Standard Fire and Special Perils Policy
Fire is a hazard potent enough to cause losses to a great extent to any residential, commercial or industrial properties, both movable and immovable. In the fire insurance policy, 'Fire' means the production of light and heat by combustion or burning and it has broken bounds i.e. fire is not limited or confined to usual limits. A fire insurance policy provides indemnity against loss by expenses incurred towards repair, replacement and damages to the insured property due to fire and allied perils. Sum insured for immovable property and other contents are generally fixed on the basis of the reinstatement value of the property. Properties like stocks in trade are always insured on a market value basis. However, if the property is insured on a value less than it ought to be insured else it qualifies for under-insured, condition of average will apply in case of loss.
Coverage: This policy broadly covers: Standard Fire and Perils policy is commonly known as fire insurance not only indemnify against losses by fire but also 11 other perils as briefed below:
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Fire
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Lightning
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Explosion/Implosion
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Aircraft Damage
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Riot, Strike and Malicious Damage
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Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
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Impact of Damage
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Subsidence and Landslide including Rockslide
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Bursting and/or overflowing of Water Tanks, Apparatus, and Pipes
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Missile Testing operations
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Leakage from Automatic Sprinkler Installations
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Bush Fire.
MAJOR EXTENSIONS AVAILABLE
In addition to basic covers as stated above this policy could also be extended to cover the below claims on payment of additional premium.
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Architects, Surveyors and Consulting Engineers Fees ( in excess of 3% claim amount)
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Removal of Debris (in excess of 1% claim amount)
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Forest Fire.
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Impact Damage due to Insured’s own Rail/Road Vehicles, Fork lifts, Cranes, Stackers and the like and articles dropped therefrom
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Spontaneous Combustion
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Omission to Insure, additions, Alterations or Extensions
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Earthquake (Fire and Shock) - Mandatory Cover
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Spoilage Material Damage Cover - for loss of stock in process due to an insured peril.
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Leakage And Contamination Cover - for oils and chemicals only.
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Temporary Removal of Stocks Clause - Additional Expenses incurred for transferring stock.
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Loss Of Rent clause - for owners of building, if the same is being let-out at the time of loss
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Insurance Of Additional Expenses of Rent For An Alternative Accommodation - for any additional rental expenses post loss
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Startup Expenses - to cover the additional expenses to restart the process
OTHER EXTENSIONS
Some insurers are also offering additional covers/extensions in fire policy upto specified/agreed limits for expenses incurred against these heads in case of a fire. Some of those covers are briefed below.
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Involuntary Betterment
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Fire Fighting/ Extinguishing Expenses
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Dewatering Expenses
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Brands and Labels Trademark
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Immediate Repairs
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Waiver of Under Insurance
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Destruction of Sound Property
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Accidental Damage
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Minor Works Extension
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Claims Preparation costs
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Removal of Foreign/ External Debris
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Property not on insured Premises
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Capital additions
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Obsolete Parts
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Contamination & Co Mingling of Stocks
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Catalyst and Consumable (including lining and refractory) interest in process
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Growing Plants, Crops And Trees, Landscaping
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Decontamination and Cost of Clean Up
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Property in Course of Construction/Erection
Various Types of Fire Insurance
Some of the most common options for fire insurance policies available in India are briefed below
Standard Fire & Special Perils policy (SFSP) – Issued to cover loss or damage to insured property on specified location/s with specified sum insured for respective location, due to insured perils.Re-instatement value as well as market value both basis of sum insured could be opted in these policies for respective properties insured. Under-Insurance penalty will applicable in case of claim.
Fire Floater Policy – Issued to cover the stock laying at more than one location and the exact value per location is not available or could not be ascertained.Sum insured in these policies will be always on the basis of market value.Under-Insurance penalty will applicable in case of claim.
Fire Declaration Policy – Issued to cover the stock if there is frequent fluctuation in quantity of stock. An estimated value of stocks is insured at the inception of the policy and Highest value or Average value of stock per month is declared. Excess premium is adjusted/refunded at the end on the policy period. Under-Insurance penalty will applicable in case of claim. Sum insured in these policies will be always on the basis of market value.
Fire Floater Declaration Policy – Issued to cover the stock if there is frequent fluctuation in quantity of stock lying at multiple locations. It has benefits of both Fire Floater & Fire Declaration policies. Premium will be adjusted at the end of policy based of monthly declarations. Under-Insurance penalty is applicable in case of claim
Valued Policy – Issued to cover the Items whose value cannot be determined like curios, work of Art, Paintings Etc. Sum insured is fixed on the basis of valuer’s report.
General Exclusions
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Excess applicable will be as mentioned in the policy schedule.
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Loss, destruction or damage caused by war, invasion, act of foreign enemy hostilities or war like operations (whether war be declared or not), civil war, mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising, rebellion, revolution, insurrection or military or usurped power
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Loss, destruction or damage by ionizing radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel, radioactive toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof
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Pollution or contamination which itself results from a peril hereby insured against
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Damage to the stocks in Cold Storage premises caused by change of temperature
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Damage to any electrical machine, apparatus, fixture, or fitting arising from or occasioned by over-running, excessive pressure, short circuiting, arcing, self-heating or leakage of electricity from whatever cause (lightning included)
A-1. Fire and Perril
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Heading Fire and Perill:
Detail Fire and Perill