What is Fire and Perils Insurance?
Fire and Perils Insurance is a type of insurance that protects businesses against loss or damage caused by fire and specific associated risks. It is commonly known as the Standard Fire and Special Perils Policy in India.
This policy provides financial protection against a wide range of unforeseen events that can impact business assets and operations.
What Does Fire and Perils Insurance Cover?
A standard fire insurance policy typically provides coverage for:
- Building: Physical structure of the premises
- Contents: Furniture, fixtures, and office equipment
- Machinery: Plant and machinery used in operations
- Stock: Raw materials, finished goods, and inventory
This ensures that both fixed and movable assets of a business are protected.
Types of Perils Covered Under Fire Insurance
Here is the list of 9 perils of a standard fire insurance policy:
Fire
Generally, any damage caused by fire is covered under a fire insurance policy. However, there are exclusions such as damage caused by fermentation or natural heating.
Lightning
Damages caused by lightning, such as structural damage to buildings or roofs, are covered.
Explosion / Implosion
If your insured premises are damaged due to an explosion or implosion, the policy covers such losses. However, exclusions include damage to:
- Boilers
- Economizers
- Machinery or apparatus where steam is generated
Aircraft Damage
Damage or loss caused by aircraft or aerial devices, including items dropped from them, is covered under special perils insurance.
Riots, Strikes, or Terrorist Activity
Losses or damages caused by violent external disturbances such as riots, strikes, or terrorist activities are included.
Natural Calamities
This includes storms, cyclones, hurricanes, and floods. These events can cause severe damage, and the policy provides coverage for such losses.
However, earthquakes and volcanic eruptions are not included and require additional coverage.
Subsidence and Landslide
Damage caused due to subsidence or landslides is covered.
Exclusions include:
- Normal cracking or settlement of the building
- Coastal erosion
- Poor construction or defective design
Bursting or Overflowing of Water Tanks and Pipes
Damage caused by bursting or overflow of water tanks, pipes, or related apparatus is covered under the policy.
Bush Fire
Bushfire damage is covered, but forest fires are typically excluded.
What is NOT Covered Under Fire and Perils Insurance?
While the policy covers multiple risks, there are certain exclusions that businesses should be aware of:
- Damage due to war or nuclear risks
- Loss due to negligence or intentional acts
- Electrical or mechanical breakdown unless caused by an insured peril
- Loss due to normal wear and tear
- Earthquake and volcanic eruption, unless added as an extension
Understanding these exclusions helps avoid claim rejection and ensures better policy selection.
How to Compare Fire and Perils Insurance Policies Online
Choosing the right fire insurance policy requires careful comparison. With multiple options available, businesses should evaluate policies based on:
- Coverage offered and included perils
- Add-ons such as earthquake cover
- Claim settlement ratio of the insurer
- Premium vs coverage value
- Policy exclusions and limitations
Online comparison platforms make it easier to analyze multiple policies side by side and select the one that best fits your business requirements.
Conclusion
For Small and Medium Enterprises (SMEs) and start-ups, fire-related damages can be financially exhausting and disruptive. Beyond physical damage, such incidents can halt operations and impact long-term growth.
A well-chosen fire and perils insurance policy helps businesses recover from losses, repair damages, and continue operations with minimal disruption. While most policies cover the standard perils listed above, it is always advisable to consult an expert before making a decision to ensure complete and appropriate coverage.
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