A fire and perils insurance policy is a special type of insurance plan that safeguards a policyholder against unforeseen eventualities caused due to accidental explosion, fire, lightning, damage or destruction caused by man-made perils such as riots, strike, etc, the destruction caused by aerial devices, natural calamities such as cyclone, storm, flood, etc. damage caused due to the impact of rail or a vehicle on road, damage because of subsidence or landslide, perils caused because of contamination and pollution, overflowing or bursting of water tanks, pipes, and apparatus, missile testing operations, leakage from the installation of automatic sprinkler and bush fire.

Precisely, a fire and perils insurance plan is a contract in which an insurer guarantees to pay for the damages and losses that occur to a property for a specific period (normally a fire insurance policy is a policy for one year and it can be renewed annually. The asset valuation is made as per their market value. The value of the asset factors in both appreciation and depreciation because of inflation.

Inclusions of a Standard Fire and Perils Insurance Policy:

A fire and perils insurance policy, in general, provides coverage for the following:

• Fire
• Explosion/ implosion
• Lightning
• Aircraft damage
• Storm, flood, tempest, cyclone, hurricane, tornado, and typhoon
• Riot, malicious damage, strike
• Impact by any road or rail vehicle, or an animal belonging to a third-party.
• Landslide and subsidence including road slide.
• Overflowing or bursting of apparatus or water tanks.
• Leakage from the installation of the automatic sprinkler.
• Contamination or pollution resulting from any of the mentioned perils.
• Missile testing operation.
• Bush fire
• Any insured peril that is the result of any of the aforementioned perils.

Additional Covers:

• Surveyor, consulting engineer, and surveyor’s fees up to a specific percentage of the claim amount is included.
• All the expenses that are incurred to remove debris for cleaning the site up to a certain percentage of the claim amount.
• Equipment and machinery temporarily removed for repairs, renovation, cleaning, or another similar purpose for a specific period.

Exclusions of a Standard Fire and Perils Insurance Policy:

The expenses and losses that are not covered in a standard fire and perils insurance plan are:

• The expenses incurred on surveyors’ consultant engineering, architect fees, and removal of debris. Earning loss, loss due to delay, market loss, or other consequential loss, damage of any kind, or any indirect loss.
• If a building is insured or it contains the insured property gets unoccupied and thus remains for a period that is more than 30 days.
• Damage or loss caused to the insured property through its fermentation, spontaneous combustion, or natural heating.
• Damage or loss caused because of insured property by drying process or undergoing any heating.

Perils Not Covered:

• Nuclear and allied perils
• War and allied perils
• Contamination and pollution:
  • Volcanic eruption, earthquake, or other convulsions of nature.
  • Damage to aircraft arising because of the occurrence of any insured perils.
  • Strike, riot, or malicious damage or losses that arise because of:
    • The partial or total cessation of work
    • Temporary or permanent dispossession that is resulting from the unlawful occupation of a person.
    • Temporary or permanent dispossession is the result of an order of the Government.
    • Larceny, theft, or omission by any person in case of a malicious act.
  • River or coastal erosion:
    • Forest fire
    • Damage or loss by spoilage is the result of retardation of any process because of the operation of any perils that are insured.

Properties That Are Not Covered:

• Items such as unset precious stones or billions or work of art for a specific amount, manuscripts, drawings, plans, obligations, securities, documents or obligations of any kind, coins, stamps, paper money, books of accounts, cheques, or other books of business, records of a computer system, explosive manuscripts, etc.
• The stock of cold storage due to temperature change:
  • Damage, loss, or destruction of any electronic or electrical machine fixture, apparatus, fitting arising from excess running, short-circuiting, self-heating, arcing, leakage of electricity due to any cause (including the lightning).
  • Damage, loss, or destruction of boilers, vessels, or economizers, apparatus, machinery wherein steam is generated through its own implosion/ explosion.

Add-Ons or Riders:

With perils and the expenses covered in fire and perils insurance, you can as well get a cover concerning the following perils, expenses during the purchase of the policy or at the time of inception of the plan by paying an additional premium.

Perils:

• Damage, loss, or destruction of property because of deterioration of stock available in the premises of cold storage because of power failure.
• Forest fire
• Spontaneous combustion
• Impact damage because of own vehicle of the insured, forklifts, and the same articles dropped from there.
• Forest fire
• Earthquake
• Damage cover for spoilage material
• Removal of stocks temporarily
• Contamination and leakage cover
• Terrorism

Expenses:

• Architects, consulting engineers, and surveyor’s fees
• Rent loss
• Removal of debris
• Expenses of start-up
• Addition accommodation expenses

Sum Insured:

• You can get the insurance of your property as per its depreciation cost or based on replacement cost.
• For getting better protection, insurance on a replacement basis is suggested. The selected sum insured must be adequate for reinstatement.
• In case the property’s value may increase because of the factors such as exchange rate, increasing prime cost, etc. then at the time of policy purchase, the related sum insured can be increased by a specific percentage.
• In the same way, a reduction in sum insured during the purchase of policy can be effected for which premium refund is allowed based on a short period.

The Final Words!

The fire and perils insurance in this way is a method to protect your property against any loss or damage due to various aforementioned reasons.