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DEFINITION
There is said to be a fire within the meaning of fire insurance when:
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There is actual ignition.
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The fire is purely accidental or fortuitous in origin so far as
the insured is concerned.
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The fire has burnt / damaged the property of the insured.
STANDARD FIRE & SPECIAL PERILS POLICY COVERS
This policy is taken to insure a specified risk which could be any or
all of the following building, furniture & fittings, stocks, plant and
machinery and any other other specified fixed assets.
PERILS COVERED
The major perils covered in a fire policy can be grouped as:-
Fire Perils
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Fire.
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Explosion / implosion.
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Aircraft damage.
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AOG perils.
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Lightning. Storm, cyclone, tempest, hurricane, tornado &
flood.
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Subsidence & landslide including rock slide.
Social Perils
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Riot, strike, malicious damage.
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Terrorism (the optional cover).
Other perils
Fire Perils
Fire - actual ignition by accident means, and does
not include the following:
EXPLOSION / IMPLOSION
Explosion due to domestic boilers is covered, but explosion due to
industrial boilers are covered under “Boiler Pressure plant Machinery”.
Explosion by centrifugal forces are not covered.
AIRCRAFT DAMAGE
Aerial devices, space craft causing direct physical impact damage are
covered. Damage by falling objects are also covered. Shattering of wall
due to sonic boom is not covered.
AOG PERILS
LIGHTINING
Lightning means visual discharge of atmospheric electricity. Only direct
effects are covered and indirect effects like voltage surge are not
covered.
SCTTTHF
Storm, cyclone, tempest, typhoon, tornado, hurricane,
flood and
inundation.
Wind as per Beaufort Index of wind velocity and location. Based on the
wind speed and velocity it is classified and is called differently in
different places.
Flood
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Water coming out of its natural confines ex:
Drainage overflows,
water tank overflows is also considered as flooding.
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Inundation entry of floodwater into the property.
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Landslide / Subsidence Gradual sinking or settling in of soft sub
soil.
SOCIAL PERILS
RSMD
Malicious Damage
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Damage caused due to personal grouse or ill will.
All acts of commission are covered and Acts of omission are not covered.
Eg:
During strike employees may cause physical damage. This is an act of
commission. This is covered.
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Failure to switch off fan and consequential damage caused due to this is
not covered. This Is an act of omission and is not covered.
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Prevention of access is not covered. Burglary and theft during RSMD is
covered.
OTHER PERILS
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Impact damage - damage due to collision with third party. Impact
damage from insured’s own vehicle or vehicle of his employees is not
covered.
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Missile testing - exposure to this risk is mainly present along the
Indian East coast near Gopalpura region. Any damage due to wrong
firing of missiles is covered.
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Inadvertent leakage from sprinklers other than defects and repairs
are covered.
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Bush Fire - fire from foliage other than forest fire is covered.
EXCLUSIONS
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War and war group of perils.
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Nuclear group of perils.
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Earthquake / volcanic eruption.
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Theft / burglary except during strike.
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Electrical fire due to short circuit, arcing, excess of voltage.
Excluded Property
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Bullion, curios, plans and drawings beyond Rs 10,000.00.
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Loss or damage to machinery when removed to another place for
repair for a period beyond 60 days.
Excluded Losses
RULES AND REGULATIONS UNDER TARIFF
One Industry One Rate
As per the new guidelines, the principle of One Industry One Rate should
be
followed. It is important to classify the industry as per the correct
risk code.
No selection of Property
All property has to be covered and selection of property is not allowed
in Fire Insurance.
BLOCKWISE SUM INSURED
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Building.
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Plant and machinery.
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Stock.
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Stock in process.
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Furniture.
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Fittings.
RISKS ARE COVERED IN TWO MAJOR HEAD
Non Industrial Risks
Includes dwellings, shops, hotels, schools, colleges,
clubs, office
premises etc.
Industrial Risks
Eg:
Chemical, textile, rubber, cement, sugar etc.
PERILS PARTICULAR TO PARTICULAR INDUSTRY
There are certain perils which are not common across the board, but are
specific to certain industries only like:-
These can be added on as optional to the standard
policy.
SPECIAL STOCK INSURANCE POLICY
FLOATING POLICIES
Floating policies are policies which are taken to insure the risk at a
number of locations under one policy. Floating policies can be issued in
respect of immovable property. It is permissible to issue a policy
covering stock in one account in more than one specified building or in
open within the limit of one city / town / village.
DECLARATION POLICIES
Declaration policies are policies which are issued in case there is a
fluctuating stock balance throughout the year. These policies are issued
for the highest sum insured throughout the year & the unused balance is
refunded against declarations.
BASIS OF VALUATION POLICY
Reinstatement value policies are taken for covering a risk for the value
of it’s reconstruction / replacement / reinstatement in case of a loss. This
basis of valuation is followed while taking up the insurance policy to
ensure that the insured is adequately covered in case of a loss.
Reinstatement value insurance may be granted on buildings, machinery,
furniture, fixture & fittings only.
SPECIAL / RATED RISKS
Certain industries can be given special confessional rate which has to
be granted by the Tariff Advisory Committee only.
SPECIAL CLAUSE
Escalation Clause
An increase in the sum insured throughout the period
of the policy can be opted by the insured in return for an additional
premium to be paid in advance.
INSURANCE OF ADDITIONAL EXPENSES OF RENT FOR AN ALTERNATIVE
ACCOMMODATION
Additional expense of rent for an alternative accommodation in respect
of non - manufacturing risks may be covered under Fire Material Damage
policy only on the following basis:
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The cover may be granted for non - manufacturing
premises only.
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The rate should be same as applicable to the
existing premises under occupation.
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The additional expense recoverable under the policy
may be additional rent actually paid i.e., the difference between the
new and the original rent only.
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Insurance should be granted against RSMTD and
earthquake & other extraneous perils.
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The cover may be limited to building f superior and
class I construction.
LOSS OF RENT CLAUSE
Where loss of rent caused by insured perils is covered, the rate
chargeable for the above cover is the rate applicable to the particular
building or premises concerned.
OMISSION TO INSURE ADDITIONS, ALTERATION OR EXTENSIONS CLAUSE
The insurance by this policy extends to cover
buildings and / or machinery, plant and other contents as defined in
columns….. here of which the insured may erect or acquire or for which
they may become responsible:
RATING CALCULATION OF PREMIUM The tariff Advisory Committee vide its circular dated 04.12.06 has
withdraw the rates applicable under the fire Tariff w.e.f.01.01.07. Now company would have to file fresh rates with the TAC under the new
file and use guidelines.
AVERAGE By applying the Principle of average, the adequacy of Sum insured is
checked. Under insurance is penalized. Claims are settled on the
following basis: Claim Amount = Loss x Sum insured
value
CONTRIBUTION In case of multiple insurers then the loss will be borne by them as per
their ratios and proportions.
SUBROGATION Any claim is to be settled by the person who perpetuated the loss. After
indemnifying the insured, the insurer steps into the shoes of the
insured. Subrogation is the transfer of rights and remedies of the
insured against the Third party to the insurer.
RE-INSTATEMENT OF SUM INSURED
Sum insured is per policy limit. Any claim settled will reduce the Sum
insured by the claim amount. Sum insured will be re - instated by payment
of additional premium for the un-expired period from date of loss.
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