With the increasing adoption of various kinds of insurance products in India, insurance providers are also coming up with tailored products for very specific events or needs of the market. One such insurance product, though spoken very less about in relative terms, is Fire insurance policies. As is evident in the name, this insurance provides cover to the buyer of fire insurance policy against damages that could be incurred due to a fire. There are quite a few different kinds of fire insurance policies available in India. It is important for every buyer to go through these policies before choosing one which is right for their needs.
Types of fire insurance policies
- Valued policy
A valued policy is useful for insuring expensive, precious and important items owned by the buyer. These include artwork, antiques, and other assets owned by the buyer. Typically, the market values for these kinds of items are not available. The consolidated value of the insured items is specified beforehand between the insurer and the buyer. The insurer agrees to pay a certain specific amount of money to the buyer, in case these assured goods are damaged by fire.
- Specific policy
Under the specific policy, as the name suggests, the risk is insured for a specific sum amount. In case of loss of property or other damage, the insurer will have to pay a specific, pre-determined amount if the loss of property is less than the specified amount. However, the actual value of the property is not taken into consideration for this policy. In certain cases where the buyer purchases only a nominal sum assured, where the actual value of the loss is quite substantial, the insurer will apply the average clause to limit its liability. The compensation amount is the proportionally reduced.
- Average policy
When the ‘average clause’ is applicable to a policy, it is known as Average Policy. The average clause is added to penalise the buyer for taking up a policy for a lesser sum, while the value of the property is higher. The compensation payable will be proportionally reduced if the value of the policy is found to be lesser than the value of the property.
- Floating policy
A floating policy is very useful for those businesses which have their branches at multiple locations. The floating policy will cover all of these branches under just one policy. However, the floating policy should belong to one single person and will cover all of the items insured in all the different locations. The premium is charged while taking into account the average premium that the buyer would have to pay in case all these goods would have been insured differently under different policies. The ‘average clause’ will apply to all of these policies.
- Comprehensive policy
The comprehensive policy is complete, 360-degree protection for the insured property. It protects the insured items against theft, damage, fire, burglary, riots, labour disturbances, explosion, lightning, natural disasters, explosion and break-in’s etc. The comprehensive policy can be applied to shops, buildings, homes, offices, and factories. For homeowners opting for a comprehensive policy, the building, as well as all the contents of the building, is also covered.
- Consequential loss policy
In case of circumstances like a fire taking place at a factory, where production may reduce or even stop, but the fixed expenses continue at the same rate, a policy called consequential loss policy is taken. In this case, all the consequential losses or loss of profits are calculated on the basis of loss of sales. A separate policy can be taken up for standing charges, however.
- Replacement policy
In this kind of a policy, the insurer will provide compensation to the buyer on the basis of the market price of the property at that given time. The sum amount of compensation is calculated after taking into account the depreciation of the property. The replacement policy, as the name suggests, will provide compensation to the buyer in accordance with the replacement price of the insurer property. However, the new asset purchased has to be similar to the one which has been lost. The amount of compensation which the buyer will receive will depend upon the market price of the new assets so that it can be replaced by the buyer without incurring any additional costs.
When it comes to opting for a fire policy, it is important to know all about the different kinds of policies and what they entail. Speak to a professional so that you can find out exactly what all these fire policies are and which one will be applicable for your own needs. These are the 7 types of fire policies you will find in India, and of what use they can come to use. Research well and find the right insurance company when choosing a fire policy for your home or office.