Property Insurance

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A fire insurance policy covers all properties— moveable or immovable, against various perils. The fire insurance policy has been renamed as the standard fire and special perils policy. So, in this article, we must discuss what is covered under a Fire Insurance Policy.

Some of the properties covered under a fire insurance policy are:

  1. Building:
  • Both under construction and completed projects
  • Interiors, partitions, and electrical
  1. Plant & Machinery, equipment, and accessories
  • Both new and second-hand
  • Obsolete machinery
  1. Some other contents, covered are cables, pipelines, furniture, fixture, household goods, etc.

Some of the risks covered under a fire insurance policy are:

  • Fire:

Destruction or damage caused to the insured property due to natural heating, fermentation, or spontaneous combustion or when it is undergoing any heating or drying process can’t be treated under damage to fire. For instance, if paints or chemicals are kept in a factory, and they catch fire while undergoing heat treatment; the same will not be covered under the policy. Similarly, if any public authority orders the burning of insured property, then also it will be excluded from the policy.

  • Lightning:

The impact of lightning can result in fire or any other kind of damage, like cracks in a building due to a lightning strike, etc. Covers both fire and other damages caused by lightning under this peril.

  • Explosion/Implosion:

Explosion means sudden, violent burst with a loud voice. An explosion occurs when the pressure within the vessel reaches atmospheric pressure. The impact of the explosion can also lead to fire damage. On the other hand, implosion means bursting inward. It usually happens when the external pressure is more than the internal pressure.

  • Aircraft Damage:

It includes loss or damage caused to the property directly by aircraft and aerial devices.

  • Riot, Strike, and Terrorism Damage:

When a person acts with others to disturb public peace, (other than war or invasion) it is a riot, strike, or terrorist activity. Covers any loss or damage caused to the insured property by any such activity or by the action of any lawful authority in suppressing such disturbances or minimizing consequences. Though excludes terrorism from most of the policies, can add it as an extension by paying an extra premium.

  • Storm, cyclone, typhoon, and flood:

These are all types of violent natural disturbances which can cause damages to your property, and therefore, the policy covers them.

  • Impact Damage:

Covers any damage caused to the insured property when it comes in direct contact with rail/road vehicle or animal. However, such vehicles or animals should not belong to the insured in any way.

  • Subsidence and Landslide including Rockslide:

While subsidence occurs when the land or building sinks to a lower level, a landslide usually occurs on a hill when the landslides down. Covers any damage or destruction caused to the insured property due to subsidence and landslide. However, it does not cover normal cracking, defective design, and destruction due to the use of defective materials.

  • Bursting and/or overflowing of water tanks, Apparatus, and Pipes:

Insured loss or damage caused to the insured property by water on account of bursting or overflowing of water tanks and pipes.

  • Missile Testing Operations:

Covers any damage caused due to missile testing operations.

  • Leakage from Automatic Sprinkler Installations:

Any damage caused to the insured place when water accidentally discharged or leaked out from automatic sprinkler installations gives coverage to that.

  • Bushfire:

It covers damages caused due to burning, whether accidental or otherwise, of bushes and jungles and the clearing of lands by fire. However, it doesn’t include damages caused by a forest fire.

Case study

Rajesh Mishra was the owner of a garment showroom in a commercial area of Mumbai. The showroom stocked all trendy and designer clothes for the complete family. It was the day before Diwali in 2015 when the fire suddenly erupted at his showroom and spread so quickly engulfing everything. Including delivering stock to a foreign client, before anybody could do anything to stop it. Two fire brigades took around three hours to extinguish the fire. Thankfully, it hurt no one physically. But the fire damaged both the building and content.

Luckily, three years ago when Rajesh started his business, he bought a fire insurance policy. He approached his insurer who sent a surveyor to ascertain the cause and calculate total losses. Once the surveyor submitted his report, the insurer disbursed the claim amount in a few days.  As the fire occurred due to the insured peril, the insurer covered all the losses. The policy curtailed business losses to a great extent and helped Rajesh to survive a financial loss.