Fire Insurance


Fire insurance covers loss or damage to your property caused by fire or lightning.

 

Extraneous Perils

 

The policy is usually extended to cover the following extraneous perils:

 

  • Explosion
  • Riot and Strike
  • Malicious Damage
  • Impact Damage by Road Vehicle
  • Damage caused by aircraft and other aerial devices and/or articles   dropped therefrom
  • Storm, Tempest and Flood
  • Earthquake and Volcanic Eruption
  • Bursting and Overflowing of Water Tanks and Pipes

 

Physical Assets

 

The property to be insured may consist of the following physical assets:

 

  • Building
  • Furniture, fixtures and fittings
  • Plant and equipment
  • Office equipment
  • Stock-in-trade from raw materials to finished products

In addition, the following expenses which may be incurred following the operation of an insured peril, can also be insured:

  • Cost of Removal of Debris
  • Architects' Surveyors' and Consultant Engineers' Fees

 

Sum Insured

 

The property can be insured on a depreciated value basis or on reinstatement value basis.

On depreciated value basis, the settlement of a claim is the replacement/reinstatement cost of the property at the time of the loss, less depreciation. The sum insured should thus represent the depreciated value of the property insured.

 

However, to ensure that in the event of a loss the insured is in a position to reinstate the property at today's value, it is common to insure on a current reinstatement cost where the basis of settlement of a claim is new for old without a factor for depreciation. The sum insured would then have to reflect the current reinstatement cost of the property insured.

 

The sum insured on stock-in-trade should be based on cost of material, labour and factory overhead expenses (excluding profit).

 

Adequate Coverage

 

It is important to ensure that the sum insured is adequate. Otherwise, in an event of a claim under-insurance will result in the application of "average". This means that the insured will be considered as being his own insurer for the uninsured position and will therefore have to bear a rateable proportion of the loss accordingly.