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Fire Insurance FAQs
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Q- What is Fire Insurance?
A- Fire insurance indemnifies or compensates for any physical or material losses or damages to tangible property due to fire and allied perils within India.

Q- What are perils covered under fire insurance?
A- Fire insurance covers the various movable or immovable business assets like building, plant & machinery, furniture & fixtures, stocks and other assets against physical / material damage or loss due to—
• Fire
• Lighting
• Explosion/Implosion
• Aircraft damage
• Riot, strike and malicious damage
• Impact damage
• Subsidence and landslide including rockslide
• Bursting and or overflowing of water tanks, apparatus and pipes
• Missile testing operations
• Leakage from automatic sprinkler installations
• Bush fire

Q- How should the sum insured or the insurance value be estimated for any kind of property?
A- The amount for which the property is to be Insured should either be the Reinstatement value or its market price, estimated or expected to be incurred during the insurance period. The re-instatement value is the cost expected to be incurred to replace/rebuild the insured asset like it was before the loss or damage. The market price is the reasonable selling price of the asset or the price at which buyers and sellers agree to trade in an open market.

Q- Can the sum insured be revised after affecting the policy?
A- Yes the sum insured can be revised after effecting the policy. The insurer has to be notified in writing of the changes required. Additional premium has to be paid in case of an increase of sum insured and the insurers will refund the premium in case the sum insured is reduced.

Q- What is a policy period?
A- Policy period is the time period mentioned on the policy schedule, during which the policy is valid and effective.

Q- What is the normal time span of a policy ?
A- Normally, fire insurance policies are issued for a year, but shorter duration policies can be purchased, but are not cost effective.

Q- What are the factors that determine the cost of a fire insurance policy?
A- The fire insurance Premium is not exorbitant when you compare the premium paid and the sum Insured Risk accepted by the insurers. Some of the factors which determine the cost of a fire insurance Policy normally are:
1) The occupancy or the usage of the risk
2) the fire protection and security systems installed in the premises to be insured
3) the deductibles applicable to the policy
4) the Claim experience.

Q- In the event of loss or damage, what should be the procedure to be followed for lodging a claim ?
A- The loss/damage should be reported immediately to the insurance company, preferably, in writing, stating the policy number and giving relevant details of the properties damaged or destroyed, and the estimated value of loss incurred. The insurer will depute a surveyor who will be responsible for assessing the loss. The insurers will settle the payment of the claim once the surveyor submits his reports to them.

Q- What kind of properties / assets can be covered under a Standard Fire and Special/Allied Perils Insurance policy?
A- All tangible, moveable and immoveable properties of the Proposer on land, excluding those within transit, can be covered under the policy. They can be broadly categorized as :
• Building (including plinth and foundations, if required)
→ Whether completed or in course of construction (excluding the value of land)
→ Interiors, Partitions and Electricals
• Plant & Machinery, Equipment & Accessories (including foundations, if required)
→ Bought Second hand
→ Bought New
• Stocks
→ Raw Material
→ Finished Goods
→ In process
→ In trade, belonging to Wholesaler, Manufacturer and Retailer • Other Contents such as
→ Furniture, Fixtures and Fittings
→ Cables, Piping
→ Spares, Tools and Stores
→ Household goods etc

Q- Are losses arising out of theft and burglary covered under the Standard Fire and Special Perils policy?
A- No, losses arising out of theft and burglary are not covered under the Standard Fire and Special Perils policy. They can be covered in a separate policy – Burglary and Housebreaking Policy.

Q- What is meant by contents ?
A- The things that are held, housed or included within the building or the compound of the Risk being considered for insurance. E.g. the plant and machinery, furniture, fixtures, equipments and stocks of a garment factory would well illustrate the contents of a garment manufacturing unit.

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