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Conditions of Fire Insurance Policy

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

Fire, an element both mesmerising and destructive, has the power to ravage homes, businesses, and lives in the blink of an eye. In the wake of such calamities, the importance of insurance becomes glaringly apparent, offering a lifeline amidst the chaos.

It is critical to understand the complexities of fire insurance conditions in the modern world when dangers are present and uncertainties are significant. Every phrase, from the coverage limits to the exclusions, is important since it might determine the level of protection in times of crisis.

However, the route to recovery is not always easy since the intricate web of conditions built into fire insurance policies can often confuse even the most vigilant policyholders. It is important to understand the terms and conditions of the policy before getting one.

Continue reading to find out all about the general conditions of fire insurance policy.

What is a Fire Insurance Policy?

A fire insurance policy is a type of insurance coverage designed to protect individuals, businesses, and properties from financial losses resulting from fire-related damages.

It typically provides compensation for the repair or replacement of structures, personal belongings, and other assets damaged or destroyed by fire.

Fire policy conditions may also cover additional marine perils such as smoke damage, water damage from firefighting efforts, and damage caused by explosions. Policy terms, coverage limits, premiums, and deductibles can vary depending on the insurer and the specific needs of the insured party.

Fire insurance is essential for homeowners, business owners, and property owners to safeguard against the devastating consequences of fire incidents.

Eligibility Criteria for Fire Insurance

To qualify for fire insurance, the insured property has to fulfil specific requirements. The following are the basic eligibility requirements for fire insurance in India:

Type of Property: Fire insurance policies are accessible for a wide range of properties, including commercial and industrial structures. The premium prices and coverage limits vary depending on the type of property.

**Condition and Age of Property: **The condition and age of the property play a crucial role when determining the eligibility for fire insurance. Older properties or those in a poor state may be deemed a higher risk and need higher premiums.

Ownership of the Property: The proposer must possess the property or have a legitimate stake in it. The insurable interest could be derived from possession, ownership, or any other legal relationship.

Compliance with Safety Standards: The property must follow safety standards and have suitable fire protection systems in place. Noncompliance with safety requirements may lead to the rejection of the insurance application.

Location of Property: Another significant consideration in establishing eligibility is the property's location. Higher insurance rates may be necessary for properties situated in high-crime or natural disaster-prone locations.

Scope of Coverage in a Fire Insurance Policy

Add-On Covers

  • Insurance firms in India provide add-on covers in addition to the regular fire and special hazards coverage to give policyholders more complete protection. Common add-on covers include the following:

  • Coverage for machinery breakdown

  • Coverage for theft and burglaries

  • Insufficient rent coverage

  • Coverage for business disruptions

  • Employees' personal accident insurance

  • Policyholders can opt to include these add-on coverages in their policy for an extra cost. Before purchasing add-on covers, make sure you carefully read the policy documentation and understand the coverage they provide.

Standard Fire and Particular Hazards

  • In India, losses or damages resulting from fire, lightning strikes, explosion, explosions, aircraft destruction, riots, strikes, terrorist activity, storms, cyclones, flooding, earthquakes, and subsidence are covered by the Standard Fire and Special Perils (SFSP) insurance policy.

  • In addition, the coverage might cover damage from missile testing operations, impact damage, and the bursting or overflowing of water tanks, equipment, and pipelines.

  • It is crucial to remember that the coverage can change based on the insurance provider and the policy. Certain risks may be excluded from coverage under some plans, or other risks may be covered as an add-on.

Exclusions in Fire Insurance Plan

Fire insurance plans typically include certain exclusions that specify conditions or circumstances under which the insurer will not provide coverage.

While specific exclusions may vary depending on the insurance provider and policy terms, there are several common exclusions found in most fire insurance plans:

Intentional Acts: Fire insurance typically does not cover damage resulting from intentional acts of the insured or any other involved party. For example, if a property owner sets fire to their own property to collect insurance money, the insurer will not cover the damages.

War and Terrorism: Damage caused by war, invasion, acts of foreign enemies, civil war, terrorism, and similar events are usually excluded from fire insurance coverage. These events are considered beyond the control of the insurer and fall under specialised insurance policies.

Nuclear Hazard: Damage caused by nuclear reactions, nuclear radiation, or radioactive contamination is commonly excluded from fire insurance plans. Such risks are typically covered by separate nuclear hazard insurance.

Wear and Tear: Normal wear and tear, gradual deterioration, and lack of maintenance leading to damage are generally not covered by fire insurance. Insurers expect property owners to maintain their premises adequately to prevent foreseeable damage.

Government Action: Damage resulting from the actions of governmental authorities, such as confiscation, seizure, or demolition of property for public purposes, may be excluded from coverage.

Earth Movement: Damage caused by earthquakes, landslides, sinkholes, or other earth movements is often excluded from standard fire insurance policies. However, earthquake insurance can be purchased as a separate policy.

Water Damage: While fire insurance typically covers damage from fire, smoke, and related perils, it may exclude damage from water, such as floods, sewer backups, or water seepage. Property owners may need to obtain separate flood insurance to cover such risks.

Illegal Activities: Damage resulting from illegal activities conducted on the insured property, such as drug manufacturing or other criminal acts, may be excluded from coverage.

Additional Policy Conditions of Fire Insurance

While it is important to understand the main conditions of fire insurance policy it is important to take note of additional conditions that refer to specific terms and requirements outlined within an insurance contract beyond the standard coverage provisions.

These conditions are designed to avoid risks and ensure that both the insurer and the insured are adequately protected in the event of a fire-related incident.

While the exact conditions may vary depending on the insurance provider and the policy type, several common additional fire insurance policy conditions are worth noting:

Building Material Standards: Some policies may specify standards for building materials used in construction or renovation projects on the insured property. This could include requirements for fire-resistant materials or guidelines for the installation of electrical wiring and heating systems to minimise fire hazards.

Inspection and Maintenance Requirements: Insurers may require regular inspections of the insured property to assess fire risks and ensure compliance with safety standards. Additionally, policies may stipulate maintenance obligations, such as keeping heating systems serviced or repairing faulty electrical wiring, to reduce the likelihood of fire damage.

Fire Prevention Measures: Insurance policies may include conditions requiring the insured to implement certain fire prevention measures on the insured property. This could involve installing smoke detectors, fire extinguishers, and sprinkler systems or maintaining clear access to fire exits. Failure to comply with these measures could impact coverage eligibility or result in higher premiums.

Subrogation Rights: Insurance policies commonly include provisions granting the insurer the right to pursue legal action against third parties responsible for causing a fire that results in a loss covered by the policy. This allows the insurer to recover costs associated with the claim from negligent parties.


Understanding the conditions of a fire insurance policy is crucial for any business or property owner to safeguard against potential losses due to fire and burglary incidents. Such policies provide financial security and peace of mind in the face of unforeseen events.

With Tata AIG offering specialised SME insurance solutions, businesses can tailor their coverage to suit their specific needs, ensuring comprehensive protection against fire-related risks. By adhering to the terms and conditions outlined in our fire insurance policies, businesses can mitigate the impact of potential disasters and continue to thrive with confidence.


What are the express conditions of fire insurance?

Express conditions of fire insurance refer to specific terms and requirements outlined in the insurance policy regarding coverage, obligations of the insured, and circumstances under which the insurer will provide compensation in case of fire damage. These conditions are explicitly stated in the policy and are legally binding for both the insured and the insurer.

Can you explain the condition of average in fire insurance?

The condition of average, also known as the principle of average, in fire insurance stipulates that if the insured property is underinsured at the time of loss, the insured will only receive partial compensation for the damages. In other words, if by any chance the value of a property insured is greater than the insured, the insured is considered to be self-insured for the difference, and the insurer will only pay a proportionate amount of the loss.

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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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