Principle of Indemnity in Fire Insurance: A Critical Analysis

Open Access

Year : 2019 | Volume : | Issue : 1 | Page : 32-40
By

    Devina Srivastava

  1. Divya Jakhar

  2. Rushil Desai

  3. Aswathi Vakkayil

  1. Scholar, Symbiosis Law School, Pune, Symbiosis International (Deemed) University, Pune, Maharashtra, India
  2. , Symbiosis Law School, Pune, Symbiosis International (Deemed) University, Pune, Maharashtra, India
  3. , Symbiosis Law School, Pune, Symbiosis International (Deemed) University, Pune, Maharashtra, India
  4. , Symbiosis Law School, Pune, Symbiosis International (Deemed) University, Pune, Maharashtra, India

Abstract

Fire insurance means insurance against any loss caused by fire. Fire insurance has no direct relation to saving but is always a question of indemnity for property. The principle of indemnity, which arises under common law, ensures that the insured does not recover more than actual loss suffered by him/her. The principle of indemnity gives rise to the principles of subrogation and contribution which ensure that an insured does not gain under the insurance contract. The application of these principles to a contract of fire insurance raises imminent questions about concepts such as policy coverage or depreciation, status of salvage value, underinsurance and limited interest. A Standard Fire and Special Perils Policy must be discussed in the light of these nuances. Thus, the purpose of this paper is to provide a clear picture as to the nature and purpose of fire insurance by studying the application of principle of indemnity and incidentally, the principles of subrogation and contribution to a contract of fire insurance. The discussion leads to results which help in understanding the settled position taken by courts regarding the aspects of fire insurance contract. Further, based upon the discussion, ways and methods have been recommended to resolve the studied issues and make the fire insurance regime in India more efficient and efficacious. The paper has value for all stakeholders, especially insurance companies and its customers as its ultimate aim is to help in eliminating uncertainty in fire insurance contract which would help both, insured and insurer, in better implementation of a fire insurance contract.

Keywords: Contribution; Fire Insurance; Indemnity; Subrogation

[This article belongs to Journal of Banking and Insurance Law(jbil)]

How to cite this article: Devina Srivastava, Divya Jakhar, Rushil Desai, Aswathi Vakkayil Principle of Indemnity in Fire Insurance: A Critical Analysis jbil 2019; 2:32-40
How to cite this URL: Devina Srivastava, Divya Jakhar, Rushil Desai, Aswathi Vakkayil Principle of Indemnity in Fire Insurance: A Critical Analysis jbil 2019 {cited 2019 Jul 17};2:32-40. Available from: https://journals.stmjournals.com/jbil/article=2019/view=98787

Full Text PDF Download

References

  1. M. Danzon, Tort Reform and the Role of Government in Private Insurance Markets, 13(3) The Journal of Legal Studies 517, 549 (1984).
  2. Section 2(6A), The Insurance Act 1938.
  3. Lucena Craufurd, 127 Eng. Rep. 630, 642 (1805) (Lawrence, J.J.)
  4. F. Gephart, Fire Insurance Rates and State Regulation, 28(3) The Quarterly Journal of Economics 447, 465 (1914).
  5. Insurance: Remedy of Insured upon Wrongful Cancellation by the Insurer, 9(8) Michigan Law Review 730, 731 (1911).
  6. Arif Khan, Theory and Practice of Insurance 20 (1999).
  7. Insurance: Subrogation: Accident Insurance, 7(2) Michigan Law Review 177, 179 (1908).
  8. A. S, Insurance: Concept of Indemnity as Limiting Recovery on Fire Insurance Policies, 32(4_ Michigan Law Review 529, 538 (1934).
  9. McGee, The Modern Law of Insurance 4 (2006).
  10. Avtar Singh, Law of Insurance 8 (3rd 2017).
  11. (1854) 15 CB 365, 387.
  12. [1883] 11 QBD 380, 386 (CA).
  13. James Jr., Indemnity, Subrogation, and Contribution and the Efficient Distribution of Accident Losses. 21 NACCA LJ 360 (1958).
  14. [1962] 2 QB 330, 339.
  15. North British London, Liverpool and Globe, (1877) 5 Ch D 569
  16. Andrews Patriotic Assurance of Ireland, (1886) LR 1r 355.
  17. American Surety Co. Irrighton, (1910) 37 TLR 91.
  18. Jenkines Deane, (1933) 103 LJKB 250
  19. V. Srinivasan, Principles of Insurance Law 474 (8th ed. 2009).
  20. V.S. Sarma, Modern Law of Insurance in India 175 (5th ed. 2013).
  21. The Alexian Hope, (1988) FTLR 270.
  22. (1807) 1 Camp 123.
  23. Re Earl Egmount’s Trust, Lefroy Earl Egoinot, [1908] 1 Ch 821, 826.
  24. (1910) FTGH 98.
  25. K. Exports (P) Ltd. v. New India Assurance Co. Ltd., III (2004) CPJ 74 NC.
  26. Balfour Barty King, [1957] 2 WLR 84.
  27. State of U.P. Deputy Labour Commissioner, (2011) 2 SCC Online All 24.
  28. Rohini Nandan Goswami Ocean Accident and Guarantee Co., AIR 1960 Cal 696.
  29. United India Insurance Co. Ltd. M/S Kiran Combers & Spinners, (2006) 5 SCC 128.
  30. Supra at 12 at 177.
  31. L. Vaughan & T. Vaughan, Fundamentals of Risk and Insurance 68 (2007).
  32. (1886) 34 Ch D 234.
  33. ILR 14 All 273.
  34. Supra at 12 at 178.
  35. (1879) 26 GR 341 (UC).
  36. Rice Bazendale, (1861) 7 H&n 96.
  37. Bousfield Barnes, (1815) 4 Camp 228.
  38. W. Stempel, Law of Insurance Contract Disputes 98 (1955).
  39. Maurice Goldsborough Mort & Co. Ltd., [1939] AC 452 (PC).
  40. Lowry, P.J. Rawlings & R. Merkin, Insurance Law: Doctrines and Principles 182 (2011).
  41. Vance Forster, 26 GR 341 (UC).
  42. H. Reader, Modern Day Actual Cash Value: Is It What the Insurers Intend? Tort & Insurance Law Journal 282, 294 (1987).
  43. 689 So. 2d 290, 291 (Fla. 3d DCA 1997).
  44. Black’s Law Dictionary 506, 1690 (9th ed. 2009).
  45. Jonathon C. Held & Heidi Hudson Raschke, Defining Indemnity in the Context of Actual Cash Value Calculations 54 (February 2018).
  46. Valuation and Measure of Recovery under Fire Insurance Policies, 49(6) Columbia Law Review 818-836 (1949).
  47. R. Collins, P.W. Rasmussen, S. Beutel & M.M. Doty, The Problem of Underinsurance and How Rising Deductibles will Make it Worse, Issue Brief. New York, NY: The Commonwealth Fund 2297, 2301 (2015).
  48. Dickinson & L. Roberts, Underinsurance on a Portfolio of Property Exposures in an Inflationary Environment, 6(21) The Geneva Papers on Risk and Insurance 3, 19 (1981).
  49. (2009) 7 SCC 777: 2009 3 CPR 272.
  50. (1874) LR 9 CH App 483.
  51. Monroe Southern Mutual Ins. Co., 63 Ga. 669 (1879)
  52. Harnett & J.V. Thornton, Insurable Interest in Property, Ins. LJ 420 (1949).
  53. Fire Insurance Recovery on a Limited Interest in Property, 50(7) Columbia Law Review 960, 970 (November 1950).
  54. Ibid.
  55. 1925 AC 619 (HL).
  56. Waters Monarch Life Assurance Co, 1856 5 E & B 870.
  57. S. Quinn, 74 Subrogation, Restitution, and Indemnity, Texas Law Review 1361 (1960).
  58. Oberai Forwarding Agency New India Assurance Co. Ltd, (2000) 2 SCC 407
  59. (2017) 2 SCC Online Del 87.
  60. Cousins and Co. Ltd. v. D & C Carriers Ltd., (1971) 2 QB 230.
  61. Mark Rowlands Ltd. Berni Inns Ltd., 1985 QB 211.
  62. L Lucas Ltd. Export Credit Guarantee Deptt, (1974) 1 WLR 909.
  63. Phoenix Assurance Co. Spooner, (1905) 2 KB 753 (CA).
  64. Barry, Applying the Contribution Principle, 36(1-2) Metaphilosophy 210, 227 (2005).
  65. [2009] VSCA 124.
  66. HIH Claims Support Ltd v. Insurance Australia Ltd, [2011] HCA 31.
  67. W. Greg, Fire Insurance: Is ‘Double’ Payment Necessarily Overpayment?27(6) Michigan Law Review 683, 686 (1929).
  68. Insurance: Indemnity Policy: Liability for Premiums, 8(6) Michigan Law Review 508, 509 (1910).

Regular Issue Open Access Article
Volume 2
Issue 1
Received March 9, 2023
Accepted March 29, 2019
Published July 17, 2019