Fire insurance policies-what is not covered

 

 Insurance protects from the unforeseen whether it is life or property, the unexpected always needs cover. Insurance policies offer the required financial assistance when one suffers a loss. Fire insurance policy is an   important safeguard against fire and allied perils. Damage to property due to natural disasters is covered under the fire policy.

However, it is necessary to know the policy contents, and reading the fine print of the policy is the best method to come to an understanding of the coverage offered. We often see the exclusions under the policy written in fine print and ignore it. Understanding the exclusions under the policy gives us   a wider comprehension of the policy coverage.

A quick look into the details of these exclusions will highlight the modus operandi of the cover offered. Policies may be then customized to accommodate the specific requirements of the policyholder. Fire insurance policy does not cover the following risks.

Spontaneous combustion

This risk is more for a business owner handling cotton, coal stocks and other like materials, where there is a risk of spontaneous combustion.

Spontaneous   combustion   means a   fire that ignites without an external heat source or ignition. Due to light heat of the surroundings the stocks undergo natural heating, fermentation and   spontaneous combustion. Such risks require the spontaneous combustion cover which is excluded in fire policies.

Spontaneous combustion cover can be obtained on specific request on payment of additional premium.

Acts of government or public authority

Damage caused by action taken by government authorities, such as demolishing or burning a building for public safety reasons or permanent or temporary dispossession by order of the government are not   covered under fire insurance policy.

Property undergoing any heating or drying process

Heating and drying process is a part of the activities conducted for finishing of   stocks, like drying grains, dyeing textiles, and other heating processes specific to each industry.  This exclusion helps the insurer as it restricts the insurer’s   liability, where there is higher risk of fire spreading.

 

Explosion of boilers (other than domestic boilers)

This   exclusion is for   industrial and commercial boilers used in manufacturing, power generation, or other non-domestic applications. Domestic boilers do not fall under this exclusion. The damage to boiler and any property directly damaged by the explosion like machinery or apparatus (in which steam is generated) or their contents resulting from their own explosion/implosion is not covered.

For this cover Boiler Insurance cover may be opted under Engineering insurance.

Total or partial cessation of work

Business may be interrupted due to damage caused by the operation of insured perils.  The business comes to a standstill due to damaged machinery and premises. The policy   excludes coverage for the total or partial cessation of work.

However the Loss of Profits cover can be purchased to cover such risks.

Normal cracking, settlement or bedding down of new structures

Normal cracking, settlement, bedding   down of structures happens after construction of building is over. Fire policy does not cover such damages as they are not fire and fire peril related damage.

War or warlike operations, nuclear perils

Damage caused by war, acts of terrorism, or nuclear events is excluded from   fire insurance policies. These damages are voluminous in nature and require greater insurance capacity to cover such perils.

Pollution or contamination

Loss or damages arising from pollution, contamination, or environmental hazards, regardless of whether they result from a fire or another cause. Separate covers may be purchased to cover these risks.

Overrunning, excessive pressure, short-circuiting

Damages due to    electrical   and mechanical issues, such as overrunning, excessive pressure, and short-circuiting is excluded.

To protect against losses caused by electrical or mechanical breakdowns, machinery breakdown insurance policy may be purchased.

 

Wear and tear, gradual damage, and maintenance issues

Damage caused by normal wear and tear, gradual deterioration, or lack of maintenance is excluded.     Maintenance of the   building, machinery, plant is the duty of the policyholder and damages due to poor maintenance are excluded.

Following additional perils under fire insurance policy may be obtained on payment of additional premium:

Earthquake

Terrorism

Burglary, housebreaking, theft, etc.

 Being well-informed about the coverage is crucial   while finalizing one’s insurance plan.

Policyholders must understand the policy coverage offered, what is not covered and what is needed so that additional coverage may be sought from the insurer. Awareness of the limitations of the policy vis a vis the requirements enable faster recovery from a financial loss.

 

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

 

Disclaimer:

Zen insurance brokers is an IRDAI registered broker which facilitates quick and adequate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.