What is Standard Fire and Special Perils Policy (SFSP)?
A SFSP policy is a type of fire insurance policy. Just like any other insurance, it is a contract wherein the insurer (insurance company) guarantees to pay the insured for the loss or damage to the property if caused due to the covered perils. This insurance policy is specified for one year and can be renewed annually. Both, homeowners as well as commercial entities like factories, offices, shops etc. are advised to buy SFSP policy as it offers several fire insurance benefits.
When it comes to commercial policies, SFSP policy is generally bought by entities who look out for a sum insured beyond Rs. 50 crores. This policy provides coverage to plant & machinery, building, stock and other assets of the business. It is an ideal policy for corporates and SMEs who require coverage for their business against unforeseen and uncontrollable factors that can have financial repercussions.
Types of Standard Fire and Special Perils Policy (SFSP)
Below are the five types of policies under SFSP:
- Valued policy: Under this policy, the value of the insured property is determined at the time of the purchase. In case of damage or loss, the insurer is liable to pay the pre-decided amount to the insured.
- Valuable policy: This policy functions in a reverse manner of the valued policy, and the claim amount is decided as per the current market price, not at the time of purchase.
- Specific policy: This policy only covers the risk up to a specific sum.
- Floating policy: When goods are at different locations a floating policy can be highly beneficial. However, it is to be noted that the goods should belong to the same person (insured).
- Comprehensive policy: This type of policy provides coverage for multiple risks including explosions, burglary, labour disturbances, etc. and also offers added features. This makes it highly recommended.
Case
A fabric manufacturer in Surat bought a standard fire and special perils policy (SFSP) insurance policy for his new setup. Once, a fire broke down in his manufacturing unit and burnt the stock. The insured immediately informed the insurer about the event. The insurance company assessed the reason for the damage and concluded that the fire broke due to an insured peril. The insured was thus compensated for the loss and could get back to business, rather easily.
Conclusion
You know about your business more than anyone and how much would be at risk if a fire accident takes place. If the expected damage is more than Rs 50 Crore than SFSP policy is the right choice. You can also customize the policy coverage however, it is recommended to opt for the comprehensive coverage this insurance provides.
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