Fire Insurance: Operative clause under fire policy

The Operative Clause of fire policy consists of three parts, preamble, perils covered and limitations.

The first part, the preamble, recites the parties to the contract and provides that ‘ if, after the payment of premium, the property insured described in the schedule be directly destroyed or damaged by any of the perils specified during the period of insurance or during renewal of the policy for which premium is received, the company shall pay to the insured, subject to the terms of the policy, the value of the property at the time of its destruction, or the amount of such damage or at its option reinstate or replace such property.’

The Second part gives the description of perils that are covered under the fire policy.

The last part of the clause provides,  that ‘the liability of the company shall be in no case exceed in respect of each item, the sum insured, or in the whole the total sum insured specified in the schedule.’

Extracts from “ Guide for Fire and Consequential Loss Insurance (IC-57)” by Dr. Rakesh Agarwal. Copyright of Sashi Publications, kolkata www.sashipublications.com and www.bimabazaar.com