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Fire Insurance
Fire insurance is a type of insurance policy that provides financial protection to the policyholder against losses and damages caused by fire. This insurance policy covers the cost of repair or replacement of property, including buildings, contents, and inventory, damaged or destroyed by fire. It is commonly known as, “Standard Fire and Allied Perils Policy”.
In addition, the policy may also cover losses caused by perils such as lightning, explosion, and other specified perils. Fire insurance is vital for all businesses and homeowners to protect their valuable assets from fire-related risks.
Who should get the Fire Insurance coverage
Godown, cold storage & warehouse owners, shopkeepers
Building owners who have contents, which are highly fire risk prone, i.e., furniture, household goods
Manufacturing and industrial units
Transporters of goods, with high fire risk
Hospitals, clinics, hotels, lodges and boarding service providers
Research institutes, educational institutes, Banks and financial institutions, Charitable trusts and similar institutions
Any person or institution or entity or firm or organization which may be exposed to losses resulting from fire and allied perils
Ways fire insurance works
Premium Payment
The policyholder pays a premium to the insurer based on the value of the property insured or mutual acceptance of the value of the commodity and the risk associated with it.
Risk Assessment
The insurer assesses the risk associated with the property or the product, such as its location, construction, and occupancy type, among other variables, to determine the premium amount.
Policy Coverage
The insurer issues a policy document that outlines the coverage and exclusions of the policy, along with the policy period and sum insured.
Loss Assessment
In case of a fire or allied peril related loss, the policyholder informs the insurer immediately and provides necessary information and documents, such as the police FIR, fire brigade report, and the estimated cost of repair or replacement.
Settlement of Claim
After verifying the claim and assessing the damage, the insurer settles the claim by either reimbursing the policyholder for the cost of repair or replacement or by paying a lump sum amount.
Importance of fire insurance
Compliance with legal requirements
Fire insurance is mandatory for many businesses in India, especially those dealing with hazardous materials.
Protection against financial loss
This coverage helps businesses and homeowners avoid huge financial losses in the event of a fire.
Additional coverage
Fire insurance policies may also cover losses caused by other perils, such as lightning, explosion, and other specified perils.
Peace of mind
Knowing that one's property is insured against fire-related risks can provide peace of mind to business owners and homeowners, allowing them to focus on their daily operations without worrying about potential losses due to fire.
Cost-effective
The premium paid for fire insurance is often a small fraction of the value of the property insured.
Type of fire insurance (different types of fire insurance policies)
Average Policy
This is a type of fire insurance policy that applies to underinsured properties. In case of a partial loss due to fire or other specified perils, the insurer pays a proportionate amount based on the sum insured and the actual value of the property.
Declaration Policy
it is a type of policy, where there is a frequent fluctuation in stocks/ stock values and avoids under insurance (insurance at a lower value) of the stock. On the basis of pe-agreed terms, the stock value is declared periodically, i.e., monthly and at the policy year end, the premium is calculated on the basis of average stock value. Excess premium, if any is refunded.
Floating Policy
A floating policy is a type of fire insurance that provides coverage for a group of properties that may change in number or value over time. Typically, stocks stored in warehouse/godowns/storehouses, located at various locations and belonging to the insured, are covered. The sum insured for each property is not fixed and may vary depending on the nature and value of the property insured.
Floater Declaration Policy
A combination of Declaration and Floating policy, where the nature of stock holding, the location of stock and the value of stock are in a constant stage of flux.
Valued Policy
It is a type of fire insurance policy in which the insured and insurer agree to the value of the property to be insured before the policy is issued. This value becomes the sum insured, and the insurer pays this amount in case of total loss due to fire or other specified perils. The value of the compensation can be more or less, then the market value of the insured goods. Usually, work of art, jewellery, paintings, crafts, etc., are covered under such policy.
Specific Policy
It is a type of fire insurance policy in which a specific amount is insured against a specific risk, such as fire. The coverage is limited to the amount specified in the policy and does not extend to any other risks or damages. This is one of the few instances where the underinsurance is not penalized, at the time of claim, as the value of the insured subject is not taken into consideration.
Comprehensive Policy
A comprehensive policy is a type of fire insurance that provides coverage against a wide range of risks, including fire, burglary, machinery breakdown, and other specified perils. This policy offers comprehensive protection to the insured property and covers a broad range of risks.
Consequential Loss Policy
It is a type of fire insurance policy that covers indirect losses incurred due to a fire or other specified perils, such as loss of profit or rent during the period of restoration. The claim is settled by calculating the potential loss.
Replacement Policy
A replacement policy is a type of fire insurance that covers the cost of replacing the damaged or destroyed property with a new one of similar kind and quality, as long as the sum insured is sufficient to cover the cost of replacement. The claim is usually paid accounted for the depreciated value or the replacement price of the lost property.
Inclusions in a Fire Insurance Policy
Here are a few general inclusions in a fire insurance policy
Fire
Loss or damage caused by fire including damage caused by extinguishing fire.
Lightning
Loss or damage caused by lightning strikes.
Explosion/Implosion
Loss or damage caused by explosions or implosions.
Aircraft Damage
Articles dropped by an aircraft, airborne devices, etc, related loss.
Impact Damage
Damage or destruction caused to the insured property or goods due to direct impact or contact with a road/rail vehicle or animal.
Subsidence, Landslide and Rockslide
Damage to the property or destruction caused to the insured property or goods due to land sinking to a lower level than the land immediately around it, landslide and rockslide.
Bursting and/or overflowing of Water Tanks, Apparatus & Pipes
Loss or damage caused by bursting and/or overflowing of Water Tanks, Apparatus& Pipes.
Leakage from water sprinkler installations
Loss or damage caused by leakage from water sprinkler installations.
Riot, Strike, Malicious Damage (RSMD)
Loss or damage caused by riots, strikes, or malicious damage.
Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood & Inundation (STFI)
Loss or damage caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood & Inundation.
Missile Testing operations
Loss or damage caused by missile testing operations.
Bush Fire
Loss or damage caused by bush fire.
Exclusions from a Fire Insurance Policy
Here is a list of a few general exclusions from a fire insurance policy in India
Wilful acts
Losses or damages that are caused due to wilful acts of the insured or any of its representatives.
Pollution and contamination
Losses or damages caused by pollution or contamination, including that arising from industrial or commercial operations.
Electrical and mechanical breakdowns
Losses or damages caused by electrical or mechanical breakdowns, unless it is caused due to a fire or explosion.
Loss of earnings
Losses or damages resulting in loss of earnings, profits, or goodwill.
Consequential losses
Losses or damages resulting from indirect or consequential losses or damages.
Illegal activities
Losses or damages resulting from any illegal activities such as smuggling or other illegal trade practices.
Property outside the insured location
Losses or damages to property that is situated outside the insured location.
Why Buy a Fire Insurance Policy From PolicyLeader
24*7 Customer Care and Claims Assistance
Policyleader.com offers round-the-clock support to assist customers with any queries or claims related to their fire insurance policy.
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Seamless Process
Policyleader.com offers an easy and hassle-free online process for purchasing a fire insurance policy.
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Complete assistance during mishaps
Policyleader.com provides complete assistance to policyholders in case of a fire or other unfortunate events.
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Complete paperless and cashless processes
Policyleader.com offers completely digital processes for purchasing and managing fire insurance policies, saving customers time and effort.
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Value-for-money premium options
Policyleader.com offers premium options for fire insurance policies that can be customized to meet the needs and budget of the customer.
Read More...Documents required for a fire insurance claim
The exact documents required for a fire insurance claim can vary depending on the case and the specific policy. However, here are some common documents that may be required for a fire insurance claim
- Claim form.
- FIR or police report.
- Fire brigade report.
- Survey report.
- Photographs or videos of the damaged property.
- Original bills and receipts for damaged items.
- Repair or replacement estimates.
- Policy documents.
- Identity proof of the policyholder.
- Any other relevant documents as required by the insurance company.
