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Fire Insurance

A fire insurance guards against the unforeseen. But don’t ignore the finer points in the policy


DOUBT and uncertainty are an integral part of life. Ask Delhi-based businessman.

After a lot of planning and research, the 27-year-old’s dream project, a high-end apparel showroom, catering to HNIs, was supposed to be launched soon. His planning was comprehensive and execution almost complete. Till that day, he had not taken a step wrong. Well, almost. On the night before his launch, a short circuit gutted his showroom.



His whole world came crashing down and the loss was irreparable. But if he had taken an adequate fire cover, the loss could have been easily avoided. In fact, people hardly realize the importance of a policy till a casualty nails them down. Here’s an insight into why you should buy a fire insurance policy, and how to easily navigate through a claim process.



THE FINEPRINT

According to insurance brokers, you should always opt for a reinstatement clause while buying a fire insurance policy. You do not have to pay any extra premium to opt for it, and this clause ensures that you get the new replacement value of the item you have lost. It’s a must but you must make sure that you have insured your assets adequately and wisely. The sum insured should be equal to the new replacement value of the assets.



Under fire insurance, the risks that are covered usually include losses arising due to incidents of fire, lightning, explosion/ implosion, aircraft damage, riot strike and malicious damage, storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation, impact damage, subsidence and landslide, including rock slide, bursting and/or overflowing of water tanks, apparatus and pipes, missile testing operations, leakage from automatic sprinkler installations and bush fire. But the actual coverage differs from company to company. So you must read the fine print carefully before you buy a policy.



Moreover, by payment of additional premium, any loss in the event of earthquake, terrorism, molten metal spillage, impact damage due to one’s own vehicles and forklifts, spontaneous combustion of goods, spoilage of plant, machinery and stocks, leakage and/or contamination of fluids kept in tanks, deterioration of stocks kept in cold storage and forest fire could be covered. Besides, even consequent losses such as loss of rent, start-up expenses and additional expenses of rent for alternative accommodation can also be covered though additional premium.



While applying for a fire insurance policy, Jain cautions that you should check the actual value of items to be covered under this policy such as the building structure with plinth and foundation, contents and other accessories that are part of the total value declared as sum insured. If the sum insured is less than the actual value, there could be under-insurance leading to a reduction in the amount to be paid at the time of claim settlement.



You should insure all the items when you opt for a policy. It is not a good strategy to pick and choose while insuring. You may feel that you will save a few rupees in premium but catastrophes do not pick and choose when they strike.



CLAIM PROCESS



As and when a claim occurs, insurance brokers advise that you should immediately inform the claims department of the insurance company by a letter, fax, or helpline for claims registration and deputation of surveyor. You will be asked to fill up a claim form giving complete information about policy particulars, date, time, cause, place and estimate of loss. Subsequently, a surveyor is appointed by the insurance company depending on the estimated loss. The surveyor decides the liability of the insurance company after getting detailed information about the loss.



According to insurance brokers, you should always behave as if you are uninsured after the loss. You must take all such actions that you would have taken had you not been insured. Also, do not dispose of any item even if it has been rendered useless unless it has been inspected by the insurer or the surveyor.



On whether you should buy a customized policy for covering fire risk, that it only caters to a limited customer segment whereas fire policies are generic and able to cater to a wide variety of circumstances and customer segments. “Both are relevant and would continue to exist in the market as both have their set of advantages and limitations.



BETTER SAFE...


  • Provide full details as per the proposal form without suppressing or hiding any information related to property offered for insurance.

  • Always provide past claims/loss history to the insurance co.

  • Furnish complete details of previous insurance.

  • Whole property at a particular location should be insured to avoid any under-insurance

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