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 home insurance policies cover damages caused by fire but insurance companies offer add-ons that can be purchased separately by the insured if required.

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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.
Fire insurance

Types of Fire Insurance in India

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

Types of Fire Insurance Types of Fire Insurance
  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
  3. 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.

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:

Characteristics of Fire Insurance Characteristics of Fire Insurance
  • Covenant of Good Faith: The policy is on the premise of faith between the insurer and the insured. It is essential for both parties to reveal all the facts at the time of policy initiation.
  • Covenant of Indemnity: It is an indemnity policy wherein the insurer is liable to cover the loss that occurred. In case of a fire break with no loss, no insurance liability will be offered.
  • 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.
Fire insurance

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 Inclusion Fire Insurance Inclusion
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 Exclusion Fire Insurance Exclusion
  • 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:

Eligibility Criteria to Buy Fire Insurance Policy Eligibility Criteria to Buy Fire Insurance Policy
  • 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.
Fire insurance

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:

Fire Insurance Add Ons Fire Insurance Add Ons
  • 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 Claim Process Fire Insurance Claim Process
  • 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 Claim Documents Fire Insurance Claim Documents
  • 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!

Fire insurance

Fire Insurance FAQs

  • 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.
Fire Special Perils Insurance Reviews & Ratings
4.3 / 5 (Based on 76 Reviews)
(Showing Newest 10 reviews)
Ahemdabad, October 02, 2022
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.
Surat, October 01, 2022
Budget friendly
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.
Gurgaon, September 30, 2022
Instant Purchase
Wanted a fire insurance policy for my crockery business and could purchase it instantly from Policybazaar. The process was quick instant and very easy.
New Delhi, September 29, 2022
Affordable Plans
Wanted a fire insurance policy for my property that offers a comprehensive coverage from all potential fire perils. Was skeptical about the cost but foud out about Policybazaar and in no time I had purchased a really affordable fire insurance policy. Very happy with their service!
Kannur, March 31, 2022
FIre damage cover
I was looking for a fire insurance coverage online. I already have a home insurance plan that does not provide me coverage for fire damages. So i went on the Policybazaar website and looked for Fire add on and i got it at a cost effective price. Thanks Policybazaar.
Warangal, March 30, 2022
Good coverage
I purchased a fire insurance policy along with my home insurance and i got coverage against all the loss or damages caused due to fire accident. This is a good policy and i would recommend property owners to purchase it. Thanks Policybazaar.
Bhilai, March 29, 2022
Good coverage
I purchased the fire insurance add on in my home insurance policy. i am happy and satisfied that i made a good decision buying it because it provides me coverage fro any unforeseen damage caused to the building as well as contents of the house due to fire accident.
Tanur, March 28, 2022
Building and Contents Covered
I had a home insurance policy for a while but recently i saw a nearby house burnt down to ashes after a fire accident. That is why i decided to purchase a fire insurance policy as an add on at an affordable rate and now i feel relaxed as the fire insurance will provide cover for the damages caused due to fire to the house of the content of the house.
Bilaspur, March 27, 2022
Building and Contents Covered
I had a home insurance policy for a while but recently i saw a nearby house burnt down to ashes after a fire accident. That is why i decided to purchase a fire insurance policy as an add on at an affordable rate and now i feel relaxed as the fire insurance will provide cover for the damages caused due to fire to the house of the content of the house.
Faridabad, March 26, 2022
Service was outstanding
Due to a fire disaster, my property was destroyed, and I filed a claim. Because I was unfamiliar with the claim process, Policybazaar s customer service assisted me in submitting a claim request. I received a timely payment on my claim. The service was outstanding.