A Fire Insurance Policy is one of the most important insurance policies for any business owner. A Fire-related Damage can cause losses to the tune of Crores of Rupees. There have been many fire accidents over the years which has destroyed factories, Plants and Machineries and set many businesses back by years. Additionally, restarting business operations after a fire accident can be very difficult. In such a scenario, a comprehensive fire insurance policy can be of invaluable help by providing funds to restart operations.
What is a Fire Insurance Policy?
A Fire Insurance Policy is a named peril policy which reimburses the Insured Party for loss caused to the Insured Assets by Fire and associated Perils. Our Blogpost on the Coverages in Fire Insurance Policy covers the various Fire Insurance Perils in detail. A Fire Insurance Policy is also known as a Standard Fire and Special Perils Policy or SFSP Insurance Policy.
It is very important for the Insured Party to understand the fire insurance coverages to avoid unwanted surprises at the time of claim. It is even more important to understand the exclusions in a Fire Insurance Policy.
This blogpost covers the Fire Insurance Policy Exclusions in detail.
What are the Exclusions in a Fire Insurance Policy?
The exclusions in a Fire Insurance Policy (SFSP Policy) are as follows:
1. This SFSP Policy does not cover (not applicable to policies covering dwellings):
- The first 5% of each claim subject to a minimum of Rs. 10,000 in respect of each and every loss arising out of “Act of God perils” such as Lightning, STFI, Subsidence, Landslide and Rockslide covered under the policy.
- The first Rs. 10,000 for each loss arising out of other perils in respect of which the insured is indemnified by this policy. The excess shall apply per event per insured.
2. A Fire Insurance Policy also excludes any Loss or Damage caused by war, invasion, act of foreign enemy hostilities or war, civil war, mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising, rebellion, revolution, insurrection or military or usurped power.
3. Another exclusion under a Fire Insurance Policy is for Loss or Damage directly or indirectly caused to the insured property by:
- Ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel
- The radioactive toxic, explosives or other hazardous properties of any explosive nuclear assembly or nuclear component
4. Another Fire Insurance Policy Exclusion relates to Loss or Damage caused to the insured property by pollution or contamination excluding:
- Pollution or contamination which itself results from a peril hereby insured against
- Any peril hereby insured against which itself results from pollution or contamination
5. Loss, Destruction or Damage to bullion or unset precious stones, any curios or works of art for an amount exceeding Rs. 10000/- are excluded under a Fire Insurance Policy
6. Loss, destruction or damage to the stocks in Cold Storage premises caused by change of temperature are excluded under a Standard Fire and Special Perils Insurance Policy.
However, this Fire Insurance Policy exclusion can be removed by opting for the add-on cover of Deterioration of Stock in Cold Storage Premises due to Change in Temperature by Damage to Cold Storage Machinery. You can read our blogpost on Important Add-On Covers in a Fire Insurance Policy to know about various Fire Insurance Policy Add-On Covers in Detail.
7. A very important exclusion under Fire Insurance Policy relates to Loss, Destruction or Damage to any electrical machine, apparatus, fixture or fitting arising from overrunning, excessive pressure, short circuiting, arcing, self-heating or leakage of electricity from whatever cause (lighting included) provided that this exclusion will apply only to the particular electrical machine, apparatus, fixture or fittings and not to any other electrical machine, apparatus, fixture or fitting which may be destroyed or damaged by fire to set up.
8. A SFSP Policy also does not cover goods held in trust or on commission, manuscripts, plans, drawings, securities, obligations or documents of any kind, stamps, coins or paper money, cheques, books of accounts or other business books, computer system records, explosives unless otherwise expressly stated in the policy.
9. Another Exclusion in a Fire Insurance Policy relates to Expenses necessarily incurred on
- Architects, Surveyors and Consulting Engineer’s Fees in excess of 3% of the claim amount and
- Debris Removal by the Insured following a loss, destruction or damage to the Property insured by an insured peril in excess of 1% of the claim amount.
10. The above fire insurance coverages can be included in the SFSP Policy by opting for add-on covers of Architects, Surveyors and Consulting Engineer’s Fees and Removal of Debris. You can read our blogpost on Important Add-On Covers in a Fire Insurance Policy to learn more about various Fire Insurance Policy Add-On Covers in Detail.
11. Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind or description whatsoever is also not covered under a Fire Insurance Policy. The Loss of Gross Profit due to business interruption can be covered under a Business Interruption Insurance Policy.
12. Loss or damage by spoilage resulting from the retardation or interruption or cessation of any process or operations caused by the operation of any of the perils covered is also one of the fire insurance exclusions.
13. The last exclusion in a SFSP Policy relates to Loss or Damage to insured property which is removed to any building or place other than the one mentioned in the Fire Insurance Policy, except machinery and equipments which are temporarily removed for repairs, cleaning, renovation or other similar purposes for a period not exceeding a period of 60 days.
This article covered the exclusions in a fire insurance policy in detail. It is extremely important to read fire insurance exclusions in a thorough matter so that you are aware as to what is not covered in a Fire Insurance Policy.
If you are looking to purchase a Fire Insurance Policy for Building, Factory or Warehouse Stocks, Qian is an experienced insurance broker for Fire Insurance Policy in India. The team at Qian can assist you with comprehensive coverages along with competitive fire insurance premiums and will assist you in claims settlement as well.
You can reach out to us at email@example.com or call us on 022-22044989.