Fire insurance is a contract of insurance against the loss/damage by accidental fire or other occurrences customarily included under a fire policy.

Types of Fire Policies

1. Standard Fire and Allied Perils Policy :

   The “Standard Fire and Allied Perils Policy” popularly known as SFSP, covers the following perils:

   1. Fire

   2. Lightning

   3. Explosion / Implosion:

   4. Aircraft Damage:

   5. Riot, Strike and Malicious Damage (RSMD):

   6. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation (STFI):

   7. Impact Damage:

   8. Subsidence and Landslide including Rockslide

   9. Bursting and/or overflowing of Water Tanks, Apparatus and Pipes

   10. Missile Testing Operations:

   11. Leakage from Automatic Sprinkler Installations

   12. Bush Fire: It means fire spread from the bushes.

   More covers can be added( Add-on Covers) by endorsement and by paying additional premium under SFSP policy in addition to the above covers.

2. Special Policies:

   1. Floater Policy : This policy is issued only for the stocks stored in warehouses/godowns at various places but belonging to the policy holder. This policy issued to stocks in godowns where inter godown movement of stocks is very frequent and where it is not possible to record each and every inward and outward movement of stocks cannot be monitored. Policy holder can take the policy for one sum insured which is floated over all the godowns.

   2. Declaration Policy : This type of policy is useful where there are frequent fluctuations in stocks / stock values and to avoid the under insurance (insurance of lower value) of the stock. Based on the pre-agreed terms the stock value to be declared periodically say monthly and the premium at the year-end (Policy year) is worked out on the average of the stock value declared and excess premium if any will be refunded to the policy holder.

   3. Floater Declaration Policy It is combination of the above-mentioned policies i.e. stock lying at various locations and the value of stock fluctuating.

   The following are the normal exclusions under any types of fire policies mentioned above General Exclusions

   THE FIRE INSURANCE DOES NOT COVER THE FOLLOWING RISKS KNOWN AS GENERAL EXCLUSIONS

   • a) The first 5% of each claim subject to a minimum of Rs. 10,000 in respect of each loss arising out of “Act of God perils” such as Lightning, STFI, Subsidence, landslide and Rock slide covered under the Policy

   • b) The first Rs. 10,000 of each loss arising out of other perils in respect of which the Insured is indemnified by this Policy.

   • The Excess shall apply per event per Insured.

   • Loss, destruction, or damage caused by war, and kindred perils.

   • Loss, destruction, or damage directly or indirectly caused to the insured property by nuclear peril.

   • Loss, destruction, or damage caused to the insured property by pollution or contamination.

   • Loss, destruction, or damage to any electrical and / or electronic machine, apparatus, fixture or fitting (excluding fans and electrical wiring in dwellings) arising from or occasioned by over-running, excessive pressure, short circuiting, arcing, self-heating or leakage of electricity, from whatever cause (lightning included).

   • Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or disruption whatsoever.

   • Earthquake Vulcanic eruption: Earth Quake can be covered under the fire policy but by paying additional premium,

   • Loss or damage due to Terrorism unless specifically covered.

   • Loss or damage by spoilage resulting from the retardation or interruption or cessation of any process or operation caused by operation of any of the perils covered.

   • Loss by theft during or after the occurrence of any insured peril except as provided under Riot, Strike, Malicious and Terrorism Damage cover.

   • Loss or damage to property insured if removed to any building or place other than in which it is herein stated to be insured, except machinery and equipment temporarily removed for repairs, cleaning, renovation, or other similar purposes for a period not exceeding 60 days.

   ADD ON COVERS:

   Normally, depending upon the need and risk exposure following additional covers are given.

   1. Combustion (by Fire Only)

   2. Earthquake (Fire and Shock)

   3. Forest Fire

   4. Impact damage due to Insured’s Own Vehicle and the articles dropped from them.

   5. Deterioration of Stocks in Cold Storage premises due to accidental power failure consequent to damage at the premises of Power Station due to an insured Peril. (Applicable only when stock is covered)

   6. Deterioration of Stocks in Cold Storage premises due change in temperature arising out of loss or damage to the cold storage machinery (ies)in the Insured’s premises due to operation of an insured Peril. (Applicable only when stock is covered)

   7. Architects etc. fees (more than 3%)

   8. Debris Removal (more than 1%)

   9. Omission to Insure, Additions, Alterations, Extensions Clause

   10. Spoilage Material Damage Cover (applicable to stock and machinery containers only)

   11. Leakage and Contamination Cover

   12. Temporary Removal of Stocks Clause

   13. Loss of Rent Clause

   14. Insurance of Additional Expenses of Rent for An Alternate Accommodation

   15. Start Up Expenses.

   Choosing the amount to be insured.

   While the proposer is the best person to know about the intrinsic/financial value of the property to be insured, here are some suggestions to choose the value to be insured.
   
   To get the amount equal (or almost equal) to the loss after an accident, one has to choose either of the following methods of indemnity.

   1. Normal Indemnity : The market value of the property can be chosen as Sum insured. Under this type of indemnification depreciation will be deducted from the actual expenses for reconstruction /reinstatement/ replacement, towards the usage of the property till the time of accident.

   2. Reinstatement Value policy : Under this type of indemnity which is popularly known as “new for old”, The cost of reconstruction/ re-erection without deducting depreciation is paid. In simpler words irrespective of the usage and age of the property destroyed/damaged/lost, the cost of constructing the property anew will be paid. Sum Insured should be the cost of the reconstruction as a new property.

   3. Escalation Clause : This clause provides automatic and gradual increase of Sum insured as per the percentage of escalation chosen, by payment of additional premium. This will ensure that sum insured is coping up with inflation of value of the property during the currency of the policy.

   Remember these points while buying fire insurance:

   Buying a fire insurance policy bring customer’s peace of mind as it covers them for losses or damages resulting from a fire and other covered events/perils.
   
   But following points should be considered while buying fire insurance for proper protection.

   • Perils Covered

   • Exclusions

   • Add on Covers

   • Proper Description of The Property

   • Related Clauses Like Goods Held in Trust Clause, Reinstatement Value Clause Etc. Adequacy of Sum Insured to Avoid Under Insurance.