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A fire insurance policy covers the financial loss which insured may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period and up to agreed amount.

The policy specifies the maximum amount, which the insured can claim in case of loss. This amount is not, however, the measure of the loss. The loss can be ascertained only after the fire has occurred. The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy.

Here Are the Risks Covered Under a Fire Insurance Policy

Lightning

The impact of lightning can result in fire or any other kind of damage, like cracks in a building due to a lightning strike, etc. Both fire and other damages caused by lightning are covered under this peril.

Valued policy

Under this plan, the value of the property is decided. The insurance of this policy is decided based on the value of the property. As per the agreement the insurer will pay in the event of destruction of property by fire.

Specific policy

Policy ensures a risk of specific amount. A specified sum insured is decided for a certain belonging. In the event of loss of property, the insurer will pay the compensation for th loss if it is less than the specified amount.

Floating policy

If you are a businessman and engaged in import and export business, then this policy is the best option for you. This fire insurance policy provides coverage against the risk of goods lying at different places. But the goods should belong to the same person and a single policy with single premium will cover all the risk of all these goods.

Consequential loss policy

If any fire incident may take place, it may displace work in the factory, production may go down when the fixed expenses continue at the same rate. But this fire insurance coverage offers consequential loss or loss of profits. This loss of profits is calculated on the basis of loss of sales.

Types of Fire Insurance Policies

Comprehensive policy

As per this policy, you will not only gets coverage against fire-related accidents but also other risks including theft, lightning, burglary, civil commotion, damage or loss due to pests etc. You will get a certain specified amount under this fire insurance policy in India.

Consequential loss policy

If any fire incident may take place, it may displace work in the factory, production may go down when the fixed expenses continue at the same rate. But this fire insurance coverage offers consequential loss or loss of profits. This loss of profits is calculated on the basis of loss of sales

Valued policy

Under this plan, the value of the property is decided. The insurance of this policy is decided based on the value of the property. As per the agreement the insurer will pay in the event of destruction of property by fire.

Specific policy

Policy ensures a risk of specific amount. A specified sum insured is decided for a certain belonging. In the event of loss of property, the insurer will pay the compensation for th loss if it is less than the specified amount

Exclusion of Fire Insurance

  • Damages caused by normal heating, own fermentation or spontaneous burning are excluded from fire insurance policy.
  • Loss or damage of the property due to nuclear perils, electrical or mechanical breakdown are excluded.
  • Pollution or contamination
  • Burglary and housebreaking
  • Terrorist act, war and warlike operations are not included in fire the insurance policy.

Benefits of Fire Insurance

Fire insurance coverage provides the security for home, share, home furniture, enterprise buildings, etc,

This policy offers the price of possessions and properties alternatives, which get damaged or broken due to the fireplace incident.

Fire insurance policies offer the advantages for the homeowner in these ways. It provides the compensation for damage of the building.

If any of the home furnishings materials get damaged due to the fireplace incident, like plywood home furniture, carpets, clothes, then you will get coverage.

Alternative or maintenance for the electronic items like television, computer, air coolers are also included in fire insurance coverage.

It offers the alternative or maintenance price for the machines in case of those get broken due to the fireplace incident.It covers the price of share broken due to the fire.

Know About Fire Insurance

  • It is a well known fact that the fire causes huge losses every year.The individual owner by taking fire insurance can prevent the firewaste to some extent.
  • The insurer acts as a middle man between all the members of thesociety who are exposed to the fire risk on the one hand and themembers who will be the actual victims of the fire losses on theother.
  • The insurer charges the premium from all the insured members andmakes good the losses when they occur to any of them.
  • The system of fire insurance cannot save the society from theeconomic loss to the community to the extent of the property lostby fire, but it compensates someone and this saves him from aruinous loss, at the cost of group of some others.

Functions of Fire Insurance Policies

The true functions of fire insurance is to equalize heavy fire losses of a few individuals by distributing  them over  a large number of persons  held together by the ties of insurance  . The greatest  advantage  of fire insurance lies in a the fact of individual enterprise  and security  but his this does not counteract  the fire waste in any  way.

ESSENTIALS OF A VALID CONTRACT:

Like any other  ordinary contract a fire insurance contract must fulfil the essential elements  of a valid contracts.   ( 1)  GOOD FAITH :   A fire insurance contract being a  contract of utmost good faith requires  the insured and the insurer to disclose everything  which is a the  in their knowledge and which   might affect the contract.  (2)  INSURABLE INTEREST : A fire policy is a valid only if the policy holder has an insurable interest  in the property insured.   (3)  CONSIDERATION:  Fire insurance policy is a issued for a  lawful consideratio.

TENURE OF THE POLICY: 

Fire insurance policies are issued usually for one year durations  but in some cases for shorter  periods also.  (4)  SCRAP: The scrap of whatever is left  of the goods or properties after damage or destroyed by fire automatically pass on the hands of the insurer after the payments of the claim under fire insurance.  (5)  SEVERAL POLICIES: In case of several policies for the same property  each insurer is a entitled to contributions  from other insurers  . After indemnifications  the insurer is subrogated  to the rights and the interest of the policy holder. 

 NO CLAIM WHEN A FIRE IS DELIBERATE:

  (6) NO CLAIM UNDER CERTAIN CONDITION: Fire policies generally  contain conditions  exonerating the insurer from liability  under certain circumstances  like riot, civil, disturbances, war etc., In the absence of any specific  exceptions  the insurer  is liable  for all losses caused by the fire whatever  may be its causes.  (7)  INDIRECT RISKS: The fire insurance also includes indirect risks such as a comprehensive  risks, consequential  risk caused by fire and reinstatement  or rehabilitations risks which occur after the fire destroys  the goods or properties.  (8)  ASSIGNMENT:  Fire policies can be assigned  with the prior  consent of the insurer. 

 INTIMATION OF FIRE:

On occurrence of the fire, the insurer should be intimated immediately  so that he could salvage the remainder of the property and can also  determine the amount of loss.  (9) COVER NOTE:  In fire insurance  cover a note is a  issued in advance of the policy and usually contains the same terms and conditions  on which a policy is to be issued  . If any  a loss  occurs before the policy is issued. Cover note will sufficient to prove the insurance.  (10)  SETTLEMENT  OF CLAIM: The claim  may be settled in case or by reinstating or rehabilitating   the goods or properties damaged by fire under the fire insurance.