If there is damage or loss due to fire, it will be covered by an insurance policy. There will be occasions where the fire will spread without your knowledge or control, such perils should be covered by an insurance policy so that there will not be an adverse effect on your business. You should choose the best fire insurance policy after comparing various kinds of policies offered by reputed insurance companies.

Coverage of a Fire Insurance Policy

You can buy an insurance policy to cover various kinds of risks associated with the fire. The insurance company will assess the risk factors by visiting your office or factory and a quotation will be provided to cover various kinds of risk factors.

The insurance company will make the payment to the extent of the insurance cover but not to the extent of the damage that takes place at your property. Hence, you should prefer to pay a higher premium so that the maximum coverage will be offered by the insurance policy.

  • Destruction of the property
  • Damage to the premises
  • Loss of goods (raw material, semi-finished and finished goods)

Tips to Save the Insurance Premium

To save the premium of the fire insurance policy, you can take the following steps:

  • Raise the Deductible: Instead of opting for opting for the lowest possible deductible, you can opt for the highest possible deductible so that the insurance premium will be low. If the risk associated with the stock or internal items are low, you can choose the lowest possible deductible. You should not forget the fact that the highest deductible will make you higher out of pocket expenses when the damage takes place. Hence, you should strike the right balance by opting for the most appropriate premium as per your needs.
  • Bundle with Other Insurance Policies: If you buy two or more insurance policies from the same insurance company, you are likely to get a discount on the insurance premium. If you buy insurance cover for your automobiles from a general insurance company, you can buy a comprehensive insurance policy to cover the property as well. The insurance company will give a discount on the 2nd insurance policy to the extent of 5% or 10%.
  • Smoke Detectors: Installation of smoke detectors and other home security systems will lead to early detection of harm and the concerned parties will be alerted immediately. There are latest fire warning sensors and alarms which can detect fumes immediately. The property damage can be prevented or reduced by choosing the best alarm systems. If the insurance company is convinced of the installation of safety devices at key points on the premises, you will get a discount on the insurance premium.
  • Insure with the Same Company: While renewing the insurance policy, you can strike a deal by continuing your association with the same insurance company. Some insurance companies will reduce the deductible during claims. However, you can shop around to get better deals from other insurance companies. You should compare the features and the premium and should settle for the best insurance plan to fulfill your needs.
  • Inform the Improvements: If there are improvements at the premises, you can bring them to the notice of the insurance company. If the insurance company is satisfied with the installation of the fireproof equipment and fire safety devices, the insurance company can reduce the premium. The safety training provided to the staff at the workplace will also have a positive impact on the assessment of risk at your premises. You should take steps to convince the insurance company that the risk of fire is low or the fire mitigation systems are in place as per the latest standards. Thus, it is possible to decrease the premium substantially.
  • Manage the Record of your Possessions: While buying an insurance policy, you should manage an accurate record of your possessions. The items which should be covered by the insurance policy should be listed and you should mention the value of the items as well. If you keep a record of your valuable items, they can be quoted in the claim very easily. you can also take a video so that you can identify the items accurately after the mishap.

Types of Fire Insurance Policies

The following types of fire insurance policies are available in India:

  • Specific Fire Policy - The insured will go for the specific sum assured offered by the insurance company. The liability of the insurance company will be to the extent of the ‘sum assured’ or the actual loss whichever is lower.
  • Valued Fire Policy - The insured will enter an agreement with the insurance company to pay a lump sum if there is a destruction of the property due to fire. The policy can be purchased to cover antiques, valuable artwork and expensive articles. The insured will strike an agreement as per the market value of the items and the policy will be issued by the insurance company.
  • Floating Fire Policy - A large business entity will have operations at various geographical locations. The business can buy insurance policy for various items at different locations by choosing a floating fire insurance policy. The insurance company will collect premium equivalent to the average premium if various items are insured separately. The average clause will also be applied while claiming the policy. Hence, there is a great convenience for the insured as well as the insurance company.
  • Reinstatement Value Fire Policy - The fire insurance policy will cover the risk to the extent that the property or assets will be restored to its original state. Hence, the payment made by the insurance company will help the business overcome the loss triggered by an unfortunate fire accident.
  • Blanket Fire Insurance Policy - Various current, as well as fixed assets of the business will be covered by the blanket fire insurance policy.
  • Comprehensive Fire Insurance Policy - The comprehensive fire insurance policy will offer complete protection to the property. The policy can be subscribed to protect a house, office, office building, factory and manufacturing unit or processing unit. If there is forced entry into the premises, the loss will be covered by the insurance policy. The loss that takes place due to burglary will also be covered by the policy. The external building as well as the contents of the building will be covered by the policy.
  • Open Declaration Fire Policy - The policy can be subscribed against stocks whose value will fluctuate on a continuous basis. In this case, the insured will deposit some money with the insurance company and the declaration of the subject as well as the value will be done.

Losses Covered by the Fire Insurance Plan

The following losses are generally covered by the fire insurance policy:

  • Goods or items damaged by using the water while quenching the fire
  • Breakage or loss of goods while removing the debris during or after the fire accident
  • Damage due to the loss of furniture in throwing them out from windows or doors
  • Wages paid to workers during the fire extinguishing operation
  • Destruction or damage to the adjacent premises by the fire brigade to arrest the spread of fire

Losses not Covered by the Fire Insurance Plan

  • Losses due to fire triggered by the earthquake
  • Loss due to the act of war, riots, or invasion
  • Loss due to an underground fire
  • Theft during or after the fire accident
  • Burning of public property as per the court order or government ruling
  • Loss due to the explosion of a bomb or fermentation
  • Damage to goods due to lightning
  • If paints and chemicals preserved at the factory catch fire during the heat treatment process, the fire accident will not be covered by the insurance policy.

How to Buy a Fire Insurance Policy?

You can buy a fire insurance policy online by submitting the necessary information to the insurance company.

You should mention the immovable and movable property that should be protected by the insurance policy.

  • Building - It is possible to buy an insurance policy to cover the under construction as well as completed project. The insurance coverage includes interiors of the building, partitions and electrical equipment.
  • Plant & Machinery - The brand new machinery as well as old machinery can be insured by mentioning the item’s name, specifications and price.
  • Cables and Pipelines - The cables and pipelines can be included in the insurance policy
  • Furniture - office furniture such as tables, chairs and other accessories can be covered by a comprehensive insurance package.

Causes of Fire or Fire Accident

You should be aware of the causes of fire and fire accidents which are covered by the insurance policy.

  • Lightening - If the damage or fire due to lightning is not covered by the fire insurance policy, you should take steps to include the risk in the insurance policy. The lightning may damage the building with the development of cracks.
  • Explosion or Implosion - The fire insurance policy will cover the explosion as well as an implosion. If the internal pressure in the vessel reaches the atmospheric pressure, it will lead to an explosion. The inward bursting is called implosion. If the external pressure is higher than the internal pressure of the vessel, it will lead to implosion.
  • Aircraft/ Aerial Device - If there is loss or damage to the property due to aircraft or aerial device, the damage will be covered by the insurance policy.
  1. Strikes and Riots - During strikes and riots, the lawful authorities will take preventive or corrective action. During the firefighting process, there may be damage to the insured property. The insured property will be covered by the insurance company.
  • Impact Damage - Impact damage is covered by the fire insurance policy. The impact damage may take place with the association of a moving vehicle or animal. The insurance company will pay damages if the vehicle or animal does not belong to the insured.
  • Subsidence/Landslide/Rockslide Damages - The subsidence refers to the sinking of the building from the ground level. Similarly, landslide refers to the movement of landslides in the hilly region. The damage or destruction due to rockslide, subsidence and landslide are covered by the fire insurance policy. However, the insurance company should get assurance that the building was designed as per the proper established standards to overcome subsidence or landslide.
  • Missile Testing Operations - If your building is located in the missile testing zone the risk exposure will be high. Insurance companies will collect a higher premium to cover the risk prominently. Hence, the damage that takes place due to a misfire of the missile on your property and the resultant loss will be covered by the fire insurance policy.
  • Bushfire - While forest fire is not covered by the insurance company, the bushfire is covered by the policy prominently. There will be various kinds of damages due to the burning of bushes. The property that catches fire due to bushfire will be covered by the fire insurance plan.
  • Leakage from Automatic Sprinkler System - If there is leakage from the automatic sprinkler system, there might be to the property. The damage that is triggered by the fire will be covered by the insurance company.

Eligibility for Fire Insurance

Various kinds of properties can be covered by the fire insurance policy. The following buildings or structures can be covered by the policy:

  • Dwelling units
  • Guesthouses
  • Houses
  • Offices
  • Shops
  • Hotels
  • Entertainment establishments
  • Shopping complexes
  • Manufacturing units
  • Warehouses
  • Farms
  • Oil storage tanks

Conclusion

Fire insurance is nothing but a contract between the insurance company and the insurer by which the losses occurred at the insured property due to fire will be compensated by the insurance company. To make a fire insurance claim, you should establish the actual fire or ignition and should prove that the fire is accidental. You can save the insurance premium by taking steps to reduce the risk at the premises.