Fire Insurance

WHAT IS INSURANCE?
 Risk Transfer mechanism
 Economic Concept of Insurance:

1. Insurer offers policy to cover specified risks
2. Insurer collects policy premium from customers
3. Insurer invests premium
4. Insurer pays money to insured customers in the
event of losses covered by policy.
COMMON TERMS IN
INSURANCE
 Proposal Form : Basis of offer
 Premium : Consideration
 Policy : Acceptance
 Intermediary : Interface
between the Insurers & the
Insured
 Insurance Claim : Claim for reimbursement

from the insurance company
when the insured has suffered
a loss that is covered under an
insurance policy
INSURANCE
LIFE GENERAL
INSURANCE INSURANCE
GENERAL INSURANCE
 Property Insurance
 Marine Insurance
 Motor Insurance
 Miscellaneous Insurance
 Liability Insurance
 Health Insurance
PROPERTY INSURANCE
 Fire Insurance
 Engineering Insurance
 FLOP
 MLOP
Tariff Policies:
• Tariff Advisory Committee is a part of the IRDA
• TAC was entrusted in formulating the rules &
regulations governing certain class of business in India
 Prior to detariffing, Companies could charge the
premium as per the tariff only.
 Tariff gives the strict guidelines to what to cover and
what not to cover.
 The tariff specifies the minimum rate for a risk to be
covered
Fire is now a non tariff product
FIRE INSURANCE
What is Fire?
 Fire would mean a combustion which is
rapid enough to produce a flame or glow.
 A fire, for purposes of Property Insurance,
must be "hostile,"
ie, it should not be in a place in which it is
intended to be
Why is there a need for Fire
Insurance?
1. The existence of property susceptible to
damage by fire or allied perils.
2. The fact that this property has certain
intrinsic value in terms of money.
3. Due to fire there may be a damage/loss of
property and this loss of property may cause
other losses like loss of profit.
Subject matter of Fire Insurance:
The subject matter of fire insurance may
be any kind of movable or immovable
property having pecuniary value, like:
 Building
 Plant & Machinery
 Furniture, Fixtures & Fittings
 Stock etc
Who can take a Fire Policy?
Any person or organisation that has an

insurable interest in the subject matter of
insurance can take the policy
SECTIONS UNDER A FIRE POLICY
 Section I General Rules & Regulations
 Section II Standard fire & Special Perils policy
 Section III Dwellings, Offices, Hotels, Shops located
outside the compounds of Industrial/Manufacturing Risk
 Section IV Industrial/Manufacturing Risk
 Section V Utilities outside the compound of industrial /
manufacturing risk
 Section VI Storage Risk located outside the compound of
Industrial / manufacturing risk
 Section VII Tank Farm/Gas Holders located
outside the compound of Industrial / manufacturing risk
 Section VIII Add on covers
SECTION I
GENERAL RULES&REGULATIONS
These are certain rules and regulations

which are applicable to all sections of
the Fire Policy:
Kutcha Construction
 Buildings having walls/Roofs of

wooden planks/thatched leaves,
grass or hay shall be treated as
Kutcha construction for rating
Pucca Construction
 Walls, Roofs made of concrete, RCC and

bricks will be pucca construction
Minimum premium
Minimum premium is Rs. 50/- for risks rated

under Section III & tiny sectors under Section IV
For all other sections it is Rs 100
Sections Min Premium Rates

Section III & IV 50
All sections except III & IV 100
Types of policies
Valued Policy
A valued policy can be issued for
properties whose Market values cannot
be ascertained
eg. Curios, Manuscripts, work of art
subject to the valuation certificate being
submitted and found acceptable by the
insurers.
For e.g. The world famous picture of
“Mona Lisa” would be covered under a
valued policy
Long Term Policies
 Most policies are issued for a period of 1

year (Annual)
 A long term policy is the exception since it
is issued for a period exceeding 12 months.
 This happens only in the case of
“Dwellings”
Long Term Policies (Contd)
 Long Term policies can be issued for a minimum
of 3 years
 Refund for mid term cancellation of policy is
allowed (Subject to minimum premium retention)
 No refund shall be allowed if there has been a
claim under the policy
 Mid term inclusion of perils is not allowed
 Premium for entire policy period has to be
collected in advance.
Long Term Policies shall be issued based on either of
the following 2 methods
 A) No discount is offered and sum insured will
automatically increase by 10% for every completed 12
months.
Or
 B) Discounts given as per chart below on fire rate
only. In this case basic sum insured will be same
throughout the policy period.
 Discounts ranging from 15% to 50% are allowed on the

premium for the respective periods.
 3 years- minimum
 3yrs-15% discount
 8 yrs-40% discount
 9 Yrs-45% discount
 10yrs or more-50% discount
 No long term discount can be given on EQ
Floater Policy
 Floater policy can be issued for stocks at
various locations under one Sum Insured.
 Unspecified locations shall not be allowed.
 The rate shall be the highest rate applicable
to insured’s stock with a loading of 10%.
 If rate chargeable is different for different
locations then highest rate will be charged
on total sum insured
Examples – Floater Policy
 Imagine if Bajaj Auto has 2 manufacturing plants
one in Pune and other in Chennai.
 Under this policy both the plants can be covered
for stock under one Sum Insured.
 The premium is calculated by taking the combined
value of both the plants along with a 10 % loading
charge
Declaration policy
 If the insured’s quantity or value of stock
fluctuates frequently then he can opt for a
declaration policy.
 It is a policy where the insured declares the
sum insured and he has to provide monthly
declarations.
 The policy is applicable only to stocks
Declaration policy (Contd)
 Sum insured is decided by the insured
based on the average stock or highest value
of stock in the month.
 The minimum SI is Rs 1 crore is one or

more locations and the sum insured shall
not be less than 25 lakhs in at least one of
these locations
Declaration policy (Contd)
 Declaration policies cannot be issued in
respect of:
– Stock in process
– Stocks at railway siding
– Insurance required for a short period
Declaration Policy (Contd)
 Reduction of sum insured is not allowed
 Refund of premium at the time of

adjustment cannot exceed 50% of premium
charged on the policy
Examples – Declaration
 John owns a fabrication factory in Sholapur &

Kolhapur.
 The steel rates per kg keeps changing every week
according to demand & supply.
 Hence John would like to opt for a Declaration
policy which is more convenient for him.
 a) John declares that his average value of the stock

over both the locations is 2 crores and specifically
at Kolhapur it is 22 lakhs. Can he get a
Declaration policy?
Examples – Declaration Policy
 b) Can he insure steel pipes which are

undergoing welding in the factory?
 c) John wants a short term cover for his
stock? Will he get it?
Floater Declaration Policy
 It is a combination of Floater and Declaration
policy which needs to have a minimum sum
insured of Rs 2 crores. The maximum premium
refund is 20 % and the minimum retention should
be 80% of the total premium.
There is a 10% loading charge here
 Floater Policy + Declaration Policy

= Floater Declaration Policy
Examples – Floater Declaration
Let us look at how Amul insures their ice-cream.
 Amul operates out of multiple locations across India.

Here they face two problems. First of all ice-cream is
highly seasonal
 Hence at different locations the stock would vary but
more importantly the value of the stock differs.
 Also Amul would find it difficult to find out the exact
value of their stock at any given day.
 This is where the policy has an advantage over the
other policies
Example-Floater Declaration Policy
With this policy now Amul can

 Cover all locations under a single sum
insured
 Takes care of his SI through a monthly
declaration
 It will take care of fluctuations
SUM INSURED
What is the basis of Sum Insured?

Market Value
 Under the Standard Fire policy, the basis of
selecting Sum Insured and the basis of valuation
for loss assessment is 'Market Value'.
 The Sum Insured should be selected so that it is
adequate or equal to the Market Value at any time
during the policy period.
 At the time of loss assessment, the applicable
value for reference is the Market Value
immediately prior to the occurrence of loss.
Reinstatement Value
 The Sum Insured for Buildings, Machinery
and FFF can also be selected / opted on
basis of 'Reinstatement Value'.
 The Reinstatement Value is the value
required to 'Replace' or 'Reinstate' the
property to its condition prior to the loss.
 This option cannot be exercised for
insurance of 'Stocks'.
Underinsurance =
(Sum Insured/Actual Value)*100
 Market value basis - both depreciation and

under insurance are applicable
 Reinstatement value basis - only under

insurance is applicable
Rules of Cancellation
 Policy can be cancelled by either the insured or
the company. If the company opts for cancellation
of the policy then they should give 15 days notice
Conditions:
 Insurer-Premium refund on pro-rata basis for the
unexpired period
 Insured-Premium retention on short-period basis
for period which the policy was in force
Table for Short period Insurance
 Short period means any insurance policy that is less than 12
months
 For a period not exceeding 15 days 10% of the annual rate
 For a period not exceeding 1 month 15% of the Annual rate
 For a period not exceeding 2 months 30% of the Annual rate
 For a period exceeding 9 months The full Annual rate
Mid Term Cover
 Generally it is not permissible to grant mid term
cover for STFI or RSMD.
The following provisions shall apply where such

covers are granted mid-term
 a) Insurers must receive specific advice from the
insured accompanied by payment of the required
additional premium in cash or by draft
 b) Cover shall commence 15 days after receipt of
premium and rates will be applicable on short
period scale covering the entire interest of the
insured up to the expiry period
 c) Cover will be granted for entire property with
no option for selection.
Partial Insurance
 It is not permissible to issue a policy
covering only certain portions of building.
Plinth & foundation of a building maybe
excluded
 It is not permissible to insure parts of a
machinery
 This is done to ensure that selection of risk
(which is against the basics of insurance) is
not carried out
Section II
Standard Fire & Special Perils

covered in a Fire policy
1. Fire
 Ignition under accidental or fortuitous

circumstances.
 Spontaneous combustion, fermentation or
heating or scorching without ignition is not
a fire.
Fire (contd)
According to insurance Parlance, a Fire as
covered under a Fire policy is said to have
occurred when the following conditions are
satisfied
 There is actual ignition

 The property is one which ought not to have
been on fire
 The fire is purely accidental or fortuitous in
origin, as far as the insured is concerned
What other Losses are parts of a
Fire Policy?
 Damage during or immediately
following a fire caused by smoke,
scorching walls
 Damage caused by the Fire
brigade in the discharge of their
duties.
 Damage to property by exposure
to weather caused as a result of
removal of property from a
burning building in effort to
mitigate the loss
2. Lightning - AOG Peril
 Flash of light in the sky caused by the

discharge of atmospheric electricity from
one cloud to the other or to the Earth.
 Excludes breakdown damage to electrical
equipments
3. Explosion/Implosion
 Explosion -‘“a sudden violent bursting with
a loud report”
 Technical definition -“sudden increase in
pressure in the surrounding air, or gases,
from sudden and violent expansion of any
substance in their neighbourhood”
Explosion results in;
 Fire damage
 Concussion Damage
3.Explosion/Implosion
 Implosion is diametrically opposite to the

explosion.
 It is the bursting inward or collapse due to

external atmospheric pressure.
4. Air Craft Damage
 Damage or destruction to the property

insured (by fire or otherwise) caused by
aircraft or aerial or space devices such as
balloons, artificial satellites etc. or articles
dropped there from
5. Riot, Strike & Malicious
Damage
 Loss of or visible physical damage/destruction by
external & violent means to insured property by
rioters, strikers or any person acting with
malicious intentions
 Riotous situation - disturbance of peace by an
unlawful assembly
 Malicious act - a deliberate intention & plan of
one or more individuals to do something unlawful
to cause loss or damage to other’s property
6. Storm, Typhoon, Flood &
Inundation – AOG Peril
 These are natural perils

 Also known as “weather perils”
 These perils have a low frequency of
occurrence
 But are generally catastrophic &
devastating when they strike
7. Impact Damage
 Loss of or damage to the property due to

physical impact by any animal or rail or
road vehicle (not belonging to or owned by
the insured or any occupier of the premises
or their employees while acting in the
course of their employment)
8. Subsidence, Landslide &
Rockslide – AOG Peril
 Damage by fire or
otherwise to the
insured property
directly caused by
natural calamity
resulting in subsidence
or landslide including
rockslide.
9. Bursting/Overflowing Water
Tanks & Pipes
 Damage to property by bursting or

overflowing of water tanks, apparatus or
pipes
10. Missile Testing Operations
 Damage by fire or otherwise directly caused

by Missile Testing Operations carried out
by the Defence Department of the
Government of India.
11. Leakage from Automatic
Sprinkler Installations
 Loss of or damage to the property insured

directly caused by water discharged or
leaking from the automatic sprinkler
installations in the premises
 Such discharge or leakage of water should
be accidental
12. Bush Fire
A bushfire is a fire that
occurs in the bush
(collective term for scrub,
woodland or grassland of
Australia, New Zealand,
New Caledonia)
 Loss or damage to insured
property directly caused
by burning of bush
Coverages
 Any loss/Damage to property due to these

12 perils will be covered under this policy
 Architects, Surveyors & consulting
Engineers up to 3 % of claim amount.
 Debris removal expenses up to 1% of Claim
amount.
Perils covered – Easy to
Remember
 Fire F
 Lightning L
 Aircraft Damage A
 Malicious Damage, Riots M
 Explosion/Implosion E
 Storm, Flood, Tempest S
 Bush fire B
 Over Flowing/Bursting O
 Leakage from sprinklers L
 Testing Missiles T
 Subsidence, Landslide S
 The last peril is Impact Damage which can be remembered as “ID”

Section II – Exclusions
 5% of each& every claim subject to a
minimum of Rs 10000/- in respect of each
and every loss arising out of “Act of God
Perils” .(not applicable to dwellings)
 First Rs 10000/- for each and every loss
arising out of other perils.(not applicable to
dwellings)
Exclusions - Contd
 War or War-like Operations
 Ionizing Radiation, Radioactivity, Nuclear
material
 Pollution or contamination unless this is caused by
the action of an insured peril
 Leakage of Electricity or Short-circuiting (Only
the particular machine or apparatus that
undergoes the leakage/short-circuiting is
excluded, and other affected property is covered)
Exclusions - Contd
 Fees of Architects, Surveyors and
Consulting Engineers exceeding 3% of
Claim (Insurance for higher amounts can
be taken as an Add-On)
 Expenses for removal of Debris exceeding
1% of claim (Insurance for higher amounts
can be taken as an Add-On)
 Retardation or Cessation of any process
Exclusions - Contd
 Theft
 Earthquake or volcanic eruption (Insurance

for this can be taken as an Add-On cover)
Exclusions - Contd
 Bullion, curios, works of Art, cheques,

currency etc (unless specified)
 Consequential losses of any kind

Exclusions - Contd
 Property undergoing any heating or drying
process
 Burning of property insured by order of any
Public authority
 Its own fermentation, natural heating or
spontaneous combustion
Exclusions - Contd
 Explosion/Implosion : Excludes those
apparatus or boilers damaged by centrifugal
forces
 Aircraft Damage :Loss or destruction
caused by pressure waves, Loss or damage
caused by an aircraft to which permission to
land had been extended by the insured.
Exclusions - Contd
 STFI : Excludes those resulting from
earthquake, volcanic eruptions or other
convulsions of nature.
Any loss / damage caused only by rain water

is not covered
Exclusions – Contd
 Impact Damage
• Is an exclusion if it is the insured’s vehicle
or any occupier of the premise
• Belongs to an employee during the course

of their employment
Exclusions – Contd
 Subsidence, Landslide & Rock slide :
• Excludes normal cracking, settlement,

coastal erosion, demolition or defective
design
Exclusions - Contd
 Leakage from Automatic Sprinkler
Installations
• Excludes Repairs, Removals or

Alterations of the sprinkler installation
• Defects in construction known to the

insured
Exclusions - Contd
 Bush Fire
• Excludes damage caused by Forest Fire,

War & Nuclear Perils
Section II – General Conditions
under the Standard Fire Policy
 Policy is voidable in case of mis-

representation, mis-description or non-
disclosure of material facts
General Conditions-Contd
 Insurance ceases under the following conditions
– On expiry of 7 days from the date of fall/displacement
of the building except for insured perils
– When there is a change in the Trade, Manufacture or
Occupation Contract Stands Void
– Insured Property becomes unoccupied for more than 30
days (Except Dwellings)
– -If the interest in the property passes from the insured
otherwise than by will or operation of law
General Conditions-Contd
 An immediate notice/ claim registration is
required and detailed written report to be
submitted within 15 days
 Fraudulent or false declaration will forfeit
all benefits
 If the value of the property is higher than
the sum insured at the time of loss, insured
will bear the rate able portion. The principle
of under-insurance will be applicable.
General Conditions - Contd
 If some other insurance is also in force on
the same property then the principle of
contribution will apply
 Details of all other insurance policies

covering same property against same perils
should be provided by the insured
Section III
Hotels, Dwellings, Shops & Offices

Section III – Hotels, Dwellings,
Shops & Offices
The Rules & regulations for this particular
section are:
 Buildings and contents under this sections
shall be rated ‘per se’
 Stock outside insured’s premises which is
adjacent is held covered.
 Grinding of lenses in optical frame shop,
polishing / varnishing in furniture shop,
occasional repair are permitted
Section III - Contd
 A loading of 10% on the rates applicable to
the contents for seasonal storage of crackers
in a shop dealing in goods otherwise not
provided.
 Storage of hazardous goods up to 5 % of
total value of the stock is ignored.
 Reduction in premium for deletion of the
STFI( .15 per mille) & RSMD(.10 per
mille)
Section IV
Rules & Regulations pertaining to

Industrial/Manufacturing Risks
Section IV
Rules & Regulations pertaining to
Industrial/Manufacturing Risks
 Operations incidental to the main process
shall be rated as par with the main process if
it is carried out within the compound walls
 Dwelling houses located inside the factory
compound maybe rated “per se”
 In case where more than one product is
manufactured in the same block the highest
rate applicable shall be charged overall.
Section V
Utilities located outside the

industrial/manufacturing risks
Section V
Utilities located outside the
industrial/manufacturing risks
For both these sections the reduction in

premium rates for deletion of STFI and /or
RSMD perils at the inception of the policy
is as follows
 STFI Re 0.25%
 RSMD Re 0.10%
Section VI
Storage Risk
Section VI -Storage Risk
Rules & Regulations pertaining to Storage Risk
outside the compound of
Industrial/Manufacturing Risk
 Operations such as packaging/assorting/stitching/
battery charging which do not materially alter the
nature of the risk are allowed to be carried out in
premises.
 Presence of hazardous goods of higher category
not exceeding 5% of the total value of the stocks
maybe ignored
Section VI - Contd
 Utilities and miscellaneous blocks shall be

rated at Re 1.00 per mille
 Rates shown in this section shall apply to

Buildings/Areas used for storage of
materials.
Section VI-Contd
 Reduction in premium rates for deletion of

STFI/RSMD at inception is as follows:
Godown Open
 STFI Re 0.25% Re 1.5%
 RSMD Re 0.10% Re 0.10%
Section VII
Tank Farms/Gas Holders outside

compound
Section VII
Tank Farms/Gas Holders outside
compound
Rules & Regulations pertaining to Tank
Farms/Gas Holders outside the compound of
Industrial/Manufacturing Risk
 Reduction in premium rates for deletion of STFI
and/or RSMD
STFI Re 0.25%
RSMD Re 0.10%
Section VII-Contd
 All tanks located in the same dyke shall
carry the highest rate applicable to any one
tank overall
 Utilities and miscellaneous blocks shall be
rated at Re 1.00 per mille
 Associated properties such as pumping
stations, compressor house, blower houses
shall be rated at par with the rate applicable
to respective gas holders/spheres/tanks etc
Section VIII
Add on Covers
Section VIII-Add on Covers
Standard Fire and Special Perils Policy
(Policy) can be extended to include the
following ‘Add on’ covers:
 Removal of Debris in excess of 1% claim

amount
 Forest fire
Add on Covers-Contd
 Deterioration of stocks in cold storage due

to machinery damage or due to insured
peril.
 Impact Damage due to insured’s own
vehicle.
 Start-up Expenses
Add on Covers-Contd
 Spontaneous Combustion
 Omission to insure additions, alterations or

extensions
 Earthquake (Fire & Shock)
 Spoilage Material Damage cover

Add on Covers - Contd
 Leakage & Contamination cover
 Loss of Rent Clause
 Architect, Surveyors and Consulting
Engineers in excess of 3% claim amount
 Insurance of additional expenses of rent for
alternative accommodation
 Temporary Removal of stock
How to calculate the premium
 Premium rate is in per mille(1000)

 Policy is issued generally for 1 year.
Premium Calculation - Examples
House & Contents (how to calculate premium)
 Fire policy rate – 0.50 per mille
 Earth quake rate –0.10 per mille
 Value of building-Rs. 10,00,000/-.
 Premium for the building
 10,00,000 X 0.50/1000 = 500/-
 10,00,000 X 0.10/1000 = 100/-
 Total premium = Rs 600/- + Tax
Premium Calculation - Examples
Shop (Buiding’s Rate – 1.8+0.1,
Stock/Contents – 2.8 + 0.1)
 Building Premium including EQ

Rs 500000/- X 1.9/1000= Rs 950/-
 Contents Premium
Rs 1000000X2.9/1000 =Rs 2900/-
 Total =3850/- + tax

Fire Insurance-Clauses
Important Clauses
 Designation of Property Clause
Insurers agree to accept the designation under

which the property has been entered in the
insured’s books. If there is a property which is
named differently or insured has given some name
to it, we will accept the nomenclature of the same
property as given in the insured’s books.
Fire Insurance – Clauses (Contd)
 Example- Designation of Property Clause
An air conditioner is named as Plant & Machinery
in the books of insured when generally it is a part
of appliances. In such cases there will be some
confusion at the time of loss & claim settlement.
To avoid such confusions and disputes, if insured
has opted for designation of property clause, we
will accept the name he has given to it as per his
books.
 Agreed Bank Clause
If insured property is financed or hypothecated

by / to a financial institution an agreed bank clause
is taken. The policy is taken in the name of the
Bank and all information provided to the bank will
be considered as delivered to the insured. At the
time of claim, bank will receive the claim amount.
 Reinstatement Value Clause
If the sum insured is fixed on the basis of reinstatement

value, this clause is to be taken.
Under this the sum insured is based on reinstatement
value/ replacement cost.
 No depreciation is deducted from assessed loss at the time

of the claim
 Under-insurance will however be applicable
 Only fixed assets can be insured on reinstatement value
Clauses – Contd
 ARCHITECTS, SURVEYORS AND
CONSULTING ENGINEER’S FEES (upto
3% of the claim amount)
 REMOVAL OF DEBRIS CLAUSE (upto
1% of the claim amount)
 FLOATER CLAUSE
 DECLARATION CLAUSE
 VOLUNTARY DEDUCTIBLE CLAUSE
Escalation clause
The escalation clause allows the client for regular
automatic increase in the Sum insured throughout the
period of the policy provided certain conditions are met
by the insured:
 Automatic increase in Sum insured against advance
 Maximum increase should not exceed 25% of the sum
insured
 50% premium of the final rate should be paid in
advance
 This clause is available for a policy covering building,
machinery and accessories only and not for stock cover
Underwriting Considerations
 Nature/Type of Risk
Manufacturing, Godowns, Shops etc
 Location of Risk
Earthquake zone, Geographical, Social
Hazards etc
Underwriting Considerations
(Contd)
 Age of the Risk
How old is the machinery, building and all other
property
 Past Claim Record

What amount against premium paid, type of accidents
etc
 Frequency of Loss
At what interval and how often the claim is taken?
Key points of the Fire Policy
 Full premium to be paid in advance
 Minimum premium of Rs 100 except
Section III risks and tiny sector industries
where the minimum premium is Rs 50
 Full property is to be insured-partial
insurance is not allowed
 Policies are usually issued for 12 months
Key points-Contd
 In case of policy cancelled by the;
Insurer-Premium refund on pro-rata basis for the

unexpired period
Insured-Premium refund on short-period basis for
the unexpired period
 Mid Term revision of Sum Insured is allowed

a) Increase in Sum Insured-On pro-rata basis.
b) Decrease in Sum Insured-Refund on short
period basis..
Key Points - Contd
 Silent Risk-where there is no
manufacturing/storage activities are not carried
out continuously for 30 days or more.
The premium for a silent risk rate is Re 1.00 mille.
 Rating of risk in multiple occupancy industrial
estate shall be rated ”per se”.
 In terms of Long term policy for Dwellings, the
long term discount is not applicable on earth-
quake rate.
 Terrorism is not an automatic cover, it is now an
add on cover.
Claim Process
 Intimation of claim with estimate of loss to
be given to the insurance company
 Claim form duly Filled
 Appointment of Surveyor
 Photographs, Surveyor Report, Fire Brigade
Report, Police Report and Meteorological
Report
Claims Process - Contd
 Detailed Claim Bills with supporting
documents
 Copy of Internal Enquiry report on the
cause of the loss
 Final file scrutiny is done
 If claim is admissible, cheque is dispatched
to the customer

Fire Insurance

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Fire Insurance

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WHAT IS INSURANCE?

 Risk Transfer mechanism

 Economic Concept of Insurance:

 Insurance Claim : Claim for reimbursement

Any person or organisation that has an

These are certain rules and regulations

 Buildings having walls/Roofs of

 Walls, Roofs made of concrete, RCC and

Minimum premium is Rs. 50/- for risks rated

For all other sections it is Rs 100

Sections Min Premium Rates

 Most policies are issued for a period of 1

 Discounts ranging from 15% to 50% are allowed on the

 The minimum SI is Rs 1 crore is one or

 Reduction of sum insured is not allowed

 Refund of premium at the time of

 John owns a fabrication factory in Sholapur &

 a) John declares that his average value of the stock

 b) Can he insure steel pipes which are

 Floater Policy + Declaration Policy

 Amul operates out of multiple locations across India.

With this policy now Amul can

What is the basis of Sum Insured?

 Market value basis - both depreciation and

 Reinstatement value basis - only under

The following provisions shall apply where such

Standard Fire & Special Perils

 Ignition under accidental or fortuitous

 There is actual ignition

 Flash of light in the sky caused by the

 Implosion is diametrically opposite to the

 It is the bursting inward or collapse due to

 Damage or destruction to the property

 These are natural perils

 Loss of or damage to the property due to

 Damage to property by bursting or

 Damage by fire or otherwise directly caused

 Loss of or damage to the property insured

 Any loss/Damage to property due to these

 The last peril is Impact Damage which can be remembered as “ID”

 Earthquake or volcanic eruption (Insurance

 Bullion, curios, works of Art, cheques,

 Consequential losses of any kind

Any loss / damage caused only by rain water

• Belongs to an employee during the course

 Subsidence, Landslide & Rock slide :

• Excludes normal cracking, settlement,

• Excludes Repairs, Removals or

• Defects in construction known to the

• Excludes damage caused by Forest Fire,

 Policy is voidable in case of mis-

 Details of all other insurance policies

Hotels, Dwellings, Shops & Offices

Rules & Regulations pertaining to

Utilities located outside the

For both these sections the reduction in

 Utilities and miscellaneous blocks shall be

 Rates shown in this section shall apply to

 Reduction in premium rates for deletion of

Tank Farms/Gas Holders outside

 Removal of Debris in excess of 1% claim

 Deterioration of stocks in cold storage due