HOW A FIRE INSURANCE POLICY IS AFFECTED

HOW A FIRE INSURANCE POLICY IS AFFECTED...
The following procedure is adopted in taking a fire insurance policy.
1. Selection of Insurance Company. A person who wants to get his
property insured against fire is to select the insurance company which has a sound financial backing and enjoys a goods reputation in the early settlement of claims in the event of a loss.
Rates of Premium. The companies which give coverage to insurancenormally combine and do not compete among themselves in cutting down therates of premium. The premium rates, therefore, usually do not differ.
Proposal Form. The person who wants to get his property insuredagainst fire or wants a "package" insurance, will furnish the facts in 'Utmost GoodFaith'. There will not be any concealment of facts on the part of the insurer as wellas incurred
Survey of the property. Before insuring the property against fire, theexpert surveyors engaged by the company inspects the property and prepares anestimate of the risk involved.
Acceptance of proposal. If the company is satisfied that the person isnot insuring the property for any profit motive, it on the basis of proposal form andthe surveyor's report, insurers the property and fixes up the premium on the facevalue of the policy. When the premium is paid by the insured, the property isinsured from that date.
Rate of Premium. The rate of premium is not uniform for all kinds ofproperty The rate of the premium is determined by the type of premises wherethe goods are kept. If the building is fire proof, the rate of premium will be low. Incase, the goods kept in a building are of such a nature that they can catch fireeasily, the rate of premium will be high.
Cover Note. On receipt of the premium, the company issues a CoverNote to the insured stating that the contract has been completed and the propertyhas been insured.
Issuance of Policy. The company after the completion of all formalitiesprepares the fire policy, giving their in full detail of the property and sends it to the
insured.