PROPERTY & PECUNIARY

INSURANCE

WEEK7
PROPERTY & PECUNIARY
INSURANCE

ZULFIQAR ALI KHAN

THE STANDARD FIRE POLICY
 SINCE 1923 MOST INSURERS OTHER THAN
LLOYD’S UNDERWRITERS HAVE EMPLOYED
A STANDARD FORM OF POLICY.
 THERE IS NO REFERNCE TO INDEMNITY IN THE
WORDING; THE UNDERTAKING IS THAT ON THE
HAPPENING OF CERTAIN SPECIFIED EVENTS THE
INSURER WILL:
a. PAY TO THE INSURED THE VALUE OF THE
PROPERTY AT THE TIME OF THE HAPPENING OF ITS
DESTRUCTION OR THE AMOUNT OF SUCH DAMAGE,
OR
b. AT ITS OPTION WILL REINSTATE OR REPALCE SUCH
PROPERTY OR ANY PART THEREOF.

ZULFIQAR ALI KHAN

THE STANDARD FIRE POLICY
 HERE IT IS TO BE NOTED THAT THE
INSURER’S LIABILITY IS DECLARED TO BE
LIMITED IN RESPECT OF EACH ITEM TO THE
SUM INSURED THEREBY &, IN ALL, TO THE
TOTAL SUM INSURED OR ANY SUMS
SUBSTITUTED THEREFORE BY
ENDORSEMENT. THE LATTER PROVISION IS
INSERTED TO PERMIT AN ALTERATION OF
AMOUNTS INSURED WITHOUT THE
NECESSITY OF ENTERING INTO A NEW
CONTRACT.

ZULFIQAR ALI KHAN

THE PERILS COVERED
 THE PERILS COVERED ARE:
a. FIRE, OTHER THAN THAT CAUSED BY CERTAIN
PERILS AS DETAILED BELOW,
b. LIGHTNING, &
c. EXPLOSION:
i. OF BOILERS USED FOR DOMESTIC
PURPOSES ONLY, OR
ii. IN A BUILDING NOT BEING PART OF ANY GAS
WORKS, OF GAS USED FOR DOMESTIC
PURPOSES OR USED FOR LIGHTING OR
HEATING THE BUILDING.

ZULFIQAR ALI KHAN

THE PERILS COVERED
 UNDER b & c IT IS UNNECESSARY FOR FIRE
DAMAGE TO BE CAUSED. THE EXPLOSION COVER
IS LIMITED & DOES NOT INCLUDE EXPLOSION OF
GAS USED IN ANY TRADE PROCESS.
 ‘DOMESTIC PURPOSES’ IS NOT EASY NORMALLY
BUT IMPLIES THAT THE USE OF THE BOILER OR
GAS IS FOR A PURPOSE SIMILAR TO THAT MET
WITH IN AN ORDINARY HOUSE.
 IT HAS BEEN HELD THAT A HOT WATER BOILER USED
IN A HOSPITAL FOR PROVIDING HOT WATER FOR
KITCHEN USE & WARMING THE WARDS BY MEANS OF
RADIATORS IS A BOILER USED FOR DOMESTIC
PURPOSES.

ZULFIQAR ALI KHAN

THE PERILS COVERED
 FIRE IMPLIES THE ACTUAL IGNITION OF
SOMETHING WHICH OUGHT NOT TO BE ON FIRE, &
IT MUST BE ACCIDENTAL OR FORTUITOUS SO FAR
AS THE INSURED IS CONCERNED. THE FIRE NEED
NOT ORIGINATE IN THE INSURED PREMISES, SO
THAT IF A FIRE OCCURS IN NEARBY PREMISES &
AS A RESULT DAMAGE BY SCORCHING (DRY UP
WITH HEAT OR BURNT AT SURFACE) OR
BLISTERING (THIN BUBBLE ON THE SKIN) IS
CAUSED TO THE INSURED PROPETY, THAT WOULD
BE RECOVERABLE UNDER THE POLICY. OTHER
CIRCUMSTANCES IN WHICH THE LOSS IS SO
CLOSELY CONNECTED WITH THE FIRE THAT IT IS
REGARDED AS COVERED BY THE POLICY
INCLUDE:
ZULFIQAR ALI KHAN
THE PERILS COVERED
 PROPERTY DAMAGED BY WATER OR OTHER
EXTINGUISHING AGENTS USED FOR EXTINGUISHMENT
PURPOSES;
 DAMAGE DONE BY THE FIRE BIRGADE IN THE
EXECUTION OF ITS DUTIES, FOR EXAMPLE, IN GAINING
ACCESS TO A FIRE;
 PROPERTY BLOWN UP TO PREVENT A FIRE
SPREADING;
 DAMAGE OCCASIONED BY FALLING WALLS OR PARTS
OF A BUILDING IN WHICH A FIRE TAKES PLACE;
 LOSS OF OR DAMAGE TO PROPERTY REMOVED FROM
A BURNING CAUSED BY RAIN, THEFT, OR DAAMAGE
DURING REMOVAL, PROVIDED THAT THE REMOVAL
WAS JUSTIFIED & THAT THE INSURED TAKES STEPS AS
SOON AS REASONABLY POSSIBLE TO PROTECT THE
REMOVED PROPERTY FROM FURTHER DAMAGE.

ZULFIQAR ALI KHAN

THE EXCEPTED PERILS
 IN THE STANDARD FORM THE EXCEPTED
PERILS ARE INCORPORATED IN THE
OPERATIVE CLAUSE OF THE POLICY.
 PURPOSE OF THIS IS TO PLACE THE BURDEN OF
PROOF OF LOSS UPON THE INSURED, WHO IS
REQUIRED TO PROVE NOT ONLY THAT THE
PROPERTY HAS SUSTAINED DAMAGE BY FIRE BUT
THAT SUCH DAMAGE IS ‘NOT OCCASIONED BY OR
HAPPENING THROUGH’ THE STATED EXCEPTED
PERILS. THE EXCEPTED CAUSES OF FIRE ARE AS
FOLLOWS:

ZULFIQAR ALI KHAN

THE EXCEPTED PERILS
a. ‘ITS OWN SPONTANEOUS FERMENTATION
(EXCITED) OR HEATING OR ITS UNDERGOING ANY
PROCESS INVOLVING THE APPLICATION OF HEAT’.
THE EFFECT OF THE WORD ‘ITS’ IS TO WAIVE THE
RULE OF PROXIMATE CAUSE. IF THE WORD WERE
NOT SO USED, THE INSURERS WOULD NOT BE
LIABLE FOR ANY FIRE CAUSED BY OR RESULTING
FROM THE USE OF ANY PROCESS INVOLVING THE
APPLICATION OF HEAT TWO EXAMPLES WILL
ILLUSTRATE THE PRACTICAL EFFECT:
a. A HAYSTACK CATCHES FIRE BY ITS OWN
SPONTANEOUS HEATING. THE HAYSTACK
ITSELF IS NOT COVERED, BUT IF THE FIRE
SPREADS & DAMAGES NEARBY PROPERTY,
SUCH FURTHER DAMAGE IS WITHIN THE POLCIY
TERMS.

ZULFIQAR ALI KHAN

THE EXCEPTED PERILS
a. GOODS UNDERGOING A HEATING PROCESS
IGNITE & THE FIRE SPREADS. THE ONLY
PART OFF THE LOSS NOT COVERED IS THAT
IN RESPECT OF THE GOODS BEING HEATED.
a. ‘EARTHQUAKE & SUBTERRANEAN
(UNDERGROUND) FIRE’. THE RISK FROM THESE
CAUSES DEPENDS UPON THE LOCALITY OF THE
PREMISES. SUBTERRANEAN FIRE REFERS TO A
FIRE OF VOLCANIC ORIGIN, BUT WOULD
INCLUDE A FIRE IN A COAL MINE OR AN OIL
WELL.
b. ‘RIOT & CIVIL COMMOTION’. IN FIELD V.
METROPOLITAN POLICE RECEIVER (1907) IT WAS
HELD THAT THE FOLLOWING FIVE ELEMENTS
MUST BE PRESENT TO CONSTITUE A RIOT:

ZULFIQAR ALI KHAN

THE EXCEPTED PERILS
i. THERE MUST BE THREE OR MORE PERSONS
ASSEMBLED;
ii. THEY MSUT HAVE A COMMON PURPOSE;
iii. THERE MUST BE EXECUTION OR INCEPTION OF
THE COMMON PURPOSE;
iv. THERE MUST BE AN INTENT TO HELP ONE
ANOTHER, BY FORCE IF NECESSARY, AGAINST
ANY PERSON WHO MAY OPPOSE THEM IN THE
EXECUTION OF THE COMMON PURPOSE; &
v. THERE MUST BE FORCE OR VIOLENCE
DISPLAYED IN SUCH A MANNER AS TO ALARM
AT LEAST ONE PERSON OF REASONABLE
FIRMNESS & COURAGE.

ZULFIQAR ALI KHAN

THE EXCEPTED PERILS
FOR THE PURPOSE OF OBTAINING A RECOVERY UNDER
THE RIOT (DAMAGES) ACT 1886, NOT ONLY MUST THE
ABOVE FIVE ELEMENTS BE PRESENT BUT THE
ASSEMBLY MUST ALSO BE TUMULTUOUS (VIOLENT &
CONFUSED EMOTIONS) (J. W. DWYER LTD. V.
RECEIVER OF METROPOLITAN POLICE DISTRICT
(1967)).
CIVIL COMMOTION IS USED TO INDICATE A STATE
BETWEEN A RIOT & A CIVIL WAR. IT HAS BEEN
DEFINED AS AN INSURRECTION (A RISING) OF THE
PEOPLE FRO GENERAL PURPOSES, NOT AMOUNTING
TO A REBELLION. THE ELEMENT OF TUMULT OR
TURBULENCE (VIOLENTLY DISTURBED) IS ESSENTIAL.
a. ‘WAR, CIVIL WAR, & RELATED PERILS’.

ZULFIQAR ALI KHAN

POLICY CONDITIONS
 CONDITION 1 – MISREPRESENTATION. THIS IS A MODIFIED
STATEMENT OF THE IMPLIED CONDITION OR PRINCIPLE OF
THE ‘UTMOST GOOD FAITH’. NOTE THAT THE POLICY IS NOT
AUTOMATICALLY AVOIDED BUT IS VOIDABLE AT THE
OPTION OF THE INSURERS.
 CONDITION 2 – ALTERATION. THE POLICY IS AVOIDED ‘WITH
RESPECT TO ANY ITEM THEREOF’ … UNLESS THE
ALTERATION HAS BEEN PREVIOUSLY AGREED BY THE
INSURER.
 CONDITION 4 – CLAIMS. THIS SETS OUT IN DETAIL THE
ACTION TO BE TAKEN BY THE INSURED. IN THE LAST
SENTENCE IT IS MADE A CONDITION PRECEDENT TO
LIABILITY. THE STATUTORY DECLARATION WHICH THE
CONDITION EMPOWERS THE INSURERS TO DEMAND IS
SELDOM CALLED FOR BUT WOULD BE OF VALUE TO THE
INSURERS IF THEY BELIEVED A CLAIM TO BE FRAUDULENT
BUT HAD INSUFFICIENT EVIDENCE.
ZULFIQAR ALI KHAN
POLICY CONDITIONS
 CONDITION 5 – FRAUD. THIS CONDITON IS
CONCERNED ONLY WITH CLAIMS. IF THE INSURED IS
REQUIRED TO MAKE A STATUTORY DECLARATION IN
ACCORDEANCE WITH CONDITION 4 & THIS LATER
PROVES TO BE FALSE HE WILL BE GUILTY OF PRE
JURY & LIABLE TO CRIMINAL PROSECUTION.
 CONDITION 6 – REINSTATEMENT. THIS SETS OUT THE
RULES WHICH APPLY IF THE INSURERS EXERCISE
THEIR OPTION TO REINSTATE THE DAMAGE.
 CONDITION 7 – INSURER’S RIGHTS AFTER A FIRE. BY
THIS CONDITION, COMMONLY KNOWN AS THE ‘RIGHT
OF ENTRY’ CONDITION, THE INSURERS MAY:
a. ENTER INTO OR KEEP POSSESSION OF THE
BUILDING OR PREMISES WHERE THE
DESTRUCTION OR DAMAGE HAS HAPPENED, &

ZULFIQAR ALI KHAN

POLICY CONDITIONS
a. TAKE POSSESSION OF & DEAL WITH GOODS
OR PROPERTY IN ANY REASONABLE
MANNER.
 CONDITION 10 – WARRANTIES. THE CONDITION
PROVIDES THAT BREACH OF A WARRANTY
PERMITS THE INSURER TO AVOID THE POLICY
IRRESPECTIVE OF ANY INCREASE IN RISK.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
 CONDITION 3 OF THE STANDARD FIRE POLICY LISTS
CERTAIN PERILS & FORMS OF PROPERTY WHICH ARE
EXCLUDED:
 EXPLOSION:
 THIS POLICY DOES NOT COVER DESTRUCTION OR
DAMAGE BY EXPLOSION (WHETHER THE EXPLOSION
BE OCCASIONED BY FIRE OR OTHERWISE) EXCEPT AS
STATED ON THE FACE OF THIS POLICY.
EXPLOSION MUST BE CONSIDERED UNDER THREE
HEADINGS:
III. CONCUSSION (DISTURB OR VIOLENT SHOCK RESULT
OF TWO BODIES’ CONTACT) DAMAGE. LOSS CAUSED
BY THE FORCE OF THE EXPLOSION, e.g., BROKEN
WINDOWS, IS NOT COVERED.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
I. EXPLOSION FOLLOWED BY FIRE. THE PROXIMATE CAUSE OF
THE FIRE IS THE EXPLOSION & THE WHOLE OF THE LOSS
WOULD BE EXCLUDED. HOWEVER, WHILE THE INSURERS ARE
NOT LIABLE FOR THE EXPLOSION DAMAGE, THEY EXPRESSLY
ADMIT LIABILITY FOR LOSS BY FIRE FOR, ON THE FACE OF THE
POLICY, THEY AGREE TO COVER FIRE DAMAGE ‘WHETHER
RESULTING FROM EXPLOSION OR OTHERWISE’. THUS, THE
INSURERS AGREE TO WAIVE THE RULE OF PROXIMATE CAUSE.
II. FIRE CAUSING AN EXPLOSION. THE INSURERS ARE LIABLE FOR
THE FIRE DAMAGE WHICH OCCURS BOTH BEFORE & AFTER THE
EXPLOSION, BUT ARE NOT LIABLE FOR THE LOSS BY
EXPLOSION. OBVIOUSLY, SUCH DIFFERENTIATION IS VERY
DIFFICULT IN PRACTICE, & OFTEN THE SETTLEMENT OF THE
LOSS MUST BE A COMPROMISE. EXPLOSION OF BOILERS USED
FOR DOMESTIC PURPOSES ONLY & OF AS IN CERTAIN
CIRCUMSTANCES IS COVERED BY THE STANDARD POLICY, &
THESE NOTES THEREFORE APPLY ONLY TO ALL OTHER
EXPLOSION RISKS.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
 RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE:
(DISCUSSED BEFORE)
 EXCLUDED PROPERTY:
 THIS POLICY DOES NOT COVER GOODS HELD IN TRUST
OR ON COMMISSION, MONEY, SECURIITIES, STAMPS,
DOCUMENTS, MANUSCRIPTS, BUSINESS BOOKS,
COMPUTER SYSTEMS RECORDS, PATTERNS, MODELS,
MOULDS, PLANS, DESIGNS, EXPLOSIVES, UNLESS
SPECIALLY MENTIONED AS INSURED BY THIS POLICY.
 THE REASONS FOR THE EXCLUSIONS ARE:

3. THAT THERE MIGHT BE DIFFICULTY IN ASSESSING THE

VALUE OF THE EXCLUDED PROPERTY IN THE EVENT
OF A CLAIM &
4. TO ENSURE THAT THE SUM INSURED IS ADEQUATELY
ADJUSTED IF COVER IS WANTED FOR SOME OR ALL OF
THE TYPES OF PROPERTY EXCLUDED BY THE
CONDITION.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
 SPECIAL CONDITIONS ARE THEREFORE IMPOSED, & SOME
TIMES THERE ARE SPECIAL LIMITS OF LIABILITY IF COVER
IS GRANTED. EXCLUDED PROPERTY OTHER THAN
EXPLOSIVES IS USUALLY COVERED BY THE USE OF THE
‘ALL OTHER CONTENTS’ CLAUSE WHICH IS COMMONLY
INCORPORATED IN THE DESCRIPTION OF ‘MACHINERY &
PLANT’ OF POLCIY SCHEDULES. EXPLOSIVES, IF
ISNURABLE AT ALL, CAN BE COVERED ONLY BY SPECIAL
ARRANGEMENT & UNDER STRICT SAFEGUARDS.
 MARINE CLAUSE:
 DESTRUCTION OF, OR DAMAGE TO, PROPERTY WHICH AT
THE TIME OF THE HAPPENING OF SUCH DESTRUCTION OR
DAMAGE IS INSURED BY OR WOULD BUT FOR THE
EXISTENCE OF THIS POLICY BE INSURED BY ANY MARINE
POLICY OR POLICIES, EXCEPT IN RESPECT OF ANY
EXCESS BEYOND THE AMOUNT WHICH WOULD HAVE BEEN
PAYABLE UNDER THE MARINE POLICY OR POLICIES HAD
THIS INSURANCE NOT BEEN EFFECTED.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
 THE EFFECT OF THIS CLAUSE IS TO EXCLUDE
LIABILITY FOR DAMAGE TO PROPERTY THAT IS
ALSO COVERED BY A MARINE POLICY. THE MAIN
REASON FOR THE EXCLUSION IS THE DIFFICULTY
OF ARRANGING SATISFACTORY CONTRIBUTION
BETWEEN FIRE & MARINE POLICIES SINCE THE
RANGE, EXTENT & CONDITIONS OF COVER MAY
VARY CONSIDERABLY. FURTHER, THERE IS THE
POSSIBILITY THAT BEFORE THE FIRE THE GOODS
MAY HAVE SUSTAINED UNDISCOVERED &
UNDEFINED DAMAGE BY SEA WATER, PILFERAGE
(SMALL THEFT) OR OTHER MARINE PERIL, SO
THAT IF THE FIRE INSURERS WERE TO PAY FOR
THE LOSS THE MARINE UNDERWRITERS WOULD
BE RELIEVED OF A LEGITIMATE LIABILITY.

ZULFIQAR ALI KHAN

THE EXCLUSION CONDITION
 NORTHERN IRELAND OVERRIDING EXCLUSION
CLAUSE (DISCUSSED BEFORE).

ZULFIQAR ALI KHAN

THE PURCHASER’S INTEREST CLAUSE

 IT IS KNOWN VARIOUSLY AS THE PURCHASER’S INTEREST

CLAUSE OR THE TRANSFER OF INTEREST CLAUSE:
 IF AT THE TIME OF DESTRUCTION OR DAMAGE TO ANY
BUILDING HEREBY INSURED THE INSURED SHALL HAVE
CONTRACTED TO SELL HIS INTEREST IN SUCH
BUILDING & THE PURCHASE SHALL NOT HAVE BEEN
BUT SHALL BE THEREAFTER COMPLETED, THE
PURCHASER ON THE COMPLETION OF THE PURCHASE,
IF & SO FAR AS THE PROPERTY IS NOT OTHERWISE
INSURED BY OR ON BEHALF OF THE PURCHASER
AGAINST SUCH DESTRUCTION OR DAMAGE, SHALL BE
ENTITLED TO THE BENEFIT OF THIS POLCIY SO FAR AS
IT RELATES TO SUCH DESTRUCTION OR DAMAGE
WITHOUT PREJUDICE TO THE RIGHTS & LIABILITIES OF
THE INSURED OR THE INSURER UNDER THIS POLICY
UP TO THE DATE OF COMPLETION.

ZULFIQAR ALI KHAN

THE PURCHASER’S INTEREST CLAUSE

 IN THE CASE OF A CONTRACT FOR THE SALE OF

PROPERTY, WHICH IS INSURED BY THE VENDOR,
IF A FIRE TAKES PLACE BETWEEN THE DATE OF
THE CONTRACT & COMPLETION, THE PURCHASER
IS ENTITLED TO THE BENEFIT OF THE PROCEEDS
OF THE POLICY. THIS CLAUSE ONLY APPLIES TO
BUILDINGS.

ZULFIQAR ALI KHAN

LLOYD’S FIRE POLICY
 LLOYD’S FIRE POLICY IS A SHORTER & PERHAPS
SIMPLER FORM THAN THE STANDARD POLICY. IT
DECLARES THAT THE UNDERWRITERS WILL MAKE GOOD
TO THE ISNURED, OR TO HIS EXECUTORS,
ADMINISTRATORS, & ASSIGNS, LOSS OR DAMAGE AS
COVERED BY THE POLICY & SUSTAINED BY THE
SUBJECT-MATTER OF INSURANCE. PERILS INSURED
AGAINST ARE:
 FIRE &/OR LIGHTNING;

 FIRE CONSEQUENT UPON EXPLOSION WHEREVER THE

EXPLOSION OCCURS;
 EXPLOSION CONSEQUENT ON FIRE ON THE PREMISES
INSURED;
 EXPLOSION OF DOMESTIC BOILERS OR OF GAS USED FOR
DOMESTIC PURPOSES OR FOR LIGHTING OR HEATING THE
BUILDING.

ZULFIQAR ALI KHAN

LLOYD’S FIRE POLICY
 IN ADDITION TO APPLIED CONDITIONS FOLLOWING
CONDITIONS ARE APPLICABLE:
 EXCLUSIONS: RIOT & CIVIL COMMOTION, KINDRED
(RELATED) PERILS, RADIOACTIVE CONTAMINATION,
EXPLOSIVE NUCLEAR ASSEMBLIES, & WAR RISKS AS
DETAILED IN THE STANDARD FORM.
 FRAUD: THE COVER IS STATED TO BE VOID IF THE
INSURED KNOWINGLY MAKES ANY FALSE OR
FRAUDULENT CLAIM.
 THE ELECTRICAL CLAUSE: THIS RELIEVES THE
UNDERWRITERS OF LIABILITY FOR DESTRUCTION OR
DAMAGE TO ELECTRICAL PLANT OR CONDUCTORS
CAUSED BY ABNORMAL CURRENTS OR SELF-HEATING.
DAMAGE CAUSED BY THE FIRE SPREADING TO OTHER
INSURED PROPERTY IS COVERED.

ZULFIQAR ALI KHAN

FIRE POLICIES ON PRIVATE DWELLINGS

 STANDARD FIRE POLICY IS NOT USED FOR THE

INSURANCE OF PRIVATE DWELLING HOUSES. SCOPE
& WORDING OF FIRE POLICIES ON PRIVATE HOUSES
VARIES; NOT ONLY ARE ADDITIONAL PERILS
INCLUDED, BUT ALSO FOR CONTENTS THE WORDING
IS FRAMED TO GIVE COVER UP TO 15% OF THE SUM
INSURED BEYOND THE INSURED’S OWN DWELLING, &
PROPERTY BELONGING TO DOMESTIC SERVANTS &
MEMBERS OF THE INSURED’S OWN FAMILY
PERMANENTLY RESIDING WITH HIM IS INLCUDED. IN
ADDITION, POLICIES ON THE BUILDINGS OF PRIVATE
HOUSES INCLUDE THE BUILDINGS OF DETACHED
DOMESTIC OUTBUILDINGS & WALLS, GATES & FENCES
IN ONE AMOUNT WITH THE HOUSE, WITHOUT
AVERAGE.

ZULFIQAR ALI KHAN

FIRE POLICIES ON PRIVATE DWELLINGS

 THE PERILS COVERED BY A TYPICLA POLICY OF THIS KIND

WOULD INCLUDE:
2. FIRE, INCLUDING FIRE DIRECTLY CAUSED BY:
i. RIOT OR CIVIL COMMOTION (BUT EXCLUDING ALL
SUCH DESTRUCTION OR DAMAGE CAUSED IN
IRELAND & NORTHERN IRELAND);
ii. EXPLOSION;
iii. EARTHQUAKE;
iv. AIRCRAFT & OTHER AERIAL DEVICES OR ARTICLES
DROPPED THEREFROM;
v. SPONTANEOUS FERMENTATION, HEATING OR
COMBUSTION;
3. LIGHTNING;
4. EXPLOSION;
5. EARTHQUAKE SHOCK;
6. SUBTERRANEAN FIRE.

ZULFIQAR ALI KHAN

FIRE POLICIES ON PRIVATE
DWELLINGS
 IT IS NOW RARE FOR THE FOR
BUILDINGS OR CONTENTS OF A
PRIVATE DWELLING TO BE COVERED
BY A POLICY OF THIS NATURE
BECAUSE INSURERS ARE WILLING TO
GRANT POLICIES OF MUCH WIDER
SCOPE.

ZULFIQAR ALI KHAN

COLLECTIVE POLICIES
 THESE REPRESENT A METHOD OF CO-
INSURANCE WHEREBY A SUBSTANTIAL
INSURANCE IS SHARED BETWEEN A NUMBER OF
DIFFERENT INSURANCE COMPANIES.
 A SINGLE POLICY IS PREPARED & THE DIFFERENT
COMPANIES (DESCRIBED IN THE DOCUMENT AS CO-
INSURERS) ARE SHOWN IN RELATION TO THE
PERCENTAGES UNDERWRITTEN BY EACH.
 LIABILITY IS SEVERAL & NOT JOINT ie EACH
INSURER IS RESPONSIBLE ONLY FOR ITS AGREED
PERCENTAGE OF ANY LOSS WHICH MAY BE
SETTLED UNDER THE INSURANCE.
 A SIGNING SLIP IS SENT BY EACH INSURER TO
THE ‘LEADING OFFICE’, THAT BEING THE INSURER
WITH THE LARGEST PERCENTAGE.

ZULFIQAR ALI KHAN

COLLECTIVE POLICIES
 LEADING OFFICE PREPARES POLICY ON BEHALF
OF ALL THE INSURERS. IN ADDITION TO HE
ECONOMY IN POLICY PREPARATION TWO
FURTHER ADVANTAGES ARE:
 ONLY ONE SET OF RENEWAL PAPERS IS

NEEDED, &
 EACH ENDORSEMENT IS DEALT WITH BY THE

LEADING OFFICE, WHICH PREPARES ONLY ONE

DOCUMENT FOR ALL THE INSURERS.
 LLOYD’S UNDERWRITERS NOT SUBSCRIBE
DIRECTLY TO A COLLECTIVE POLICY & IF A
PERCENTAGE OF THE INSURANCE IS PLACED AT
LLOYD’S A SEPARATE LLOYD’S POLICY WILL BE
ISSUED FOR THIS.
ZULFIQAR ALI KHAN
THE ESCALATOR CLAUSE
 AN AUTOMATIC INCREASE IN THE SUM INSURED MAY
IN CERTAIN CIRCUMSTANCES, & SUBJECT OT AN
ADDITIONAL PREMIUM, BE AVAILABLE TO COUNTER
TO SOME EXTENT THE EFFECT OF INFLATION. AN
ANNUAL RATE OF INCREASE OF UP TO 20% IS
CHOSEN BY INSURED.
 THE CLAUSE STATES THAT DURING THE PERIOD
OF INSURANCE THE SUM INSURED SHALL BE
INCREASED BY THAT PROPORTION OF THE
SPECIFIED PERCENTAGE WHICH THE NUMBER OF
DAYS SINCE THE COMMENCEMENT OF SUCH
PERIOD SHALL BEAR TO THE WHOLE OF SUCH
PERIOD. THUS, SUM INSURED INCREASES
PROGRESSIVLEY DURING THE PERIOD OF
INSURANCE.

ZULFIQAR ALI KHAN

THE ESCALATOR CLAUSE
 AVAILABLE TO BUILDING & CONTENTS
INSURANCES, BUT IT IS NOT AVAILABLE FOR
THE INSRUANCE OF STOCK, AS THIS IS
CATERED FOR BY A DECLARATION POLICY.

ZULFIQAR ALI KHAN