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What is the Importance of a Fire Insurance Policy?

Sep 26, 2023


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Fire Insurance Policy

What is the Importance of a Fire Insurance Policy?

What is a Fire Insurance Policy?

A Fire Insurance Policy is a type of insurance policy whereby the Fire Insurance Company agrees to reimburse the Policyholder for any damage or loss to insured assets because of a fire-related accident. Fire Insurance Coverage includes protection against a range of perils like Fire, Explosion, Implosion, Storm, Floods, Earthquake etc.

What is the importance of purchasing a Fire Insurance Policy?

Fire Accidents occur unexpectedly and may cause huge damage. It takes years of efforts to build assets such as home, offices and factories and a Fire Damage can destroy years of efforts in building such assets. This problem is especially grave for factory owners.

Factory Owners invest crores of rupees in factories, buildings, warehouses, plant & machinery and inventory.  A small fire accident can destroy everything and set a business back by years. In some cases, the factory owner may face financial stress or even bankruptcy. As a result, it is extremely important to protect your assets by purchasing a Fire Insurance Policy in India.

What are the Benefits of a Fire Insurance policy?

A Fire Insurance Policy in India offers many benefits as follows:

1. Fire Insurance Policy covers all forms of insured assets

A Fire Insurance Policy reimburses the Insured Party to replace or reinstate all the assets which have been damaged due to a fire-related accident such as Buildings, Plant & Machinery, Offices, Warehouse Inventory etc. Fire Insurance Policy puts the Insured back in the same position that he was in prior to the fire-accident. Fire Insurance Coverage in India is provided at reasonable premiums and with minimum deductibles which makes a Fire Insurance Policy a must-have insurance policy for all factory owners.

2. Add-On Covers extend Fire Insurance Coverage

When a Fire Accident happens, there are multiple expenses which need to be incurred which are not part of a basic Fire Insurance Policy.

For example, After the factory is destroyed by a Fire Accident, there would be huge debris on the property. Removal of such debris is very expensive. Such expenses for debris removal are covered by the Removal of Debris Add-On Cover in a Fire Insurance Policy.

You can read our detailed blogpost on important add-on covers in a Fire Insurance Policy to learn more about add-on covers in a Fire Insurance Policy.

3. Coverage against a range of Perils

The coverages in a Fire Insurance Policy are not restricted only to Fire-Related Damage. A Fire Insurance Policy provides cover against a range of perils such as Riots, Strikes and Malicious Damage, Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation, Explosion/Implosion, Lighting etc. This blog post on fire insurance explains the coverages in a Fire Insurance Policy in detail.

4. Business Interruption Insurance Policy

A Business Interruption insurance Policy can be purchased with a Fire Insurance Policy. The Policy pays for the loss of profits faced by the business when it is damaged by the fire. A Business Interruption Insurance Policy will help the business owner cover for fixed expenses like Rents, Employee Salaries, Interest Payment on loans etc. when the business is not generating revenues due to fire-related damage

5. Easier Availability of Bank Loans

Lenders that provide loans for factories, and warehouse stock will require a comprehensive Fire Insurance Policy to protect themselves in case the plant and machinery, or the warehouse stock is damaged by a fire-related accident. A Fire Insurance Policy will give lenders peace of mind and make bank loans more accessible.

6. Sense of Security

A Fire Insurance Policy gives a sense of security that your investments are well secured In case of a Fire Accident. It is always prudent to be well prepared and secure yourself with a Fire Insurance Policy.

Final Thoughts

As you can see, the importance of a Fire Insurance Policy cannot be understated. If you wish to purchase a comprehensive Fire Insurance Policy, you should take the assistance of an experienced fire insurance broker who will assist you in purchasing a Fire Insurance Policy at competitive premiums

The Insurance Broker will select the suitable fire insurance policy among the different types of fire insurance policy available depending on the requirements of your business. Also, make sure that the Insurance Broker explains the exclusions in a Fire Insurance Policy in detail so that you are aware about what is not covered in your Fire Insurance Policy.

Choosing the right fire insurance policy can save you from crores of rupees in losses in the future.

  1. What is a Fire Insurance Policy?
  2. What is the need for a Standard Fire and Special Perils Insurance Policy?
  3. What are the Perils covered under a Fire Insurance Policy?
  4. What are the Principles of a Fire Insurance Policy?
  5. Principle of Insurable Interest
  6. Principle of Utmost Good Faith
  7. Principle of Proximate Cause
  8. Principle of Indemnity
  9. Principle of Subrogation
  10. Principle of Contribution
  11. What are the Add-On Covers available in a Fire Insurance Policy?
  12. Types of Fire Insurance: What are they?
  13. Stock Declaration Policy
  14. Floater Policy
  15. Average Policy
  16. Agreed Value Policy
  17. What is Bharat Sookshma Udyam Suraksha Policy?
  18. What is Bharat Laghu Udyam Suraksha Policy?
  19. What can be Insured with a Fire Insurance (Standard Fire and Special Perils) Policy?
  20. How is the Premium calculated under a Fire Insurance Policy?
  21. How to fix Sum Insured under a Fire Insurance Policy?
  22. What are the Exclusions in a Fire Insurance Policy?
  23. How to Claim Fire Insurance?
  24. Get the Best Quotes for Fire Insurance Policy
  25. FAQS
  26. Testimonials