Fire insurance is the type of insurance that pays or compensates for the damages caused to your property or goods due to fire. It covers the replacement, reconstruction or repair expenses of the insured property as well as the surrounding structures.
It also covers the damages caused to a third-party property due to fire. In addition to these, it takes care of the expenses of those whose livelihood has been affected due to fire.
Fire insurance is also known as a fire and burglary insurance policy. It is like property insurance that provides coverage for loss or damage caused by fire to the property. The policy pays the insured on the basis of either actual cash value or replacement cost value.
Fire insurance render protection against any loss or damage caused due to any movable or immovable object that turns into a fiery explosion. A fire policy covers property damage such as furnishings, office building, machinery, stock, etc. due to a fire accident.
Fire insurance is like a burglary insurance policy that provides coverage for the damages caused due to any natural calamity, explosion, bursting of the water tank, etc.
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Types of Fire Insurance Policy in Insurance Companies
A fire insurance policy covers the loss that the insurer may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period and up to agreed amount. Here are the types of fire insurance policy in various insurance companies:
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Valued policy
Valued policy is one of the types of fire insurance policy in which the insurer and insured agree on a stated amount that will be paid in the event of a future loss instead of an amount that would have to be proven as the actual loss.
The insurer firsts value the property and then undertakes to pay compensation up to that value in the case of loss or damage. The insurer pays the total admitted value irrespective of the then market value of the properties. The measure of indemnity is, in consequence, not value at the time of the fire, but a value agreed upon the inception of the policy.
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Floating policy
Floating policy is also one of the types of fire insurance policy that covers the damages to properties lying at different places. This policy provides coverage for one or more goods at the same time under one premium and one sum assured.
The floating policy is the policy taken to cover one or more kinds of goods at one time under one sum assured for one premium and about the same owner.
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Comprehensive policy
This is known as an all-in-one policy. It has a wide coverage and includes damages due to fire, theft, burglary, etc. This policy undertakes full protection not only against the risk of fire but combining within the risk against burglary, riot, civil commotion, theft, damage from the past, lightning.
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Specific policy
This covers you for a specific amount which is less than the real value of the property. A specified sum insured is determined for a particular property and in case of loss the actual loss does not exceed the chosen insured amount. This policy provides extensive coverage not only against fire related perils but also provides coverage against any other perils, such as robbery, burglary, civil rampage, etc.
Here the value of the property insured has no relevance in arriving at the measure of indemnity in a specified policy and the insured sum sets a limit up to which the loss can be made good.
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