Do you know what is covered in your fire insurance policy?

The idea of fire insurance in an instant give way to vivid pictures of damages and losses caused by fire. Fire insurance in simple terms is a kind of insurance which covers damages and losses caused by fire. Fire insurance helps to cover the risk of loss of property caused by fire accidentally or unintentionally.

Let’s look at the policy a little in-depth.

Under section 2(6A) Insurance Act 1938, the fire insurance policy is defined as follows: “Fire insurance business means the business of effecting, otherwise than independently to some other class of business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies”.

What is the coverage to expect from this policy?
A fire insurance policy covers the loss that the insurer may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period and up to an agreed amount. This policy specifies the maximum amount, which the insured can claim in case of loss. This amount is not the measure of the loss. The loss can be analyzed only post the incident has occurred. The insurer is liable to make the payment for the actual amount of loss not exceeding the maximum amount fixed under the policy.

So, in totality the fire insurance policy pretty much covers you for all the losses arising due to an accidental fire. As per the policy’s terms and conditions you can expect the policy to give you coverage for a list of things that are a. The actual loss of goods caused by the fire, b. The loss of any adjacent property or building caused due to the fire in the insured property, c. Additional everyday expenses affected due to the damage endured by your property, d. Compensation amount paid to the firefighters, e. The fire triggered due to electricity issues, and f. Damage caused due to overflowing pipes or water tanks.

While these are the broad areas of coverage you can expect from the fire insurance policy, but it is important for you to know the exact coverage you are expected to get from your policy basis the type you choose. Here’s the list for you:

  • Valued Policy: This is a fire insurance policy wherein the agreement is framed and the insurer accepts to pay in the event of destruction of property by fire.
  • Specific Policy: This policy insures a risk for a specific amount. In case any loss occurs under this policy, the insurer pays all the loss provided. It is not more than the sum specified in the policy. Thus, the value of the property is not considered for this purpose.
  • Average Policy: This fire insurance policy comes into play to offer coverage to you, when your property is under-insured, i.e.; insured for a sum smaller than the value of the property. The insurer must bear only the proportion of the actual loss which the sum assured bears to the actual value of the property at the time of loss.
  • Floating policy: In case of this policy, the insurer is covered for several types of goods lying at various locations for one amount and one premium. This means you can operate many outlets or warehouses in one city or in varied cities or locations, but by paying an average premium you can get your goods insured at all these varied locations with ease and gain full coverage in case a mishap strikes.

These are a just a few common types of fire insurance coverage and depending on your requirement and exact need at hand, you can opt for a policy of your choice. However, whatever policy you choose, you should understand that the exclusions of the coverage are also many and normally, loss, damage, or destruction caused as a result of war and kindred perils like invasions, military revolutions, civil commotions or civil wars, rebellion, nuclear peril etc. are not covered under the policy terms. Conscious disruptions, or destruction caused to the property insured owing to pollution and contamination and other such accidents are not covered within the policy terms.

Apart from the inclusions and exclusions, you should understand that you can increase the policy benefits on your insurance and get an inflated fire insurance coverage by opting for specific add-on riders. You can take unlimited add ons and increase your coverage manifolds by including coverage for damages occurring from theft during the fire outbreak, damages on specific machinery and the likes. Just to know more on this and get more insights on policy terms, you need to discuss your policy needs with the right agent.

To start with choosing the perfect fire insurance for business talk to us at Akshar. We specialize in giving you a fire insurance policy that stands to protect you from umpteen fire-related perils basis the right coverage.

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