Types of Fire Insurance Policies

Fire insurance is a form of property insurance which protects people from the costs incurred by fires. When a structure is covered by fire insurance, the insurance policy will pay out in the event that the structure is damaged or destroyed by fire.

Specific Policy

In this type of policy, the insurance company is liable to pay a sum, which may be less than the property’s real value. The insured is called to bear a part of the loss, as the actual value of the property is not considered in deciding the amount of indemnity.

Valued Policy

In this type of policy, the value of the commodity is already set and actual loss is not taken into consideration. The policy follows a standard contract of indemnity, wherein the policyholder gets paid a specific amount of indemnity, without considering the actual loss.

Floating Policy

This type of policy is subject to average clause and the extent of coverage expands to different properties, belonging to the policyholder, under the same contract and one premium. The floating policy also provides protection of goods kept at two different stores.

Comprehensive Policy

Known as “all-in-one” policy, the insurance company indemnifies the policyholder for loss arising out of fire, burglary, theft and third party risks. In this type of policy, the policyholder also gets paid for loss of profits incurred, due to fire, till the time the business remains shut.

Replacement or Re-instatement Policy

As per replacement or re-instatement policy, the insurance company instead of paying the policyholder the amount of indemnity in cash, replaces the damaged property/commodity with a new one.

Fire Insurance Claim Procedure

Individuals/corporate must inform insurer as early as possible, in no case later than 24 hours.

Provide relevant information to the surveyor/claim representative appointed by the insurer.

The surveyor then analyzes the extent/ value of loss or damage.

The claim process takes anywhere between one to three weeks.

Documents Required

True copy of the policy along with schedule

Report of fire brigade

Claim Form

Photographs

Past claims experience

Need of Fire Insurance

Fire insurance is important because a disaster can occur at any time. There could be many factors behind a fire, for example arson, natural elements, faulty wiring, etc. Some facts that stress the importance of fire insurance include:

Fire contributes to the maximum number of deaths occurring in America due to natural disasters.

Eight out of ten fire deaths take place at home.

A residential fire takes place after every 77 seconds.

The major reason for a residential fire is unattended cooking.

Fire Insurance in India

Fire insurance business in India is governed by the All India Fire Tariff that lays down the terms of coverage, the premium rates and the conditions of the Fire Policy. The fire insurance policy has been renamed as Standard Fire and Special Perils Policy. The risks covered are as follows:

Dwellings, Offices, Shops, Hospitals (Located outside the compounds of industrial/manufacturing risks) 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

Perils Covered

Cause of Loss Fire Lightning Explosion/Implosion Aircraft damage Riot, Strike Terrorism Storm, Flood, inundation Impact damage Subsidence, landslide Bursting or overflowing of tanks Missile Testing Operations Bush fire etc.

Perils Covered
  • Loss or damage caused by war, civil war and kindered perils
  • Loss or damage caused by nuclear activity
  • Loss or damage to the stocks in cold storage caused by change in temperature
  • Loss or damage due to over-running of electric and/ or electronic machines
Perils Covered

In the event of a fire loss covered under the fire insurance policy, the Insured shall immediately give notice there of to the insurance company. Within 15 days of the occurrence of such loss the Insured should submit a claim in writing giving the details of damages and their estimated values. Details of other insurances on the same property should also be declared.

Indian Companies Offering Fire Insurance