The standard fire policy

The fire policy is one one of the key policies in the protection of assets. Fire may be defined as a chemical reaction which is accompanied by emission of heat and light and generally smoke, the combination of which is usually called smoke, usually a chemical reaction occurs involving change in the material under consideration and the change is not generally reversible. It is possible for the fire policy to be extended to include other perils such as storm, tempest, floods, strikes, escape of water, and earthquakes. Some of these have the potential for destruction with losses running to millions of shillings.

The Standard Fire Policy

The study of fire (material damage) policy, its wordings, conditions is comparatively easy because since 1923, there has been in general use amongst insurers a standard policy form. This for is employed for all contracts of fire insurance except those those in respect to building, rent and contents of private dwellings

The wording of policy has been having since been revised in order to simplify the reading and understanding of the conditions. However, despite the varying wordings and formats, the standard fire policy covers the same perils. These perils are;

• Fire
• Lightning
• Domestic explosions

Fire

To constitute a fire within the meaning of a fire insurance policy, three requirements must be complied with,

• There must be actual ignition
• There must be something on fire which ought not be on fire
• The fire must be fortuitous in its origin as far as the insured is concerned.

The fire need not to originate in the insured premises, so that if a fire occurs, in nearly premises and as a result damage by scorching or blistering is caused to the insured property that would be recoverable from the insurers.

The policy shall generally cover loss or damage done by:

• Escape of fire beyond its confines and arson
• Water or other extinguishing agents such as foam used for extinguishment.
• Blowing up of properties to spread fire from spreading
• Fire brigade while putting off the fire and trying to gain access to the fire.
• Falling walls or parts of building in which a fire takes place.
• Removal from burning building caused by rain or theft or damage during removal provided that the removal was justified and that the insured took reasonable steps to protect the removed property for further damage or loss

Excepted Perils in Fire,

In the standard fire policy, the excepted perils are incorporated in the operative clause of the policy wording. the purpose of this is to place the onus or 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 also that such damage was not the result of the stated excepted perils. The main exceptions are;

• Fire burning in its own proper limits and confined therein
• Any property undergoing its own spontaneous fermentation or heating or its undergoing any process involving the application of heat., the effect of the word “its” is to wave the rule of proximate cause. If the word were not used, the insurers would not be liable for any fire caused or resulting from the use of any process involving the application of heat.
• Burning of property by order of public authority
• Loss or damage occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition of any lawful constituted authority.
• Loss occasioned directly or indirectly by typhoon, hurricane, tornado, cyclone or other atmospheric disturbances.
• Loss of earning, delay, loss of market, or other consequential loss or damage by any king or description.
• Explosion resulting from fire, – this overrides the normal in proximate cause. Under this principle, the direct results of a fire would be covered. But the insurers do not cover this particular direct result. If insurance is required against results of explosion, then the policy must be extended.
• Loss or damage resulting total or partial cession of work or interruption or cession of any process or operation as this should be covered under a business interruption policy
• Mutiny, riot, military or popular uprising

Explosion under the policy can be considered under three heading as follows,

Concussion damage

This refers to the loss caused by force of the explosion and is not covered in a fire policy

Explosion followed by fire

 In this case the proximate cause of fire is the explosion. Hence the insurers will be liable for for the fire loss as they have expressly admitted liability under the policy but they will not be liable for the explosion damage

Fire causing an explosion

In this case, insurers are liable for the damage which occurs both before and after the explosion. By are not liable of the loss by explosion.

Earthquake or Subterranean Fire

Earthquake should be understood in its ordinary meaning as a sudden, violent shaking of the earth’s surface. Earthquake has a potential of causing massive material damage and loss of human life.  Subterranean fire on the other hand, refers to fire of volcanic origin including a fire in a coral mine or an oil well could also result in great losses. These loses are excluded in a standard fire policy.

Lightning

 Under certain conditions, very large static charges can build up in the cloud formation of such size that they can be discharged to an object which is sufficiently near; such object may be an oppositely charged cloud, or a tall tree to convey the charge to earth.

Any loss or damage caused by lightning is covered under the standard fire policy. All that the insurer is required to do is to prove that lightning cause the loss and this is easy for a loss adjuster to ascertain.

Domestic (or limited) Explosion

The basic explosion afforded in in the standard policy is quite limited. The cover provided is in respect of damage or destruction to property insured caused by the explosion of boilers or gas used for domestic purposes only. The use of a boiler matters in determining the insurance cover to be provided. When a boiler is located in a factory but is used to boil water for kitchen use, it is deemed to be a boiler for domestic purposes, meaning non trade purposes.