Fire Insurance is a type of insurance which provides cover for loss or damage caused by burning. A person can insure himself or property against any loss as a result of fire, lighting, wiring, lightning and explosion. It covers all risks associated with fire. However, the insurer can only be compensated if the fault was not caused by him. The compensation covers possible damages to buildings, factories, goods and shops, although the structure of the building and some inflammable items kept inside will be taken into consideration. Fire insurance may be taken with average or without average clause.


Fire Insurance With Average Clause

If the fire insurance policy contains “average clause,” the compensation will be based on the actual value of the building, the amount for which it was insured and the total loss suffered. The compensation would be calculated thus:



Fire Insurance Without Average Clause

Under fire insurance without average clause, the insurance company will only be liable for the estimated amount of the loss. Take for instance, if the property is N25,000 and the insured amount is N13,000 and the loss is assumed to be N10,000, the insured will only receive N10,000 as compensation.


Difference between Contribution and Group Insurance


  1. It deals with the principles of insurance.
  2. Risk is insured with many insurers.
  3. Each insurance company involved will be liable for only a proportion of the liability.


Group Insurance

  1. It deals with types of Insurance.
  2. Many people or a group of employees take a single policy.
  3. The insurance company is liable to everyone covered by the single policy.

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