Fire & Allied Perils

Fire Insurance is governed by All India Fire Tariff issued by Tariff Advisory Committee, a Statutory Body.

  • The Standard Fire and Special Perils (SFSP) Insurance can cover all properties on land (excluding cost of land), moveable or immoveable, at various locations against named perils.
  • Special Types of Policies are designed for Stocks (declaration and floater), Building, Plant & Machinery keeping in mind the nature of property, proposers' requirements and basis of indemnification.
  • Long Term Policies available for Dwellings with suitable discounts in premium.
  • Policy can be extended to cover certain additional perils and expenses at additional premium.
  • Concept of "one risk one rate" for all properties in an Industrial or Manufacturing Complex, for administrative convenience of the proposer.

  • Who can take this Policy?

  • Any person / firm / organization / institution who may suffer financial loss in the event of operation of insurable perils may insure such property under the fire policy. They may be broadly categorised as under :

  • Owners of Building and contents such as house hold articles, furniture etc.
  • Shop Keepers.
  • Educational/ Research Institutions.
  • Hotels, Boarding and Lodgings, Hospitals, Clinics or such service providers.
  • Industrial and Manufacturing Firms.
  • Godown Keepers.
  • Bailees, Lessor, Lessee, Banks, Financial Institutions, Mortgagors, Mortgagees.
  • Traders in stocks.
  • Trustees, Charitable Institutions.
  • Transporters and C & F Agents.
  • Types of policies available under this category:
    • Stocks can be covered under Floater or Declaration basis
  • What are the perils (Cause of Loss) covered:
    • Perils Covered:
      • Fire
      • Lightning
      • Explosion / Implosion
      • Aircraft damage
      • Riot, Strike, Malicious damage (hereinafter called RSMD Perils)
      • Storm, Tempest, Flood, Inundation, Hurricane, Cyclone, Typhoon and Tornado.
      • Impact by any Rail/ Road vehicle or animal
      • Subsidence / Landslide including rockslide.
      • Bursting and / or overflowing of water tanks, apparatus.
      • Leakage from Automatic Sprinkler Installation.
    • All moveable/ immoveable properties of the proposer on land (excluding those in transit) that are covered are broadly categorized as follows:
      • Building (including plinth and foundations, if required)
      • Compound Walls and Gates
      • Plant & Machinery, Equipment's & Accessories (including foundations, if required)
      • Stocks (All types and kinds pertaining to Insured line of activity)
      • Other Contents such as:
      • Furniture, Fixtures and Fittings
      • Cables, Pipings
      • Spares, Tools and Stores
      • Household goods etc.
      • Specific Items such as bullion, unset precious stones, curios, work of arts, manuscripts, plans, drawings, securities, obligations or documents, stamps, coins or paper money, cheques, books of accounts, computer system records, explosives.
  • What perils can be covered by paying extra premium
    • Add on covers
    • In addition to the perils/ expenses covered, the proposer can opt to seek cover in respect of the following perils/ expenses at inception of the policy on payment of additional premium:
    • Loss/ damage/ destruction of the property caused by
      • Deterioration of Stocks in Cold Storage premises due to power failure following damage due to an Insured peril
      • Forest Fire
      • Impact Damage due to Insured's own Vehicles, Fork lifts and the like and articles dropped therefrom
      • Spontaneous Combustion
      • Omission to insure additions, alterations or extensions
      • Earthquake (Fire and Shock)
      • Spoilage material damage cover.
      • Leakage and contamination cover.
      • Temporary removal of stocks.
      • Terrorism
      • Accidental Damages.
      • Architects, Surveyors and Consulting Engineer's Fees (in excess of 3% claim amount) expenses
      • Debris Removal (in excess of 1% of claim amount) expenses
      • Loss of rent
      • Insurance of additional expenses of rent for alternative accommodation.
      • Start up Expenses.
  • What are the main Exclusions?
    • Exclusions Applicable:
      • Losses/ Expenses not covered:
      • 5% of each and every claim subject to minimum of Rs. 10,000 resulting from Lightning, STFI and Subsidence and Landslide including Rockslide and Rs. 10,000 in respect of all other perils.
      • Expenses incurred on Architects, Surveyors' Consultant Engineers fees and Debris Removal in excess of 3% and 1% of claim amount respectively.
      • Loss of earnings, loss by delay, loss of market or other consequential or indirect loss or damage of any kind.
      • Perils not covered:
      • War and allied perils.
      • Ionising radiations and contamination by radioactivity.
      • Pollution or Contamination.
      • Properties not covered:
      • Items like manuscripts etc. unless specifically declared.
      • Cold storage stocks due to change of temperature.
      • Loss / damage/ destruction of any electrical and/or electronic machine,apparatus, fixture or fitting arising from over running, excessive pressure, short circuiting, arcing, self heating or leakage of electricity, from whatever cause including lightning.
      • Loss / damage / destruction of Boilers, Economisers or other Vessels in which steam is generated machinery or apparatus subject to Centrifugal force, by its own explosion/ implosion.
  • Types of discounts on premium available under this category
    • De Tariff Discount
  • Basis of Sum Insured- Recommendations & Samples
    • To avoid under insurance deduction during a claim we strongly recommend that the Sum Insured indicates as follows:

      Building, Furniture fixtures and fittings : Reinstatement value basis (i.e New for Old)

      Plant ,Machinery, Equipment’s, Air Conditioners & Stabilizers, Generators, Transformer and accessories: New replacement value basis

      Stocks : Market Value Basis

      Under Insurance formula % = Sum Insured / New replacement value X100

      Note: Depreciation is Not applicable if Sum Insured indicates reinstatement value

      Sample of Market Value Settlement
      Replacement value at the time of Loss 1,50,00,000
      Less Depreciation say 20% 30,00,000
      Value at Risk 1,20,00,000
      Sum Insured under the policy 75,00,000
      Cost of repairs & replacements 10,00,000
      LESS: Depreciation 20% 2,00,000
      Less: Salvage 25000
      Loss Assessed 7,75,000
      Under Insurance 37.5% 2,90,625
      Claim payable 4,84,375
      Policy Excess 10000
      NET CLAIM PAYABLE 4,84,375
      Sample of Reinstatement Value Settlement
      Replacement Value at the time of reinstatement completion 1,50,00,000
      Sum Insured under the policy 1,50,00,000
      Cost of repairs & Replacements 10,00,000
      Less: Salvage 25,000
      Less: Policy Excess 10,000
      NET CLAIM PAYABLE 9,65,000
      Sample of any other Sum Insured chosen by the customer
      Replacement value at the time of reinstatement completion 1,50,00,000
      Sum Insured under the policy 1,25,00,000
      Under Insurance by 25,00,000
      % of Under Insurance 16.67%
      Cost of Repairs & Replacements 10,00,000
      Less : Salvage 25,000
      Loss Assessed 9,75,000
      Less : Under Insurance 16.67% 1,62,533
      Loss after Under Insurance 8,12,467
      Less: Policy Excess 10,000
      NET CLAIM PAYABLE 8,02,467
      Sample Settlement of Claim in respect of Stocks
      Market Value at the time of Loss 1,00,00,000
      Sum Insured under the policy 75,00,000
      Under Insurance by 25,00,000 i.e. 25%
      Claim assessed 10,00,000
      Less: Salvage 25,000
      Loss after deducting Salvage 9,75,000
      Less: Under Insurance 25% 2,43,750
      Loss payable after applying under insurance 7,31,250
      Less: Policy Excess 10,000
      NET CLAIM PAYABLE 7,21,250
  • Excess and other deductibles during claim
    • For Fire :
    • For Sum Insured upto INR 10 Crores : 5% of the claim amount subject to a minimum of Rs.10,000/- for each and every claim
    • For Sum Insured more than INR 10 Crores to INR 100 Crores : 5% of the claim amount subject to a minimum of Rs. 25,000/- for each and every claim
    • For Sum Insured more than INR 100 Crores to INR 1500 Crores : 5% of the claim amount subject to a minimum of Rs.500,000/- for each and every claim
    • For Claims under Terrorism (applicable only if terrorism is covered)
    • As per Terrorism Pool
  • Claims procedure
  • Other relevant information
    • Fire Policy is an annual policy, generally, renewable each year.
    • Long Term policy (for a minimum period of three years) can be considered for covering "dwellings" only with suitable discounts in premium.
    • Policy can be cancelled at any time during the currency with suitable refund of premium for the unexpired period on shot term rates are available
    • Location of Risk:
      • The proposer shall describe all locations where the properties are built or installed or stored or kept at the inception.
      • Any change of location of risk shall be sent to the Insurance Company in writting and obtain suitable endorsement
      • Change of ownership in the insured property shall be intimated so that the new owner may be covered be means of suitable endorsement.
      • Any material change in the location of risk, trade or manufacturing activities shall be intimated to the insurer so that the changes are endorsed to offer continuous cover.