Fire Insurance
Standard Fire & Special Perils insurance covers – Assets / Properties with intrinsic economic value can be covered under Fire & Special Perils Insurance. The fire insurance policy is meant to cover erected fixed assets and movable assets whilst lying at a particular location and declared accordingly for insurance. It is designed to provide protection in respect of loss of or damage by Fire & Allied perils to
- Buildings
- Electrical Installation In Buildings
- Contents Of Buildings Such As Machinery, Plant And Equipment, Accessories, Etc.
- Goods (Raw Materials, In Process, Semi Finished, Finished, Packing Materials, Etc) In Factories,
- Godowns, Tank Farms.
- Goods In The Open
- Contents In Dwellings, Shops, Hotels, Etc
- Furniture, Fixtures And Fittings
- Pipelines (Including Contents) Located Inside Or Outside The Compound.
Need for Fire Insurance:
- The existence of material property susceptible to damage or destruction by fire or other peril.
- The fact that material property has intrinsic value measurable in terms of money recognized by the economic beliefs of society.
- The fact that the occurrence of a fire will result not only in loss of or damage to material property but also other consequential losses such as loss of production causing loss of
Fire Policy Covers 12 insured perils
- Fire
- Lightning
- Explosion/ Implosion.
- Aircraft Damage.
- Riot, Strike, Malicious and Terrorism Damage.
- Storm, Typhoon, Hurricane, Tornado, Flood and Inundation.
- Impact damage.
- Subsistence and landslide including Rock slide.
- Bursting and overflowing of water tanks, apparatus and Pipes.
- Missile testing operations.
- Leakage from Automatic Sprinkler Installation
- Bush Fire.
- Earthquake (add on cover)
Exclusions:
As provided in policy wordings.
How to consider the Sum Insured
Property Other Than Stock – can be insured on depreciated cost (market value) or replacement cost basis.
In order to get better protection, insurance on reinstatement (replacement) basis is recommended.
Stock: Raw Material, Stock In Progress, Finish Goods
The sum insured selected should be adequate to avoid under insurance.
Extensions on Additional Premium:
- Architects, Surveyors and Consulting Engineers Fees ( in excess of 3% claim amount)
- Removal of debris in excess of 1% of claim amount.
- Deterioration of Stocks in Cold Storage premises due to accidental power failure consequent to damage at the premises of Power Station due to an insured peril.
- Deterioration of stocks in cold storage premises due to change in temperature arising out of loss or damage to the cold storage machinery (ies) in the Insured’s premises due to operation of insured peril.
- Forest Fire
- Impact Damage due to Insured’s own Rail/Road Vehicles, Forklifts, Cranes, Stackers and the like and articles dropped therefrom
- Spontaneous Combustion- Sum insured of relative commodity
- Omission to Insure additions, alteration or extensions
- Spoilage Material Damage Cover
- Leakage & Contamination Cover
- Temporary Removal of Stocks Clause
- Loss of Rent clause
- Insurance Of Additional Expenses Of Rent For An Alternative Accommodation
- Start Up Expenses
Excess: 5% of claim amount subject to minimum of Rs.10, 000 to minimum of Rs. 50 lacs depending upon sum insured at one location.
Fire Loss of Property (FLOP) – Covers loss of profits arising out of interruption in business because of operation of perils.
• Machinery Loss of Property (MLOP) – Covers consequential loss due to accidental breakdown of any machinery.
• Advance Loss of Profit (ALOP) – Coverage for Financial Losses due to delay in Construction and infrastructure projects.
Coverage available under Erection All Risk policy.
- Storage Risk
- Shifting
- During Erection
- During Testing
The policy can be taken by the principal, contractor or sub contractor, jointly or separately.
The policy comprises of 2 Sections:
- Section I – Material Damage – covering physical loss, damage or destruction of the property insured by any cause, other than those specifically excluded in the policy.
- Section II – Third Party Liability – covering the legal liability falling on the insured contractor as a result of bodily injury or property damage belonging to a third party.
How is the Sum Insured considered?
Section I – Material Damage
- Total Contract Price including the estimated cost of labour charges and cost of materials
- Materials or items supplied by the Principal
- Any additional items not included in (a) and (b) above
Section II – Third Party Liability (Optional)
The sum insured under section II should represent the per accident limit (the maximum legal liability that may fall on the insured as a result of an accident in the insured’s site). The limit per policy period should be fixed taking into account the maximum number of such accidents which can reasonably be expected to occur –
Period of Insurance:
Period of insurance should be equivalent to the period of contract, commencing from the date of unloading of the first batch of material at the site of construction and expiring on the date of handing over of the contract work to the principal.
In case of delay in completion of work, policy can be extended by paying additional premium depends upon extension period.
Excess: As per tariff depending upon type of project
