Fire Insurance Coverage includes cover for many perils apart from the basic cover for a fire accident. One of the important add-on covers in a Fire Insurance Policy is STFI Coverage.
STFI cover is an add-on cover purchased along with a Standard Fire & Special Perils Insurance Policy which protects one’s property against loss caused by any of the covered perils.
Even other fire insurance policies such as Bharat Laghu Udyam Suraksha (BLUS), and the Bharat Sookshma Udyam Suraksha (BSUS) policy provide STFI Cover as an add-on cover.
The Fire Insurance Policy Wordings for STFI Cover reads as ”Loss, Destruction or Damage caused by Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood or Inundation excluding those resulting from Earthquake, Volcanic Eruption or other convulsions of nature.”
The terms used in the above clause have no standard definition in a Fire Insurance Policy. However, normally the perils covered under the STFI Cover in a Fire Insurance Policy are interpreted as the Flood Group of Perils.
What are the perils covered under the STFI Cover in a Fire Insurance Policy?
The exact definition of the terms included in STFI cover in a Fire Insurance Policy are mentioned below:
Storm and Tempest
The terms Storm and Tempest are normally used together in a Fire Insurance Policy. A Storm refers to any kind of atmospheric disturbance which can create strong winds, lightning, rains, hail or even snow. Oxford Dictionary defines Storm as very bad weather with strong winds and rain, and often thunder and lightning while a tempest is defined a violent windy storm usually accompanied by hail, snow or rain.
The Storm Peril is different from the Flood Peril (though both are covered under the STFI Cover). Flood may be caused by a Storm, but Flood is not the same as Storm and Tempest Peril.
Storm is a relatively common occurrence and usually does not cause much damage to the insured’s property.
Flood means temporary inundation of usually dry land by water due to overflowing of seas, rivers, lakes, dams etc. or due to heavy rainfall or ground water welling up. Thus, flood normally means water escaping its usual boundaries or due to an accumulation of rainwater in a particular area.
Flood is distinct from Water Damage. Water Damage normally happens inside homes, offices and other properties and is usually caused by burst or flow inside the property. The main difference between a flood claim and water claim is source of origination of water.
In a flood, the water normally originates from a natural external source such as river, sea, dams and 2 or more properties are damaged while in a water damage claim, the damage comes from inside the insured premises such as home, office etc but the neighbourhood premises are not damaged in a water damage claim.
Many states of India are prone to floods and hence flood insurance is an important provision under the STFI cover of a Fire Insurance Policy.
The term ‘Inundation’ has not been explicitly defined in the Standard Fire and Special Perils Policy (SFSP Insurance Policy).
Inundation is the accumulation of water in a normally dry area resulting in a rise in water levels in that area. Inundation happens due to the overflowing of water causing a dry area to be drowned or submerged.
Cyclones are defined as “a violent tropical storm in which strong winds move in a circle”. Cyclones are caused by atmospheric disturbances around a low-pressure area and are distinguished by swift and destructive air circulation. Cyclones are usually accompanied by violent storms and bad weather.
In India, the coastal states of Tamil Nadu, Andhra Pradesh, Orissa, West Bengal, Gujarat, etc are prone to cyclones. Cyclones are extremely destructive, and Cyclone Coverage is an important provision of STFI Coverage in a Fire Insurance Policy.
Typhoons and Hurricanes
Typhoons, Hurricanes and Tropical Cyclones are similar phenomena. It is a generic term referring to clouds or thunderstorms that form over tropical waters. Once a tropical cyclone reaches a maximum of 74 miles per hour, it is called a Hurricane or Typhoon depending on the region where it originates.
A Tornado can be defined as violently rotating winds forming a vortex over an area of land. Tornadoes usually occur on land, whereas tropical cyclones, typhoons and hurricanes occur on water bodies.
Who Needs STFI Coverage in Fire Insurance?
A Fire Insurance Policy is usually taken by businesses to protect their assets against Fire damage and other perils. STFI Cover is an important add-on cover in a Fire Insurance Policy which increases the coverages in a Fire Insurance Policy by adding cover for additional Perils such as Storm, Cyclone, Tempest, Hurricane, Flood, Inundation etc.
So, any business which needs protection from natural calamities should take STFI cover as part of their SFSP Policy.
How can one avail Flood Insurance Coverage in India?
Even though India is prone to floods, there is no standalone flood insurance cover available in India. Flood Insurance Cover is offered under Standard Fire and Special Perils Insurance Policy as part of STFI Coverage. STFI Cover provides protection against damages caused due to floods and other natural perils. Fire Insurance Companies charge additional premium for providing STFI cover and the Insured can decide whether he wants the STFI cover included as part of his SFSP policy or not.
What is the Claims Procedure in the event of loss caused by STFI Perils?
The Insured Party needs to follow below mentioned steps to raise a claim for any loss occurring due to any of the STFI Perils:
Step 1: Inform the Fire Insurance Company about the damage and call the necessary authorities to prevent further damage to the property.
Step 2: Submit necessary documents like Claim Intimation Form, SFSP Policy to the Insurance Company.
Step 3: To help the surveyor substantiate the amount of loss, all original invoices, bills, value of insured property prior to loss, repairs/ replacement bills for damages caused to the property need to be submitted.
Step 4: Newspaper clippings showing the incidence of flood/storm/cyclone/typhoon along with the meteorological report can also help in further substantiating your claim.
You can read out detailed blogpost on Claims Process in a Fire Insurance Policy to learn more.
What is a Standard Fire and Special Perils Insurance Policy?
A small fire can destroy huge factories and buildings and cause enormous losses to your business. A Fire Insurance Policy protects you for any loss caused to the insured property because of any of the named perils and hence the importance of a Fire Insurance Policy cannot be understated.
The coverage in a Standard Fire and Special Perils Insurance Policy includes cover for Perils such as Fire, Riots, Strikes, Explosions, Subsidence, Landslides and rockslides, Overflowing/Bursting of Water Tanks and Pipes.
Qian is a leading Fire Insurance Broker for in India and can assist you with risk inspection surveys for your property and recommend best practices so that the fire risks are minimized at your property. The experts at Qian will also recommend important add-on covers to include in your Fire Insurance Policy which are suitable for your business as well as make you aware of the exclusions in a Fire Insurance Policy. Moreover, their dedicated Claims Settlement Team will also assist you with the entire Claims Process in a Fire Insurance Policy, should such a need arise in event of a Claim.
- What is a Fire Insurance Policy?
- What is the need for a Standard Fire and Special Perils Insurance Policy?
- What are the Perils covered under a Fire Insurance Policy?
- What are the Principles of a Fire Insurance Policy?
- Principle of Insurable Interest
- Principle of Utmost Good Faith
- Principle of Proximate Cause
- Principle of Indemnity
- Principle of Subrogation
- Principle of Contribution
- What are the Add-On Covers available in a Fire Insurance Policy?
- Types of Fire Insurance: What are they?
- Stock Declaration Policy
- Floater Policy
- Average Policy
- Agreed Value Policy
- What is Bharat Sookshma Udyam Suraksha Policy?
- What is Bharat Laghu Udyam Suraksha Policy?
- What can be Insured with a Fire Insurance (Standard Fire and Special Perils) Policy?
- How is the Premium calculated under a Fire Insurance Policy?
- How to fix Sum Insured under a Fire Insurance Policy?
- What are the Exclusions in a Fire Insurance Policy?
- How to Claim Fire Insurance?
- Get the Best Quotes for Fire Insurance Policy