Fire Insurance

Fire and Special Perils Policy (Material Damage)

The Insurance Policy broadly covers losses due to:

   -    Fire, lightning, explosion and implosion

   -     Aircraft damage, riot, strike, malicious damage and terrorism

   -    Storm, tempest, flood and inundation

   -    Impact damage, subsidence

   -    Landslide/rockslide

   -    Bursting and/or overflowing of water tanks, apparatus and pipes

   -    Missile testing, leakage from automatic sprinkler installations and bush fire.

Property can be insured on depreciated cost (market value) or replacement cost basis. In order to get full protection, insurance on reinstatement (replacement) basis is recommended.

Premium rate depends on construction of building and occupancy. Discount/ loading in premium is given based on past claims experience for risks exceeding Rs. 50 crores sum Insured at any location and installation of Fire Extinguisher Appliances.

Consequential Loss (Fire) Insurance Policy

Fire and Special Perils Policy compensates only for Material Damage to the insured property. It specifically excludes any consequential loss.

In case of a major loss caused by Fire, there could be an interruption in business operation leading to reduction in turnover finally resulting in possible loss of profits. However, standing or fixed charges continue to accrue regardless of whether there is any production or not. Such loss cannot be covered under Fire policy.

Consequential Loss Policy compensates for the Revenue loss suffered by the enterprise. Hence, for complete protection to the business enterprise and its profitability Consequential Loss Policy is very essential in addition to Fire Insurance Policy.

The Policy broadly covers loss of Net Profit on account of interruption of business,, consequent upon Material Damage to property due to Fire or any other insured peril under the Standard Fire and Special Perils Policy.

It also covers standing charges which continue to be incurred during the period of interruption and the increase in cost of working necessarily and reasonably incurred to maintain the business as far as possible at its normal level, so that loss under net profit and standing charges is avoided or at least minimised.