Types of Fire Insurance Policy in India

India, with its diverse landscape and vibrant urban centres, faces a wide range of fire risks that underscore the necessity of robust insurance coverage. From industrial accidents to other incidents, the threat of fire is significant, necessitating a comprehensive understanding of fire insurance policies available in the country. In this article, we will explore different fire policy types crafted to address specific needs and minimize financial risks.

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Types of Fire Insurance Policy

The different types of fire insurance policies are as follows:

  1. Valued Policy: Under Valued Policy, the value of a subject matter is decided, upon which the insurer pays if it is destroyed or damaged. This policy doesn’t work on the principle of indemnity. The agreed value that is compensated can be more or less than the market price. This policy is designed for the goods and properties which actual value can’t be decided after their damage or loss. Usually, the work of art, jewellery, paintings, crafts etc. come into this category.
  2. Specific Policy: This policy paid up to the specific amount the risk is insured. In case of a fire loss, the insurer will pay for the loss that is less that the specific amount or up to the sum insured. Let’s say, a policy is taken to cover a property worth value Rs. 80,000, for sum insured Rs. 50,000. When the property sees a loss of Rs. 40,000, the insurers have paid the full amount. If the loss is up to Rs. 50,000, the full amount will be paid. But if the loss exceeds Rs. 50,000, the insurer will pay up to the insured amount. However, the insured isn’t penalised for availing a policy for a lesser amount, as the value of the property is not taken into consideration.
  3. Average Policy: When an average clause is applicable to fire policy, it is called Average Policy. This clause is used to penalise the policyholder for taking up a policy with a lesser amount than the actual value of the property. The compensation amount is proportionately reduced in case the value of the policy is less than the insured property. Let’s say if you own fire insurance of worth Rs. 20,000 when the value of your property is Rs. 30,000. In case of fire damage of around Rs. 50,000, the insurer will pay you up to Rs. Rs. 10,000 (20,000/30,000 x 15,000) and not Rs. 15,000. It discourages the policyholder to get an under-valued policy.
  4. Floating Policy: This policy is tailor-made for the businessmen who deal in import and export businesses. The floating policy is taken to cover the goods of an organisation lying at the different places, provided the goods should belong to one person. The premium charged is the average premium that would have been paid, in case a specific policy would have been taken for all these goods. The insurer may put its own clause and conditions.
  5. Comprehensive Policy: By opting for a comprehensive policy, the insured can be well assured for fire, explosion, lightning, burglary, riots, labour disturbances etc. A single policy covers multiple risks, thus, comprehensive insurance is highly recommended.
  6. Consequential Loss Policy:  Due to a fire incident, factory works will be at a halt. Production will go down despite the fixed expenses continue at the same rate. With a consequential loss policy, all these losses can be covered. This policy pays the policyholder for the loss of profit by calculating the compensation on the basis of loss of sale.
  7. Replacement Policy: Under this policy, the insurance providers assure compensate for the loss on the basis of the market value of the property. Thus, the amount to be compensated is calculated after considering the depreciation value of the property. The policy ensures that the compensation will be on the replace price. So, the new asset will be of a similar price that has been lost. As the compensation will be on the market price of the new assets, it is replaced without an additional expense.
You may also read:6 Ways to Save an Extra on Fire Insurance Policy

Who can Opt Fire Insurance Policy?

The fire insurancecan be opted by:

  • Any person/institution /firm/organisation/ who may expose to financial loss or damage in case of fire outbreak
  • Owners of Building and contents such as household articles, furniture etc.
  • Godown keepers and shopkeepers
  • Educational institutions, research institution, Bank or other financial, institution, trusts, charitable institutions
  • Hospitals, hotels, clinics, lodging and boarding centres or other related service providers
  • Manufacturing firms, industrial entities
  • Transporters
Explore Fire Insurance

What's Stored for You?

Under a fire insurance policy, the following circumstances are covered:

Damages Caused by Fire

  • Lightening
  • Explosion/Implosion
  • Storm, Typhoon, Hurricane, Tornado, Flood and Inundation
  • Riot, Strike, Malicious Damage, Aircraft Damage
  • Missile testing operations
  • Impact damage
  • Bursting and overflowing of water tanks, apparatus and Pipes
  • Subsidence and landslide including Rockslide
  • Bush Fire
  • Leakage from Automatic Sprinkler Installation

The aforementioned types of fire insurance in India can be considered while taking up a plan. You should analyse your needs first, compare the policies and premium, in order to settle down with the adequate insurance. In this regard, online insurance comparison of fire insurance will go long run. You can be benefited with various insurance quotes as well which serve you in availing the choice of your insurance. Anothermost important aspect to be considered is the fire insuranceclaim and how the insurer’s reputation in paying off the claims.

You may also read: 9 Perils of Standard Fire Insurance Policy

Conditions on which Ground the Claim is Accepted

Your claim will be accepted on the following grounds only:

  • No claim arising out of damage or loss due to high temperature. The loss must be by actual fire explosion or ignition and not by other means.
  • The actual or nearby cause of the loss should be fire
  • The loss or damage must recount to subject matter of fire policy
  • The explosion must be either of the goods or of the property where goods are kept.
  • The incident should be accidental, no coverage is offered for the intentional Even the fire is caused due to the malicious act of the policyholder, the claim will not be entertained by the insured.
You may also read: Things to Consider for Ensuring Right Fire Insurance

Concluding with a Live Example!

Pune-based Kant Dabholkar while sharing his experience said that the loss or damage encountered during a fire outbreak is no doubt a shocking one but you can’t replace the loss of lives. When he suffered from two fire cases in his press, there was no casualty thankfully. However, watching the flames reaching out to touch the sky is horrifying. The only time when the importance of fire insurance can be realised then, said Mr Dabholkar!

Contribute your share towards protecting your business form fire-related perils. Purchase fire insurance today and stay protected for tomorrow.

If you are finding it difficult to choose a right fire insurance policy for your business then you may connect with our team of experts at Policybazaar for Business. They can help you in choosing a fire and burglary insurance policy that suits your needs and is within your budget.

Written By: PolicyBazaar - Updated: 10 May 2024
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Policybazaar for Business - Fire Special Perils Insurance - Customer Reviews
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4.8 October 09, 2022
Aaftab
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.
Thiruvananthapuram
4.8 October 08, 2022
Balachandar
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 .
Mangaluru
4.8 October 07, 2022
Raahim
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.
Bengaluru
4.5 October 06, 2022
Aadi
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.
MP
4.8 October 05, 2022
Rohit
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.
Bhopal
4.3 October 04, 2022
Baban
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.
Chandigarh
4.3 October 03, 2022
Aarnav
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.
Assam
4.5 October 02, 2022
Jagadish
Affordable
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.
Ahemdabad
4.5 October 01, 2022
Rahul
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.
Surat
4.5 September 30, 2022
Baabul
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.
Gurgaon