Fire Insurance
Fire insurance is a type of property insurance that covers loss or damage caused to your office buildings, home or any other site/place where you run your business. Purchasing this insurance policy helps to cover the repair cost, replacement cost or reconstruction of property as per the sum insured amount specified in the policy.
Why is Fire Insurance important?
Let us understand the fire insurance meaning and why is it a wise choice. Here are some of the features of fire insurance that indicate why you should purchase it.
- Protection against any loss or damage caused due to any movable or immovable object that turns into a fiery explosion.
- A fire policy covers property damage such as furnishings, office building, machinery, stock, etc. due to a fire accident.
- Besides, fire perils, a burglary insurance policy also provides coverage for the damages caused due to any natural calamity, explosion, bursting of the water tank, etc.
Types of Fire Insurance
- Standard Fire & Special Perils: This is a type of fire insurance contract between the insurer and insured that provides coverage for the loss or damage caused to the building, plan & machinery, stock and other assets for a sum insured exceeding Rs 50 Crores.
There are 5 types of policies specifically under Standard Fire & Special Perils insurance (SFSP). They are as follows:
- Specific Policy: A specified sum insured is determined for a particular property and in case of loss the actual loss does not exceed the chosen insured amount
- Comprehensive Policy: This policy provides extensive coverage not only against fire related perils but also provides coverage against any other perils, such as robbery, burglary, civil rampage, etc.
- Valued Policy: At the intimation of the policy, the value of a particular property is determined. Instead of the current market value, the indemnity of the policy is determined which is based on the value of the property. So, the agreed value at the time of purchase is the deciding factor of policy indemnity here.
- Floating Policy: If you deal with fluctuating stocks in different areas. This policy provides coverage for one or more goods at the same time under one premium and one sum assured.
- Valuable Policy: The claim amount is decided according to the current market price of the damaged property.
- Bharat Sookshma Udyam Suraksha: This policy provides coverage for the loss or damage caused to the building, property, plant & machinery, stocks and other assets for a sum insured up to Rs. 5 Crores.
- Bharat Laghu Udyam Suraksha: This policy provides coverage for the damage or destruction caused to the building, plant & machinery, stocks and other assets for a sum insured between Rs 5 Crores and Rs 50 Crores
Important Points
Inclusion under Fire Insurance
Fire
The policy provides coverage for any damage caused due to the fire. Besides, any damage caused due to natural heating, own fermentation or unconstrained burning is not included.
Lighting
If any damage/loss occurs because of lighting, for instance, cracks in the roof/building area, etc. it will be covered.
Explosion
Damage caused by a fire explosion is covered under this policy.
Aircraft Damage
If any damage happens which leads to fire due to an aircraft, for instance, articles dropped by an aircraft, airborne devices etc. will be covered under the policy.
Terrorist Activity, Riots/Strike
Any harm to the protected property caused because of a strike, riot or any fear-monger action, is secured by fire insurance.
Natural Calamity
Any damage to the insured property due to any natural calamity such as storms, typhoons, etc. is covered under the policy.
Landslide/Rockslide
You will be covered for the destruction caused to your property due to a rockslide/landslide.
Bursting/Overflowing of the Water Tank
If the property is damaged due to bursting/overflowing of the water tank, it will be covered.
Bush Fire
Setting fire to overgrown bushes/plants may end up damaging the property. This will be covered under the policy. Please note that the policy will not cover the destruction caused due to the forest fire.
Points Excluded under Fire Insurance
- Willful or intentional damage
- Damage to stocks in cold storage due to change in temperature
- War, invasion or war-like operations
- Pollution or contamination
- Missing property or mislaid property
- Consequential or indirect loss
- Fees or expenses while preparing a claim
- If the insured premises or building remains unoccupied for more than 30 days
- Electrical machines damage (any particular machine)
- Short-circuit
- Leakage of electricity
Eligibility Criteria to Buy Fire Insurance Policy
- Eligibility Criteria to Buy Fire Insurance Policy
- Anyone who possesses a building, furniture, household articles and so on.
- Retailers or shopkeepers, godown keepers.
- Banks, financial, education, research institutes, and so on.
- Service suppliers include hotel owners, medical clinics, lodging, clinics and so on.
- Manufacturing and industrial firms, transporters.
Add-on Coverage in Fire Insurance
Upon the payment of an additional premium of fire insurance, the insured can benefit the following add-on coverage
- Earthquake
- Wreckage removal
- Forest fire
- Loss of rent
- Start-up cost
- Alternate accommodations.
- Unconstrained burning
- Damage to stock due to change of temperature
- Leakage and contamination cover
- Architect, engineers, Surveyors consultation fee
- Cover for molten metal spillage
- Impact loss owing to insured’s own road/rail transit
Guidelines to File Fire Insurance Claim
Filing a claim for fire insurance is simple if approached in the correct direction. Below are steps to claim your fire insurance policy, which are:
- Inform the insurer
- Provide account details of damaged property
- Calculate an estimated amount
- Inspection visit
- Provide assistance to inspector if required
- Insurer will settle the claim
Required documents to file Fire Insurance Claim
The following is the list of common documents, which will be required while filling any claim related to fire insurance:
- Copy of policy
- Duly filled claim form
- Substantial proof (Newspaper cutting, News report etc.)
- Previous claim records if any
- Fire brigade report
- Forensic report, if required
- Copy of final investigation report
Frequently Asked Questions
The insurance policy protects the insured for a duration of 12 months.
Yes, the insured can cancel this policy at any time and get the premium back on a pro-rate basis.
Reinstatement value is also known as new replacement value which refers to the point when the insured reaches the same position as he was before the incident took place.
Impact damage means when an external object such as a car, bike, tree, etc. damages your insured property after collision or impact.
You can increase coverage by purchasing add-ons provided by the insurance company.
You can make changes to the coverage part of the policy. You can add or remove any particular add-on that will increase or decrease the premium amount accordingly. This will only be effective when the insurer accepts it and you have paid the additional amount for the added coverage.
The premium of the fire insurance depends on the following factors:
- The sum insured opted by the buyer
- Nature of insured property, plant & machinery, building, stocks, etc.
- History of claims
- Nature of insured business
- Risk profile of the business
Hotels, offices, shops, manufacturing/industrial risks, utilities kept outside the compound manufacturing plant or industry, storage risks and tank gas/farms holders outside the compound of manufacturing plant or industry.
No, there is no such provision to exclude inbuilt perils in the policy.
The insurer will provide coverage for the loss caused due to theft within 7 days from the occurrence of the specified peril.
At present, as per IRDAI guidelines, there is no option to increase the sum insured limit in the inbuilt covers.
Partial selection of assets is not allowed. The policy covers the complete value of plant and machinery, FFF and stock as per the risk premise.
