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Assets Not Covered Under the Fire Insurance Policy

  • Author :
  • TATA AIG Team
  • Published on :
  • 16/04/2024
  • 2 min read

Fire insurance is a type of insurance that protects your property from any damage or losses caused by fires. The property can be any real estate or a property. By purchasing this type of policy, you can secure your firm, organisation, or home from any unexpected losses.

Fire insurance policies have many options, giving buyers different types of provisions. However, like many policies, this one too has many exceptions that every policy must be aware of. This article has answers for all those who are wondering, “fire insurance provides cover for which assets?” Keep reading to know more.

What is Fire Insurance?

Every property owner opts for insurance that helps them protect their assets and incur losses caused by unexpected causes, like fire. A fire insurance policy assists property owners in creating a protective shield for their assets from fire. It also provides financial protection for a wide range of valuable assets. These include buildings, equipment, personal property, and inventory.

Furthermore, purchasing a fire insurance plan can help property owners recover from the cost of repair, replacement, or reconstruction of the property per the insurance limit. Since fire-related incidents are quite common in India, these insurances allow business and property owners to protect and recover from potential harm.

Coverage of Different Types of Fire Insurance

Depending on the kind of coverage required by individuals, there are various types of insurance policies to protect against fires:

Valued Policy: This policy gives the policyholder certainty of claiming a fixed amount while claiming the insurance amount. The insurer predetermines the amount for an asset or property at the time of purchase. So, the agreed value can be either more or less than the market value, yet it does not change regardless of the market price.

Average Policy: This value works with the Average Clause. This means that the policyholder will have to set the insured amount less than the actual cost of the property.

So, if the policyholder suffers a loss greater than the sum insured, the Average Clause is applied, and the compensation is calculated as follows: [(Insured Value)/ (Actual Value) ] * Loss

Specific Policy: This policy covers a pre-specified amount of a certain asset. This value is usually lesser than its actual value. In case the asset suffers a loss greater than the insured sum, the policyholder will only get the pre-specific amount as compensation.

Comprehensive Policy: This policy offers greater benefits to the policyholder by offering protection against fire, burglary, lightning, riots, etc. Its comprehensive benefits can well-assure the policyholder in case of accidents other than fire.

Floating Policy: This type of policy is tailor-made for business owners owning assets or properties at more than one location. It allows policyholders to protect multiple properties that are scattered in different locations.

It also reduces the pain of buying individual policies for all the different properties. If any of the properties suffer a loss due to fire, the provider will compensate based on the sum insured.

Replacement Policy: As the name suggests, this policy allows policyholders to receive compensation for either the depreciated value or the actual value of the property.

Inclusions and Exclusions of Fire Insurance Policy

Now that you know what fire insurance is and what options you can choose from while buying a policy, let’s move on to the next important aspect. Your fire insurance provides cover for assets, and it is important to know which ones it covers..

Inclusions:

  • Fire insurance provides cover for tangible assets. Here are the inclusions of a fire insurance policy:

  • Explosion and Implosion

  • Loss of property caused by fire

  • Theft

  • Impact damage

  • Bushfire

  • Damage due to missile testing

  • Loss of goods

  • Cost of temporary accommodation

  • Fire caused due to short-circuit.

Exclusions:

  • Fire insurance has various exclusions. Here is the list of exclusions:

  • Intentional damage or willful negligence

  • War and invasion

  • Electrical machine damage

  • Missing or misplaced property

  • Damages due to rusted fittings or apparatus

  • Assets that are a liability of a third-party

  • Underground fires

  • Fires issued by public authorities

  • Spontaneous combustion

  • Fire caused by an earthquake

Conclusion

It is crucial to insure your property from unexpected causes like a fire that can cause a great financial loss. In this case, fire insurance is a significant addition one can make to their property insurance.

Its benefits and inclusion of numerous tangible assets will add another level of protection to your valuable assets. With a wide variety of options, you can choose the most suitable type of fire insurance and secure your peace of mind.

At Tata AIG, we understand that unexpected reasons can cause a fire and deeply affect your life. With our SME insurance plans, be assured of your valuable assets with the help of an extensive list of inclusions and effective claims.

FAQS

Does fire insurance provide cover for intangible assets?

No, fire insurance provides cover for the listed tangible assets.

Can I buy fire insurance online?

Yes, one can buy fire insurance online by visiting their insurer provider’s official website and following the instructions.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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