Fire Insurance
Property insurance policies that cover damage and losses resulting from fire are called fire insurance policies. Some homeowners insurance policies include some fire protection coverage, but if their property is damaged by fire or destroyed, they can purchase additional coverage.
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Why do we need Fire Insurance ?
According to this policy, the insurer will compensate the policyholder if the business premises are destroyed. Calculating the compensation is done after considering the depreciating value of the property. In exchange for the compensation, the new asset will have the same value as the one that has been lost. The compensation provided for the new asset will be based on its market value, which will not incur any additional expense.
Why is Fire Insurance Important ?
Let us understand why fire insurance is a wise choice. Having a fire insurance policy comes with a broad range of scope, which includes:
An insurance policy covering fire damage will provide coverage to your home and your business for damage caused by fire or an explosion resulting from fire.
Due to a fire-outbreak, the insured property can suffer damages, such as the loss of furniture, machinery, stock, etc.
Besides, fire insurance covers damage that occurs due to natural disasters, explosions, water tank bursts, as well as fire-related perils.
Types of Fire Insurance
Fire insurance policies are classified as follows, based on requirements:
Specific Policy: it is given for a specific property a specific sum insured and in case of a loss the amount compensated is dependent upon whether or not it is less than the amount determined.
Comprehensive Policy: Additionally, this policy offers comprehensive coverage against other perils, such as robbery, burglary, rampage, etc.
Floating Policy: Export and import businesses may benefit from this type of insurance policy. Your goods lying at various locations will be covered by this policy. All perils associated with the goods need to be covered under one sum assured and under one premium for the goods to belong to the same individual.
Consequential Loss Policy: In factories and workplaces, fires can disrupt production. Fixed expenses, however, may remain unchanged despite the disruption in the workforce.
Replacement Policy: In this policy, the insurance provider assures compensation for the loss of the premise of the property’s market value. After contemplating the depreciating value o the property, the amount that is to be compensated is calculated. The compensation provided will be at the replacement price, which implies that the new asset will be of the price that has been lost. It is to be noted that there will not be any additional expense as the compensation provided will be on the new asset’s market price.
