Insurance of buildings is an important consideration for property owners, landlords, and tenants.

It
provides financial protection in the event that the building is damaged or destroyed by a covered event.
However, it is important to understand the principles and legal concepts that govern insurance of
buildings to ensure that the policy provides adequate coverage and to avoid potential disputes with
insurers. When it comes to insurance of buildings, there are several important principles and legal
concepts to keep in mind. Here are some of the key ones:

1. Principle of indemnity: This principle states that the purpose of insurance is to restore the insured to
the same financial position they were in before the loss occurred. In other words, the insurance payout
should be equal to the amount of the loss, but not more than that.

2. Principle of subrogation: This principle allows the insurer to take legal action against a third party who
caused the loss, in order to recover the amount of the payout made to the insured. This helps to prevent
the insured from receiving a windfall. 3. Principle of contribution: If the building is insured under more
than one policy, each Insurer will only pay their proportionate share of the loss. This is known as the
principle of contribution.

4. Material facts: When applying for insurance, the insured has a duty to disclose all material facts about
the building, such as its age, construction materials, and any previous damage. Failure to disclose such
information could result in the policy being voided.

5. Insurable interest: In order to insure a building, the insured must have an insurable Interest in the
property. This means that they stand to suffer a financial loss if the building is damaged or destroyed.

6. Standard of care: The insurer has a duty to act in good faith and to handle claims in a reasonable and
efficient manner. Failure to do so could result in legal action being taken against the insurer.

7. Policy exclusions: Insurance policies will typically contain exclusions, which are events or
circumstances that are not covered by the policy. It is important for the insured to be aware of these
exclusions so that they can take steps to protect themselves against these risks.

8. Policy limits: Insurance policies will also have limits on the amount that will be paid out in the event of
a loss. It is important for the insured to ensure that these limits are sufficient to cover the full value of
the building and any associated costs, such as demolition and debris removal.

Overall, understanding these principles and legal concepts is essential for anyone who is considering
insuring a building. It is important to read the policy carefully and to ask any questions to ensure that
the policy provides adequate coverage and meets the insured's needs.

Definition of insurable interest

The term “insurable interest” refers to a sort of investment that protects against
financial loss. When the damage or loss of an item, event, or action will result in
financial loss or other problem, a person or entity has an insurable interest in it.
A person or entity with an insurable interest would purchase an insurance policy
to cover the person, thing, or event in the issue. If something occurs to the
asset, such as it being destroyed or lost, the insurance coverage would reduce
the risk of losses.

Insurance contract: meaning

 An insurance contract is essentially a contract between two parties,
where one of them is called an “insurer” and the other party is
“insured”.
 In this type of contract, the insurer promises the insured party that he
will save or indemnify him from losses caused by a particular
contingent event, on the payment of an amount called “premium”.
 Insurer usually refers to the insurance company that sells the insurance
and the insured or policyholder is the person who buys it by paying the
premium. In a contract of insurance, the insurer or insurance company
advertises the insurance policy, which is an invitation to offer.
 Then, on seeing the invitation to offer, the insured makes an offer to
the insurer. When the insurer accepts, it becomes an insurance
contract.
Liability Insurance

Liability insurance is the type of policy that protects the insured against financial liabilities resulting from
injuries to any person as well as property damage. Apart from this, liability insurance provides coverage
for any legal cost or debt that the responsible party is found legally guilty of. However, claims filed for
intentional damages, criminal prosecution, and contractual liabilities are generally not covered under
this policy.

Rights of Insured

 Once you fill the proposal form, you should hear from your insurer within 15 days about the
decision to issue or refuse the grant of life insurance
 You can appoint one or more nominees. When you do so, the sum assured will be divided
among them
 If your proposal is accepted, the policy bond should reach you within a reasonable period of
time.
 You can ask for altering the mode of premium paid and the term of policy
 In case of loss of the policy document, you can get a duplicate copy that confers the same rights
as the original policy except 15 days Free Look period.
 You can cancel your policy within 15 days from the date of receiving the policy documents.
• You can change the nominee details once the policy is issued by intimating your insurer
Responsibilities of Insured
• Fill up the proposal form correctly
• Pay premiums on time
• Don't hide any information, however immaterial it may seem
• Don't disclose your policy number and other confidential information to imposters
identifying themselves as IRDAI officials. IRDAI never makes such calls.
• Inform your insurance company immediately if you lose your policy documents
Rights and Responsibilities of Insurer
Duty to defend
Depending on the nature of your agreement, your insurer may have a duty to indemnify or
defend you under certain circumstances. The duty to defend provides you with legal
representation if you're sued. The duty to indemnify pays for any legal judgments against you.
Both are dictated by the terms of your policy.
Insurance Contract
Your insurer must honor any responsibilities outlined in your policy. It's free to provide you with
rights above and beyond those provided by law, so your agreement may have extra
responsibilities. Additionally, if a provision in your policy is found to be ambiguous it's
interpreted by a court as being in your favor if there's a dispute.
Claim adjustment
An insurer must treat its insured's interests with the same consideration it gives its own
interests. This means that a claims adjuster must give the policy holder the benefit of the doubt.
The claims adjuster should be looking for reasons to find coverage, not for reasons to deny
coverage. The claims adjuster should be looking for reasons to pay the claim, not reasons to
deny it. Unfortunately, sometimes insurance companies lose sight of this fundamental rule.
General Duties
An insurance company has a legal duty to fully investigate your claim, not just the parts that
support their position. It must also provide you with all necessary information so you can
protect your claim under the policy. Additionally, the company must respond to your
communications and promptly pay your claim if it's found valid.
Fair Deal
An insurance company's duty of good faith and fair dealing means it must always act in the
client's best interest. This responsibility, implied in all insurance agreements, prevents the
company from acting in bad faith in transactions involving your claim. If it breaches this
responsibility you are entitled to sue for damages.
Payment
If payment is owed, an insurer must promptly pay the claim. In Wisconsin, an insurer must pay
a claim that is owed within 30 days, or the insurer may be subject to paying the policy holder
12 percent interest per year. Even though this is the law, there is no good reason for an
insurance company to hold payment for 30 days if it owes benefits under a policy.