What are the types of fire insurance? Welfin | best insurance advisor in Kolkata

Fire insurance is a type of insurance that covers fire-related damages and losses. Fire insurance agency in Kolkata helps to mitigate the risk of property loss caused by fire, whether purposefully or unintentionally. A fire insurance policy compensates the insurer for losses incurred as a result of the destruction or damage to property or goods caused by fire during a specific time period and up to a certain sum. The policy stipulates the maximum amount that can be claimed by the insured in the event of a loss. This number does not represent the loss. Only after the fire has passed can the loss be assessed. The insurer is responsible for making a payment for the actual amount of loss up to the policy’s maximum limit.

Lets look into the difference insurance provided by our Fire insurance agency in Kolkata:

Valued Policy: The value of the subject-matter is agreed upon at the time the policy is taken up. If the subject-matter is destroyed or damaged by fire, the insurer agrees to pay a pre-determined amount. This policy does not follow the indemnity principle. The agreed value may differ from the market value at the time of the loss. These policies are typically offered for items whose worth cannot be assessed after they have been lost or damaged. These items could include artwork, jewellery, paintings, and so on.

Specific Insurance: This policy insures the risk for a specific amount. If the loss of property is less than the stated amount, the insurance will compensate the loss. An illustration can be provided: The property is insured for Rs. 80,000 and the insurance policy is for Rs. 50,000. If a property valued Rs. 40,000 is stolen, the insured will be compensated for the entire loss. If the loss is less than Rs. 50,000, it will be fully reimbursed. If the loss is greater than Rs. 50,000, say Rs. 60,000, the indemnity will be limited to the amount insured, i.e. Rs. 50,000. The insured is not penalised for purchasing an insurance at a lower price under this coverage.

Average Policy: Average Policy refers to a policy that includes the ‘average clause.’ The average clause is included to penalise the insured for taking out a policy for less than the property’s value. If the policy’s value is less than the property’s value, the compensation given is proportionately decreased. Assume a person purchases a Rs. 20,000 fire insurance coverage for a property worth Rs. 30,000. If a property valued Rs. 50,000 is lost, the underwriter pays Rs. 10,000 in compensation (20,000/30,000 x 15,000), not Rs. 15,000. It deters the insured from purchasing an undervalued policy.

Floating Policy: A floating policy is used to protect against the danger of products being misplaced. The goods should be owned by the same person, and a single insurance will cover all of their risks. This policy is beneficial to business people who import and export commodities and have the goods stored in several warehouses. The premium charged is often the average of the premiums that would have been paid if specific policies for all of these commodities had been purchased. These insurance are always subject to the average clause.

Policy in General:

A policy can be purchased to cover several dangers, including fire. A policy could be given to cover risks such as fire, explosion, lightning, burglary, riots, and labour unrest, among others. This is referred to be a comprehensive or all-risk insurance.

Policy for consequential losses:

Work in the plant may be disrupted by a fire. While production may decrease, fixed expenses may remain constant. A policy can be purchased to cover consequential loss or profit loss. Profit loss is calculated as a percentage of sales lost. For standing charges, a separate coverage may be purchased.

Replacement Policy: The underwriter pays compensation based on the property’s market value. The amount of compensation is calculated once depreciation is taken into consideration. Compensation is determined by the replacement price under a replacement policy. The replacement asset should be similar to the one that was lost. The amount of compensation will be determined by the market price of the new assets in order for the insured to be compensated without incurring additional costs.

Advantages of purchasing fire insurance as provided by our fire insurance agency in Kolkata include:

  • Provides complete protection against the effects of a fire explosion.
  • It may provide death payments to the employee’s family if he is killed in a fire.
  • Provides a replacement cost, allowing a homeowner to purchase an identical item.
  • Includes the cost of machine replacement and repair in the event of a fire.

Fire insurance characteristics

  • A fire insurance contract is governed by the principle of absolute good faith, which states that the policyholder must reveal all relevant information about the insurance policy’s subject matter.
  • Indemnity covenant: The insurer must only file a claim up to the insured limit. There is no claim if there are no damages or losses.
  • If the insurer has an insurable interest in the insured property, this policy will not be valid.
  • If the loss/damage is caused by something other than fire. There are no claims that apply.

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