Fire Insurance

What is fire insurance?

A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured, with in the time specified in the contract. The policy protects the insured building, assets, furniture, and fixtures against a service of perils.

Who should buy a fire insurance policy:

• Owners of building and the owners of the content inside the building which includes artefacts, furniture etc.
• Educational institutions
• Shop keepers
• Industrial or manufacturing firms
• Godown keepers
• Hostels
• Boarding and lodging
• Traders in stock
• Hospitals and clinics
• Financial institutions
• Charitable institutions, trustees
• Banks
• Bailee, lessor, lessee

Types of fire insurance policy

Valued policy:-

• In this policy the cover is a fixed amount agreed upon at the time of signing the contract.
• This insurance company pays that amount apart from of the actual loss due to fire.
• The valued insurance policy is usually offered for such items like jewellery, paintings which value is difficult to estimate once they are damaged or destroyed by fire.

Replacement policy:-

• Covers the cost of replacement of object according to its condition.
• Any technical improvements will go to the account of the insured.
• Reinstatement must be carried out by the insured in order to obtain the benefits of the special basis of settlement.

Floating policies :-

• It is taken out for thase goods which are frequently changing in a warehouse. This policy can be taken on thase goods which are lying on different localities or godowns.
• Floating policies are suitable to thase traders or products whose row-material or merchandise are lying at different localities or godowns.

Adjustable policies :-

• It is issued for existing stock.
• In case of loss by fire the amount notified by the insured at the maturity of the policy is taken as final and indemnified up to that limit.
• It is a contract limited to merchandise or stock in trade other than farming stock.

Specific policies :-

• A specific policy is a type of policy in which the property is insured for a specific sum irrespective of its value.
• If there is loss, the stated amount will have to be paid to the policy holder.