Life is unpredictable, you do not know when any problem like fire, flood, earthquake, or any accident, you might encounter. Therefore, it is better to be prepared for these kinds of things by having insurance, like life insurance, property insurance, or fire insurance. Fire Insurance helps to ensure your property, assets, life, automobile, and business. With the increasing cases of fire-related accidents, it is advisable to have one for your safety. In this blog, you will get to know in detail about the types, benefits, coverages, and many other things related to the Fire Insurance Policy.
Benefits of Fire Insurance
Having yourself prepared for the worst always helps, such as in the case of an abrupt fire, gas leakage, and other incidents. Therefore, having a fire insurance policy is a must. The benefits of the Policy are given below:
- Financial Protection
Having fire insurance acts as a safety net; in case of fire, the insurer provides benefits like covering the fire damage or loss of property and belongings, helps you rebuild or replace the property, and can also pay for your temporary living expenses.
- Legal Liability
The insurance policy company protects you from legal responsibility, like harm to third parties in fire accidents, and the policies can also pay for the legal costs and charges you may face in case of a lawsuit.
- Business Continuity
The policy helps the insured person to help in resuming business operations and recover from fire losses. The insurance policy may also cover the loss of stock, raw materials, goods in transit, and machinery essential for your business activities.
- Sense of Security and Peace of Mind
Insuring the property and assets for hazards such as fire is a very essential part, as it provides a sense of security to the person as a backup plan. It helps to reduce the stress and anxiety caused by fire accidents, as the person has already planned for this kind of situation beforehand.
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Types of Fire Insurance
There are a variety of fire insurance policies available in the market. Before buying, you should know about all the types and then choose according to your requirements. The list of types of insurance is:
| Valued Policy | Under this policy, a predetermined value of property is assigned by the insurer. |
| Specific Policy | The Specific policy offers a fixed compensation amount; the person will get full compensation if the loss amount is within the coverage amount. |
| Average Policy | Under this policy, the compensation amount is proportionately reduced if the policy’s value is less than the insured property’s value. |
| Floating Policy | The feature of this policy is that you can insure more than one property in different locations under one policy. This policy is suitable for business owners who own multiple properties. |
| Comprehensive Policy | A comprehensive policy offers large-scale coverage. It not only covers damages caused by fire but also natural and man-made calamities like explosions, lightning, riots, theft, etc. This policy covers the chances of multiple risks. |
| Consequential Loss Policy | Under this policy, essential business equipment or machines damaged by fire are covered and given compensation for this. |
| Replacement Policy | If the insured property is damaged by fire, the person is compensated with the depreciated value or the insured property’s actual value. |
Fire Insurance Coverage in India
The insurance policy for fire and related hazards covers the following list of information in India:
| FIRE INSURANCE PERILS | COVERAGE INCLUSIONS |
| Fire | The policy covers any damage caused due to fire. |
| Lightning | If there is any damage/loss due to lightning, like cracks on the roof/building, this will be covered. |
| Explosion | The policy covers any explosion caused due to fire. |
| Aircraft Damage | Damages that happen to an aircraft that lead to a fire will be covered under the policy. |
| Terrorist Activity, Strikes, Riots | Any harm caused to a protected property because of a strike, riot, or any terrorist activity is covered by the fire policy. |
| Natural Calamity | Damage to an insured property due to reasons such as storms, typhoons, etc, is covered in this policy. |
| Landslide/Rockslide | The destruction caused to the property due to a rockslide or landslide is also covered in the policy. |
| Bursting/Overflowing of Water Tanks | Damage to the insured company due to the bursting or overflowing of the water tank will be covered under the policy. |
| Bush Fire | Fire on overgrown bushes/plants that may end up damaging the property will be covered under the policy. |
| Impact Damage | It refers to damage caused to the insured property due to physical impact by external objects. |
Exclusion Under the Fire Insurance Policy in India
There are some exclusions that are not included in the standard fire insurance policy. However, if a person wishes to add some of the additional benefits to their policy, he/she can pay additional premiums and include add-ons. The list of exclusions under the insurance policy in India is given below:
- Willful or Intentional Damage
- Pollution or Contamination
- Consequential or Indirect Loss
- War, Invasion, or War-like Operations
- Loss or Damage to Cold Stocks due to an increase in temperature
- Missing Property or Mislaid Property
- Fees or Expenses while Preparing a Claim
- Short Circuit
- Leakage of Electricity
- Electrical Machine Damages (any electrical damage)
- If the Insured premises or building remain unoccupied for more than 30 days.
- Unset Precious Works or Works of Art unless specifically declared.
Add-ons in Fire Insurance Policy
Upon payment of an additional premium, the insurance policy can offer some benefits from the add-on coverage. The list of Add-ons in the Fire Insurance Policy is:
- Earthquake
- Wreckage Removal
- Forest Fire
- Loss of Rent
- Start-up Cost
- Alternate Accommodation
- Stock Damages Due to Temperature
- Leakage and Contamination Cover
- Cover for Molten Metal Spillage
- Architects, Engineers, Surveyors Consultation Fees
- Impact Loss Owing to the Insured’s Own Road/ Rain Transit
Best Fire Insurance Plans in India
| S. No. | NAME OF THE INSURANCE COMPANY | SECTOR | CLAIM SETTLEMENT RATIO (CSR) |
| 1. | National Insurance Co. Ltd. | Public | 91.31% |
| 2. | New India Assurance Co. Ltd. | Public | 90.73% |
| 3. | Oriental Insurance Co. Ltd. | Public | 91.62% |
| 4. | United India Insurance Co. Ltd. | Public | 91.10% |
| 5. | Reliance General Insurance Co. Ltd. | Private | 98.75% |
| 6. | HDFC ERGO General Insurance Co. Ltd. | Private | 98.59% |
| 7. | ICICI Lombard General Insurance Co. Ltd. | Private | 98.53% |
| 8. | Bajaj Allianz General Insurance Co. Ltd. | Private | 93.54% |
| 9. | IFFCO‑Tokio General Insurance Co. Ltd. | Private | 90.65% |
| 10. | SBI General Insurance Co. Ltd. | Private | 96.47% |
| 11. | Tata AIG General Insurance Co. Ltd. | Private | 95.46% |
| 12. | Magma HDI General Insurance Co. Ltd. | Private | 94.72% |
| 13. | Raheja QBE General Insurance Co. Ltd. | Private | 97.30% |
| 14. | Liberty General Insurance Ltd. | Private | 97.46% |
| 15. | Acko General Insurance Ltd. | Private | 97.68% |
| 16. | Go Digit General Insurance Ltd. | Private | 96.83% |
| 17. | Navi General Insurance Ltd. | Private | 95.13% |
| 18. | Universal Sompo General Insurance Ltd. | Private | 91.58% |
| 19. | Cholamandalam MS General Ins. Co. Ltd. | Private | 93.63% |
| 20. | Future Generali India Insurance Co. Ltd. | Private | 94.98% |
| 21. | Shriram General Insurance Co. Ltd. | Private | 86.86% |
Why is Fire Insurance a Must for Homeowners
The fire insurance policy is a must for homeowners as it aids in protecting one of your most valuable assets- your house, in case of fire, due to various reasons like gas cylinder explosion, fire caused by lightning, etc.
Here are some reasons why homeowners need to insure their houses from fire:
- Protection Against Fire-Related Damages
- Helps to cover Allied Perils
- Financial Stability after Disaster
- Helps to cover the loss of Rent or Temporary Accommodation
- Affordable and Customizable
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FAQs
What is a Fire Insurance policy?
Fire Insurance is a type of property insurance that covers damages caused due to fire.
Is damage caused by an earthquake covered by fire insurance?
Yes, earthquake is covered for those with the additional add-on premiums included in their insurance.
What is Value Policy?
Value policy refers to the policy in which a predetermined value of property is assigned by the insurer
Why is Fire Insurance a must for homeowners?
The fire insurance policy is a must for homeowners as it aids in protecting your most valuable assets, like your house, vehicles, etc.
What is Impact Damage?
Impact Damage refers to damage caused to the insured property due to physical impact by external objects.
