This is an official version.
Copyright © 2006: Queens Printer,
RSNL1990 CHAPTER F-10
FIRE INSURANCE ACT
AN ACT RESPECTING POLICIES OF FIRE
1. This Act may be cited as the Fire Insurance Act.
2. In this Act
(a) "contract" means a contract of insurance and includes a policy certificate, interim receipt, renewal receipt or writing evidencing the contract, whether sealed or not, and a binding oral agreement;
(b) "insurance" means a contract under the terms of which 1 party, called the insurer, undertakes for a valuable consideration to indemnify the other, called the insured, against loss or liability from certain risks or perils to which the object of the insurance may be exposed or from the occurrence of a certain event;
(c) "insurance on the cash plan" means insurance which is not mutual insurance;
(d) "mutual insurance" means a contract of insurance in which the consideration is not fixed or certain at the time the contract is made and is to be determined at the termination of the contract or at fixed periods during the term of the contract according to the experience of the insurer in respect of all similar contracts whether or not the maximum amount of that consideration is pre-determined; and
(e) "policy" means an instrument containing the terms of a contract of insurance.
Application of Act
3. (1) This Act applies to insurance against loss of or damage to property arising from the peril of fire in a contract made in the province except
(a) insurance falling within the classes of aircraft, automobile, boiler and machinery, inland transportation, marine, plate glass, sprinkler leakage and theft insurance;
(b) where the subject-matter of the insurance is rents, charges or loss of profits;
(c) where the peril of fire is an incidental peril to the coverage provided; or
(d) where the subject-matter of the insurance is property that is insured by an insurer or group of insurers primarily as a nuclear risk under a policy covering against loss of or damage to the property resulting from nuclear reaction or nuclear radiation and from other perils.
(2) Notwithstanding subsection (1), this Act applies to insurance of an automobile against loss or damage under a policy falling within this Act but in the case of a purely mutual fire insurance company incorporated or licensed in the province and carrying on business on the premium note plan, the automobile shall be specifically insured under a policy separate from that insuring other property.
Extent of coverage
4. (1) In a contract to which this Act applies, the contract shall be considered to cover the insured property,
(a) against fire, whether resulting from explosion or otherwise, not occasioned by or happening through,
(i) in the case of goods, their undergoing a process involving the application of heat, or
(ii) riot, civil commotion, war, invasion, act of foreign enemy, hostilities, whether war is declared or not, civil war, rebellion, revolution, insurrection or military power;
(b) against lightning, but excluding destruction or loss to electrical devices or appliances caused by lightning or other electrical currents unless fire originates outside the article itself and only for that destruction or damage that occurs from the fire;
(c) against explosion not occasioned by or happening through the perils specified in subparagraph (a)(ii) of natural, coal or manufactured gas in a building not forming part of a gas works, whether fire ensues from the building or not.
(2) Unless a contract to which this Act applies otherwise specifically provides, the contract does not cover the insured property against loss or damage caused by contamination by radioactive material directly or indirectly resulting from fire, lightning or explosion within the meaning of subsection (1).
(3) Where property insured under a contract covering a specified location is necessarily removed to prevent loss or damage or further loss or damage to the property, that part of the insurance under the contract that exceeds the amount of the insurer's liability for a loss incurred shall, for 7 days only or for the unexpired term of the contract where less than 7 days, cover the property removed and property remaining in the original location in the proportions which the value of the property in each of the respective locations bears to the value of the property in them all.
(4) Nothing in subsection (1) precludes an insurer giving more extended insurance against the perils mentioned in the subsection, but in that case this Act does not apply to the extended insurance.
(5) An insurer licensed to carry on fire insurance may include in its insurance contracts a clause or endorsement providing that, in the case of livestock insured against death or injury caused by fire or lightning, the word "lightning" is considered to include other electrical currents.
Contents of policy
5. (1) A policy shall contain the name of the insurer, the name of the insured, the name of the person to whom the insurance money is payable, the premium or other consideration for the insurance, the subject-matter of the insurance, the indemnity for which the insurer may become liable, the event on the happening of which the liability is to accrue and the term of the insurance.
(2) After an application for insurance is made, where it is in writing, a policy sent to the insured shall be considered to be intended to be in accordance with the terms of the application unless the insurer points out in writing the particulars in which it differs from the application in which case the insured may within 2 weeks from the receipt of the notification reject the policy.
(3) A contract may be renewed by the delivery of a renewal receipt identifying the policy by a number, date, or otherwise, or a new premium note.
Delivery of policy
6. (1) Where the policy has been delivered, the contract shall be binding on the insurer as if the premium had been paid, although it has not in fact been paid, and although delivered by an officer of the insurer who had not the authority to deliver it.
(2) The insurer may sue for the unpaid premium and may deduct the amount of the unpaid premium from the amount for which the insurer is liable under the contract of insurance.
(3) Where a cheque, bill of exchange or promissory note or a promise to pay is given, whether originally or by way of renewal, for the whole or part of a premium and the cheque, bill of exchange or promissory note or other promise to pay is not honoured according to its tenor, the insurer may terminate the contract immediately by giving written notice by registered mail.
Mortgagees and other payees
7. (1) Where the loss under a contract has, with the consent of the insurer, been made payable to a person other than the insured, the insurer shall not cancel or alter the policy to the prejudice of that person without notice to him or her.
(2) The length and manner of giving notice under subsection (1) shall be the same as notice of cancellation to the insured under the statutory conditions in the contract.
8. (1) The conditions set out in the Schedule shall be considered to be part of every contract in force in the province and shall be printed on every policy with the heading "Statutory Conditions" and no variation or omission of or addition to a statutory condition shall be binding on the insured.
(2) In this section, "policy" does not include interim receipts or binders.
Limitation of liability clauses
9. A contract containing
(a) a deductible clause;
(b) a co-insurance, average or similar clause; or
(c) a clause limiting recovery by the insured to a specified percentage of the value of the property insured at the time of loss, whether or not that clause is conditional or unconditional,
shall have printed or stamped upon its face in red ink the words: "This policy contains a clause which may limit the amount payable", and unless these words are so printed or stamped the clause is not binding upon the insured.
10. (1) Where, on the happening of a loss or damage to property insured, there is in force more than 1 contract covering the same interest, the insurers under the respective contracts shall each be liable to the insured for its rateable proportion of the loss unless it is otherwise expressly agreed in writing between the insurers.
(2) For the purpose of subsection (1), a contract shall be considered to be in force notwithstanding a term of the contract that the policy shall not cover, come into force, attach, or become insurance with respect to the property until after full or partial payment of a loss under another policy.
(3) Nothing in subsection (1) affects the validity of a division of the sum insured into separate items, or limits of insurance on specified property, or a clause referred to in section 9 or a contract condition limiting or prohibiting the having or placing of other insurance.
(4) Nothing in subsection (1) affects the operation of a deductible clause and,
(a) where 1 contract contains a deductible, the rateable proportion of the insurer under that contract shall be first ascertained without regard to the clause and then the clause shall be applied only to affect the amount of recovery under that contract; and
(b) where more than 1 contract contains a deductible, the rateable proportion of the insurers under those contracts shall be first ascertained without regard to the deductible clauses and then the highest deductible shall be prorated among the insurers with deductibles and these prorated amounts shall affect the amount of recovery under those contracts.
(5) Nothing in subsection (4) shall be construed to have the effect of increasing the rateable contribution of an insured under a contract that is not subject to a deductible clause.
(6) Notwithstanding subsection (1), insurance on identified articles shall be a 1st loss insurance as against all other insurance.
11. Where a contract,
(a) excludes a loss that would otherwise fall within the coverage prescribed by section 4; or
(b) contains a stipulation, condition or warranty that is or may be material to the risk including, but not restricted to, a provision in respect of the use, condition, location or maintenance of the insured property,
the exclusion, stipulation, condition or warranty shall not be binding upon the insured if it is held to be unjust or unreasonable by the court before which a question relating to the contract is tried.
Proof of loss forms
12. (1) An insurer shall, immediately upon receipt of a request, and in any event not later than 60 days after receipt of notice of loss, furnish to the insured or person to whom the insurance money is payable forms upon which to make the proof of loss required under the contract.
(2) An action shall not be brought for the recovery of money payable under a contract of insurance until the expiration of 60 days after proof, in accordance with the contract,
(a) of the loss; or
(b) of the happening of the event upon which the insurance money is to become payable
or of a shorter period that may be fixed by the contract of insurance.
13. (1) Where an insured assigns the right to refund of premium that may accrue by reason of the cancellation or termination of a contract of insurance under the terms of the contract and notice of the assignment is given by the assignee to the insurer, the insurer shall pay a refund to the assignee notwithstanding a condition in the contract, whether prescribed under this Act or not, requiring the fund to be paid to the insured or to accompany a notice of cancellation or termination to the insured.
(2) Where the condition in the contract dealing with cancellation or termination by the insurer provides that the refund shall accompany the notice of cancellation or termination the insurer shall include in the notice a statement that instead of payment of the refund in accordance with the condition the refund is being paid to the assignee under this section.
14. (1) The insurer, upon making a payment or assuming liability for payment under a contract of fire insurance, shall be subrogated to all rights of recovery of the insured against a person, and may bring action in the name of the insured to enforce those rights.
(2) Where the net amount recovered after deducting the costs of recovery is not sufficient to provide a complete indemnity for the loss or damage suffered, that amount shall be divided between the insurer and the insured in the proportions in which the loss or damage has been borne by them respectively.
1. Misrepresentation - Where a person applying for insurance falsely describes the property to the prejudice of the insurer, or misrepresents or fraudulently omits to communicate a circumstance which is material to be made known to the insurer in order to enable it to judge the risk to be undertaken, the contract shall be void as to property in relation to which the misrepresentation or omission is material.
2. Property of Others - Unless otherwise specifically stated in the contract, the insurer is not liable for loss or damage to property owned by a person other than the insured, unless the interest of the insured is stated in the contract.
Change of Interest
- The insurer shall be liable for loss or damage occurring after an authorized assignment under theBankruptcy Act
4. Material Change - A change material to the risk and within the control and knowledge of the insured shall void the contract as the part affected by it, unless the change is promptly notified in writing to the insurer or its local agent; and the insurer when so notified may return the unearned portion of the premium paid and cancel the contract, or may notify the insured in writing that, if the insured desires the contract to continue in force, the insured shall, within 15 days of the receipt of the notice pay to the insurer an additional premium; and in default of the payment the contract shall no longer be in force and the insurer shall return the unearned portion of the premium paid.
5. Termination - (1) This contract may be terminated
(a) by the insurer giving to the insured 15 days' notice of termination by registered mail or 5 days' written notice of termination personally delivered;
(b) by the insured at any time on request.
(2) Where this contract is terminated by the insurer,
(a) the insurer shall refund the excess of premium actually paid by the insured over the proportional premium for the expired time, but in no event shall the proportional premium for the expired time be considered to be less than a minimum retained premium specified; and
(b) the refund shall accompany the notice unless the premium is subject to adjustment or determination as to amount, in which case the refund shall be made as soon as practicable.
(3) Where this contract is terminated by the insured, the insurer shall refund as soon as practicable the excess of premium actually paid by the insured over the short rate premium for the expired time, but in no event shall the short rate premium for the expired time be considered to be less than a minimum retained premium specified.
(4) The refund may be made by money, postal or express company money order, or by cheque payable at par.
(5) The 15 days mentioned in clause (1)(a) of this condition start to run on the day following the receipt of the registered letter at the post office to which it is addressed.
6. Requirements After Loss - (1) Upon the occurrence of a loss of or damage to the insured property, the insured shall, where that loss or damage is covered by the contract, in addition to observing the requirements of conditions 9, 10 and 11,
(a) immediately give notice of the loss or damage in writing to the insurer;
(b) deliver as soon as practicable to the insurer a proof of loss verified by a statutory declaration,
(i) giving a complete inventory of the destroyed and damaged property and showing in detail quantities, costs, actual cash value and particulars of amount of loss claimed,
(ii) stating when and how the loss occurred, and where caused by fire or explosion due to ignition, how the fire or explosion originated, so far as the insured knows or believes,
(iii) stating that the loss did not occur through a wilful act or neglect or the procurement, means or connivance of the insured,
(iv) showing the amount of other insurances and the names of other insurers,
(v) showing the interest of the insured and of all others in the property with particulars of all liens, encumbrances and other charges upon the property,
(vi) showing changes in title, use, occupation, location, possession or exposures of the property since the issue of the contract,
(vii) showing the place where the property insured was at the time of loss;
(c) where required give a complete inventory of undamaged property and showing in detail quantities, cost, actual cash value;
(d) where required, and where practicable, produce books of account, warehouse receipts and stock lists, and furnish invoices and other vouchers verified by statutory declaration, and furnish a copy of the written portion of another contract.
(2) The evidence furnished under clauses (1)(c) and (d) of this condition shall not be considered proof of loss within the meaning of conditions 12 and 13.
7. Fraud - A fraud or a wilfully false statement in a statutory declaration in relation to the above particulars shall vitiate the claim of the person making the declaration.
8. Who may give Notice and Proof - Notice of loss may be given, and proof of loss may be made, by the agent of the insured named in the contract in case of absence or inability of the insured to give the notice or make the proof, and absence or inability being satisfactorily accounted for, or in the like case, or where the insured refuses to do so, by a person to whom a part of the insurance money is payable.
9. Salvage - (1) The insured, in the event of loss or damage to property insured under the contract, shall take all reasonable steps to prevent further damage to the property so damaged and to prevent damage to other property insured under the contract including, where necessary, its removal to prevent damage or further damage to the property.
(2) The insurer shall contribute proportionally towards reasonable and proper expenses in connection with steps taken by the insured and required under subparagraph (1) of this condition according to the respective interests of the parties.
10. Entry, Control, Abandonment - After loss or damage to insured property, the insurer shall have an immediate right of access and entry by accredited agents sufficient to enable them to survey and examine the property, and to make an estimate of the loss or damage, and, after the insured has secured the property, a further right of access and entry sufficient to enable them to make appraisement or particular estimate of the loss or damage, but the insurer shall not be entitled to the control or possession of the insured property, and without the consent of the insurer there can be no abandonment to it of insured property.
11. Appraisal - In the event of a disagreement as to the value of the property insured, the property saved or the amount of the loss, those questions shall be determined by appraisal as provided under the Insurance Contracts Act before there can be a recovery under this contract whether the right to recover on the contract is disputed or not, and independently of all other questions. There shall be no right to an appraisal until a specific demand for an appraisal is made in writing and until after proof of loss has been delivered.
12. When Loss Payable - The loss shall be payable within 60 days after completion of the proof of loss, unless the contract provides for a shorter period.
13. Replacement - (1) The insurer, instead of making payment, may repair, rebuild or replace the property damaged or lost, giving written notice of its intention to do so within 30 days after receipt of the proof of loss.
(2) In that event the insurer shall start to repair, rebuild or replace the property within 45 days after receipt of the proofs of loss, and shall after that time proceed with all due diligence to the completion of the property.
14. Action - Every action or proceeding against the insurer for the recovery of a claim under or by virtue of this contract shall be absolutely barred unless commenced within 1 year next after the loss or damage occurs.
- A written notice to the insurer may be delivered at, or sent by registered mail to, the chief agency or head office of the insurer in the province. Written notice may be given to the insured named in the contract by letter personally delivered to him or her or by registered mail addressed to him or her at his or her latest post office address as notified to the insurer. In this condition, the expression "registered" means registered in or outside
1970 c130 Sch; 1971 No4 s2; 1971 No4 s3; 1971 No4 s4; 1989 c12 s12
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