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What is Fire Insurance?

The most popular Property Insurance cover in India is Fire Insurance. Although called Fire Insurance, the policy offers coverage against the operation of various specified perils under a single policy. The policy is technically named as Standard Fire and Special Perils Policy.

The policy can be offered to any sort of property such as residential dwellings, industrial occupancies, warehouses and non-industrial entities. Infrastructural utilities like roads, bridges, tank farms and the like can also be insured under this policy. Building structure, contents, furniture and fixtures, plant and machinery, electronic equipment, utilities and stocks can all be included under the policy for apt coverage.

The policy offers coverage against the operation of following perils:

FIRE

Fire means combustion which is accidental accompanied by visible flame or glow excluding destruction or damage caused to the property insured by

  • i) its own fermentation, natural heating, or spontaneous combustion,
  • ii) its undergoing any heating or drying process and
  • iii) Burning of property insured by order of any Public Authority, -including damage by fire initiated from such causes to the said property. However, ensuing damage by spread of fire to other property insured is payable provided such damage is not caused by peril otherwise excluded under the policy.

LIGHTNING

Loss or Damage Directly caused by Lightning

EXPLOSION/IMPLOSION

Damage excluding loss, destruction of or damage

  • (a) to boilers (other than domestic boilers), economizers or other vessels, machinery, or apparatus (in which steam is generated) or their contents resulting from their own explosion/implosion,
  • (b) caused by centrifugal forces.

AIRCRAFT DAMAGE

Loss, Destruction or damage caused by Aircraft, other aerial or space devices and articles dropped therefrom excluding those caused by pressure waves.

fire insurance - vector image of home and fire symbol
fire insurance types - vector image of house and tornado

RIOT, STRIKE & MALICIOUS DAMAGES

Loss of or visible physical damage or destruction by external violent means directly caused to the property insured but excluding those caused by

  • i) Total or partial cessation of work or the retardation or interruption or cessation of any process or operations or omissions of any kind.
  • ii) Permanent or temporary dispossession resulting from confiscation, commandeering, requisition, or destruction by order of the Government or any lawfully constituted Authority
  • iii) Permanent or temporary dispossession of any building or plant or unit or machinery resulting from the unlawful occupation by any person of such building or plant or unit or machinery or prevention of access to the same.
  • iv) Burglary, housebreaking, theft, looting, larceny or any such attempt or any omission of any kind of any person (whether or not such act is committed in the course of a disturbance of public peace) in any malicious act.

STORM, TEMPEST, CYCLONE, TYPHOON, HURRICANE, TORNADO, FLOOD, INUNDATION

Loss, destruction or damage directly caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood, or Inundation excluding those resulting from earthquake, Volcanic eruption, or other convulsions of nature. (Wherever earthquake cover is given as an “add on cover” the words “excluding those resulting from earthquake, volcanic eruption or other convulsions of nature” shall stand deleted.

IMPACT DAMAGE

Loss of or visible physical damage or destruction caused to the property insured due to impact by any Rail/ Road vehicle or animal by direct contact not belonging to or owned by

  • a) the Insured or any occupier of the premises or
  • b) their employees while acting in the course of their employment.

SUBSIDENCE, LANDSLIDE AND ROCK SLIDE

Loss, destruction, or damage directly caused by Subsidence of part of the site on which the property stands or Land slide/Rock slide excluding:

  • a) The normal cracking, settlement or bedding down of new structures
  • b) The settlement or movement of made up ground
  • c) Coastal or river erosion
  • d) Defective design or workmanship or use of defective materials
  • e) Demolition, construction, structural alterations or repair of any property or groundworks or excavations.

MISSILE TESTING OPERATIONS

BUSH FIRE

Loss excluding, destruction or damage caused by Forest Fire.

BURSTING AND/OR OVERFLOWING OF WATER TANKS, APPARATUS AND PIPES

Bursting or breaking of water tanks, pipes, or apparatus due to the buildup of internal pressure beyond their capacity or breaking point and Overflowing is the escape of water from the top of an overfilled container, water tanks, apparatus, or pipes

LEAKAGE FROM AUTOMATIC SPRINKLER INSTALLATIONS

Excluding loss, destruction, or damage caused by

  • a) Repairs or alterations to the buildings or premises
  • b) Repairs, Removal, or Extension of the Sprinkler Installation
  • c) Defects in construction known to the Insured.
fire insurance claims - vector image of house and water overflowing infront of it
fire insurance features- vector image of house getting damaged due to water,fire ,tornado and earthquake

In addition to the above coverages, the following additional coverage can be opted for, by paying additional premium as applicable:

  • Earthquake (Fire and Shock)
  • Terrorism Cover
  • Impact Damage by insured’s own vehicles etc.
  • Spontaneous combustion
  • Architects, Surveyors and Consulting Engineers fees (in excess of 3% of claim amount)
  • Debris Removal (in excess of 1% of claim amount)
  • Omission to insure Additions, Alterations or Extensions
  • Deterioration of Stock in Cold Storage
  • Forest Fire
  • Spoilage Material Damage Cover
  • Leakage and Contamination Cover
  • Loss of Rent
  • Alternative Accommodation
  • Start Up Expenses

Limit Of Indemnity Under Fire Insurance

The limit of indemnity under this cover shall not exceed the Total Sum Insured given in the Policy Schedule. In respect of several insurance policies within the same compound/location with one or different insurers, the maximum aggregate loss payable per compound/location by any one or all insurers shall be the Policy Sum Insured. If the actual aggregate loss suffered at one compound/location is more than the Policy Sum Insured, the amounts payable under individual policies shall be reduced in proportion to the sum insured of the policies.

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Excess Under Fire Insurance

It is the first amount payable by the insured in the event of a loss, and is the uninsured portion of the loss. The Excess varies based on the location-wise sum insured as is applicable as stated below:

  • For locations having Sum insured upto Rs 10 Crs: 5% of claim amount subject to minimum of Rs 10,000/- for each and every claim
  • For locations having Sum insured above Rs 10 Crs and upto Rs 100 Crs: 5% of claim amount subject to minimum of Rs 25,000/- for each and every claim
  • For locations having Sum insured above Rs 100 Crs and upto Rs 1500 Crs: 5% of claim amount subject to minimum of Rs 5,00,000/- for each and every claim
  • For locations having Sum insured above Rs 1500 Crs and upto Rs 2500 Crs: 5% of claim amount subject to minimum of Rs 25,00,000/- for each and every claim
  • For locations having Sum insured above Rs 2500 Crs: 5% of claim amount subject to minimum of Rs 50,00,000/- for each and every claim

On the happening of loss or damage to any of the property insured by this policy, the Insurance Company may

  • a) enter and take and keep possession of the building or premises where the loss or damage has happened.
  • b) take possession of or require to be delivered to it any property of the Insured in the building or on the premises at the time of the loss or damage.
  • c) keep possession of any such property and examine, sort, arrange, remove or otherwise deal with the same.
  • d) sell any such property or dispose of the same for account of whom it may Concern.
fire insurance policy conditions - vector image of house and people holding lock
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The powers conferred by this condition shall be exercisable by the Insurance Company at any time until notice in writing is given by the insured that he makes no claim under the policy, or if any claim is made, until such claim is finally determined or withdrawn, and the Insurance Company shall not by any act done in the exercise or purported exercise of its powers hereunder, incur any liability to the Insured or diminish its rights to rely upon any of the conditions of this policy in answer to any claim. If the insured or any person on his behalf shall not comply with the requirements of the Insurance Company or shall hinder or obstruct the Company, in the exercise of its powers hereunder, all benefits under this policy shall be forfeited. The Insured shall not in any case be entitled to abandon any property to the Insurance Company whether taken possession of by the Insurance Company or not. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the Insured, all benefits under this policy shall be forfeited.

The Insured shall at the expense of the Insurance Company do and concur in doing, and permit to be done, all such acts and things as may be necessary or reasonably required by the Insurance Company for the purpose of enforcing any rights and remedies or of obtaining relief or indemnity from other parties to which the Insurance Company shall be or would become entitled or subrogated, upon its paying for or making good any loss or damage under this policy, whether such acts and things shall be or become necessary or required before or after his indemnification by the Insurance Company.

If at the time of any loss or damage happening to any property insured under the SFSP Policy, if there be any other subsisting insurance or insurances, whether effected by the Insured or by any other person or persons covering the same property, the Insurance Company shall not be liable to pay or contribute more than its rateable proportion of such loss or damage.

The Sum Insured shall stand reduced by the amount of loss in case the insured immediately on occurrence of the loss exercises his option not to reinstate the sum insured to its initial value.

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