IRDAI Surveyor Fire (S-02) cheat sheet

Fire insurance is a contract of indemnity: the insured is restored to the pre-loss financial position, never better off; sum insured is the ceiling, not the measure of loss.

Insurable interest must exist at the time of loss for property covers; the surveyor should confirm ownership, mortgagee rights, or bailee exposure before assessing.

Proximate cause governs: the nearest efficient cause of loss decides admissibility. Fire damage followed by smoke or water used to extinguish fire is treated as fire damage.

Utmost good faith (uberrima fides) obliges both parties to disclose material facts; non-disclosure or misrepresentation can void the policy under Sections 17-19 of the Indian Contract Act, 1872.

Standard Fire and Special Perils (SFSP) policy is the base Indian fire cover; it can be issued on reinstatement, declaration, or floater basis in addition to the standard sum-insured basis.

Average clause applies to underinsurance: claim = (sum insured / value at risk at loss) x loss, when sum insured is less than the value of property covered.

Reinstatement value policies require the sum insured to reflect the cost of rebuilding/replacement at the time of loss; depreciation is not deducted if the insured actually reinstates.

Subrogation transfers the insured's recovery rights against a negligent third party to the insurer after indemnity is paid; the surveyor should note third-party liability in the report.

Contribution applies when more than one policy covers the same property and interest; each insurer pays rateably, and the insured cannot profit from multiple policies.

SFSP standard covers: fire (including lightning), explosion/implosion of gas in domestic appliances, riot, strike, malicious damage, aircraft damage, storm/tempest/flood/inundation, subsidence/landslide/rockslide, bursting/overflowing of water tanks and pipes, missile testing, and leakage from automatic sprinkler installations.

Standard exclusions include war and nuclear risks, willful act or gross negligence of the insured, spontaneous combustion, fermentation, and loss by theft (unless separately covered).

The 'Fire' peril requires actual ignition; mere scorching without ignition, or damage by smoke from a source other than the insured peril, is generally not covered.

The 12% condition: if the sum insured on any one item is less than the value of that item, the insured bears a rateable proportion of every claim (average clause).

The 5% condition: on a declaration policy, the insured must declare the value of stocks monthly; a claim is settled on the average of the declarations or the actual value, whichever is higher.

Reinstatement value policies require intimation of intention to reinstate within the specified period; otherwise settlement reverts to market value basis.

Removal of debris and professional fees are typically sub-limits (often a percentage of the claim) and must be separately noted in the policy schedule.

The policy is voidable for misrepresentation, non-disclosure, or fraud; premium payment and notification of loss are conditions precedent to liability.

Special perils such as terrorism, earthquake (where not in the standard SFSP), and accidental damage are extensions that must be explicitly endorsed and separately rated.

Assess loss on the basis of the policy: market value (replacement cost less depreciation) or reinstatement value (cost to rebuild/replace with new, subject to sum insured).

Determine the value at risk on the date of loss, not the date of policy inception; average clause is applied against this value.

For stock, compute loss as opening stock + purchases - sales - closing stock salvaged, cross-checked against books and stock statements.

Apply depreciation to damaged assets based on age, condition, and useful life; for machinery, use depreciation rates consistent with accounting standards or insurer guidelines.

Deduct salvage value realised or realisable from the gross loss before applying average; salvage belongs to the insurer unless the policy states otherwise.

For reinstatement claims, verify actual reinstatement has occurred or is contractually committed; otherwise settle on market value basis.

Where loss exceeds sum insured, the maximum payable is the sum insured less any applicable deductible or excess.

Document the cause of loss, extent of damage, and basis of valuation in the survey report; attach photographs, invoices, and stock statements as evidence.

For partial losses, distinguish between repair cost and replacement cost; repair is usually the appropriate measure if the asset remains functional.

On appointment, the surveyor should confirm the licence is valid for the relevant class of business (fire) and that no conflict of interest exists with the insurer or insured.

Initial site visit: record the date/time of loss, cause, extent of damage, and secure the scene; photographs and videos should be dated and geo-tagged where possible.

Collect key documents: policy copy, claim form, FIR/incident report, fire brigade report, stock statements, purchase invoices, books of account, and repair/replacement estimates.

Verify the insured's books and records to establish the value at risk and to detect over-insurance, under-insurance, or misrepresentation.

Prepare a preliminary report within the timeline agreed with the insurer, followed by a detailed final survey report with findings, valuation, and recommendations.

The survey report should state the proximate cause, whether the peril is covered, the basis of assessment, and any exclusions or conditions affecting liability.

Maintain a chain of custody for salvaged property and record its valuation and disposal; obtain the insured's acknowledgement of salvage.

Submit the report to the insurer within the timeframe stipulated by the IRDAI (Surveys) Regulations and the insurer's instructions; keep copies of all correspondence.

Avoid expressing legal opinions on policy interpretation; the surveyor's role is factual assessment and loss quantification, leaving coverage decisions to the insurer.

The IRDAI (Insurance Surveyors and Loss Assessors) Regulations, 2015 govern licensing, renewal, and conduct of surveyors and loss assessors in India.

A surveyor must hold a valid licence for the class of business (fire, marine, motor, etc.) in which the survey is conducted; practising without a valid licence is an offence.

Licence is granted for a specified period (typically three years) and must be renewed before expiry; renewal applications are to be made within the prescribed timeframe.

Surveyors must maintain independence and impartiality: no direct or indirect interest in the subject matter of the survey, and no remuneration contingent on the claim amount.

The code of conduct requires confidentiality of information obtained during surveys, professional competence, and avoidance of conflicts of interest.

Surveyors must not accept surveys where they have a financial interest, family relationship with the insured, or prior involvement that compromises objectivity.

Surveyors must maintain records of surveys conducted and make them available to IRDAI on request; failure can attract disciplinary action including suspension or cancellation of licence.

Fees for surveys are regulated by IRDAI and must not be linked to the amount of loss assessed; fee scales are prescribed and must be adhered to.

Breach of the code of conduct may result in penalties, suspension, or cancellation of licence under the Regulations; IRDAI may also refer matters for prosecution.