GENERAL INSURANCE KNOWLEDGE : April 2020

What actually is the fire insurance and it's need for us? Everyone in his life doing jobs, working hard to earn money for improving livelihood of his life. In a competitive market a business man is trying to improve growth of it's company by improving sales, manufacturing of products as well as controlling unnecessary expenses. Now, suppose what will be the condition if unfortunately you will lose your hard earned money and assets which are necessary to live a life. Similarly the situation for a business will not be good enough if he lost his entire business due to an unknown circumstance. There may be many causes that can change entire life of a human being or it's business. It is not possible to reinstate or compensate for every kind of losses but in the way of insurance a person can get compensate for the losses that can be measured monetary.

Now, in this article we will discuss about fire insurance and it's requirement in our life. When, we listen word "fire insurance" it comes in our mind that fire insurance covers risk of damages occurs due to fire and it shows a limitation of coverage but actually there is a wider difference in the word fire and the risks covered by the fire insurance. Fire insurance not only cover the risk related to damages takes place due to fire but it also covers the risk of lightning, explosion and implosion, aircraft damage, impact damage, riot, strikes, malicious damage, storm, tempest, flood and inundation, subsidence and landslide including rock slide, bursting and/or overflowing of water tanks, apparatus and pipes, missile testing operations, leakage from automatic sprinkler installations and bush fire are the perils which are included in the fire insurance to provide wider risk cover.

It is not the end of the risks provided under fire insurance, considering the different needs of humans and organizations, insurance providers have designed fire insurance in 2 parts. First part is the basic risk known as Flexa which we have already discussed above but storm, tempest, flood and inundation is not the part of flexa. It comes in 2nd part of fire insurance, which is additional covers formerly know as add on covers. Add on covers are based on the requirements of individuals or corporate clients.

Lets discuss upon the add ons and their requirements. The flexa covers are sufficient for an individual person but before discussing about add ons first we needs to understand why we should buy fire insurance and what kind of properties it insured. A fire insurance covers the properties of a person or an organization that can be prone to risk associated with above mentioned perils..like residential house, flats, co-operative group housing society, an office building, factory premises or a manufacturing unit. All these buildings and their contents i.e. Furniture, Fixtures, Electronic Equipment, Plant & Machinery, Household Items, Inventory and other valuables can be easily burns if a fire takes place. Even in case of no fire other perils like lightning, explosion and implosion, aircraft damage etc as mentioned above can be dangerous for the property of a person or an organizations. In the absence of an insurance it could be very much costlier to reinstate these things as the losses occurs could be in lacs to crores or thousand of crores.

So considering the risk exposure and variety of risks insurer decides to provide other risk covers associated with nature of occupancy of the properties. A residential house could be in danger if there is flood and associated perils generally known as act of god but these risks are not limited to residentials. To cover these kind of risks an insured can opt for STFI and Earthquake Cover.

An other add on is "Terrorism", risks related to terrorist activities can be covered by opting this add on.

As we know the needs of fire insurance and its benefits, we are now going to understand the type of fire insurance. There are four types of fire insurance except standard policy which are made to fulfill various kind of requirements of individuals and corporate companies.

First is "Valued Policy", the main purpose of this policy is to provide the coverage to valuables whose market value can not be decided or ascertained..Curios, Works of Art, Manuscripts, Obsolete Machinery are the examples of these kind of properties. To cover these properties, the value is mutually agreed between the insurer and the insured. The valuation certificate needs to be submitted to take this policy.

Next one is "Floater Policy", the main purpose of this policy is to provide the coverage to manufacturing, trading and other organizations whose stocks are lying at various locations and the value of stock fluctuates due to daily inward or outwards. In a single sum insured all locations can be covered and no need to declare per location sum insured.

Third is "Fire Declaration Policy" the main purpose of this policy is to cover stock on declaration basis. Considering the fluctuation in stock quantity on day to day basis due to inward and outwards, it is difficult for an organization to ascertain the actual value of stock to be insured. Insurer therefore advised to cover these kind of risks under Fire Declaration Policy wherein highest value of stock in a month or average value of stock in a month is to be declared and the premium is charged on the declared value and adjusted at the end of policy if there is any shortfall or refund of premium.

Fire Floater Declaration Policy is provided on the same basis as 'Fire Declaration Policy". The only difference is that in "Fire Declaration Policy" sum insured of each location is separately declared whereas in "Fire Floater Policy" only one sum insured is declared to cover all locations on floater basis.

So, the following are the additional benefits that can be covered under fire insurance.

Architects, Surveyors and Consulting Engineers Fees
Removal of Debris
(A) Deterioration of Stocks in Cold Storage premises due to accidental power failure consequent to damage at the premises of Power Station due to an insured peril
(B) Deterioration of stocks in cold storage premises due to change in temperature arising out of loss or damage to the cold storage machinery(ies) in the Insured's premises due to operation of insured peril
Forest Fire
Impact Damage due to Insured's own Rail/Road Vehicles, Fork lifts, Cranes, Stackers and the like and articles dropped there from
Spontaneous Combustion
Omission to Insure additions, alterations or extensions
Earthquake (Fire and Shock)
Spoilage Material Damage Cover
Leakage And Contamination Cover
Temporary Removal of Stocks Clause
Loss Of Rent clause Insurance Of Additional Expenses of Rent For An Alternative Accommodation
Start up Expenses

Sr.No.	Cover	KM	Description of Cover
1	Flat Battery	With in 100 km of network city	Alternative arrangement to remove immobilization will be taken care
2	Spare Keys	With in 100 km of home city
3	Flat Tyre	With in 100 km of network city
4	Minor Repair	With in 100 km of network city
5	Towing facilities	With in 100 km of network city	Towing facility is arranged
6	Message relays	Any Where	Communication is made to immediate family
7	Medical Coordination	Any Where	Telephonic assistance is provided
8	Fuel Assistance	With in 100 km of network city	Up to 3 Litres
9	Taxi Benefit	With in 100 km of home city	Taxi is arranged for a location up to 50 kms
10	Accommodation	With in 100 km of network city	Beyond 100 kms from home city & within 100
11	Legal Advice	Any Where	Up to 30 mins in Day timings

GENERAL INSURANCE KNOWLEDGE

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