Fire Insurance

Fire insurance is an important insurance policy for your property in order to build a resilient business. It provides coverage to commercial property from several unforeseen incidents caused due to fire, explosions, lightning, theft, storm, cyclone, typhoon, terrorist acts, riots, etc.

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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.

Types of Fire Insurance in India

Here are the types of fire insurance policies in India that you can purchase:

Special Fire & Special Perils (SFSP)
Sum Insured Above ₹ 50Cr
Special Fire & Special Perils (SFSP)
Sum Insured Above ₹ 50Cr
Special Fire & Special Perils (SFSP)
Sum Insured Above ₹ 50Cr
1Specific Policy 2Comprehensive Policy 3Valued Policy 4Floating Policy 5Valuable Policy
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  1. Special Fire & Special Perils: This is a type of fire insurance contract between the insurer and insured that provides coverage for the loss or damage caused to the building, plan & machinery, stock and other assets for a sum insured exceeding Rs 50 Crores.

There are 5 types of policies specifically under Special Fire & Special Perils insurance (SFSP). They are as follows:

    • 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.
    • Valued Policy: At the intimation of the policy, the value of a particular property is determined. Instead of the current market value, the indemnity of the policy is determined which is based on the value of the property. So, the agreed value at the time of purchase is the deciding factor of policy indemnity here.
    • Floating Policy: If you deal with fluctuating stocks in different areas. This policy provides coverage for one or more goods at the same time under one premium and one sum assured.
    • Valuable Policy: The claim amount is decided according to the current market price of the damaged property.
  1. Bharat Sookshma Udyam Suraksha: This policy provides coverage for the loss or damage caused to the building, property, plant & machinery, stocks and other assets for a sum insured up to Rs. 5 Crores.
  2. Bharat Laghu Udyam Suraksha: This policy provides coverage for the damage or destruction caused to the building, plant & machinery, stocks and other assets for a sum insured between Rs 5 Crores and Rs 50 Crores

Characteristics of Fire Insurance

The following are the characteristics of a fire insurance policy, which make it a unique product to others. Let us understand the characteristics, which should not be ignored:

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  • One-year Policy: The term fire insurance policy is generally for a year but it can be renewed depending on the terms and conditions mentioned in the policy schedule.
  • Insurable Interest: The policy is valid when the insured has an insurable interest in the insured property. In case a loss occurs, such interest may be required. This is beneficial to the insured by the survival of the insured property and under a situation of destruction may face a loss as well.
  • Direct Loss: If the root cause of the loss or damage is fire, one may avail of this.
  • Personal Right: In case of any loss/damage under any unfortunate circumstances, the insured amount will be provided to the person whose name is mentioned in the policy document.
  • Personal Insurance Contract: The policy requires complete transparency. The insured must know the insured’s behavior. Also, the insured can only transfer the policy with the consent of the insurer only and the insurer has the right to terminate the policy if their possession of goods is transferred to a third-party.
  • Property Description: While buying a fire insurance policy it is imperative to give a proper account of the possession. This is essential because as per the location addressed in the document of the policy, the claims will be settled if in case any unfortunate event occurs at the insured place. In case if there is any change, it needs to be brought to the notice of the insurer to avoid further upshot.

Inclusions Under Fire Insurance in India

Covering a wide range of perils, it is often termed as Standard Fire and Special Perils Policy is also known as SFSP. In the below grid, let us have a look at the inclusion the policy offers:

Fire Insurance coverage

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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.
Terrorist Activity, Riots/Strike Any harm to the protected property caused because of a strike, riot or any fear monger action, is secured by fire insurance.
Natural Calamity Any damage to the insured property due to any natural calamity such as storm, tycoon, etc. is covered under the policy.
Landslide/Rockslide You will be covered for the destruction caused to your property due to a rockslide/landslide.
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.

Exclusions Under Fire Insurance Policy in India

Here are some of those events that are not covered under Fire Insurance:

Fire Insurance does not cover

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  • Deliberate, willful 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.

Eligibility Criteria to Buy Fire Insurance Policy

If you wish to buy a fire insurance policy, the following is the criteria:

Any person who Runs/Owns

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  • 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, godown keepers.
  • 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.

Add-on Coverage in Fire Insurance

Upon the payment of an additional premium of fire insurance, the insured can benefit the following add-on coverage:

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  • 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 aspectwhen you buy fire insurance policy. It is of utmost importance to be 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

Tips to File Fire Insurance Claim

Filing a claim for fire insurance is simple if approached in the correct direction. Below are steps to claim your fire insurance policy, which are:

Fire Insurance claiming process

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  • First thing, in case of any unfortunate mishap wherein you need to file a claim inform the insurer at the earliest.
  • Furnish a detailed account of damaged properties along with an estimated cost for the equivalent.
  • It is imperative to cooperate with the surveyors if they look forward to you for any kind of assistance or additional information.
  • Help the surveyor in every manner possible. It might sound annoying but it is better to take a tour of the damaged premises. This will enable a quick settlement against the claim filed.

Documents Required to File Fire Insurance Claim

The following is the list of common documents, which will be required while filling any claim related to fire insurance:

Fire Insurance claiming process

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  • An authorised copy of the policy, which includes the schedule and clauses.
  • The complete duly filled claim form.
  • In case, if the incident is published a proof to substantiate the same such as a Newspaper proof.
  • Records of previous claims, if any.
  • Photographs
  • Report by the fire brigade.
  • Forensic report wherever is needed.
  • A copy of the final investigation report.

The truth is that if you own a business it is always vulnerable to risks despite the precautions you undertake or you use the technological advancements. It is better to take care of the possibilities. It is better to be safe than sorry.

What are you waiting for? Buy fire insurance today!

Frequently asked question

  • Q: How to handle a loss in case of a fire?

    Ans: Despite all the precautions, you can’t predict a calamity. Hence, you need to be calm in case any such situation arises. In case of a fire, inform the local fire brigade who will help you to put out the fire. If there is any loss of another person’s property due to the fire or in an effort to douse it, the insurer shall compensate for the same.

    Inform the insurer, cooperate with the supervisor at the time of loss assessment. You can also take photos of the loss if the surveyor takes a lot of time to arrive and shift all the unaffected assets to a safe place. Fill the claim form and submit it along with the documents supporting your claim. After the repair or replacement of damages, submit all the bills to the insurer.

  • Q: Why do I need to insure my building?

    Ans: Your building may get damaged due to fire or other perils and the losses will not be covered by a general insurance policy. For that, you’ll need a fire insurance that will cover the damages sustained by the building. Similarly, natural calamities also may wreak devastating losses, which can burn a hole in your pocket. Hence, to safeguard your property, you need fire insurance.
  • Q: Can I cancel my policy in the middle of the policy tenure? Will the amount be refunded?

    Ans: Yes, the insurance company will give you a pro-rated refund of premium. If there is any retention of premium or balance for a short period, it will be refunded.
  • Q: Am I eligible to claim a higher amount if opt for a higher value?

    Ans: No. The correct claim amount is decided based on the current market value of your property and the basic Sum Insured. The compensation that is to be offered, in case of a loss, will be decided on whether the property is sufficiently insured or not. If you choose an excessive amount, it will mean excessive premium, while in case the amount is adequate, you’ll get an amount is equal to the market value of the property. In both the cases, the offered claim amount will be the same.
  • Q: Does fire insurance also offer coverage for jewellery, ornaments and artworks?

    Ans: Usually, general fire insurance doesn’t cover these items, unless discussed with the insurer while buying the policy. However, on special request and subject to valuation, these items can be covered under a policy.
  • Q: Does burglary insurance cover my household goods when I am away?

    Ans: A burglary insurance policy covers you against the risk of theft. However, the policy will cease if the house remains unoccupied beyond a defined period unless the insurance company has been informed beforehand. In such cases, you will be covered only if the insurer agrees to extend the cover even if the house is empty. This is why it is important to clear everything at the time of buying the plan.
  • Q: What property insurance should I purchase if I own an SME?

    Ans: There are various insurance plans offering coverage against risks such as fire, earthquakes, floods that cause damage to the building, unexpected breakdown of any machinery, damage to electronic equipment, workmen compensation, fidelity guarantee, cargo risks cover etc. You can select the Sum Insured for every category based on the insurance needs of the enterprise.
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Fire Special Perils Insurance reviews & ratings
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4.8 October 09, 2022
Aaftab
I am using a fire insurance policy from policybazaar and experienced amazing feedback from them in claim settlement. I have a sports merchandise shop that caught fire last yearI raised a claim which was resolved within a few days without any hassles.
Thiruvananthapuram
4.8 October 08, 2022
Balachandar
The support team of Policybazaar is really helpful and prompt. They solve all your queries fast. Would definitely recommend Policybazaar for purchasing insurance .
Mangaluru
4.8 October 07, 2022
Raahim
Got a fire insurance policy for my shop and it was really extensive with so many features. Purchased it from Policybazaar without paying any commission fees. Great coverage.
Bengaluru
4.5 October 06, 2022
We deal in the cotton industry and suffered a huge loss last year because of the fire. We were looking for insurance to safeguard us financially from any such incident in the future. We landed on the policybazaar website and bought fire insurance. Their website is well managed and gives all the necessary information.
MP
4.8 October 05, 2022
Rohit
Had to purchase a fire insurance which should be in my budget as I run a very small store. Got a lot of affordable plans on Policybazaar and purchased the one that suited my budget. All plans are in budget and with so many features.
Bhopal
4.3 October 04, 2022
Baban
I have a shop of garments and it caught fire last year in which I lost items worth thousands. Purchased a fire insurance from Policybazaar and now I feel really relieved that it would financially cover my shop in such circumstances.
Chandigarh
4.3 October 03, 2022
A part of my warehouse having thousands of material caught fire. Luckily I had a fire insurance policy that I could claim and received compensation from them. It was such a relief. The claim settlement team at Policybazaar is helpful and really quick.
Assam
4.5 October 02, 2022
Jagadish
I have a warehouse of clothes and was planning to buy a fire insurance policy to cover my material from unwanted fire. Got a really affordable plan from Policybazaar with some really great features.
Ahemdabad
4.5 October 01, 2022
Rahul
Wanted to cover my crockery shop from fire and was searching for an affordable plan. Found a great plan at Policybazaar which suited my budget.
Surat
4.5 September 30, 2022
Baabul
Wanted a fire insurance policy for my crockery business and could purchase it instantly from Policybazaar. The process was quick instant and very easy.
Gurgaon
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