Incidents like fire and burglary can cause huge losses for businesses. To avoid complete loss, business owners invest in policies like fire or burglary insurance. Of these, a fire insurance policy is a contract between the policyholder and the insurance company. In this contract, the insurance company promises to indemnify the losses incurred due to a fire incident.
The standard fire insurance policy covers certain types of fire-related losses. As an insurance buyer, you need to be aware of what fire insurance covers so that you can make claims as required.
Peris Covered in Fire Insurance
Perils of Fire
A fire policy from a trusted insurer like TATA AIG provides coverage for losses to property and goods due to fire. These include man-made perils in fire cover, like fire due to riots. However, it should be noted that the insurance does not cover certain instances; these are:
- Damage or destruction caused due to natural heating
- Damage or destruction caused due to fermentation
- Loss incurred due to any heating or drying procedure
- Damage or loss caused due to spontaneous combustion
- The insured property got burned due to raiders from public authority
Explosion or Implosion
Another peril covered in fire insurance is explosions and implosions. An explosion happens when the inside pressure of a vessel reaches or exceeds the atmospheric pressure outside the vessel. At the same time, an implosion happens when external pressure on the vessel is greater than internal pressure.
It should be noted that the fire insurance policy does not cover loss or damage caused due to:
- Economisers or other vessels
- Boilers
- Machinery, apparatus or its contents producing steam
Fire Insurance For Lighting
A fire insurance policy also provides coverage for the damages or losses caused by lightning. Lightning strikes on buildings can cause cracks, which are also covered under the fire insurance.
STFI (Storm, Tempest, Flood, Inundation)
Standard fire insurance covers storm, tempest, flood, and inundation losses. However, it should be noted that the insurance policy does not provide coverage for losses due to earthquake, volcanic eruptions or other natural perils under the standard list of fire insurance.
As a policy buyer, you must ask your insurance provider and get additional coverage for such damages.
Aircraft Caused Loss
The fire perils insurance policy covers any damage or loss of insured property caused by aircraft, aerial devices, or articles dropped from them.
Impact Damage
Fire insurance coverage also protects against damage or destruction caused to insured property or products by direct impact from rail/road vehicles or animals. But it should be noted that these vehicles or animals should not be owned by you (policyholder), any occupier of the premises, or any employees during employment.
Subsidence and Landslide
Subsidence and landslides are what fire insurance covers under a standard policy. Subsidence means sinking or area where the insured property is located. At the same time, a landslide means the collapse of a mass of land from a cliff or mountain.
The fire insurance policy provides coverage for damage caused by subsidence, landslides, or rockslides. However, the insurance does not cover losses that occur due to:
- Normal cracking or settlement of new building structure
- Coastal or river erosion
- Structural alteration, demolition, repair of insured property or excavation or groundwork
- Damages that are caused by defective design, artistry, and use of defective material.
Bush Fire Insurance
The standard perils covered in fire insurance also include loss or damage of insured property due to the burning of bushes or jungles by fire. However, it should be noted that fire insurance does not cover loss, destruction or damage caused by forest fire.
Bursting, Overflowing of Water Tanks, Pipes and Apparatus
A standard fire insurance policy also covers damage or loss caused by water, such as overflowing water tanks or bursting pipes or apparatus.
Leakage From Automatic Sprinkler
A fire insurance policy also covers the loss or damage to insured property caused by water leakage from an automatic sprinkler machine. However, it should be noted that it does not cover damage or loss due to:
- Removal, repair or extension of sprinkler system
- Construction defects that are known to the insured
- Alterations or repairs to the building
Missile Testing Operations
Another one of the perils covered in a fire insurance policy is loss or damage to insured property caused by missile testing operations.
Summing Up
Any small, mid or large-size damage due to fire can be troubling and hamper their regular functioning. Having a fire insurance policy ensures that they are provided financial assistance to replace or repair the damage caused and continue their operations.
All the above-mentioned perils covered in fire insurance are standard ones and are included in almost every insurance provider’s list. However, it is always suggested that you connect with your chosen insurance company and confirm all the included damage and loss coverage.