Debris Removal Clause in Fire Policies

                           

To get back business to normal after a loss, needs a lot of finance, right from removing the debris, repair of machines, maintenance of process etc. Fire policies usually cover the losses due to insured perils and policy pays the loss amount. Apart from this, the expenses for cleaning up a damaged premises are high and the debris removal clause in fire policies provides the right cover for such expenses.

What is paid under debris removal insurance?

Debris removal insurance is an extension under the standard fire policy to cover the costs and expenses of removing debris if an insured property has been destroyed or damaged by an insured peril. 

If a fire breaks out in a building complex it leads to damage of the building and the surroundings. Removal of debris is the next step which involves money and labor.

Debris removal insurance pays the cost of removing debris that’s been left behind. Policies with a debris removal provision cover only costs and expenses for removal of debris resulting from an insured peril, such as concrete rubble, wooden frames, steel rods etc.

Costs including labor and expenses for clean-up of the damaged premises is payable under this extension. Debris that was accumulated following a loss due to an insured peril is paid by the policy.

A separate sub limit for debris removal is set in the insurance policy as per the choice of the insured, because a major loss can wipe away the entire sum insured in a single claim and may leave an insufficient amount for debris removal expense. Separate sum insured for this section will keep the sum insured for this purpose.

How to fix sum insured for debris removal extension?

Factors to consider while arriving at the sum insured for debris removal extension will be:

• Age of the building
• Proximity to other buildings, space between the other areas
• Steel or wooden or concrete structure, since the labor costs vary with the type of structure and the ease of removing the debris varies with each type of material

Important points to remember:

• The fire policy provides debris removal costs after a claim up to 1 % of claim amount automatically. This is in built in the policy.
• Policy can be extended to include additional percentage for debris removal costs, up to the agreed percentage, of the claim amount on payment of additional premium
• Claim for debris removal has a time limit and clearance of debris must take place within the set time limit. This time limit is opted by the insured at inception of the policy.
• Coverage for debris removal costs is usually limited to a percentage of the sum insured as agreed before hand

Clause on debris removal

 Removal of Debris (in excess of 1% of the claim amount)

 “In consideration of the payment of additional premium, it is hereby declared and understood that the policy is extended to cover costs and expenses necessarily incurred by the insured in a) the removal of debris from the premises of the Insured; b) dismantling or demolishing; c) shoring up or propping; of the portion or portions of the property insured by (specified as being insured by this Endorsement in the Schedule of) this policy destroyed or damaged by perils hereby insured against but not exceeding in the aggregate the amount (limited to 10% of the total sum insured) stated in the Schedule of this policy in respect of this Endorsement.” Note: (b)&(c) above shall be deemed deleted when neither Building nor Machinery are covered

 

Comprehensive planning and strategy are required in the conduct of business processes so that there is no interruption in the business activity due to a loss.  Insurance policies are an added advantage as they ensure financial protection and flow of funds in the form of payments when faced with a loss.

Clearing, shoring and propping up of the premises for further activity following a loss is significant in the business process. Removal of debris is as expensive as it is necessary. Insurance policies have customized the requirements of the business sector with suitable insurance covers that serve as financial tools.

 

 

We at Zen Insurance assist in choosing the right insurance cover for your business units. Plan your insurance program wisely and contact us for assistance.

Disclaimer:

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.