In Cyprus, reimbursement for loss or damage to premises or goods caused by fire is based on the principle of placing the insured back to his position before the fire occurred, as George Coucounis explains.
Fire may occur due to various reasons and damage premises, their contents and neighbouring buildings. Such loss and damage caused to any person can be repaired by the owner or by the insurance company when the property is insured.
The amount stated in the insurance policy does not necessarily correspond to the measure of the damage. An insured person must always provide proof of the extent of the loss and damage he suffered so that to be compensated accordingly. A damage caused to goods is assessed at their market value or at the insured’s cost prior to the fire. The said damage can correspond to the amount insured, however it is not paid as the sum stated in the insurance policy, but as the amount necessary for covering the loss and damage.
It is important to know that every insurance policy constitutes an indemnity agreement and the insured may choose the amount to be insured for and pay the relevant premium. The insurance company despite accepting the risk is not bound to indemnify him with the amount insured. In the event fire damage takes place, the insured is not entitled to recover more than the amount stated in the insurance policy, provided always he produces adequate proof of his real loss and damage.
The burden of proving the value of the goods or of the property damaged rests upon the insured who is obliged to prove their value at the time of the fire. The way of assessing the damage is to define the market value of the property or the cost of repairing it and to put the insured at the place he was prior to the fire.
When the damage is caused by fire and the property is insured, the insurance company will inspect and assess the damage through a surveyor. In the case of buildings, the damage can be assessed through an expert who may be an architect, a civil engineer or a quantity surveyor and he can be appointed either by the insured or the insurance company. When the damage is caused to the contents or to goods, it can be assessed either according to their purchase price or to their selling price provided sales were made at the time of the fire or it may be based on the books kept or the invoices issued regarding similar sales made.
When it comes to domestic items which are destroyed by fire, the assessment of the damage is again made according to their purchase price or to the cost for their replacement.
In some cases, damage is caused by fire which starts from one building and moves to a neighbouring one. Here, the owner or the householder of the building where the fire started is responsible for the damage caused to his property and to the property of his neighbour. Therefore, he will be indemnified for his loss and damage if the property is insured and in case he included a cover for third party risk his neighbour will also be indemnified.
A fire may be caused to premises by the malicious act of an arsonist who is unknown and it may be spread to the next door premises. The question arising here is whether the owner of the premises where the fire started is responsible to repair the damages caused to the property of his neighbour.
The answer is negative provided the owner has taken all reasonable measures to prevent the spread of the fire to the property of his neighbour. The fire is considered to have been caused by an independent act of a third person, an event unforeseeable to the owner who under such circumstances can escape liability by proving that he was not negligent and that he took all necessary measures to extinguish the fire and to prevent it from spreading to the property of his neighbour.
Another issue worth mentioning is when people under-insure their property in order to avoid paying the actual premium. This attitude is not recommended and it may not come to their benefit in case an insurable risk occurs. The insurance company will be held liable pro rata and consequently they will not receive adequate compensation.
George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus.
Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.