News - Fire Insurance Demystified
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22 Jan 2015It gives your finances breathing space and puts you in a position to regain lost ground
Insurance as a principle is not new to mankind, as it has been practiced since Second or Third century BC. Since evolution has struck every practice in this universe, the evolution of insurance as a practice cannot be neglected. But the principle engraved in it has never changed, that is ‘risk transfer.’ Among the various forms of insurance that are prevalent today, the traces of fire insurance can be seen in the Great Fire of London in the 17th Century, where this catastrophe destroyed 13000 households, claiming heavy loss to property and life. A need to insure the property was felt as it was undoubtedly (and still today is) among the most valuable possession of mankind.
A lot of work has been done since then, to bring out the best policy cover for property. Today, fire cover is provided with various add-ons to a range of policy seekers belonging to various sections of the economy. The New India Assurance Company, which has been the leading general insurer for decades, also provides a range of products in fire segment to its valued clients depending on their need and other factors.
In technical terms, a standard fire policy covers not only fire but a range of perils like fire, lightning, explosion/implosion, aircraft damage, riot, strike, malicious and terrorism damage, storm, tempest, flood, inundation, hurricane, cyclone, typhoon and tornado, impact by rail/road vehicle or animal, missile testing operation, bush fire, etc. This standard fire policy covers all properties on land (excluding cost of land) moveable or immovable at various locations against named perils.
The New India Assurance Company provides long-term policies (minimum of three years) for dwellings. These policies can be taken in two ways; either the insured can ask for a greater discount or can opt for an escalation clause (increase in sum insured). These policies are designed in consideration to the growing demand of customers at affordable price.
Also, special policies are designed for stocks (declaration and floater), building, plant and machinery keeping in mind the nature of property, proposer requirement and basis of indemnification. The special policies for stocks are made especially to take care of frequent fluctuations in stock and/ or frequent changes in value of stock at various locations.
The policy can also be extended to cover certain additional perils and expenses at additional premium. In addition to the perils/expenses covered, the proposer can opt to seek add-on cover (Like deterioration of stocks in cold storage, forest fire, impact damage, spontaneous combustion, earthquake, spoilage material, leakage and contamination, temporary removal of stock, etc.) at inception or during the currency of policy on payment of additional premium. By default, the policy coverage is for one year which can be renewed on expiry.
Taking in view the global economic condition and the recent ‘Make In India’ initiative by Government of India, the New India Assurance Company understands the need of the growing corporate/ manufacturing sector and provides for an IAR (Industrial All Risk) policy. It is an ‘all risk’ policy, which is very comprehensive, convenient, and cost effective. It gives considerable savings to the insured due to its lower rates and its provision of allowing under-insurance up to 15%. It covers both material damage and business interruption losses along with machinery breakdown, burglary and with an optional cover of machinery loss of profit. Both, standard fire and all risk policy can be cancelled at any time during the coverage with suitable refund of premium for the unexpired period.
The premium for the policy is calculated and charged on the basis of risk ratings that are done by the assigned underwriters of company, who identify and assign occupancy type to the risk. The sum insured as declared by the insured is taken into consideration and appropriate rate for the identified occupancy is charged. After the company receives premium, the policy (which is a legal agreement, where insurer agrees to protect the insured financially against the named perils) is generated. A Government of India owned company like New India Assurance believes in providing maximum support to the customer (within the boundaries and purview of the principles of Insurance and the issued policy) in case of their financial crisis at a very nominal rate.
Today, we are living at the mercy of nature. With increased human interference, the frequency and intensity of natural calamities has increased, causing intense damage to life and property. Life is irreplaceable and the same goes with property without insurance. Keeping in view the global financial scenario, growing volatility and competition in the market, one cannot take the risk to lose the existing infrastructure (be it tangible or intangible) because of such events.
The effective loss caused by one single event/ calamity is so much that it can break the financial backbone of not only a particular individual or organization but even of a country. The advantage of having fire and allied peril insurance is that it gives your finances a breathing space out of a catastrophe, which has destroyed everything. It puts you in a position to regain your lost ground. Recent events have shown the significance of being risk (financial) immune and for that insurance is very important. This risk transfer mechanism that includes a minimal cost (premium) is the best return to investment in current scenario and people should understand the importance of fire insurance. As it is well said, ‘Good things come at a price’ and that price is ‘premium.’
Source: dnaindia.com
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