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Difference between Fire Insurance and Property Insurance

  • Author :
  • TATA AIG Team
  • Published on :
  • 15/01/2024
  • 2 min read

Building a property takes years of hard work, dedication and passion. Thus, it becomes the responsibility of every property owner to maintain and protect their valuable asset from any kind of damage or loss. This is where having a suitable insurance policy becomes necessary.

Both fire insurance and property insurance offer coverage to your insured property in the event of loss and damage. The insured property we are talking about here can be a home, a residential or a commercial property.

While both types of insurance offer nearly similar features, they are quite different from each other and serve different purposes as well.

In this article, we will elaborate on how property insurance and fire insurance are different from each other. At the end of this post, you will be able to select the right type of insurance for yourself.

Read on!

What is Fire Insurance?

As the name suggests, fire insurance is a category of insurance that covers damages and losses resulting from an unprecedented fire accident. It can be bought as a standalone policy, bundled as a fire and burglary insurance policy, or as a part of a property insurance policy.

Note that a fire insurance policy offers coverage only against the losses and damages that result from a fire outbreak. Further, it can be purchased for residential as well as commercial properties that are exposed to fire-related accidents.

Another important fact to understand about fire insurance is that it does not offer any coverage for willful or intentional fire damage to the insured property. It must be due to an unforeseen risk.

Benefits of Fire Insurance

The following are the main characteristics of a fire insurance policy:

Broad List of Inclusions: A fire insurance policy from a reputed insurance provider comes with an extensive list of inclusions. It covers coverage against fire outbreaks caused by a range of unforeseen events such as faulty electricity fixtures, explosions, man-made fires, faulty equipment and so on. Moreover, a majority of insurance providers allow you to customise your policy according to the risks your business or insured property is exposed to. For example, if your insured property is vulnerable to fire outbreaks due to chemical explosions, you can include it in your fire insurance coverage.

Suitable for Small as well as Large Businesses: Fire insurance can be purchased by any type and size of business. This is another great thing about fire insurance policies. Whether you are a small store owner or running a huge factory, you can purchase suitable fire insurance accordingly.

Offers Peace of Mind: By offering the necessary financial support and assistance, a fire insurance policy provides you with peace of mind. It allows you to deal with the losses and damages resulting from a fire tragedy and bring your business back to a running state.

What is Property Insurance?

Property insurance refers to a popular category of insurance that offers coverage to the insured property against a wide array of risks, such as damages and loss due to natural disasters, theft, fire, man-made hazards, and other named perils. It typically covers the insured building along with its contents. The building we are referring to can be anything from a home, an office, or any place where you run your business.

Benefits of Property Insurance

Just like any other insurance product, the benefits characteristics of a property insurance policy can vary from one insurance provider to another. However, there are some perks that are offered by a majority of property insurance plans:

All-Round Financial Protection: The primary advantage of buying a property insurance policy is that it comes with 360-degree protection. It means it protects the insured property against all possible perils, such as earthquakes, floods, fires, theft, and so on. What’s more? You can adjust your coverage as per the risks your property is especially exposed to.

Building and Content Coverage: A property insurance policy offers financial protection not only to the insured building but also to its content, such as personal belongings, electronic equipment, furniture, etc.

Easy to Manage: Another benefit of property insurance is that it is very convenient to manage. Instead of purchasing multiple insurance policies for covering different types of risks, you can invest in all-round property insurance. Doing so is cost-efficient as well.

Difference Between Fire and Property Insurance

Before discussing the differences between fire and property damage insurance in detail, let’s take a quick glance at the table below:

Key Parameters  Fire Insurance  Property Insurance 
Type of Coverage  Focuses on covering the insured property and contents against fire-related accidents such as explosions, lightning, and other named perils.  Focuses on covering the insured property as well as its contents against a variety of possible risks and unforeseen events such as theft, fire, natural calamity damage, etc. 
Cost Lower as compared to property insurance.  Higher as compared to fire and other types of insurance. 
Versatility  It is not versatile as it offers coverage for damage resulting specifically from fire accidents.  It is highly versatile as it offers complete protection under a single policy. 
Ideal For Home and business owners who are at a greater risk of fire tragedy.  Large commercial property owners who are looking for comprehensive coverage. 
Examples Residential and commercial areas close to a forest, small shops and factories, etc.  Hospitals, offices, shopping malls, bungalows, etc. 
Liability Coverage  Depending on the type of policy and insurance provider, a fire insurance policy may or may not offer liability coverage.  Most property insurance policies come with liability coverage. It means, they can help you deal with the legal troubles arising from a third-party loss or damage as well. 
Both fire and property insurance offer financial coverage to the insured property. If you have the right type of insurance, you can make a claim as per the terms of your policy and get reimbursed for the loss or damage you have suffered. In short, both types of insurance allow you to mitigate the risks and bring your property back to the state it was before the unforeseen tragedy.

However, there are some notable differences between these two insurance types. These are as follows:

Premium Cost: For those who don’t know, a policy premium refers to an amount that you pay towards your insurance plan monthly or at regular intervals. The idea here is simple: the higher the coverage offered, the higher the premium amount.

Since a property insurance policy offers comprehensive coverage to the insured property, it comes with slightly higher premium rates. On the other hand, a fire and perils policy is relatively cost-effective as it only covers the damages resulting from fire accidents.

Insured Entities: Fire insurance can be purchased by home as well as business owners of all types and sizes.

On the other hand, property insurance is designed for large property and business owners. Since it offers extensive coverage under a single policy, it is more beneficial for commercial property owners.

Suitable For: Fire insurance can be purchased by anyone whose property or business is exposed to fire-related risks. This includes homeowners as well as shop owners.

On the other hand, property insurance is great for the owners of commercial properties such as factories, shopping malls, warehouses, and so on.

Should I Purchase Fire Insurance or Property Insurance?

The choice between property insurance and fire insurance should be based entirely on the risk your property or business is exposed to. Although property insurance offers comprehensive coverage that includes fire outbreaks as well, it is advisable to invest in a fire insurance plan separately to offer maximum protection to your business.

Final Words

Insuring your property is the most critical step in order to protect and maintain it for years to come. By investing in the right property or business insurance, you can protect your valuable assets against any unforeseen events, such as natural calamities, fire hazards, etc.

Apart from buying property insurance, you can also invest in Tata AIG Fire and Burglary Insurance, which not only saves you from various types of property losses and damages due to fire and natural calamities but also secures your valuables against the events of burglary and theft.


What is the meaning of fire and allied perils in my insurance policy?

“Fire and allied perils” in an insurance plan refers to the comprehensive coverage offered by the policy for losses/damages due to fire and other events that may include explosions, storms, floods, vandalism, and so on.

Does fire insurance cover reconstruction and repair costs?

Yes, fire insurance policies typically cover the cost of repair and reconstruction of the damaged property. However, the coverage can vary from one policy to another. Hence, it is advisable to read and understand the terms and conditions carefully before purchasing the desired insurance plan.

Can I purchase fire insurance as a part of business insurance?

Yes, you can purchase fire insurance as a part of your business insurance. Many insurance providers offer fire policies that offer coverage against a variety of other unforeseen events, such as earthquakes, thunderstorms, floods, theft, burglary, and so on. Moreover, you can even purchase a fire insurance policy on a standalone basis.

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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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