Fire Insurance

Fire insurance protects property owners and businesses from loss due to fire, lightning, natural disasters, and man-made incidents, such as riots and strikes, that can also cause property damage.

You can think of fire insurance as a legal agreement between you and the insurance company. The insurer agrees to cover any financial loss you suffer due to fire (and fire-related perils) in exchange for a premium payment from you.

Also Read: Fire Insurance: Definition, Types & Coverage Explained

In June 2017, Chennai Silks faced severe damage due to a massive two-day fire. Major portions of the 7-storeyed building were damaged, resulting in a loss of ₹60 Crores for the shop owner.

Thankfully, the shop was insured for ₹250 Crores with a comprehensive fire insurance policy. The quick claim initiation and reports submitted to the insurance company and local law enforcement authorities helped the business recover quickly.

The insurance company’s surveyor calculated the losses based on fire brigade reports, FIR, stock registers, and through an in-person inspection of the damaged building. The shop was offered a settlement amount based on the report, which helped speed up the recovery after this incident.

(Source: Chennai Silks Building – Insurers to Assess Damage in a Week – Deccan Chronicle)

• Increase in Fire Incidents: According to the National Crime Records Bureau (NCRB)[2], the number of fire accidents in India has increased over the past decade. So, it’s critical that businesses in India protect against such perils with proper insurance.

• Comprehensive Protection Against Fire & Allied Perils: Fire insurance doesn’t just protect against damage by fires. It offers all-around protection against damage caused by lightning, explosions, water damage, riots and theft.

• Prevents Business Interruption and Loss of Income: Fires can cause temporary shutdowns and halt business operations, resulting in even greater loss. With a fire insurance policy, you can recover those losses and reduce risk.

• Loss of Rent Coverage: Fire insurance covers additional costs like the rent you may have to pay after shifting to another property when your damaged property is being repaired or replaced.

• Third-Party or Public Liability Coverage: Some fire insurance policies offer a third-party liability add-on to cover legal fees or compensation for any accidental damage caused to surrounding buildings or people due to fire.

Also Read: Functions of Fire Insurance

Further Reading: Features and Benefits of Fire Insurance

A fire insurance plan is ideal for businesses, property owners and homeowners. If you belong to one or more of the following categories, consider securing your property with a fire insurance policy:

• Small, Medium and Large Businesses: Setting up any business requires extensive effort and a lot of money. Therefore, whether you run an independent business like a grocery store or a salon, a chain of restaurants or apparel stores, or a large-scale business where you manage multiple properties, like factories, warehouses and sales outlets, you need fire insurance to protect against loss.

• Homeowners: No matter how big or small, your house is undoubtedly one of your most valuable possessions. Therefore, securing your dream abode against incidents such as fire and natural disasters with fire insurance for homeowners makes sense.

• Renters: Home fire insurance isn’t just for home or business owners. Apartments and flats have expensive appliances, gadgets, and other possessions. With TATA AIG, you can insure what you own in a rented property and secure yourself against losses.

Also Read: What are the Characteristics of a Fire Insurance Policy?

• Grocery Shops: A fire insurance plan will cover grocery stores and stationery shops that sell easily flammable goods such as cooking oils, books, matchboxes, etc.

• Electronic and Automobile Shops: Commercial fire insurance will protect electronic stores, automobile and accessory shops from fires and other perils.

• Offices and Educational Workspaces: Our plan covers coworking office spaces, personal office set-ups and educational institutions such as schools and colleges.

• Home, Lifestyle, and Fitness Stores: Home furniture outlets, gyms, spas, salons, etc., can be insured with an extensive fire insurance policy.

• Garages and Workshops: Motor garages, carpenter workshops, plumber workshops, and other similar repair service providers can get coverage under fire insurance.

• Cafes and Restaurants: Fire insurance secures cafes, bakeries, multi-cuisine fine-dining restaurants and fast-food joints.

• Healthcare Centres: Healthcare centres, such as hospitals, medical stores, physiotherapy, diagnostic, or natural treatment centres, benefit from fire insurance.

• Other Properties: Other services and businesses such as boutiques, antique shops, bookstores, call centres, etc., are also covered under fire insurance.

• You are an Indian citizen and above 18 years of age.

• The property you insured under fire insurance online is located in India.

• You are a legal owner, tenant, lessee, or occupier of the property.

• You have all the valid documents required.

• The insured property is not unoccupied for more than 30 days.

• Visit the official TATA AIG website and click on the “Business” dropdown to buy fire insurance online.

• Select Fire & Burglary Insurance and browse through our available fire insurance plans.

• Select your business occupancy type from the dropdown menu. For example, if you own a marriage hall, select marriage hall from the menu.

• Next, enter your location pin code and phone number. Verify the details with an OTP to get an instant quote.

• Select your plan, add-ons (if required) and provide additional details. Review the quote and complete the payment process.

Also Read: How to Renew a Fire Insurance Policy

Further Reading: Types of Fire Insurance Policies in India

At TATA AIG, our fire insurance policy comes bundled with burglary insurance to provide wider coverage. Here are the policy inclusions for damages against fire and similar perils:

• Physical damage, loss, or destruction caused to the insured property due to fire.

• Damage caused by bushfires, jungle fires or other unexpected fires caused by extreme weather conditions

• Damages caused by fire, explosions or implosions

• Damages and fires caused by lightning

• Property damages from the sudden sinking of land, rockslides and landslides.

• Damage caused by the impact of objects like walls, falling trees, vehicles, animals, aircraft, etc.

• Damages or losses caused by missile testing operations performed on the property premises.

• Damages and losses caused to the property due to riots, strikes, or other malicious activities.

• Water damage caused by the bursting or overflowing of water tanks, water apparatus, and pipes

• Water leak damage from automatic sprinkler installations

• Destruction and loss caused by natural calamities, including earthquakes, storms, floods, volcanic eruptions, cyclones, typhoons, tempests, hurricanes, tsunamis and tornadoes.

• Damage or loss due to theft.

• Exclusions Under Fire Insurance

• Loss due to theft. Any items outside your building or anything attached to the outside of the outer walls or the roof of your building, unless securely mounted, will not be covered.

• Loss or destruction caused by war, invasion, foreign enemy attacks or war-like operations

• Loss, destruction or damage caused to the insured property by pollution or contamination

• If your property is damaged due to pollution or contamination, it’s not covered—unless the pollution directly results from an insured event (like a fire) or causes an insured event.

• Any damage caused by nuclear radiation, waste or materials, such as radioactive fuel or explosive nuclear components, is not covered.

• Loss, destruction or damage to high-value items like bullion, precious and uncut stones, or artwork are not covered unless their value is declared and specifically mentioned in the policy.

• If something is lost, misplaced, or disappears without a clear connection to an insured event, it won’t be covered.

• Fraudulent claims or deductibles

• Deliberate or wilful destruction

• Physical loss or destruction caused by an act of terrorism or sabotage

• Loss for preparing for claims

• Loss or damage to your stock caused by halting your operations

• Loss, destruction or damage caused to any property (including a computer) or any expense arising from legal liabilities.

• Consequential loss

Disclaimer: This is the general list of inclusions and exclusions you can expect under a fire insurance policy. We recommend checking your policy documents to verify your inclusions and exclusions.

Optional Add-On Covers

• Floater Cover:** This add-on extends your coverage for physical loss or damage to goods stored at more than one location.

• Terrorism Cover:** Covers physical loss or property damage due to terrorism at the insured property.

• Accidental Damage Cover:** Covers accidental damage to the property by any external, visible and violent causes.

• Rent Insurance:** Covers additional rent you may need to pay for shifting to another location when your insured property is damaged by fire or other covered perils.

• Declaration Policy for Stocks:** Covers goods on payment of an advance premium based on your report of the value of goods.

• Omission to Insure, Additions, Alterations, or Extensions:** Coverage for newly built or bought buildings and property for up to 5% of the total coverage amount.

• Escalation Clause:** Covers the automatic regular increase in the sum insured throughout the policy duration for an additional premium payment in advance.

• Electrical Injury:** Covers loss/damage caused by overrunning, excessive pressure, short circuit, arcing, self-heating, or leakage of electricity.

• Contract Works:** Covers permanent and temporary property being built as part of a project, along with materials and other items used in construction.

• Involuntary Betterment:** Covers the cost of replacing damaged property with better replacements when the exact replacements are not available.

• Protection and Preservation of Property:** Covers necessary costs to temporarily protect or preserve insured property from physical loss or damage.

• Brands and Trademarks:** Covers loss or damage to goods with a brand or trademark caused by an insured peril.

• New Location Cover:** Covers the property you own at a new location. The property will be automatically covered for up to 15 days from the date of acquisition.

• Deterioration of Stocks in Cold Storage Premises:** Covers damage to your stocks caused by a change of temperature due to electricity failures.

• Fuel Contamination During Decantation:** Covers loss due to fuel contamination in underground fuel tanks from water or other fuel mixing with your stored fuel.

• Wrong Fueling of Vehicles:** Covers your legal responsibility to your customers from using the wrong fuel for vehicles by your employees at petrol or diesel pump stations.

• In-Built Covers

• Additions, Alterations or Extensions:** This cover offers a maximum of 15% of the sum insured for newly bought or built properties, such as buildings, plants or machinery.

• Temporary Removal of Stocks:** This cover offers a maximum of 10% of the sum insured for goods that are temporarily moved for processing, fabrication or finishing.

• Specific Contents Coverage:** This offers a fixed coverage for deeds or records, data recovery and personal effects of up to 20 individuals.

• Start-Up Expenses:** Payment of up to ₹5 lakhs for necessary expenses, loss or damage caused by an insured risk during the policy period.

• Professional Fees:** This covers 5% of the claim amount for consultation fees for architects & surveyors when rebuilding insured property. It does not cover costs for preparing estimate reports or claim reports.

• Debris Removal Costs:** This offers up to 2% of the claim amount for debris removal costs, dismantling, demolition, shoring or propping insured property or machinery.

• Costs Compelled by Municipal Regulations:** This covers additional construction costs required by municipal, local, state or central laws.

• Notify TATA AIG:** Inform TATA AIG immediately or within 7 days on our toll-free number (1800-266-7780) or email (general.claims@tataaig.com), providing policy details and a description of the incident. You can register/notify us about your fire insurance claim on our website also.

• Report to Authorities:** File reports with the fire brigade, police or relevant authorities, depending on the nature of the incident.

• Submit Claim Form:** Complete the fire insurance claim form and submit it with necessary documents like proof of loss and authority reports within 30 days.

• Survey and Investigation:** Cooperate with TATA AIG’s surveyor to properly assess the damage to your property. Submit any additional documents required.

• Claim Settlement:** Once we have verified your fire claim and documents, you will receive your claim payout amount.

*Please note that fire insurance claims over ₹1 lakh need to be filed manually as per Insurance Regulatory and Development Authority (IRDAI) guidelines.

Also Read: How Do You Treat Salvaged Goods In Fire Insurance Claims

• A completely filled-out fire insurance claim form.

• Substantial proof of the incident if the incident was published in newspapers or news reports.

• A copy of the fire brigade report/FIR

• Photographs of the extent of the damage

• Repair/replacement estimates/invoice with payment proof

• Stock register or inventory records

• Valuation related documents

• KYC documents (ID and address proof)

Fire insurance premium calculation is done after considering multiple factors that directly influence the price and coverage of your chosen plan. These are some factors insurance companies consider when calculating fire insurance premiums:

• Property Value:** The replacement cost of the property directly affects the premium amount. The higher the replacement value, the higher the premium price.

• Usage Type:** Premiums for high-risk properties, such as warehouses or workshops are higher, whereas those for low-risk properties, such as shops or offices, are lower.

• Location Risk:** Properties in fire-prone zones, such as Madhya Pradesh and Gujarat or disaster-prone zones, incur higher premiums than those in safer areas.

• Safety Measures:** Fire alarms, sprinklers, and other safety installations can reduce premiums, as they reduce the risk of damage and total destruction of the property.

• Add-Ons Opted:** Additional covers, such as debris removal or rent loss, enhance the coverage but increase the premium rates of the base policy.

TATA AIG’s online fire insurance premium calculator simplifies the process, helping you estimate your premium accurately based on these factors.