What are the principles of fire insurance?
- Indemnity - It covers loss compensation only.
- Proximate cause - The accurate reason for the fire.
- Insurable interest -Proof that the policyholder is the owner of the property/belongings
Fire is a type of peril that causes financial loss and If you invest in standard fire insurance usually there are other perils covered too with it like a flood, storm, etc. This is a comprehensive type of insurance usually for factories or other businesses.
Who should take Fire Insurance?
Anyone who has an insurable interest in their property or belongings.
If you have taken property fire insurance for your factory, the coverage will Include the stock that's in it, and the structure only if you are the owner.
If its a rented property, the structure of the building will not be insured by your policy as there wouldn’t be an insurable interest
For any rented accommodation, the landlord is responsible for the structural damage
If you are taking loans, make sure to ask for insurance for the structure of the property too as banks usually ask if the structure is insured too.
What is covered under Fire Insurance?
- Electrical installations like Machinery
- Stocks - finished good, semi-finished goods, and Raw material
- Other types of equipment
Home insurance - All personal belongings except expensive and precious items
Shops and hotels - furniture and stock
Which is not covered under fire insurance?
- Caused by the Third-party - for example, your factory is on the ground floor and the fire was caused by someone of the first floor
PS - But these perils can be bought as a rider along with a standard fire insurance policy.
- You should be aware of the items you wanna cover so that you could calculate the value of your belongings.
- Proof of insurable interest (ownership) should be there
- It's important to have fire safety equipment too, the quality of which would also help you get a lower premium.
Things to declare
- You would need to declare the kind of products that you want the insurer to secure, depending on which the premium will be decided, flammable materials premium would cost a lot more.
- You would have to declare the previous loses you have had too,
Always take insurance equal to the value of the items you want to insure.
For instance, your Stock value is Rs 2 crore for which you took insurance of Rs 1 crore. You suffered a loss of 50% and because you took 1 core, ideally you should get Rs 50 lakh, but insurers work on a pro-rata basis. Since you have insured only half of the stock, your loss will be compensated for 50% too.
Hence, You will be entitled to get Rs 25 lakhs
Therefore, it's very important to cover the entire stock and not only a part of it.
Important Documents for Fire Insurance
- Fire department report
- Police report - this is crucial evidence that explains the cause of the fire
- Panchanama report - damage
- Evidence to establish the value of the stock
- Surveyor report
Once you inform your insurance company, they send a surveyor who makes a report, this Surveyor report is very important to evaluate your loss.
And if you have any objection with their report, you can also submit an objection letter to your insurer (Insurance samadhan can help you with this, click here to register)
Within 30 days of the surveyor visiting you, a discrepancy report for further information or claim acceptance will be sent to you.
Sometimes, the claim is not as per what you thought it would be, and it’s important to know that the offer you get from your insurer is not the final ultimatum, you don't have to accept it if you think you deserve better and we at insurance samadhan could help you with that too!
Register here if you have difficulties in raising complaints or claiming your money!
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