What is covered in Fire Insurance and common misconceptions around it

Life can sometimes throw you a curve when you least expect it in the form of unforeseen events that can damage your property. Man-made and natural disasters do not come with prior warning; they occur unannounced and leave a trail of destruction in one fell swoop.

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Back in 2018, there were 13,099 reported incidents of fire accidents in India. Needless to say, these unfortunate accidents resulted in heavy losses to those impacted.

While it is advisable to take every step of precaution to ensure our homes and workspaces are kept safe, there is always a margin for error.

This margin can be overcome with the help of fire insurance that will have your back by protecting you from total loss when life goes awry.

What is fire insurance?

A standard fire and special perils (SFSP) insurance policy offers coverage that protects you against losses sustained to your property as a consequence of natural or man-made disasters.

Unforeseen calamities can occur to anyone, at any time. In such a situation, there is often little that one can do to salvage what remains thereafter.

The losses and damages can truly impact you financially and emotionally.

Having a fire insurance and special perils insurance policy in place will help take the financial burden off your shoulders to save you from distress.

Who should buy fire insurance and why is it helpful?

It is advisable that all homeowners secure their property with a standard fire and special perils (SFSP) insurance policy. This policy is also available for coverage for commercial entities like shop, factory, and office.

Let’s look at two quick examples that illustrate why this coverage is helpful.

  1. As a homeowner, you do face certain unavoidable risks of property damage or destruction from natural disasters or man-made incidents. For instance, a dish left boiling and unattended on the gas may lead to a fire that can destroy the contents of your home. A standard fire and special perils (SFSP) insurance policy will cover you against such losses and prevent you from dipping into your savings for repair and refurnishing.
  2. According to the 2019 Indian Risk Survey, fire outbreak was the 10th biggest risk to businesses in India. As a business owner, any damage to your shop, office or factory can result in massive losses. In such a situation, your standard fire and special perils (SFSP) insurance policy will help you start over by covering you for your losses.

Common misconceptions about fire insurance

Quite often, the many prevailing misconceptions about SFSP coverage stand in the way of people buying this essential coverage. Let’s take apart some of these misconceptions by unveiling the facts behind them.

Misconception: SFSP Policy only covers you against damages caused by fire

Fact: Apart from fire, you also get protected against losses due to ‘other perils’ such as aircraft damage, cyclones, explosions and implosions, floods, riots, storms, tempests, and typhoons, among other natural and man-made calamities.

Misconception: It is expensive

Fact: While the premium can vary between insurers, the cost of these premiums is overall quite affordable in the market. And, when you compare the cost of the premium against the value of the property and contents covered, you are actually getting amazing deal!

What does fire insurance cover you against?

Let’s take a closer look at the situations in which you can receive coverage from your standard fire and special perils (SFSP) insurance policy.

  1. Fire
    The policyholder is covered against losses sustained due to fire. In such a scenario, the insured party receives compensation up to the policy limits specified. However, do note that the coverage excludes damages caused due to natural heating, own fermentation, spontaneous combustion or burning of property on the instruction of a public authority.
  2. Storm, cyclone, flood, inundation and related natural disasters
    The insured party receives compensation up to pre-determined policy limits for material losses occurring directly as a result of natural disasters like storm, cyclone, floods, inundation, typhoon, tempest, tornado, and hurricane. Coverage does not extend to convulsions of nature such as volcano eruptions or earthquakes (Earthquake can be specifically opted as an add on).
  3. Lightning
    Lightning can damage your property by causing the roof to crack. It can also cause electrical malfunctions and lead to a fire. Fortunately, your standard fire and special perils insurance policy will cover you against any losses you face as a result of lightning.
  4. Explosion/implosion
    A fire can lead to an explosion which can cause severe loss due to destruction of property. These losses too are covered under the scope of your policy. Do note that there are certain exclusions; for instance, certain machinery or apparatus may not receive coverage.
  5. Aircraft damage
    Fire or damages caused by aircrafts or objects dropped down by aircrafts are also covered. Damage due to pressure waves is excluded from coverage.

There’s more…

Apart from the unfortunate events listed above, a standard fire and special perils policy also covers you against losses due to damages from riots, vehicle or animal impact, landslide and rock slide, overflowing or bursting of water pipes and tanks, leakage of automatic sprinklers and bush fires.

This policy not only covers your building structure but also covers the content. Stock and Machinery can also be added if that’s commercial establishment like shop, Industry.

As we can see, a standard fire and special perils (SFSP) insurance policy is truly comprehensive in its coverage. Make sure to secure the contents and construct of your property today with this essential insurance product for true peace of mind.

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