1

A PROJECT

ON

HOME INSURANCE

SUBMITTED SUBMITTED TO-

BY-

JAI RAM CHOUDHARY DR . S.C. ROY

ROLL NO. 120 INSURANCE LAW
FACULTY

PROF.
OF

C HANAKYA N ATIONAL L AW U NIVERSITY , P ATNA

TABLE OF CONTENTS
T A B L E O F C O N T E N T S ............................................................................2 A C K N O W L E D G E M E N T ...............................................................................2 I EXPRESS MY GRATITUDE TO THE FACULTY
O F B Y

, INSURANCE LAW FOR THE CONCEPTS GIVEN

H I M I N T H E T H I S S U B J E C T S M A L L W H I C H O F H A S B E E N T H E

B A S E

F O R

P I E C E

W O R K

. ......................3

R E S E A R C H M E T H O D O L O G Y ..............................................................3

ACKNOWLEDGEMENT

I take this opportunity to express our humble gratitude and personal regards to Prof. Dr. S.C. Roy for inspiring me and guiding me during the course of this project work and also for his cooperation and guidance from time to time during the course of this project work on the topic: Home Insurance. The Present Project Report is attempted to explain for the benefit of the general readers. Dealing with this topic in a material form has naturally involved a great deal of compression and omission of many matters of interest. I hope that my selection of material will give a fair outline of the general picture. I
EXPRESS

MY

GRATITUDE TO THE FACULTY OF,

INSURANCE LAW

FOR THE

CONCEPTS GIVEN BY HIM IN THE SUBJECT WHICH HAS BEEN THE BASE FOR THIS SMALL PIECE OF WORK.

YOURS SINCERELY JAI RAM CHOUDHARY ROLL NO 120 4TH YEAR STUDENT CHANAKYA NATIONAL LAW UNIVERSITY , PATNA

RESEARCH METHODOLOGY
Aims and Objectives: The aim of the project is to present a detailed study of the topic Home Insurance through Case study, suggestions, different writings and articles.

Research Plan The researchers have followed both Doctrinal and Non-Doctrinal method. Sources of Data: The following secondary sources of data have been used in the project Case Study Articles/Journals/Law Reports Books Websites

Method of Writing and Mode of Citation: The method of writing followed in the course of this research project is primarily analytical. The researcher has followed Uniform method of citation throughout the course of this research project.

INTRODUCTION
Insurance can be defined as a contract between two parties, where one promises the other to indemnify or make good any financial loss suffered by the latter (the insured) in consideration for an amount received by way of premium. In other words, the party agreeing to pay for the losses is the insurer. The party whose loss makes the insurer pay

the claim is the insured. The consideration involved in the contract or what the insured pays to the insurer is called premium. The contract of insurance is referred to as the policy. An asset of any nature that is the outcome of the efforts of the owner has an economic value and any damage that occurs to the asset making it non-functional in turn leads to a loss where the owner cannot derive benefits that he was enjoying earlier. Thus, it becomes necessary to replace or repair such an asset for the continued benefit of the owner. Every individual is endowed with a potential to earn. If he is disabled he cannot enjoy the same level of earnings. In the event of his death, his family suffers loss of earnings. It is in this context insurance assumes importance. If the asset had been insured, or the individuals life and earning capabilities are insured, then any loss or damage to the asset or to him would not affect the lifestyle of the owner or his dependents to a very great extent. The owner/individual may suffer a loss, but it is made good by the insurer as the owner/individual by getting his assets or himself insured, is transferring the loss to the insurer thus making him liable to reimburse it. Insurance is therefore, from the point of view of an individual, a financial arrangement whereby the individual can substitute a relatively small definite cost (premium) for a large uncertain financial loss.1 The predictability of a loss forms the base of an insurance system. Home insurance2, also commonly called hazard insurance or homeowner's insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory. It requires that at least one of the named insured occupies the home. The cost of homeowner's insurance often depends on what it would cost to replace the house and which additional rider additional items to be insured are attached to the policy. The insurance policy itself is a lengthy contract, and names what will and what will not be paid in the case of various events. Typically, claims due to floods or war (whose definition typically includes a nuclear explosion from any source), amongst other standard exclusions (like termites), are excluded. Special insurance can be purchased for these possibilities, including flood insurance. Insurance should be adjusted to reflect replacement cost, usually upon application of an inflation factor or a cost index.
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http://en.wikipedia.org/wiki/Insurance. en.wikipedia.org/wiki/Home_insurance.

The home insurance policy is usually a term contract a contract that is in effect for a fixed period of time. The payment the insured makes to the insurer is called the premium. The insured must pay the insurer the premium each term. Most insurers charge a lower premium if it appears less likely the home will be damaged or destroyed: for example, if the house is situated next to a fire station; if the house is equipped with fire sprinklers and fire alarms; or if the house exhibits wind mitigation measures, such as hurricane shutters. Perpetual insurance, which is a type of home insurance without a fixed term, can also be obtained in certain areas.

HOME INSURANCE IN INDIA

There are many public and private sector home insurance providers in the Indian market offering different plans for home insurance. General Insurance Corporation of India through its subsidiaries like United India Insurance, Oriental Insurance, the National Insurance

Company, New India Assurance, etc, are few of the known names present in this insurance sector to provide you guarantee for your coveted property. Section 103:- Basic Policy (Fire Coverage) has two subsections- one covers the building and the other its contents against damage from fire and allied perils, specifically structural and other damage from fire, lightning, riots, explosion of gas in domestic appliances, riots and natural calamities such as floods and earthquakes. This policy excludes jewellery and valuables

Cover for loss/damage due to Burglary excluding jewellery, gold and silver articles, securities, cash-and televisions and bicycles which are covered under other sections. Cover for 'all risks' against loss or damage to jewellery and valuables Cover for damage or loss to fragile items like glass ware including plate, glass etc. Cover for accidental breakdown of electrical, electronic and mechanical gadgets like refrigerators, air-conditioners, microwave ovens, washing machines or motor pumps

Cover for loss / damage to television sets, VCDs/VCRs/VCPs and computers against all types of risk-fires and allied perils, theft and accidental breakdown.

Cover for loss or damage to a bicycle Cover for loss of or damage to baggage while you are travelling in India Cover for personal accident Covers your legal liability to a third party for personal injury or property damage

Besides the House holder's Insurance policy, there is also an exclusive Fire Policy for covering the building and contents against the perils of fire, lightening, floods, earthquake, storm etc. This policy can be taken for a period of five or ten years. The longer is the term of the policy, the more is the discount on premium. The Home insurance sector in India is at a nascent stage as compared to other insurance sectors in the country. With the real estate boom at its prime in India, home finance has become an indispensable part of real estate functioning. Moreover, the housing finance
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The insurance act, 1938.

companies (HFCs) are also playing an important role in the evolvement of the home insurance company in India. Due to the new regulations by the finance companies making home insurance mandatory for seeking home loans in India, the home insurance sector has recently seen massive revival in business. Industry analyst say that, if the home loans and insurance sector continue to facilitate each other growth, then the insurance segment is soon set to achieve a 100% growth. The latest growth curve shows the home insurance premium touching the Rs 150 crore-mark, registering a growth of 25% in the last financial year; and if the situation prevails, the trend is predicted to continue. As the growth curve of investments in Indian real estate sector escalates, more and more insurance companies are making their foray into the home insurance sector. This has also initiated a trend of insurance companies from across the globe making their foray into Indian market either as individual entity or in joint ventures with the local existing insurance companies. Home insurance and real estate has of late become conspicuous of the buzz it has created in the realty industry in India. Adding to the list of leading and existing public sector companies in the home insurance business like New India Assurance, Life Insurance Company of India, United India Insurance, Oriental Insurance and National Insurance Company; is a list of private insurance companies which are set to play a pivotal role in the growth of the sector.

TYPES OF HOME INSURANCE

Home insurance in India has a key role to play in the protection of your house or building structure and valuable possessions or building content. Home insurance policy is a guarantee provided by the insurance company that combines insurance on the home, its contents the personal possessions of the homeowner, as well as insurance covering accidents that may happen at the house like fire and natural calamities. The coverage of the risk however depends on the type of policy. There are mainly two types of home insurance in India.

Building insurance Content insurance

Buildings Insurance Buildings insurance is an important part of property investments. The mandatory obligation made by the housing finance companies has strengthened the need for insurance in conjunction with property investments. Insuring the building or building structure is important since it protects you against inevitable losses in case your building is destructed and debilitated in any natural or man-made calamities. The housing finance companies are insisting on building insurance so that in the event of a disaster it can be repaired or rebuilt, as lenders don't want to be left without security for their loan. A home insurance policy should cover expenditure to rebuild your home in the event of it being totally destroyed or damaged to the point that complete rebuilding is necessary (in eventualities like earthquake, fire etc). Different home insurance companies have different specifications for policy coverage. It is recommended that you check the terms and conditions of the policy. Home insurance companies in India mostly have home insurance plans that insure the building structure of your home for its reconstruction value. This is the cost incurred to reconstruct the home if it is damaged and not for its market value such as the cost of land etc. Sum insured is calculated by multiplying the built up area of your home with the construction rate per sq. feet. Home insurance plan for buildings are usually meted out on conditions as per the policy terms arising out of conditions like

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Fire, Lightening, explosion of gas in domestic appliances Bursting and overflowing of water tanks, apparatus or pipes. Riot, Strike, Malicious or Terrorist Act Flood, Inundation, Storm, Typhoon, Hurricane, Tornado or Cyclone Damage due to earthquake, subsidence and Landslide (including Rockslide). Damage caused by Aircraft & Impact damage Third party liability and personal accident.

Content Insurance Content insurance may be considered optional but with the threat of burglaries, natural disasters and fire, content insurance covers are rising in demand. Contents insurance for home insurance plans includes protection to movable goods, possessions or contents in the house; anything that is not a fixed parts of your home, for example your appliances, electronic goods, furniture and clothing. Similarly as the modalities adopted in building insurance, different home insurance companies in India have different policies for content insurance. Most companies comply with insurance plans where a value equivalent to the market value of household contents i.e. the value for which this used item could be bought or sold in the market is covered as insurance. The insured amount given against the perils for building or structure and its contents is assessed either on 'reinstatement value' basis -which is the value for replacing the item with a new item of same type and make; or on 'market value' basis -which is the reinstatement value less depreciation depending on the age of the item. Content insurance offers protection against various perils including:

Fires Storms/flooding Explosions Theft and vandalism Valuables such as jewellery, cameras and watches against all risks,

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Cover against all kinds of accidental breakage of plate glass fixed in doors and window frames.

Loss/damage to domestic appliances due to electrical and mechanical breakdown.

Home insurance can be availed for both building and content combined. However, most home insurance plans in India excludes underinsurance of the property value, willful destruction of property, loss, damage or destruction caused by war perils, wear and tear and atmospheric conditions etc., damage due to an act of terrorism(unless specifically covered) and losses or damages incurred when premises are unoccupied beyond 60 consecutive days.

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IMPORTANCE OF HOME INSURANCE

The importance of home insurance in the protection of your house and valuable possessions is as importance as protecting your family from any hazards that act as threat to life and property. The policy provided by the home insurance companies act as a guarantee that combines insurance of the home, its contents the personal possessions of the homeowner, risk attached to burglary; as well as liability insurance for accidents that may happen at the house like fire and natural calamities. The extent of the risk covered however depends on the type and content of the policy. A generally configured home insurance policy usually covers calamities in two categories - natural and man-made. Natural Calamities Eartquake Fire Lightning,Storm Cyclone Flood Tsunami Landslide Man-Made Calamities Burglary Terrorisn Riot Strike Malicious Damage Aircraft Laws Impact from Rail/Road vehicles

Home insurance is important as it not only provides you with financial protection against any damage your property might incur - to both your buildings and the contents; but it can be considered a small amount of money you pay in lieu of the peace of mind that brings with it and the content that your property is insured and protected against all hazards. Though the importance of having a home insurance policy cannot be over emphasized, one cannot predict any disasters or unavoidable incident that might happen to one's home. Home insurance not only protects the homeowner from total loss when disaster occurs, but also protects the home owner in the event that their home is damaged by acts of God or if a person becomes injured, the home owner will not be held solely liable for all of the damages.

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The home insurance policies usually cover a home under the all risks clause unless otherwise noted in an exclusion clause. For instance, a home can be covered for fire damage, earthquake damage, and acts of vandalism under an all risks policy, but if the policy states that the home is not covered for deluge or say tsunami, than water damage due to the mentioned natural calamity would not be covered. To summarize it, the home insurance policy is important for the homeowner as it ultimately gives the home owner a sense of security to protect his family and property against calamities.

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CLAIM OF HOME INSURANCE

Concept of Claims :- Concept of claim with reference to the insurance contract differs from the angle of the parties to the contract. The insurer is under an obligation or responsibility to perform the contract as per the terms of promise made. The insured is in an advantageous position once the premium as demanded by the insurer is paid. The payment of insurance premium and acceptance of the contract by the insurer creates contractual obligation upon the parties to perform some of the duties before or after the claim is made or on happening of event or the loss is suffered by one of the parties to the contract. Meaning of Claim :- Claim is a right of the insured to receive the amount secured under the policy of insurance contract. It is the consideration of the insurance contract. It is a promise made by the insurer to pay the compensation to the insured on happening of some uncertain event resulting in loss or damage to asset insured. It is the pecuniary interest in the insurance contract. It is the insurance amount that is incorporated in the policy document of insurance contract. The claim is a right of the insured in all classes of the insurance contract. The payment of consideration is linked to the insurable interest of the insured. The insurable interest of the insured or the beneficiary under the insurance contract makes the insurance contract a valid contract. The claim payment and compensation payable as indemnity to the insured are related and are synonyms in the claims management of the insurance policy. The payment of premium is one set of promise whereas promise to pay for the loss suffered by the insured is the second set of promise and form reciprocal promises and considerations for one another. Claims are to be paid either to the insured or the nominees of the insured by the insurer under the agreement or the terms of the contract of insurance. The important terms of the insurance contract and payment of the insurance claims are the payment of insurance claim either on happening of event or on the date of maturity. Claims Department :- The claims department is one of the key departments in an insurance company. The claims department has the following functions to perform. To provide customers of insurance and reinsurance companies with a high quality of service, so that the company is able to differentiate from the rest of the companies. This can also be viewed as a unique selling proposition of a company. This role of the claims department gives a longterm edge to the company and hence is referred to as the strategic role.

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It is the claims department that monitors the claims and sees that whether the benefits of insurance exceed the costs of claims. This role is referred to as the cost-monitoring role of the claims department. The claims department has to see that the expectations of the customers are met with regard to the speed, manner and efficiency of the service. This is called the customer service role of the claims department. It is the responsibility of the claims department to meet the standard of service, to keep up to the customers expectations and still operate within the budget. This is the managerial role of the claims department. Both the quality of service and cost of claims is the responsibility of the claims department. The department has to look after the proper mix of the two. The cost of claims must not exceed a given level in trying to render a very good service to the customer.
Home Insurance Claim

Insurance claim amount is always something creeping up on the mind of both insurer and the insurance company. It is more evident in case when there is a possibility of you filing a claim to recover the amount for that claim. If you provide sufficient proof and necessary documents for your home insurance claim, there is a fair chance you can get the amount by the Home Insurance company or provider. Also, submitting a claim on your home policy is a relatively quite simple process. The steps involve contacting your agent, filling out a claim form and waiting for an appointed arbiter to verify the facts and judge the authenticity of the damage. If the damage is really worth notice, it's a matter of few days to get the claimed amount through check. Most claims are handled quickly. Sometimes the claim process can really be time taking and frustrating. Also keep in mind that most insurance providers don't enjoy the idea of two or three claims in a short span of time and you stand almost certain chance of getting cancellation of these claims. Try to stay away from high risks, so you should be sure to make only those claims that are absolutely necessary. Or, if you are sure about your rights to claim and corresponding damage or loss, just go full throttle to register a claim. Only remember that there can sometimes be unpleasant repercussions. Here are some general tips for handling home insurance claims:

Know your policy.

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Stake your claim quickly. Avoid using the word "lawyer." Get an estimate or two. Make temporary repairs.

Home Claim Procedure

Inform the call center with policy details. Provide relevant information, which includes your policy and other details regarding your claim. Consequently, your claim request is authenticated and is escalated to the company's claims department.

Company's claims department validates and registers the request. They appoint a surveyor within 48 hours.

The insured submits all the relevant documents to the surveyor. The surveyor submits the Final Survey Report (FSR) along with the documents within 7 days.

If surveyor is not appointed, the company's claims department sends a letter of requirement for submitting documents to the insured within 24 hours of claim intimation.

On receipt of documents, the claims department processes the claim within 7 days. On approval of the claim, a letter is send to the insured giving the approved amount of settlement along with the discharge voucher.

Payment cheque is released on receipt of the signed discharge voucher.

Documents Required Documents are the most valid and appropriate proof for your home insurance claims. Always keep your documents in place and ready both before you need to make a claim and when you need to make one. It is always advisable to save the receipts for items you buy. This will give the indication and estimation of the total cost of items and damage claim amount accordingly. Photographs and/or videotapes of your home (both in pre- and postdisaster form) can also be beneficial. These will help you establish an inventory of your

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belongings should the need arise. Always save photos or videos of the damage before you begin cleaning up. List of Documents Required 1. Duly completed and signed claim form 2. Xerox copy of policy 3. Copy of FIR 4. Final Report from police 5. Copy of all invoices, price lists, repair estimates Please note that this is an indicative list and some other documents may be required at the time of claim settlement.

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CASE STUDY
Home Insurance Co. Ltd., New Delhi vs Jagatjit Sugar Mills Co. Ltd. And Anr.4 Facts :On the 1st of September 1947, the Jagjit Sugar Mills Company, Limited, insured some goods for one month against riot risk. These goods were at Jaijon. On the 6th September, 1947, 113 bags of 'shakkar' are alleged to have been looted by a riotous mob and on the 19th October, 1949, a suit was brought by the insured for recovery of Rs. 5,913/11/6 being the loss suffered by them due to the looting. In regard to jurisdiction there was a 'warrantly' clause in the policy in the following words: "It is hereby warranted that in case of any claims arising in respect of the property hereby insured, the same shall be paid and settled in Lahore and the entire cause of action shall also be deemed to arise in Lahore and further that all legal proceedings in respect of any such claim shall be instituted in a competent Court in the city of Lahore only." The defendants took a preliminary objection that the Courts at Delhi had no jurisdiction, but the learned Judge overruled this objection and held that the Courts had jurisdiction because of a letter. The insurers have come up in revision to this Court and rule was Issued by me on the 18th July, 1951. The suit has been brought at Delhi because of the warranty, the ground being that as the former Lahore office is now located at New Delhi therefore in accordance with the terms of the warranty all claims have to be settled in Delhi and the entire cause of action must be deemed to have arisen in Delhi. This is a contention with which I am unable to agree. According to Explanation II to Section 20 of the Code of Civil Procedure a corporation is deemed to carry on business at its sole or principal office in British India (now the Union of India), or, in "respect of any cause of action arising at any place where it has also a subordinate office, at such place. In regard to contracts the cause of action arises in a place where the contract was made or the place where the contract was to be performed or

AIR 1952 P H 142, 1952 22.

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performance thereof completed or the place where in performance of the contract any money to which the suit relates was expressly or impliedly paid. It has been held that the domicile of a company is fixed by the statute by the situation of its principal place of business. The mere fact that in accordance with some of the letters which have been produced, and Ex. p. 8 is a principal one of them, the former office has now been shifted to New Delhi would not also transfer the right of the plaintiff to bring a suit at Delhi. The place of suing is governed by Section 20 of the Code of Civil Procedure and in regard to incorporated companies it is within the four corners of that section that we have to find the place of suing. According to the statute, in my opinion, an incorporated company can be sued at its principal place of business or if cause of action arises at some other place and it has got a subordinate place of business, at that place also. In the present case neither of these two conditions are satisfied. Counsel for the plaintiff has stressed the point that the insurers have been writing to them that the case would now be looked into by the New Delhi Office, but that does not give them a cause of action. In my opinion the learned Judge was in error in holding that by the change of the Lahore Office to New Delhi the Courts at Delhi had jurisdiction to try the suit. I, therefore, allow this petition, set aside the order of the trial Court and make the rule absolute. The plaint will be returned to the plaintiff for filing his suit in a Court of competent jurisdiction. The opposite party will pay the costs of the petitioner in this Court.

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CONCLUSION
When we build a home we take utmost care and ensure that best of everything is at our home. Same ways once we have finish building our home, we will love to be there always and also we feel as if a big dream comes true. But the future unforeseen events like robbery destruction etc could be a threat to your dream of home. So always insuring our valuable things is the easiest and the safest way in the world.

It not only provides you with financial protection against any damage your property might incur-to both your buildings and the contents; but it can be considered a small amount of money you pay in lieu of the peace of mind that it brings to you.

Home insurance not only protects the homeowner from total loss when disaster occurs, but also protects the home owner in the event that their home is damaged by acts of God

If a person becomes injured, the home owner will not be held solely liable for all of the damages.

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BIBLIOGRAPHY
John Hanson and Christopals Henly, All Risks Property Insurance (1999), LLP, Asia, Hongkong. Peter MacDonald Eggers and Patric Foss. Good Faith and Insurance Contracts (1998), LLP Asia. Hongkong. Banerjee. Law of Insurance (1994), Asia Law House, Hyderabad. Mitra B.C. Law Relating to Marine Insurance (1997), Asia Law House, Hyderabad. JCB Gilmar and Mustill. Arnold on the Law of Marine Insurance (1981), Sweet & Maxwell. International Labour Office, Administration Practice of Social Insurance (1985). E.R. Hardy Ivamy, General Principles of Insurance Law (1979). Edwin W. Patterson, Cases and Materials on Law of Insurance (1955). M.N. Sreenivasan, Law and the Life Insurance Contract (1914).