Insurance that protects your goods and property against fire related damages is
called Fire Insurance. Fire insurance covers damage or loss to a property because
of fire. It is a specific form of insurance in addition to homeowner’s or property
insurance, and it covers the cost of replacement and repair or reconstruction above
what the property insurance policy covers. Fire insurance represents a contract
where indemnification against the fire consequences is done by reimbursement of
the damage either in installments or variable lump sums.
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TYPES OF FIRE INSURANCES
1. Specific Policy:
In this policy a specific sum insured and the lower of sum insured, and total loss
is payable. If the loss exceeds the sum insured under the policy, it pays only the
sum insured.
2. Specific Policy with Average Clause:
At times the insured may buy a nominal sum assured where the actual value of loss
can be substantial. In such cases, the insurer applies the average clause to limit
its liability, and the compensation amount is proportionately reduced.
3. Comprehensive Policy:
This refers to the complete 360 degree protection for the property if the insured
property is a house, shop, office, or factory it will also cover the loss due to
burglary and break-ins.
4. Valued Policy:
Useful for insuring precious items, artwork, and antiques, the asset’s value is
agreed between the insurers and insured at the time of insurance. In most cases,
the market value is not available for such items.
5. Fire Floater:
A floating policy is taken up to cover the risk of goods lying at different places.
The goods should belong to the same person and one policy will cover the risk of
all these goods. This policy is useful to those businessmen who have their goods
in warehouses at different places.
6. Reinstatement Value Policy:
This policy compensates the market value of the lost property after accounting for
any depreciation (not applicable for under construction property or machinery).
The sum assured is based on the market value of the similar asset.
Fire Insurance Policy Coverage
- All properties on land, immoveable or moveable, excluding land cost,
at various locations are covered against the fire insurance included perils that
were decided during the policy formation.
- Standard fire insurance can extend to cover uncertainties and expenses,
on payment of additional premium. Some perils can be omitted from the plan to get
discount on premium rates.
Risk Covered under the Policy
- Lightning
- Explosion/ Implosion
- Aircraft Damage
- Riot, Strike, Malicious Damage (RSMD).
- Storm, Cyclone, Typhoon, Hurricane, Tornado, Flood and Inundation
(STFI).
- Impact Damage
- Subsidence and Landslide including Rock Slide
- Bursting and overflowing of Water Tank and Pipes
- Bush Fire
- earthquake
- Terrorism