Difference between life insurance and fire insurance and marine insurance 1
Answers
Answer:
Insurance is a contractual agreement between the insurer, i.e. the insurance company and the insured, wherein the risk of loss is transferred to the insurer, when the loss occurs out of the causes indicated in the contract, on the payment of the consideration called as premium. There are two major types of insurance, i.e. life insurance and general insurance. Further, general insurance is subclassified into fire insurance, marine insurance and miscellaneous.
In this article, we are going to talk about the difference between fire insurance and marine insurance, in detail.
Explanation:
Key Differences Between Fire Insurance and Marine Insurance
The difference between fire insurance and marine insurance are discussed in the points given below:
Fire insurance can be defined as a contract in which the insurance company promises to indemnify the insured, in case of any loss or damage caused to the property covered in the contract, of the insured, due to fire. On the other hand, by the term ‘marine insurance’, we mean an insurance in which the insurance company undertakes to compensate the insured in case of any loss to the ship or cargo, because of sea danger.
In fire insurance, the insurable interest must be present both at the time of taking policy and when the loss occurs. As against, in case of marine insurance, the insurable interest must be there only at the time of loss.
Fire insurance covers risks due to fire and associated risks. Conversely, marine insurance covers sea perils.
The claim in case of fire insurance is the amount insured, or the actual loss sustained whichever is less. In contrast, the compensation would be the cost of the goods plus a reasonable margin, i.e. 10-15% for anticipated profits.
In fire insurance contract, the moral responsibility of the insured is an important condition, whereas if we talk about marine insurance, there is no clause relating to the moral responsibility of the ship or cargo owner.
The amount of the policy cannot exceed the value of subject matter covered under the fire insurance contract. On the contrary, the market value of the ship or cargo would be the policy amount in case of marine insurance.
Conclusion
Fire insurance is the most popular insurance, that offers protection to the insured against any uncertain loss or destruction of the assets, arising out of the fire. On the contrary, marine insurance is the oldest type of insurance, in which the insurer agrees to indemnify the insured, against transit losses to any sea voyage.