Fire Insurance: All You Need to Know

What is Fire Insurance?

Fire insurance policy is an insurance contract between the policyholder and the insurance company, where the insurance provider agrees to indemnify for the financial loss the insured suffers due to a fire outbreak. The insured pays an annual premium to avail the policy benefits and renews the policy without fail. The loss is estimated after the fire occurred by the surveyor, on the basis of which report, the insurer pays off the loss. Usually, fire insurers mainly cover the below:

Protection

Insurance provider offers financial protection against unforeseen damage and devastation of moveable and immovable property in case of a fire explosion.

Property Covered

The type of property to be covered under fire insurance include buildings, plant, equipment, machinery,  stock and content like furniture and fittings, cables, art and craft related items etc.

Other Perils

Other perils covered under fire insurance include lightning, malicious damage, explosions, impact damage, natural disasters, bursting of water tanks, subsidence and landslide.

Exceptions

The permanent exclusions of fire insurance are any loss caused by war or warlike situation, civil unrest, nuclear attack, pollution, political unrest, mechanical breakdown etc.

Tenure of Fire Insurance

Usually, fire insurance comes with one-year tenure, except for dwellings where a policy is designed for long term.

Fire Insurance Claim

No doubt, fir insurance assures to cover the financial loss in case of fire perils. However, there are certain conditions that need to be satisfied before a claim gets honoured.

Firstly, losses due to fire mean it should be actual fire ignition. However, any substance resembling fire may not be accounted for as fire damage. Let’s say, damage due to smoking caused by chemical actions will not be considered as fire loss. Likewise, losses due to natural heating or fermentation will also not be counted as fire loss.

So, in insurance term, the loss caused by the ‘fire’ must satisfy two conditions to be covered under the fire insurance- first, it must be actual fire so no fire-related damage by any other form will be covered. Second, the fire should be accidental. That means no intentional fire damage will be covered. Therefore, no loss due to smoke or resembling to fire incidents is not covered.

On the other hand, any loss by fire lightning during a family function, leading to accidental fire outburst will be covered. Provided it is accidental. The amount of claim, however, will be decided after quantifying the loss

Things to Consider for Ensuring Right Fire Insurance!

Unquestionably, fire insurance plays a pivotal role in offering you with adequate financial protection in case of a fire outbreak. Considering its importance in case of a crisis like this, it is highly recommended to buy fire insurance adhering to the below factors:

1. Select Sum Insured Wisely

    At the time of buying fire insurance, it is imperative to select the tight coverage. The main purpose of insurance is to indemnify the insured at the time of eventuality, which demands to choose the sum insured wisely. You shouldn’t buy a plan in hurry and end up regretting at the later stage. In case of fire insurance, prepare the list of items that you want to secure. Especially in case of a property that is on a lease, you will need to insure its content. The other things to be considered are employees, infrastructure, machinery etc.

2. Say YES to Deductibles

   In insurance term, deductible means the amount the insured agrees upon to pay in case of a claim. For example- you have bought a fire insurance policy with Rs. 5000 deductible, in case of a claim up to Rs. 15000, you will have to pay Rs. 5000 before the insurer releases the rest of the amount. By opting for the higher deductible, you can save on your fire insurance premium. However, it is advised that you should choose your deductible wisely and only thumb up to the amount that is affordable.

3. Exclusions- Dare to Ignore

   When inclusions are an essential part of your policy, which identify your coverage, it is equally important to be aware of the fire insurance policy exclusions. There are some exclusions claim for which will not be entertained by the insurer. For example, if the fire happens, due to your carelessness or due to war and allied perils etc. the policy.

    Similar, the insurance company will reject the claim in case of intentional damage or involvement of an employee in the incident.

   These are just an example, there may be a long list of exclusions that are not meant to be paid for. It is important for you to understand the situation when you can’t claim the policy.

4. Take Precautions to Save on Premium

   Just you because you own fire insurance, it doesn’t allow you to be sloppy. Even before issuing the fire insurance, your insurer may wish to know how safe the mechanism is. Have you adopted a safety rule like no smoking zone, fire, extinguisher etc? All these further help you get the policy at an affordable rate.

5. Don’t Sign the Dotted line Without Comparing

   A careful comparison of available fire insurance quotes offered by the insurers can lead you to settle with an adequate fire insurance plan in India.  Through comparison, you can also look for what are the policies available at a competitive rate around you. Thus, policy review is essential at the time of fire insurance renewal. As your need always increases with time, the sum insured you are settled for a year age may not suffice your requirement today. At any point, you feel your policy in insufficient, talk to the insurer and port it.

   The motive of your buying fire insurance is to curtain the risk associated with the fire-related incident. So, make sure you are offered with enough coverage.

6. Ensure the Best Way to Buy Fire Insurance

   In the era of digitalisation, it is convenient to buy fire insurance plan in India online. Within a few clicks on the mouse, you can ensure a full-fledged policy instantly. All you need to do is just browse over the insurance plans online, go to the insurers’ websites, choose your requirement, provide the information, calculate the premiums and pay online. In a matter of seconds, you can be covered against fire-related perils. Not only this, even you can renew the policy online as well when it is due for renewal. Just make sure, you compare each policy on the basis of their offerings.

Final  Word!

Thus, it makes it important to have fire insurance for your business or newly owned property. Although you might have taken every possible way to protect the business from unexpected circumstances, it is daunting to avoid the possible fire-related accidents. So, it is essential to understand the requirement of your business and insure it with the right fire insurance policy.