed premium, which varies according to the nature of the property insured. For instance, the cost of insuring an ordinary private dwelling-house built of brick or stone, and tiled or slated, would be from is. 6d. per 100; the same if built of brick and timber, 2s. 6d.; thatched dwellings, from 5s.; stacks in fields in England and Wales, 7s. 6d.; in Scotland, 10s.
The amount payable in case of a loss does not depend upon the value of the property insured and injured, but simply on the amount of the damage. Under no circumstances can the sum payable exceed the amount named in the policy, and if the loss is less the amount for which the insurance company is liable will also be less.
The contract is contained in a written document called a policy, which must bear a penny stamp. If the contract is made by parol, a duly stamped policy must be executed within a month under a penalty of 20.
It is necessary that the party insuring should have an interest or property at the time of insuring and at the time that the fire happens. The name of the person interested, or for whose benefit, or on whose account the policy is made out must be inserted in the policy.
An insurable interest is conferred on anyone who has a legal or other right or responsibility prejudicially affected by a fire. Thus, a trustee may insure the trust property held by him, and a person in charge of goods the property under his care.
Policies of fire insurance are not in the nature of them assignable nor intended to be assigned from one person to another, for the contract is a purely personal one, and they have not been made assignable by statute. Upon a sale of the property insured no interest in the policy or insurance moneys passes to the purchaser unless it has been so agreed. A sale, however, subsequent to the loss would not prevent the assured suing as a trustee for the purchaser. And, of course, the contract may be assigned with the consent of the office; and this is generally done, as, for example, when completing the purchase of a new house, in which case the office will transfer the remainder of the term of insurance effected by the builders to the purchaser.
The person effecting the insurance must inform the company of all material facts affecting the subject matter. The contract is entered into on the basis of a proposal signed by the party insuring or by some person acting on his behalf. The proposal consists of written answers to questions framed by the insurance company for their guidance and protection, and it is essential that the questions should be answered truly and accurately. There have been cases in which perfectly innocent mis-statements have proved sufficient to cancel the contract when it was entered into on the faith of their being correct. A false answer is regarded as fraudulent, and would undoubtedly render the contract void.
Goods insured in a certain building are not protected if moved elsewhere, even if the risk is not increased, unless notice of their removal is given to the office and they accept the new locality. An alteration in the structure of a building or in the nature of its contents may render a contract void which was made under circumstances now no longer existing. But any change within the limits of fair dealing is permissible.
A breach of the conditions is often in fact waived either expressly or by acquiescence, and it has been held that the acceptance of a premium after notice of the breach amounts to acquiescence.
As a matter of practice, policies often provide for the transfer of the insurance to other property when that originally insured is sold or transferred by the assured to some other person; but this is only a concession on the part of the office, who would otherwise cease to be liable on the sale or transfer of the protected goods.
A fire insurance is always entered into for a fixed period, usually for a year or less, at the end of which time the policy comes to an end. As a matter of practice, a fresh policy is never issued, but the insurance is renewed by payment and acceptance of a further premium. If, however, the office chose to refuse to accept the premium, they would be acting within their rights, and the term having come to an end the policy would lapse.