Fire Insurance

2017-11-15 12:47:00 UTC

fire blog header

The fire insurance policy offers protection against any unforeseen loss or damage to/destruction of property due to fire and other perils covered under the policy. This is very important for businesses in order to protect their premises & stocks from adverse events and perils.

What is Covered:

This policy covers various assets like Building, Plant & Machinery, Stock, Furniture, Fixtures and other immovable and movable assets against loss or damage due to:

  • Fire
  • Lightning
  • Explosion / implosion
  • Aircraft damage
  • Riot, strike and malicious damage (RSMD)
  • Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation (STFI)
  • Impact damage
  • Subsidence, landslide and rockslide
  • Bursting and/or overflowing of water tanks, apparatus and pipes
  • Missile testing operations
  • Leakage from automatic sprinkler installations
  • Bush fire
  • Earthquake (Fire & Shock)- Offered as an add-on, at extra cost
  • Terrorism- Offered as an add-on, offered at extra cost

Eligibility for Perilwise’s online quote

Perilwise will find insurance for you regardless of your situation or type of business. However, in order to get prices online, your business needs to be a brick/cement/concrete construction, and not a “kutcha” construction.

Policy Tenure

The policy is generally issued for one year from the date of inception of the cover. For homes and dwellings, long term policies are sometimes issued, but for business, because it is done on reinstatement value basis, it is best to get annual policies. Read on below for more details:

How much to Insure?

A big question for many businesses is how much insurance to take. After all the insurance quote form just has a box that you can fill with any value! Perilwise has expert advisors who will help you through it

Property can be insured on depreciated cost (Market Value) or replacement cost basis. For businesses, in order to get full protection, insurance on reinstatement (replacement) basis is recommended, and forced on Perilwise. This is done to reduce incidents of claim dissatisfaction.

Reinstatement Value Basis:

This is defined as estimated cost of Reinstatement of a similar property as on the date of proposal(policy issuance) with suitable escalation over the policy period. In layman terms, Your structure should be insured at the value it takes to rebuild it from scratch again(not including cost of land)

However, Stock should be covered only on Market Value basis. In case of claim, the insurer will generally look at the invoice value of the stocks you have lost, and reimburse you accordingly.

If the Sum Insured is less than the amount required to be insured, the Company will pay only in proportion. This means that if your actual ideal sum insured is 10 lakh, but you have only set 9 lakh, then when you incur damages of 1 lakh, insurer will pay 9 lakh/10 lakh=90% of the claim amount, minus applicable deductibles.

Major Exclusions

  1. Excess(or deductible) as per policy schedule. This is usually 5% of claim value or INR 10000, whichever is higher. If you opt for add-ons, there are separate excess involved. Theft add-on generally has INR 15000 flat deductible.

  2. War and war like perils

  3. Nuclear risks

  4. Pollution or contamination even caused by insured perils

  5. High value items like gold, cash unless specified

  6. Stocks inside the Cold Storage

  7. Damage to equipment caused by electrical short circuit (lightning included)., however subsequent damages arising out of such fire is covered

  8. Expenses incurred towards Architects, Surveyor’s & Consulting Engineer’s fees in excess of 3% of claim amount

  9. Expenses incurred towards removal of debris in excess of 1% of claim amount

  10. Loss of earnings, markets, loss by delay, any other consequential losses

  11. Spoilage of material due to stoppage even though stoppage may be due to operation of perils insured

  12. Loss by theft during or after the occurrence of any loss/peril

  13. Any loss due to volcanic eruption or other convulsions of nature.

  14. Property not in the premises or removal of property to any other premises except machinery sent for repairs/cleaning for a period of 60 days


Burglary add-on:

A Burglary Insurance policy may be offered for a business enterprise or for a house. The policy covers property contained in the premises including stocks/goods owned or held in trust if specifically covered. It also covers cash, valuables, securities kept in a locked safe or cash box in locked steel cupboard if you specifically request for it

Nature of Cover

The policy offers coverage against:

  1. Property contained in a business premises owned by the insured like stocks, furniture etc

  2. Stocks held in trust / commission and for which the insured is responsible if specifically insured

  3. Damage to premises by burglars (which one has to make good), subject to the limit of sum insured, if the sum insured is not adequate, the policy pays only proportionate loss

  4. Cash, valuables and securities kept in a locked safe or cash box in locked steel cupboard if specifically covered

Major Exclusions for burglary

  1. Loss of goods held in trust / commission, jewellery, curios, title deeds, business books unless specifically insured

  2. Burglary without involvement of force (i.e. without any forcible entry- this is covered by theft add-on)

  3. Shop lifting, acts involving insured / his family members / employee

  4. Losses recoverable under fire / plate glass insurance policy

  5. War perils, acts of god, nuclear perils

  6. Riot, strike and malicious damage unless agreed to in writing

  7. By abstraction from a safe using a key or duplicate key, unless it is obtained by violence or threat

  8. Involvement of any inmate or business staff or any other person

  9. Consequential loss or legal liability of any kind

  10. Premises left uninhabited for seven or more consecutive days unless agreed

  11. Uninformed material alteration in the premises Insured not having any insurable interest

Theft add-on:

This differs from the burglary add-on in one important aspect- Burglary implies forced entry, while theft implies access of some sort(unlocked door/window, etc.)

There are more add-ons available in Fire insurance, watch this space for more!