What is fire insurance and how it works?
Fire insurance is an insurance policy that protects the losses or damages caused by a fire outbreak to the property and assets. It is constructed and designed to cover the costs of replacement and repair, which is not covered by a general property insurance policy.
Let us understand how fire insurance works. Fire insurance takes into its ambit the damages or losses done to building infrastructure itself or to the nearby structures thus compensating for the expenses attached with not being able to put the damaged property to use and also the losses of profit on the day of displacement.
What fire insurance covers?
The fire insurances cover the following incidents that may cause an outbreak of fire resulting in damage of property:-
- Fire outbreak
- Lightening
- Explosion
- Damage to Aircraft
- Strike, riot
- Hurricane, storm, flood
- Landslide, rock slide
- Bush fire
What are the exclusions which fire insurance does not cover?
Fire insurance does not cover the following incident leading to loss of the property:
- Damage of property due to war
- Damage of property due to civil war
- Damage of goods or property by the change in temperature or inability to maintain the temperature
- Damage is done due to electrical risks (conditions apply)
- Pollution induced contamination or damage
What are the types of fire policies & which one is suitable for you?
There are many types of fire insurance policies. We will talk about different types of policies and their important aspects here.
- Floating Policy:- In this policy, the loss by fire caused to the property is of the same person but of the different places under one sum and one premium policy. Basically, it is designed for the ones who have different warehouses at different places, so he may not have to take different fire insurances for each different warehouse.
- Specific Policy:- It basically covers loss up to some specified and agreed amount which may be less than the real value of a property.
- Comprehensive Policy:- It basically covers comprehensively every risk like fire, theft, burglary, third-party risks, and may also take into its ambit risks of loss of profit during the period for which business comes to halt due to fire.
- Valued Policy:- It is quite unconventional policy since it basically covers the amount of compensation which is recoverable at the incidence of loss by fire and the amount is already fixed during the signing of the insurance agreement. In it, the amount for which insurer compensates is already fixed and is irrespective of the amount of actual loss by fire.
What is the claim process for fire insurance?
For getting the claim, first of all, the insurance company is to be informed as soon as possible after the incident. It can be done by online process or telephonic conversation. A surveyor will be hired by the insuring firm. The fire department should be intimated about the incident. Surveyor will investigate the incident and settle the claim process.
Advantages of fire insurance?
Advantages of fire insurances are too many to be counted out of which some are listed below:
- It keeps you tension free about your asset and its safety;
- In case of damage the insurance money neutralize all your losses and provides you interim relief;
- It also compensates you for the loss of profit during business shut down and displacement thus minimizing your loss and help you to bring back your business to normal.
Why fire insurance policies are different and why you need an expert’s advice to select the right one for you?
All these fire insurance policies have different clauses and the safeguard you from different forms of damages caused by fire like:
- It might not immune you from the damage caused by high temperature but only by actual fire;
- It might state that the cause of a loss should solely be fire and no other event other than fire should have taken place (Now, how is that possible always? so paying the insurance premium for such policy will be a waste);
- These policies are supposed to be very careful because they might contain clauses like receipts of all the lost product should be shown for claiming insurance claim (How will I get the receipts of all those products and what if they too were lost in a fire?);
- It might state terms like a fire should not be intentional but accidental and if it will be intentional no claim shall be paid.