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Fire Insurance

Fire insurance means insurance against any loss caused due to fire. According to Section 2(61) of the Insurance Act defines fire insurance as: “Fire insurance business means the business of effecting, otherwise than incidentally to some other class of business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies”.

Need for Fire Insurance:

The existence of material property susceptible to damage or destruction by fire or other peril.
The fact that material property has intrinsic value measurable in terms of money recognized by the economic beliefs of society.
The fact that the occurrence of a fire will result not only in loss of or damage to material property but also other consequential losses such as loss of production causing loss of.

Insurable Property:

The fire insurance policy is meant to cover erected fixed assets and movable assets whilst lying at a particular location and declared accordingly for insurance. It includes: –

Buildings
Electrical Installation In Buildings
Contents Of Buildings Such As Machinery, Plant And Equipment, Accessories, Etc.
Goods (Raw Materials, In Process, Semi Finished, Finished, Packing Materials, Etc) In Factories,
Godowns, Tank Farms.
Goods In The Open
Contents In Dwellings, Shops, Hotels, Etc
Furniture, Fixtures And Fittings
Pipelines (Including Contents) Located Inside Or Outside The Compound.

Insured Perils

There are 12 insured perils.

Fire
Lightning
Explosion/ Implosion.
Aircraft Damage.
Riot, Strike, Malicious and Terrorism Damage.
Storm, Typhoon, Hurricane, Tornado, Flood and Inundation.
Impact damage.
Subsistence and landslide including Rock slide.
Bursting and overflowing of water tanks, apparatus and Pipes.
Missile testing operations.
Leakage from Automatic Sprinkler Installation
Bush Fire.
Earthquake(add on cover)

Exclusions

As provided in policy wordings.

Sum Insured

Property Other Than Stock – can be insured on depreciated cost (market value) or replacement cost basis.
In order to get better protection, insurance on reinstatement (replacement) basis is recommended.
Stock: Row Material, Stock In Progress, Finish Goods
The sum insured selected should be adequate to avoid under insurance.

Extensions on Additional Premium

Architects, Surveyors and Consulting Engineers Fees ( in excess of 3% claim amount)
Removal of debris in excess of 1% of claim amount.
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.
Deterioration of stocks in cold storage premises due to change in temperature arising out of loss or damage to the cold storage machinery (ies) in the Insured’s premises due to operation of insured peril.
Forest Fire
Impact Damage due to Insured‟s own Rail/Road Vehicles, Forklifts, Cranes, Stackers and the like and articles dropped therefrom
Spontaneous Combustion- Sum insured of relative commodity
Omission to Insure additions, alteration or extensions
Spoilage Material Damage Cover
Leakage & Contamination Cover
Temporary Removal of Stocks Clause
Loss of Rent clause
Insurance Of Additional Expenses Of Rent For An Alternative Accommodation
Start Up Expenses

Excess: 5% of claim amount subject to minimum of Rs.10, 000 to minimum of Rs. 50 lacs depending upon sum insured at one location.