Commercial Fire Insurance
Fire insurance is a contract between the insurer and the insured. It provides coverage to the insured against any loss or damage caused by fire. Not all insurance policies cover damages caused by fire, but insurance companies offer add-ons that can be purchased separately by the insured if required.
What is Fire Insurance?
Fire insurance is also known as a fire and burglary insurance policy. It is like property insurance that provides coverage for loss or damage caused by fire to the property. The policy pays the insured on the basis of either actual cash value or replacement cost value.
Why is Fire Insurance Important?
Let us understand the fire insurance meaning and why is it a wise choice. Here are some of the features of fire insurance that indicate why you should purchase it.
Protection against any loss or damage caused due to any movable or immovable object that turns into a fiery explosion.
A fire policy covers property damage such as furnishings, office building, machinery, stock, etc. due to a fire accident.
Besides, fire perils, a burglary insurance policy also provides coverage for the damages caused due to any natural calamity, explosion, bursting of the water tank, etc.
Main Type of Fire Insurance
There are other type of policies available which can be worked out according to ones specific needs, but the two main type of policies are as described below:
Specific Policy: A specified sum insured is determined for a particular property and in case of loss the actual loss does not exceed the chosen insured amount
Comprehensive Policy: This policy provides extensive coverage not only against fire related perils but also provides coverage against any other perils, such as robbery, burglary, civil rampage, etc.
What is Covered Under a Fire Insurance
Covering a wide range of perils, it is often termed as Standard Fire and Extraneous Perils Policy is also known as SFEP. In the below grid, let us have a look at the inclusion the policy offers:
| Fire Insurance Perils | Inclusions |
|---|---|
| Fire | The policy provides coverage for any damage caused due to the fire. Besides, any damage caused due to natural heating, own fermentation or unconstrained burning is not included. |
| Lighting | If any damage/loss occurs because of lighting, for instance, cracks in the roof/building area, etc. it will be covered. |
| Explosion | Damage caused by a fire explosion is covered under this policy. |
| Aircraft Damage | If any damage happens which leads to fire due to an aircraft, for instance, articles dropped by an aircraft, airborne devices etc. will be covered under the policy. |
| Riots/Strike | Any harm to the protected property caused because of a strike, riot or any fear monger action, is secured by fire insurance – subject to Insurers acceptance. |
| Natural Calamity | Any damage to the insured property due to any natural calamity such as storm, tycoon, etc.is covered under the policy. |
| Earthquake | You will be covered for the destruction caused to your property due to a earthquake. |
| Bursting/Overflowing of the Water Tank | If the property is damaged due to bursting/overflowing of the water tank, it will be covered. |
| Bush Fire | Setting fire to overgrown bushes/plants may end up damaging the property. This will be covered under the policy. Please note that the policy will not cover the destruction caused due to the forest fire. |
WHAT Is NOT Covered
Here are some major policy exclusions:
Deliberate, wilful or intentional acts Loss or damage to stocks in cold storage due to change in temperature. War, invasion, war-like operations Pollution or contamination. Missing property or mislaid. Consequential or indirect loss or damages. Costs, fees or expenses for preparing any claim. If the insured premises or building remains unoccupied for more than 30 days.
Unset precious stones, bullion or work of art unless specifically declared
Loss or damage to any of the electrical machines, short circuits, apparatus, leakage of electricity, etc. This exclusion applies to a particular machine that is lost or damaged.
Who can Purchase a Fire Insurance
Any person/organisation/institution/firm that may endure or need to insure his/her business from an unforeseen misfortune in case of a fire.
Anyone who possesses a building, furniture, household articles and so on.
Retailers or shopkeepers, Banks, financial, education, research institutes, and so on.
Service suppliers include hotel owners, medical clinics, lodging, clinics and so on. Manufacturing and industrial firms, transporters.
Additional Coverage or Extensions to Standard Cover
Subject to payment of additional premium and/or acceptance by Insurer:
Earthquake
Wreckage removal
Forest fire
Loss of rent
Start-up cost
Alternate accommodation
Unconstrained burning
Damage to stock due to change of temperature
Leakage and contamination cover
Architect, engineers, Surveyors consultation fee
Cover for molten metal spillage
Impact loss owing to insured’s own road/rail transit
Selecting Sum Insured for Fire Insurance
Sum insured is one important aspect when you buy fire insurance policy. It is of utmost importance tobe much careful while choosing a sum insured.
The following things need to be kept in mind while deciding the sum insured for a fire insurance policy:
- Stock
- Building
- Valuables, precious materials or antiques
- Plan and machinery, furniture or other important personal assets
As Insurance is a complex subject, please talk to us now for professional advice and to make sure your level of coverage is appropriate, adequate, and sufficient to your requirements.
The List of Risks or the range of insurances available is not exhaustive, if there are any particular risks that are possibly unique to your type of business and/or for any specific or special requirements, please seek our assistance and guidance.