Rights of Insurer in a Fire Insurance Policy
The following are the rights of an insurer in a fire insurance policy.
- Right to avoid the contract.
- Right of control over the property.
- Right of entering the property.
- Right of subrogation.
- Right to salvage.
- Right of reinstatement.
- Right of contribution.
They are briefly explained as below.
1. Right to avoid the contract
In case the insured does not disclose any material fact concerning the subject matter of insurance, the insurer can avoid the contract. This is because a contract of fire insurance like other contracts of insurance is a contract of utmost good faith.
2. Right of control over the property
The insurer has an implied right to acquire control over the goods or property damaged or destroyed by fire. This is because, in the final analysis, only loss under a fire insurance contract will have to be borne by the insurer who should, for this reason, be entitled to get control over the damaged property to see if the severity of loss could be lessened.
3. Right of entering the property
The insurer is entitled to enter upon the premises insured or wherein the things insured are located. But in order to enable him to do so, the insured is required to give an immediate notice of the fire with the particulars of damage done.
4. Right of Subrogation
Upon paying the amount of loss to the insured, the insurer steps into the place of the insured, taking over all his rights. For example, if the insured receives any compensation from a third party, he will have to pay it to the insurer. His loss has been made good by the insurer and therefore, any sum received by him from a third party should be passed on to the insurer.
5. Right to Salvage
When the insured goods or property is destroyed or damaged by fire, the insurer has got a right to take possession of the salvage i.e., the stock or property saved after fire. This right of the insurer is absolute and flows from the contract of indemnity.
6. Right of reinstatement
In case of damage or destruction of the subject matter, the insurer has a right either to pay the amount of loss to the insured in cash or replace the damaged or destroyed property in kind.
But this can be done
- if the contract of insurance gives him the right to do so; or
- if he suspects any fraud or arson; or
- if he is requested to do so by a person other than the insured who owns or is otherwise interested in the premises damaged by fire.
7. Right of Contribution
This right arises when the same subject matter has been insured with two or more insurers. Thus, if in case of loss, one of the i insurers has made full payment to the insured, he can claim rateable contribution from his co-insurers.