FIRE INSURANCE

Fire insurance began a few years after the Great Fire of London (1666) when a speculative builder Nicolas Barbon started the Fire Office in 1680. By 1805 there were 11 fire offices in London and over 30 in the British Isles. They ran their own fire brigades and issued fire marks to be affixed to the walls of building to mark them as being insured by particular company. Brigades sometimes refused to put out a fire on properties which were not insured, but sat around to be ready if the flames spread to properties bearing their fire marks. Later a good deal of co-operation developed and eventually the fire-brigades became part of the public service.

By the start of the twentieth century the need for household policies covering a wider range of risks began to be appreciated. By the 1920s policies covering not only fire but storm and tempest, burst pipes, impacts, explosions, and burglary were introduced. In more recent years aircraft damage, collapse of television aerials, and householders’ liabilities to the public have been added.

One feature of this type of insurance is the influence it has exerted over the years on public policy. The whole question of safety in buildings is continuously under review. Lower premiums are offered to firms and householders who take more sophisticated precautions such as installing sprinkler devices. Even the layout of towns and housing projects to leave adequate fire gaps and escapes on high building are affected by the activities of the insurance lobby, who have the public interest as well as their own interests at heart.

The chief types of policy issued by the fire offices are:

(a) Fire insurance on domestic and business premises, and their contents.

(b) Consequential Loss insurance. (This type of policy ensures that a firm continues to receive reasonable payments in lieu of profits while rebuilding is going on. Otherwise the business may lose all connection with its customers, and are be unable to pay fixed charges such as rates and mortgage repayments which still continue even when the premise have been destroyed.)

(c) Special perils. Many of these are now covered in the normal householder’s policies, but flooding is a special peril which is sometimes not covered by these policies. (For Malaysian readers kindly note that flooding is covered in our Houseowner's and Householder's policies. I will be going into further details regarding these policies in my future posting at this site.)

(d) Household policies. These have already been described above.