Fire insurence

 Fire Insurance

Introduction: 

The most popular Property Insurance cover in India is Fire Insurance. Although called Fire Insurance, the policy offers coverage against the operation of various specified perils under a single policy. The policy is technically named as Standard Fire and Special Perils Policy.

A fire insurance policy can be offered to any sort of property such as residential dwellings, industrial occupancies, warehouses and non-industrial entities. Infrastructural utilities like roads, bridges, tank farms and the like can also be insured under this policy. Building structure, contents, furniture and fixtures, plant and machinery, electronic equipment, utilities and stocks can all be included under the policy for apt coverage.

The Fire Insurance protects the insured against the risk of fire. Any property which is subject to damage by fire can be insured against fire. The loss due to fire, lightning, and explosion is also covered by Fire Insurance. Fire Insurance is for protection and not for profit. The amount of premium of fire insurance depends upon the value of the subject matter, place of storage and extent of risk involved. Fire insurance protects against the risk of damage by fire property and assets.

Definition:- 

According to the Indian Fire Insurance Act, 1938; "In addition to other insurances, fire insurance is a kind of insurance contract which takes place against fire and such other risks which are mentioned in the fire insurance contract."

Types of Fire Policies 

1. Valued Policy:- This is a type of policy where the value of the subject matter of insurance is agreed upon at the time of making the contract. The insurer has to pay a specified amount of value irrespective of the amount of loss caused due to fire. This type of policy can be taken for artwork, painting, etc. where the value of damaged articles becomes difficult to assess/measure. Principle of indemnity is not applicable here.

2. Average Policy:- It is a policy that contains an average clause. If the subject matter is not insured as per the exact market value or undervalued, then the insurer is liable to pay that percentage of the loss for which it is insured. E.g. if a policy is taken for Rs 50,000 against the market value of Rs 1,00,000. The loss incurred due to fire is Rs 40,000, then the Insurance company will pay Rs. 20,000 (50% of Rs 40,000).

3. Specific Policy:- In case of specific policy, the property is insured for a specific sum irrespective of the market value. If there is a loss, the stated amount will have to be paid to the policyholder. But the actual value of the subject matter is not considered in this respect. E.g. a property of value Rs 1,00,000 is insured for Rs 60,000 and the loss due to fire is Rs 30,000 then the insurance company will pay Rs 30,000 in full as compensation

4. Floating Policy:- This policy can be taken for those goods which are lying in different localities or godowns or warehouses since the quantity of goods lying at different places from time to time, it becomes difficult for the owner to take specific policy so businessmen and traders take fluctuating policy. Such a policy is usually taken under one sum and one premium for goods lying at different places. This policy is also known as open policy.

5. Comprehensive Policy:- Comprehensive policy covers all types of risks like fire, burglary, riots, explosions, strikes, etc. this policy is also called an all in one policy. This type of policy is not popular in India but very popular in countries like the UK, the USA, etc.

6. Excess Policy:- Excess policy is taken when the value of the stock in the market constantly fluctuates. In such an instance it is not advisable to take one policy of a certain sum, but instead, two policies can be taken.

7. Reinstatement Policy:- This is a type of fire Insurance Policy where the insurer undertakes to replace the property or goods lost by fire. In this policy instead of paying compensation for the property lost by fire, the property is replaced. The rate of premium is higher in Reinstatement Policy.

8. Blanket Policy:- Blanket Policy covers all fixed and current assets of the assured in one policy. Under this policy, all the assets lying at different places are covered under one premium and one policy.

Coverage under Fire Insurance Policy

It covers all the losses arising out of the accidental fire, subject to terms and conditions of the fire policy which is limited by the policy value and not by the extent of damage sustained by the property owner. In general, the following losses are covered:

• Actual loss of goods due to fire
• Additional living expenses due to damage to personal property
• Loss to adjacent building or property due to fire in the insured building
• Compensation paid to fire fighters
• Fire triggered by electricity
• Overflowing of a water tank or pipes

Claim Process

If you happen to encounter an eventuality because of fire, you need to make claims under fire insurance. To avoid rejection and fasten the claim process, you should be clear of the procedure and the documents needed.

• Immediately inform the insurance provider either online or by calling on their 24/7 toll-free number
•  Also, contact the fire brigade and the police
• Insurance company will appoint a surveyor for scrutiny of the situation
• Submit the duly filled in claim form and other proofs and photographs
• If approved, the claim can be settled from 15-30 days, as the time duration is different for the insurance companies

Exclusions in Fire Insurance Policy

Not all situations and cases are covered by fire insurance. Some situations are excluded.

• Fire caused by war, nuclear risks, riot or earthquake
• Planned or intentional fire by the enemy or public authority for whatsoever reasons
• Underground fire

Loss because of theft during or after the fire

Malicious or hostile, human-made causes of fire.

References:

https://www.policybazaar.com/corporate-insurance/articles/types-of-fire-insurance-policy-in-india/

https://www.shaalaa.com/question-bank-solutions/explain-the-types-of-fire-insurance-concept-of-insurance_98596

https://www.paisabazaar.com/commercial-insurance/fire-insurance/