Assets Not Covered Under the Fire Insurance Policy

Fire insurance is a type of insurance that financially covers the losses caused to the property due to accidental fire or fire explosion. This insurance policy covers the losses caused by fire during the policy tenure up to a certain agreed sum insured amount. However, there are certain assets that are not covered in the fire insurance policy.

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What Are the Assets Not Covered by the Fire Insurance?

Every insurance policy comes with some exclusions also. Here is a list of assets that are considered fire insurance exclusions-

  1. Valuable items such as precious stones, artworks, manuscripts, drawings, jewellery & ornaments, obligations & documents, coins & paper money, stamps, securities, accounts books, recordings, and explosives, unless specially mentioned in the policy documents
  2. Any cold storage stock or item damaged due to a sudden change in temperature
  3. Intellectual Property Rights (IPR)
  4. Any perishable items, including fruits, dairy items, vegetables, etc.
  5. Damages caused due to short-circuiting, rusted electrical fittings, machines or apparatus, and overloading in the electric circuit
  6. Any asset for which a third party is liable to pay for the losses or damages under the agreement made with the insured
  7. Any other asset that is excluded in the policy.

However, all the items or assets mentioned in the first point can be covered by buying an add-on cover.

Let's understand this with the help of an example- XYZ Trading Limited is an organic fruit juice processing company. It purchases and processes fruits for Rs 80,000 every day.

The company also has a cold storage unit to keep the perishable items before they are taken for processing. But one day, due to short-circuiting, these perishable items got damaged due to the temperature change, and a fire also broke out in the store.

The XYZ Trading Limited raised a claim for the damages caused due to fire. The insurer rejected the insurance claim request because both conditions were excluded under the fire insurance policy.

Does Fire Insurance Covers Gold Exchange Businesses?

In India, gold is one of the precious and pure metals which is purchased during every occasion or festival. There are many gold exchange companies where you can sell your gold and get cash instantly to fulfill your needs by utilising it during emergencies.

However, the question is, does your fire insurance policy cover the gold exchange business? Under the fire insurance policy, the stock or asset in form of jewellery and cash are covered only on the insured declared value basis whereas, for the documents and securities, the insurance company does not provide coverage for damages and losses caused by fire. Therefore, these businesses should take extra care to keep their valuable documents and securities.

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Are Third-party Assets Covered in the Fire Insurance?

Xyz Private Limited rents machinery & equipment to ABC Private Limited. As per the contract between the two businesses, XYZ Private Limited will be responsible for any damage caused to the machinery at ABC Private Limited premises due to fire under the fire insurance policy.

ABC Private Limited is not liable to pay for or claim the damages from their own fire insurance for the leased machines because XYZ Private Limited has already purchased fire insurance for them.

Intellectual Property Rights (IPRs) are Covered in Your Fire Insurance?

XYZ & Consulting Group is an innovative business solution. They are delivering various business model innovations, marketing concepts, and branding strategies to different businesses. Under the fire insurance policy, the loss of such branding & marketing documents due to fire damage is excluded. IPRs are excluded from the fire insurance policy, and all the IPRs documents need to be submitted to the central system by the administration to keep it safe from various unforeseen fire instances.

Final Words

Prevention is better than cure and as a business owner, it is better to take preventive measures to ensure the safety of your business premises or the firm. You must insure your business with the right fire insurance policy and check the fire insurance exclusions, inclusions, deductibles, etc., before purchasing the policy.

Written By: PolicyBazaar - Updated: 18 August 2022
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Policybazaar for Business - Fire Special Perils Insurance - Customer Reviews
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Based on 83 reviews
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4.8 October 09, 2022
Amazing Customer Support
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.
4.8 October 08, 2022
Helpful Support
The support team of Policybazaar is really helpful and prompt. They solve all your queries fast. Would definitely recommend Policybazaar for purchasing insurance .
4.8 October 07, 2022
Extensive Cover
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.
4.5 October 06, 2022
User Friendly Website
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.
4.8 October 05, 2022
Plans Are In Budget
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.
4.3 October 04, 2022
Covered My Shop
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.
4.3 October 03, 2022
Faster Claim Settlement
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.
4.5 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.
4.5 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.
4.5 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.