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The most popular Property Insurance cover in India is Fire Insurance. Although called Fire Insurance, the policy offers coverage against the operation of various specified perils under a single policy. The policy is technically named as Standard Fire and Special Perils Policy.
A fire insurance policy can be offered to any sort of property such as residential dwellings, industrial occupancies, warehouses and non-industrial entities. Infrastructural utilities like roads, bridges, tank farms and the like can also be insured under this policy. Building structure, contents, furniture and fixtures, plant and machinery, electronic equipment, utilities and stocks can all be included under the policy for apt coverage.
In a valued policy or agreed value policy, the sum insured of the property is not the market value but a value that is agreed upon by the insurer and the insured. It is issued for property for which the market value cannot be ascertained. For example, Curios (Ornaments), Works of Art, Manuscripts, and Obsolete machinery among others. In such cases, the insured may submit a valuation certificate for the property which, if found acceptable by the insurer, will be finalized as the sum insured on the policy.
This policy covers damage to stocks located at multiple places under a single sum insured. The insured, in this case, can take a single policy for all his goods spread across many locations.
If the value of the stocks is constantly fluctuating, then there is a possibility that the stocks may be underinsured at the time of loss since the loss assessment is based on the market value of goods at the time of the loss. To avoid such a possibility, the insured may choose to take a declaration policy wherein he will be expected to declare the value of the stocks at different intervals, say monthly, during the entire policy period. The final premium is then calculated based on these declarations and excess premium, if any, will be refunded to the insured.
It is a combination of the floater policy and the declaration policy and can be taken if both the value and the location of the stocks belonging to the insured are fluctuating.
This policy is given for buildings, machinery, furnitures and fixtures only, and not for stocks. In this policy, the insured is indemnified for the reinstatement or replacement of the property in case of damage. It provides full coverage since the compensation received is not based on the market value of the property but is the actual expense incurred by the policyholder for reinstating or replacing the property.
The limit of indemnity under this cover shall not exceed the Total Sum Insured given in the Policy Schedule. In respect of several insurance policies within the same compound/location with one or different insurers, the maximum aggregate loss payable per compound/location by any one or all insurers shall be the Policy Sum Insured. If the actual aggregate loss suffered at one compound/location is more than the Policy Sum Insured, the amounts payable under individual policies shall be reduced in proportion to the sum insured of the policies.
It is the first amount payable by the insured in the event of a loss, and is the uninsured portion of the loss. The Excess varies based on the location-wise sum insured as is applicable as stated below:
On the happening of loss or damage to any of the property insured by this policy, the Insurance Company may
The powers conferred by this condition shall be exercisable by the Insurance Company at any time until notice in writing is given by the insured that he makes no claim under the policy, or if any claim is made, until such claim is finally determined or withdrawn, and the Insurance Company shall not by any act done in the exercise or purported exercise of its powers hereunder, incur any liability to the Insured or diminish its rights to rely upon any of the conditions of this policy in answer to any claim. If the insured or any person on his behalf shall not comply with the requirements of the Insurance Company or shall hinder or obstruct the Company, in the exercise of its powers hereunder, all benefits under this policy shall be forfeited. The Insured shall not in any case be entitled to abandon any property to the Insurance Company whether taken possession of by the Insurance Company or not. If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the Insured, all benefits under this policy shall be forfeited.
The Insured shall at the expense of the Insurance Company do and concur in doing, and permit to be done, all such acts and things as may be necessary or reasonably required by the Insurance Company for the purpose of enforcing any rights and remedies or of obtaining relief or indemnity from other parties to which the Insurance Company shall be or would become entitled or subrogated, upon its paying for or making good any loss or damage under this policy, whether such acts and things shall be or become necessary or required before or after his indemnification by the Insurance Company.
If at the time of any loss or damage happening to any property insured under the SFSP Policy, if there be any other subsisting insurance or insurances, whether effected by the Insured or by any other person or persons covering the same property, the Insurance Company shall not be liable to pay or contribute more than its rateable proportion of such loss or damage.
The Sum Insured shall stand reduced by the amount of loss in case the insured immediately on occurrence of the loss exercises his option not to reinstate the sum insured to its initial value.
Fire insurance, also known as “Standard Fire and Special Perils Policy,” has certain add-ons that are mostly exclusions from the main scope of the policy. On payment of additional premium, you can extend the scope of the policy by including the exclusions mentioned under the policy.
Architects, Surveyors, and Consulting Engineer Fees:
The standard limit for architects, surveyors, and consulting engineers' fees in case of a fire insurance policy is up to 3% of the claim amount approved by the insurance company. Suppose you want to claim an additional amount under this section. In that case, you have to take the add-on that permits you to claim up to 7.5% of the adjusted loss for the expenses incurred towards architects, surveyors, and consulting engineer fees and doesn't cover the cost incurred in preparation of the insured’s claim or estimate of loss in the event of damage due to an insured peril.
Removal of Debris:
The fire insurance policy covers the cost of debris removal up to 1% of the claim amount, but if you want to increase this limit, you could opt for this add-on. This add-on covers the cost incurred for debris removal up to 10% of the claim amount on an aggregate basis.
Deterioration of stocks in cold storage premises due to accidental power failure consequent to damage at the premises of the power station due to an insured peril:
There could be instances where the stocks in the cold storage deteriorate due to an accidental power failure at the insured premises, which is a direct result of damage to the power station due to an insured peril. This add-on covers the deterioration of stocks in cold storage premises due to an accidental power failure, which is a direct result of damage to the power station due to an insured peril.
Deterioration of stocks in cold storage premises due to change in temperature arising out of loss or damage to the cold storage machinery in the insured’s premises due to operation of an insured peril:
An insured peril might also affect the power supply to the cold storage at the insured’s premises, which could result in stock deterioration. Suppose the stocks deteriorate due to a temperature change. In that case, that arises directly out of loss or damage to the cold storage machinery located at the insured’s premises, resulting from an insured peril. If an insured peril damages the cold storage machinery by altering the temperature, the stock loss due to deterioration is covered in this add-on.
Forest Fire:
The fire insurance policy covers only bushfires and excludes any damage or loss to property caused by forest fires. This add-on covers such loss or damage to the insured property.
Impact damage due to Insured’s own Rail/ Road vehicle, forklift cranes, stackers, and the like and articles dropped from that place:
The fire insurance policy does not cover the loss or damage to the insured property due to impact damage caused by rail/ road vehicles, forklift cranes, stackers, and similar articles dropped by the insured or any person acting on behalf of the insured. This add-on covers the damage or loss caused to the insured property due to the insured's own rail/ road vehicle, forklift cranes, stackers, etc.
Spontaneous combustion:
A fire insurance policy can be extended to cover the loss or damage caused to the insured property due to its fermentation, spontaneous combustion, or natural heating. For example, when held in bulk, coal could result in fire due to spontaneous combustion, which could be covered in this add-on.
Omission to insure additions, alterations, or extensions:
Certain instances occur where the insured might have omitted insured property or additions, alterations, or extensions that might happen during the policy period. This add-on would cover omissions to insured additions, alterations, or extensions of buildings, plants, machinery, and other contents at the insured premises and for use as factories.
Earthquake (fire and shock):
This add-on covers the loss or damage to the insured property directly due to an Earthquake or indirectly from the loss arising out of an earthquake, including landslides or rockslides resulting in floods or overflows of the sea, lakes, reservoirs, and rivers.
Spoilage material damage cover:
This section covers the loss or damage to the insured property by spoilage resulting from the interruption or retardation, or cessation of any process or operation which is caused by any of the insured perils covered under this policy. For this add-on to be applicable, the damage or destruction to the insured property should be first admitted by the company under the policy.
Leakage and contamination cover:
This add-on covers the loss or damage to the insured property, including the physical loss of oil/chemicals from leakage from its container by accidental means and all accidental contaminations by contact with foreign matter. The add-on would not be applicable in case of loss by contamination through improper handling or control by the insured’s employees, consequential loss, loss arising from infidelity, burglary, etc.