Fire insurance is a contract by the insurer to indemnify the owner or person having an interest in the property insured for loss or damage by fire during a specified period. A policy of fire insurance may be open or valued. By the former, the amount of liability is left to be determined according to the actual loss; by the latter, a certain valuation is fixed above which the insurer is not liable for loss. In the absence of statute or charter provision, the policy may be in any form; but to avoid looseness and ambiguity statutes in some jurisdictions have prescribed the use of a standard policy.
Insurable Interest- An interest of such a nature that the fire insured against would directly injure him, is termed insurable interest. If the person had no interest in the property upon which he obtained insurance, the only object would be a mere speculation, and the contract would not be upheld in law.
The standard form of policy contains a stipulation that the policy may be canceled at any time by the company, or at the request of the insured upon giving five days' notice of such cancellation. In case of such cancellation the unearned premiums paid shall be returned to the insured.
The contract of insurance is usually in writing, although it may be oral, unless expressly required by the statute to be written.
The contract is binding and in force as soon as the agreement is completed, although the written policy may not have been actually delivered, nor in fact ever have been issued.
After a loss it is the duty of the insured to give immediate notice to the company. Under the standard form of policy this notice must be in writing. The damaged goods must be inventoried, and a proof of loss duly sworn to must be filed within sixty days. Unless the notice is given as stated and the proof of loss filed within the specified time, no recovery can be had on the policy.
A contract of insurance is one requiring good faith between the parties, and the party seeking insurance is bound to disclose any circumstance that will affect the risk. Any fraudulent dealing is fatal to the rights of the party responsible for it. Any concealment of a material fact inquired into by the insurer will, if made intentionally by the insured, avoid the policy.