Types of Fire Insurance Policy in India

Types of Fire Insurance Policy

In India, there are three main types of fire insurance policies:

1. Bharat Sookshma Udyam Suraksha: Covers property with a sum insured up to Rs 5 Crores.
2. Bharat Laghu Udyam Suraksha: Covers property with a sum insured between Rs 5 Crores and Rs 50 Crores.
3. Special Fire & Special Perils (SFSP): Covers property with a sum insured beyond Rs 50 Crores.

Fire insurance plans can cover two types of assets: fixed and non-fixed. Fixed assets include buildings and machinery, while non-fixed assets include goods, stocks, and other valuables. Depending on your assets, you can choose the appropriate fire insurance plan.

Policies for Non-Fixed Assets:

Here are 6 different kinds of fire insurance policies for non-fixed assests:

• Floater Policy: Ideal for goods at different locations, provided they belong to the same person.
• Specific Policy: Covers risk up to a specific sum, usually lower than the asset's actual value.
• Comprehensive Policy: Covers multiple and maximum risks, recommended for various businesses.
• Valued Policy: Sum insured is specified at the time of purchase.
• Valuable Policy: Claim amount is based on the current market price of the damaged property.
• Consequential Loss Policy: Covers losses from business disruption due to fire.

Policies for Fixed Assets:

Here are 2 different types of fire policies for fixed assets:

• Replacement Value Policy: Insurer pays the replacement value of the damaged asset.
• Reinstatement Value Policy: Similar to the replacement value policy, but the insurer restores the property to its original condition before the loss.

Conditions for Claim Approval

Your claim will only be accepted under the following conditions:

• Claims due to high temperatures are not covered. The loss must be caused by an actual fire, explosion, or ignition.
• The primary or immediate cause of the loss must be fire.
• The loss or damage must relate to the subject matter of the fire policy.
• The explosion must involve either the goods or the property where the goods are stored.
• The incident must be accidental. There is no coverage for intentional acts. If the fire is caused by a malicious act of the policyholder, the claim will be denied.

Who can Opt Fire Insurance Policy?

A fire insurance policy can be opted for by:

• Manufacturing firms and industrial entities.
• Owners of buildings and their contents, such as household items and furniture.
• Warehouse keepers and shopkeepers.
• Any person, institution, firm, or organization that may face financial loss or damage in case of a fire outbreak.
• Transporters.
• Hospitals, hotels, clinics, lodging and boarding centers, and other related service providers.
• Educational institutions, research institutions, banks, financial institutions, trusts, and charitable organizations.

Note: The incident must be accidental. There is no coverage for intentional acts. If the fire is caused by a malicious act of the policyholder, the claim will be denied.

Conclusion

Understanding the different types of Fire Insurance Policy in India is crucial for protecting your assets from the devastating effects of fire. Whether you own a small business, a large industrial entity, or personal property, there is a suitable fire insurance policy available to meet your needs. By selecting the appropriate policy and meeting the conditions for claim approval, you can ensure financial security and peace of mind in the event of a fire. Remember, choosing the right fire insurance policy can make a significant difference in recovering from unexpected losses.