Fire insurance is an agreement under which the insurance provider agrees to compensate the insured person for the financial loss caused due to destruction of property in a fire accident during a specific period in return for premiums paid. In case of damage caused by a fire, the insured person can claim the maximum amount that is specified in the contract.
In India, insurance providers offer various types of fire insurance policies to fit the different requirements of different people. You will find different types of fire insurance policies in the market, which are as follows:
This is a type of fire insurance policy that is specially meant for assets whose value cannot be ascertained. Under the value policy, the insurance company provides coverage at the best estimate value of the asset as per the existing market condition.
As the name suggests, under the specific policy, the insurance company compensates only up to a specific amount, which is equal to the sum insured of the plan.
Floater policy is most suitable for business owners who have assets in different locations. A single policy covers all the assets, and the coverage would be on floater basis. To get coverage for all the assets, the details of every location, and the value of assets at each location must be specified.
A comprehensive policy is a single policy that covers various risks like damage caused by fire, lightning, explosion, riots, burglary, etc.
In replacement policy, the insurer assures to compensate for losses based on the market value of the property.
When a fire accident takes place at a commercial property, and the work is affected, leading to a loss in business, this policy compensates the loss.
Benefits of fire insurance policy
- Homeowners can recover the cost of damage caused to the structure of the house
- Fire insurance covers the cost of replacement of contents of house like air conditioner, computer, television, etc.
- In case of fire caused at commercial place such as factory or office, the insurance can cover the cost of damaged stocks.
- It can also cover the cost of repair of damage caused to machines
What is covered under Fire Insurance Policy?
A fire insurance policy covers almost all the losses caused due to the accidental fire as per the terms and conditions of the type of policy you hold. But, generally, a fire insurance policy covers the following losses:
- Loss of goods, business properties
- Additional living expenses caused due to loss of personal property
- Damage to adjacent building or property due to fire in the policyholder’s building
- Compensations to be paid to the firefighters
- The fire caused by electricity
- Overflowing of a water tank or pipes
What are the exclusions in fire insurance policy?
Some of the standard exclusions of a fire insurance policy include:
- Fire caused due to war, nuclear risks, riots or earthquake
- Intentionally caused or planned fire by public authority/enemy or whatsoever reason
- Loss due to theft during or after the fire accident
- Underground fire
A fire can cause significant damage to your property and the amount paid by the fire Insurance company can help recover the losses to a great extent.