Introduction to Fire Insurance
What actually is the fire insurance and its 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 businessman is trying to improve growth of his 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 its 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.
Why Fire Insurance is Needed?
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.
FLEXA & Add-On Covers
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 second part of fire insurance which is additional covers known as add-on covers.
Properties Covered Under Fire Insurance
A fire insurance covers the properties such as residential house, flats, co-operative group housing society, office building, factory premises or a manufacturing unit including contents, furniture, fixtures, machinery, inventory and other valuables.
Important Add-On Covers
- STFI & Earthquake Cover
- Terrorism Cover
- Architects, Surveyors and Consulting Engineers Fees
- Removal of Debris
- Deterioration of Stocks
- Forest Fire
- Impact Damage
- Spontaneous Combustion
- Earthquake (Fire and Shock)
- Spoilage Material Damage Cover
- Leakage And Contamination Cover
- Temporary Removal of Stocks
- Loss of Rent / Alternative Accommodation
- Start-up Expenses
Types of Fire Insurance Policies
1. Valued Policy
Provides coverage to valuables like curios, works of art, manuscripts, obsolete machinery, etc. where market value cannot be ascertained.
2. Floater Policy
Covers stock located at various locations under a single sum insured.
3. Fire Declaration Policy
Covers stock on declaration basis. Premium adjusted based on monthly highest or average stock value.
4. Fire Floater Declaration Policy
Similar to Fire Declaration Policy but only one combined sum insured for all locations.
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