MAHATMA EDUCATION SOCIETY’S

Pillai HOC College of Architecture Rasayani

Valuation
Module – 5
Professional Practice – 2 (B. Arch, Mumbai University)
Dr. Joydeep Dutta – Fall 2020-21
Module 5: Valuation
• Fire Insurance
• Easements
• Arbitration
Fire Insurance
• Fire insurance is property insurance that covers damage and losses caused
by fire.
• The purchase of fire insurance in addition to homeowners or
property insurance helps to cover the cost of replacement, repair, or
reconstruction of property, above the limit set by the property
insurance policy.
• Fire insurance business in India is governed by the All India Fire Tariff that
lays down the terms of coverage, the premium rates & the conditions of the
fire policy
• The fire insurance policy is now called "Standard Fire and Special Perils
Policy”
• It is often associated with Life insurance and General Insurance
• Earlier, fire insurance was nationalized (L.I.C. and G.I.C), but now private
insurance companies are allowed
Risks & perils covered by Fire Insurance
• The risks covered by fire insurance are as follows:
• Dwellings, offices, shops, hospitals:
• Industrial, manufacturing risks
• Utilities located outside industrial/manufacturing risks
• Machinery and accessories
• Storage risks outside the compound of industrial risks
• Tank farms/gas holders located outside the compound of industrial risks
• The following perils (causes of loss) are covered:
• Fire | Lightning
• Explosion, implosion | Aircraft damage
• Riot, strike | Terrorism
• Storm, cyclone, typhoon, tempest, hurricane, tornado, flood & inundation
• Impact damage | Malicious damage
• Subsidence, landslide |Bursting or overflowing of tanks
• Missile testing operations | Bush fire
Some Companies providing Fire Insurance in India
• National Insurance Co.
• The New India Assurance Co.
• The Oriental Insurance Co.
• United India Insurance Co.
• ICICI Lombard General Insurance Company Limited
• Tata AIG General Insurance Company Limited
• HDFC ERGO General Insurance Company Limited
• Bharti AXA General Insurance Company Limited
• Reliance General Insurance Company
• Bajaj Allianz General Insurance Company Limited
Fire Insurance: Procedures & Essentials
• It is a contract of insurance, not a policy of insurance
• There must be monetary consideration (premium)
• Essentials for formation of Fire insurance contract
1. A proposal must be made by the insured
2. If proposal rejected by insurance company, the premium deposit is refunded,
otherwise policy issued
3. Deposit receipt for payment of premium is called ‘cover note’.
• The essential features of a cover note are:
• If the fire takes place between the date of receipt of cover note and the date of
intimation by the company of acceptance/rejection of policy, the company will
be responsible
• It offers protection for a limited period as intimated – hence called ‘interim
protection note’
Fire Insurance: Procedural conditions to Claims
• Notice of fire forthwith and to file claim report within 15 days with details
• Forfeiture condition, if claim found fraudulent
• Reinstatement clause
• The damaged property is replaced by a new property of the same type and same value
• Right of entry clause
• On the happening of loss or damage to any of the property insured, the Company may enter and
take/keep possession of the building/premises where the loss or damage has happened
• Salvage (or scrap) Value clause
• This value is subtracted from any loss settlement if the insured retains the damaged property
• Arbitration condition
• This condition is to ensure that disputes are settled quickly between claimant and Company
Fire Insurance: Procedural conditions to Claims
• Double insurance clause
• One can take more than one policy with different companies on the same property but
on the following conditions
• The insured has to give notice to the company about other policies failing which the
insured will lose benefit of the policy under consideration
• In case of fire both companies will share the loss proportionately and the owner can
not claim damages from both companies separately (making profit by insured is
prohibited)
• Average Clause
• If value of the property insured is greater than the insured value then a proportionate
cost of the difference in the reinstatement value shall be borne by the owner
• If property is over-insured the company is liable to pay only the value of the property
• If it is under insured the company will pay only on pro-rata basis making the owner
also to pay proportionately for the loss
• If there are multiple policies on the same property, then all the Companies together
will pay the actual cost of damage proportionately
Fire Insurance: Architect’s role
How is the Architect professionally connected with fire insurance?
• While finding the fair market value, insurance comes as outgoing
• Need mention under the building contracts
• To advise on the insurable value of the property
• To prepare the claim report in case of loss due to fire and to
represent the claim before company
Easements
Definition of Easement (as per the Easements Act of 1882)
• An easement is a right which the owner or occupier of certain land possesses for the
beneficial enjoyment of that land, to do and continue to do something, or to prevent
and continue to prevent something being done, in respect of certain other land not
his own.
• Dominant and servient heritages and owners
• The land for the beneficial enjoyment of which the right exists is called the dominant
heritage, and the owner or occupier thereof called the dominant owner
• The land on which the liability is imposed is called the servient heritage, and the
owner or occupier thereof called the servient owner
• Explanations:
• the expression "land" includes also things permanently attached to the earth;
• the expression "beneficial enjoyment" includes also possible convenience, remote
advantage, and even a mere amenity;
• and the expression "to do something" includes removal and appropriation by the
dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of
the soil of the servient heritage, or anything growing or subsisting thereon
Illustrations of Easement (as per the Act of 1882)
• A, as the owner of a certain house, has a right of way thither over his neighbour B's
land for purposes connected with the beneficial enjoyment of the house. This is an
easement.
• A, as the owner of a certain house, has the right to go on his neighbour B 's land, and
to take water for the purposes of his household, out of a spring therein. This is an
easement.
• A, as the owner of a certain house, has the right to conduct water from B 's stream
to supply the fountains in the garden attached to the house. This is an easement.
• A, as the owner of a certain house and farm, has the right to graze a certain number
of his own cattle on B 's field, or to take, for the purpose of being used in the house,
by himself, his family, guests, lodgers and servants, water or fish out of C 's tank, or
timber out of D 's wood, or to use, for the purpose of manuring his land, the leaves
which have fallen from the trees in E 's land. These are easements.
• A dedicates to the public the right to occupy the surface of certain land for the
purpose of passing and re-passing. This right is not an easement.
• A is bound to cleanse a water course running through his land and keep it free from
obstruction for the benefit of B, a lower riparian owner. This is not an easement.
Easements
• It is a right the owner (or occupier) of a certain land possesses for the
beneficial enjoyment of that land, with respect to certain other land
• to do and continue to do something on it
• to prevent and continue to prevent something from being done to it
• The Indian Easements Act 1882
• The right should be for the beneficial enjoyment of the dominant
heritage
• Since the easement is attached to the land, it gets automatically
transferred on sale (e.g. right of access)
Dominant & Servient heritage
• Dominant Heritage: The land for which
the easement exists.
• The owner is benefitted from the provisions
of the Act Dominant
Heritage
• The landowner of the dominant heritage is
entitled to claim certain concessions from
the landowner of the servient heritage

Right of way
• Servient Heritage: The land on which Servient
the liability of providing the easement is Heritage
imposed
• The owner of the servient heritage has to
sacrifice a part of his absolute right of ACCESS ROAD
enjoyment and ownership of his land for the
beneficial enjoyment of the land of the
dominant owner
Continuous & Non-continuous Easement
• Continuous easement
• Easements whose enjoyment is continued with out the act of man
• e.g. Right to receive light from a neighbour’s property is a continuous
easement as no act of man is required to do that
• Similarly a drain under a property is a continuous easement.
• Discontinuous easement
• Easement that requires act of man for enjoyment
• e.g. Right to take water from the neighbour’s well which requires a fresh act
on every occasion
• Similarly Right of Access is also discontinuous, i.e. each movement is a man-
made act
Some Important Easements
1. Right to enjoy light and air from and over the property of the
adjoining owner. (easement of air and light)
2. Right of access from adjoining owner’s land (easement of way)
3. Right to run and maintain water and drain pipes thru the
neighbour’s land (easement of drainage and water supply)
4. Right of flow of water (easement of water course)
5. Right of support for a building (easement of support)
Acquisition of Easements
• Various modes of Acquisition of easements:
• By grant
• By necessity
• By prescription
• By grant: An easement may be granted by inserting a clause of granting such a
right (express or implied) in the deed of sale or mortgage or some other form of
transfer. This involves expressing the clear intention of granting by servient owner
• By necessity: This arises when one property is severed into two, either by sale,
mortgage, partition etc. and they are so situated that one can not be enjoyed
without exercising a particular privilege upon the other
Acquisition of Easements
• By prescription: As acquisition of a right due to constant use or possession for
over 20 years (or over 60 years in case claimed against the Government).
• However it is necessary to obtain declaratory order from the court that the
dominant owner is entitled to the prescriptive easement claimed there in within
2 years after the expiry of 20 years
• To acquire the easement by prescription it must be proved that:
• It has been enjoyed peacefully without interruption
• It has been enjoyed for 20 years
• It is an easement
Other Rights resembling Easements
• There are other rights that resemble easements:
• Natural Rights
• Customary Rights
• Natural Rights: Normally arise out of geographical configuration of the property
and are inherent in the property itself.
• e.g. Natural situation where water is discharged into the lower level land from the
higher one, is a natural right
Customary Rights: There are rights arising out of customs vested in favour of a large
body of persons like inhabitants of a particular village or certain caste.
• e.g. Right to bury the dead at a certain ground; or right to have Ganesh
festival/Holi at a certain ground
• It is a right in gross whereas the easement is always appurtenant to a tenant
Some Natural Rights
1. To receive air and light freely (sometimes called Ancient Lights)
2. To receive light which falls vertically upon the land and not light from the
adjacent plot.
3. No right to pollute air.
4. Right of support to land in its natural condition – digging by adjoining owner
endangering the property.
5. Right to discharge water from the higher plot to lower plot.
• But right to discharge polluted water is not a natural right. Such right should be acquired
through prescription or easement.
Arbitration
Arbitration
• Arbitration is a method of settling disputes and differences between two or more
parties, whereby they appoint one or more persons to adjudicate on the said
disputes that have arisen, and agree to abide by the decision of the adjudicators
• In choosing arbitration, the parties opt for a private dispute resolution procedure
instead of going to court
• Arbitration in India is governed by the law of arbitration in India which states that
the for adopting the arbitration as a dispute resolution mechanism an agreement to
that effect should be signed between the disputing parties
• The Arbitration and Conciliation Act 1996 is the key law that governs arbitration in
India
Mediation
• Mediation is a process involving chosen intervention by a neutral person appointed
by both the parties to settle their disputes and differences.
• It is a term of International Law which signify the interposition by a neutral and
friendly state between two states at war or on the eve of war, of its good offices to
restore or preserve peace
• Both the parties lay bare facts before mediator and after hearing both the sides
separately show its relative position, law applicable as well as impacts beside
persuasions and to some extent spirit of ‘give and take’
• Based on the opinion of the mediator the parties have two options available –
either Settle the matter, or enter into further negotiations
• The mediator is technically not an arbitrator and the signed settlement is not an
award but a mere contract
• Possible drawbacks of Mediation:
• Hearing each party in the absence of the other.
• Disclosure or information of one to another for settlement can rebound if fails to settle and can
use the above facts in the court of law
Conciliation
• Conciliation is a process alternative to arbitration for settling the disputes, though it
resembles arbitration
• Conciliator, usually possessing relevant expertise, can be sole, appointed by both parties or
joint one appointed by both the parties
• If there are two or more conciliators they meet together after study with an open mind to
ascertain the fields of agreements/ disagreement
• The result will be agreement on a number of issues whereby the fields of dispute get
reduced
• Meeting between the conciliators are without prejudice and it is not advisable for them to
rush to the parties for their dictate on every act
• Drawbacks: The process may become a failure if the conciliators :
• Are emotionally involved
• Suffer from superiority complex
• Are under the dictates of the parties
Arbitration vs. Mediation vs. Conciliation
• In an arbitration, the arbitrator looks into the legal rights and wrongs of a dispute
and makes a decision, whereas
• In a mediation, the mediator, essentially, helps parties to settle their disputes by a
process of discussion and narrowing differences. The mediator helps the parties to
arrive at an agreed solution
• Conciliation is where parties, with assistance from a dispute resolution practitioner
(the conciliator) discuss issues to reach an agreement, whereas
• Arbitration is where the parties to a dispute present arguments and evidence to a
dispute resolution practitioner (the arbitrator). The arbitrator makes binding
decisions
• Unlike the conciliator who has an active role in the conciliation process (e.g. he can
propose a solution to end the conflict), the mediator assists the parties throughout
the mediation process to help them find a solution to their dispute by themselves.
The conciliation is free for the parties.
Thank you!