What is fire insurance? All you need to know about fire insurance policy this Diwali

New Delhi: While Diwali brightens up homes and lives, unfortunately, it also carries some amount of safety risk. Quite understandably, no one wants to think of being embroiled in a fire accident amid a celebratory mood. However, the reality is that fire incident are reported every year. Taking a look at last year’s figures, the Delhi fire brigade got around 200 calls pertaining to fire incidents.

Ashu Bajaj, Head - Direct Business (SME Insurance), Policybazaar.com told Reema Sharma of Zee Media, “This raises the question of being safe and secure, both physically and financially amid the celebrations. While practising caution is paramount, it is always recommended to think a step ahead and prepare for an untoward incident, and the answer to this is fire insurance. Though it’s a common practice to install fire alarms and other safety devices, people often learn the importance of insurance the hard way when an accident has already occurred. Since no one can really predict when this can snowball into a disaster, here’s a deeper understanding of fire insurance and what it entails”.

What is fire insurance? Here is all you need to know about fire insurance policy this Diwali

As the name suggests, a fire insurance policy offers the protection of one’s property against fire damages. Covering any damages to property arising out of the fire, the policy protects against several other risks like goods and contents destruction. Generally, the damages that are covered are -

· Damages due to smoke, heat or scorching

· Damages caused due to water used in putting out the fire

· Collapsing of roofs, floors and walls due to fire

· Any other damage to property during the course of mitigating the fire

 

Who can opt for fire insurance policy?

Often, people see fire insurance as a policy meant only to cater to commercial properties. However, the truth is that fire is an equal hazard to everyone and therefore, the fire insurance plan can be opted for by any individual, organisation, institution or firm that wants their property to be safeguarded against the perils of fire. Therefore, anyone who wants to insure a building, furniture or household articles should ideally opt for this policy.

 

Types of fire insurance policies

There are mainly four kinds of fire insurance policies -

1. Specific policy - Under this, a specified sum insured is decided for a certain property and in the event of any loss, the actual loss doesn’t exceed the chosen insured amount.

2. Comprehensive policy - This policy offers coverage for not only fire-related accidents but also covers you against other risks including theft, lightning, burglary, civil commotion, damage or loss due to pests etc.

3. Floating Policy - This is beneficial if you deal with fluctuating stocks in different areas. This policy offers coverage for one or more goods at the same time under one sum assured and one premium.

4. Valuable policy - Under this policy, the claim amount is determined based on the present market price of the damaged property. At the time of claim settlement, the insurance company reinstates the damaged property or asset by paying its replacement value as the claim amount to the policyholder.

 

Factors to bear in mind while taking fire insurance policy

Before choosing your plan, here are certain factors which you should consider -

· It’s imperative that both parties should function on a contract of good faith and therefore, have full disclosure of all material facts

· Fire insurance, like any other insurance policy, works on the principle of indemnity. So even in case of a fire, if there’s no loss, there will be no coverage

· One will only be eligible to avail of the sum insured if the root cause of the damage is fire

· The insurance company needs a proper description of the property insured. The location change should be duly informed to the insurer in order to avoid the rejection of the claim

 

Add-ons to consider while getting fire insurance policy

Add-ons or riders offer extra benefits that are not a part of the standard policy. To add an extra layer of protection, one can opt for add-ons for an additional premium. Some of the useful add-ons that the policyholder should consider include debris removal, loss of rent, leakage and contamination, and fire-fighting expenses among many others.

To conclude, fire safety is of utmost importance at all times, especially during this festive season. So, to prevent any unwelcome situation arising out of a fire accident, stay safe and opt for fire insurance along with relevant add-ons to ensure absolute protection.