Types of Fire Insurance Policies in India

Fires are unpredictable and can cause devastating losses to homes, warehouses or business properties within minutes. In such situations, having the right insurance coverage can make all the difference. To protect you financially from the tremendous losses caused by fire, fire insurance in India is meticulously designed.

These insurance policies protect individuals and businesses from financial losses caused not only by fire but also by related perils like lightning, explosions, storms or riots. Since no two properties or businesses face the same level of risk, insurers offer different types of fire insurance policies to suit varied needs.

What is Fire Insurance?

Fire insurance in India is a type of property insurance that protects individuals, homeowners, warehouse owners and businesses against losses or damages caused by fire and allied perils, such as lightning, explosions, storms, riots or malicious damage.

Many insurers also offer fire and burglary insurance, which extends the coverage to include losses from theft or forced entry as well as fire-related damages. This makes it a more comprehensive option for businesses and households that face risks from both fire accidents and burglary.

Types Of Fire Insurance Policies

Below are common types of fire insurance in India, what they mean, and when they are useful.

Valued Policy

In a valued policy, the value of the insured item (property/asset) is agreed in advance between the insurer and the insured. In case of loss or damage, the compensation is paid according to the agreed value, regardless of actual market value at the time of loss.

Specific Policy

A specific policy covers a property or item for a specific sum insured. If a loss occurs above that amount, the excess must be borne by the policyholder. It is simple and suitable where values are known and static.

Floating Policy

This applies when you have assets like stock or goods located at multiple locations. A floating policy allows coverage for a cumulative sum insured across multiple locations rather than separate policies for each place. Useful for businesses with warehouses, etc.

Replacement Policy

Under the replacement policy, the insurer agrees to replace or repair the damaged property with a new one (or a similar type), often with less deduction for depreciation.

Comprehensive Policy

Also sometimes called the “all-risks” or Standard Fire & Special Perils” (SFSP). It covers fire and allied perils, along with the additional risks such as natural disasters, theft and impact damage. It provides a broader safety net.

Average Policy

“Average” here refers to a provision or condition in fire insurance that deals with under-insurance. If the sum insured is less than the actual value of the property, then in case of loss, the compensation may be proportionally reduced. This is not always a separate “policy” by name, but a principle/clause that may apply.

Consequential Loss Policy

Also known as business interruption insurance. The policy covers financial loss due to the interruption of business operations following fire damage. It compensates not just for physical damage but for the economic consequences.

Fire and Burglary Insurance: A Closer Look with TATA AIG

TATA AIG offers fire insurance in India, combined with burglary insurance to provide wider protection. Their fire and burglary insurance policies typically protect property, stock, and equipment against fire and allied perils, along with loss and damage from burglary.

Policies from TATA AIG include various perils like lightning explosion, riots, storms and more, depending on the plan. Whether you are a small business owner or own a large one, TATA AIG has several options to meet your needs.

You can even choose add-on coverage and flexible sum insured to meet your requirements.

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