FIRE INSURANCE

DEFINITION:

Fire insurance is a type of insurance that protects against financial

loss due to a structure destroyed by a fire.

In simpler terms, fire insurance helps cover some or all expenses for
rebuilding your home, office, or any insured property that’s burned
down.
FIRE INSURANCE POLICY

A fire insurance policy is a written agreement between the insurance provider and
the policyholder, in which the insurer pays for the loss of use of the insured’s
property damaged by a fire up to an agreed amount. The contract also states the
annual premium that the policyholder should pay to the insurance company.

Policies are valid for one year and can be renewed every year.

In the Philippines, a fire insurance policy is typically offered as a stand-alone

product. Some non-life insurance companies bundle it with more extensive home
insurance, property insurance, or casualty insurance package.
FIRE INSURANCE CODE OF THE PHILIPPINES

• "Section 169. As used in this Code, the term fire insurance shall
include insurance against loss by fire, lightning, windstorm, tornado
or earthquake and other allied risks, when such risks are covered by
extension to fire insurance policies or under separate policies.

• "Section 170. An alteration in the use or condition of a thing insured

from that to which it is limited by the policy made without the
consent of the insurer, by means within the control of the insured,
and increasing the risks, entitles an insurer to rescind a contract of
fire insurance.
FIRE INSURANCE CODE OF THE PHILIPPINES

• "Section 171. An alteration in the use or condition of a thing insured from that to
which it is limited by the policy, which does not increase the risk, does not affect
a contract of fire insurance.
• "Section 172. A contract of fire insurance is not affected by any act of the
insured subsequent to the execution of the policy, which does not violate its
provisions, even though it increases the risk and is the cause of the loss.
• "Section 173. If there is no valuation in the policy, the measure of indemnity in
an insurance against fire is the expense it would be to the insured at the time of
the commencement of the fire to replace the thing lost or injured in the condition
in which it was at the time of the injury; but if there is a valuation in a policy of
fire insurance, the effect shall be the same as in a policy of marine insurance.
FIRE INSURANCE CODE OF THE PHILIPPINES

• "Section 174. Whenever the insured desires to have a valuation named in his policy, insuring any
building or structure against fire, he may require such building or structure to be examined by an
independent appraiser and the value of the insured’s interest therein may then be fixed as
between the insurer and the insured. The cost of such examination shall be paid for by the
insured. A clause shall be inserted in such policy stating substantially that the value of the
insured’s interest in such building or structure has been thus fixed. In the absence of any change
increasing the risk without the consent of the insurer or of fraud on the part of the insured, then
in case of a total loss under such policy, the whole amount so insured upon the insured’s interest
in such building or structure, as stated in the policy upon which the insurers have received a
premium, shall be paid, and in case of a partial loss the full amount of the partial loss shall be so
paid, and in case there are two (2) or more policies covering the insured’s interest therein, each
policy shall contribute pro rata to the payment of such whole or partial loss. But in no case shall
the insurer be required to pay more than the amount thus stated in such policy. This section shall
not prevent the parties from stipulating in such policies concerning the repairing, rebuilding or
replacing of buildings or structures wholly or partially damaged or destroyed.
FIRE INSURANCE CODE OF THE PHILIPPINES

• "Section 175. No policy of fire insurance shall be pledged,

hypothecated, or transferred to any person, firm or company who
acts as agent for or otherwise represents the issuing company, and
any such pledge, hypothecation, or transfer hereafter made shall be
void and of no effect insofar as it may affect other creditors of the
insured.
FIRE INSURANCE COVERAGE
TYPES OF PROPERTIES COVERED

Fire insurance coverage includes any of the following buildings or its contents:
• Residential properties such as houses, condominiums, townhouses, etc. (may
include household content like fixtures, lights, furniture, appliances, flooring,
etc.)
• Commercial buildings such as hotels, restaurants, retail stores, malls, etc.
(may include goods and stocks)
• Warehouse buildings
• Industrial buildings such as bakeries and factories (may include machinery
and equipment)
• General structures such as schools, churches, hospitals, clinics, etc.
TYPES OF DISASTERS COVERED

Fire insurance covers only accidental fires, such as those caused by lightning, faulty electrical connections, or gas
explosions. Incidents due to arson, or intentionally setting fire to insured property, are not covered.
Depending on your insurance policy, it may also cover other catastrophes.
According to the Insurance Code of the Philippines (Republic Act 10607), fire insurance includes coverage
“against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are
covered by extension to fire insurance policies or under separate policies.”
This means if an insurance policy includes coverage for allied perils, it also covers loss or damage resulting from
any of the following events:
• Earthquake shock
• Typhoon/Flood
• Vehicle impact/Falling aircraft
• Explosion
• Smoke damage from a faulty heating or cooking unit
• Riots/Strikes
• Malicious damage caused by any person
• Riot/Fire due to a strike or lockout
IS FIRE INSURANCE MANDATORY IN THE PHILIPPINES?

• Fire insurance is not mandatory for residential properties in the Philippines,

unless the property is financed through a housing loan or used as collateral
in a loan.
• For example, it’s automatically included in a PAGIBIG Housing Loan.
Premiums for fire insurance and mortgage redemption insurance form part
of the monthly amortization.
• As for commercial buildings, a fire insurance policy is a requirement [4] for the
Fire Safety Inspection Certificate issued by the Bureau of Fire Protection
(BFP). This certificate is a pre-requisite for a Business/Mayor’s Permit,
Occupancy Permit, or any business license.
• Thus, you can’t operate a business in the Philippines without fire insurance.
WHY IS FIRE INSURANCE IMPORTANT?

• Mandatory or not, getting your property insured against fire is crucial for
your own financial protection. The risk of fire in the Philippines is always
present, what with its hot climate.
• Fire can also happen anytime—you’ll never know when it could hit. Even
if you’re doing everything to prevent fire in your home or office, fire from
a neighboring property can turn your million-peso worth of assets into
debris and ashes in a matter of hours.
ADVANTAGES OF FIRE INSURANCE IN THE
PHILIPPINES

Fires can cause a huge loss. If you insure your property, you can gain the
following benefits:
• Compensates for the cost of repair, replacement, or rebuilding of the insured
structure and its contents
• Pays for other costs such as temporary accommodation (for homeowners) and
medical bills of injured employees and death benefits to the families of deceased
employees (for businesses)
• May also provide financial protection against floods, earthquakes, and other
natural disasters
• Gives peace of mind and sense of security knowing that in case of fire, your
family can have a new shelter or your business can continue to operate
HOW MUCH IS FIRE INSURANCE IN THE PHILIPPINES?

• Fire insurance premiums in the Philippines cost from PHP 950 to PHP
2,000 per year for basic coverage of PHP 1 million.
• Roughly, that’s PHP 80 to PHP 166 every month. For the same price as a
cup of milk tea per month, you can already insure your investment.
HOW ARE FIRE INSURANCE PREMIUMS
COMPUTED?

• Insurers consider the following factors in computing the actual premium of

a policy:
• Nature of the use of the property (general/residential/warehouse/industrial)
• Materials the property is made of (wood, cement, steel, etc.)
• Number of occupants
• Location of the property
HOW TO GET FIRE INSURANCE IN THE
PHILIPPINES?

• Traditional method – Talk to an insurance agent who will handle the

insurance purchase on your behalf. The agent will then bring your policy
to you.
• Direct method – Visit the office of an insurance company if you don’t
have an agent yet.
• Online method – Request a quote on the insurance company’s website,
pay the premium online (or through any accredited partner), and receive
your policy through email.
FIRE / PROPERTY INSURANCE CLAIM

• GUIDELINES
1.The forwarding of the claim form is for completion and not an admission of liability upon the
part of the company.
2.On the occurrence of a loss and pending instructions from the Company or its Agent, the
insured should take all reasonable steps to protect the salvage for deterioration. The debris
and traces of the fire (in case of fire) should not be removed until the Company’s
representatives have had an opportunity of inspecting them.
3.The period allowed for lodging the claim in its final form with the Company is necessarily a
limited one, and it is particularly important that the Policy Condition relating thereto be
complied with. If, for any reason, an extension of the period is required, it is essential that
the Company’s permission be obtained in writing.
4.Cause of Loss – This should be stated as explicitly as possible, and where the cause is
undiscovered, any suspicion of incendiarism should be mentioned.
FIRE / PROPERTY INSURANCE CLAIM

5. The following particulars are required:

* Building Claims
1. A Civil Engineer’s or Architect’s detailed estimate (obtained at the expense of the insured) to place
the building in the same state of repair as before the loss. (No contemplated improvements may be
included in the estimate and a proper allowance for age and depreciation, etc. must be allowed)
2. Certified copy of Building permit
3. Certified copy of Declaration of Property
4. Copy of plan of the building or sketch prepared by engineer/architect
5. Lease contract or agreement if the insured is not lot owner
* Furniture and Equipment Claims
6. A detailed list of the articles damaged or destroyed showing the cost price of each and date acquire
7. Invoices, Receipts, if any.
FIRE / PROPERTY INSURANCE CLAIM

* Goods and Merchandise (Stock in Trade) Claims Books of accounts,

Financial Statement, Purchases and Sales Invoices and all other
businesses records
1.Certified copies of Income Tax Returns of the Insured for the last two
fiscal years
2.Latest inventory of merchandise filed with the Bureau of Internal
Revenue or any government entity prior to the loss
3.A detailed inventory of the articles damaged or destroyed, showing the
cost price of each extent of loss, and salvage value, if any, if the risk
sustained partial or water damage
FIRE / PROPERTY INSURANCE CLAIM

* Claim on A, B or C, or all of the above should be accompanied by an

affidavit or statement declaring: Nature of ownership of the property insured
1.Location of property
2.Liens and encumbrances, if any
3.For Building Claim,  year of the building was constructed and original
construction cost
4.For Stocks Claim, location of other store or warehouse and amount of
insurance on stock contained therein, if any
5.Any information relative to the loss
FIRE / PROPERTY INSURANCE CLAIM

* The information asked for in the form should be furnished in detail.

A careful description of every article destroyed or damaged should be
given together with particulars of its acquisition by the Claimant(s).
The form should be fully completed in every particular. N.B. – The
Claimant(s) must in every case state the total value of the property
covered by the Policy or Policies, or by the item or items of the Policy
or Policies under which the claim is made. The Company reserves the
right to require such additional proofs as it may consider necessary to
support a claim