The scope of fire insurance is quite extensive. The policy covers almost all types of damages that are caused due to fire and other allied perils. However, there are some major exclusions too in the policy. These exclusions specify when the coverage under the fire insurance policy would not apply.
Most fire insurance policies include a common list of major exclusions, although other insurance companies may offer them.
Key Takeaways
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Fire vs. Short Circuit: A common point of confusion in 2026 is electrical damage. If your motor burns out due to a short circuit, the insurance won’t pay for the motor. However, if that short circuit starts a fire that burns down the building, the building damage is covered.
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The “Excess” Partnership: The Excess Clause (also known as a deductible) is a fixed amount you pay for every claim. For example, if your excess is ₹10,000, the insurer only pays the portion of the loss that exceeds this amount. This encourages property owners to maintain basic safety and avoid filing small, frequent claims.
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Extension Strategy: Many “Exclusions” are simply “Options.” Costs for Debris Removal (cleaning up the site after a fire) or the fees of the Architect who designs the replacement building are excluded unless you specifically opt for those extensions.
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The Theft Gap: Fire insurance is not burglary insurance. If items are stolen during the chaos of a fire or immediately after, the fire policy will not pay for the theft. You need a standalone Burglary Policy for this.
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Consequential Loss Trap: Standard fire insurance only covers “Material Damage” (the cost of the physical stuff). It does not pay for the revenue you lose while your factory is closed for repairs. For that, you must purchase Fire Loss of Profits (FLOP) insurance.
The list of major exclusions in fire insurance is as follows –
- War and related perils such as invasion, civil commotion, military revolution, civil war, rebellion, etc., cause any type of loss or damage.
- Nuclear contamination, radiation, or related perils cause any type of loss or damage.
- Contamination or pollution causes any type of loss or damage. If an insured peril causes contamination or pollution, the policy would cover such pollution or contamination. If the insured peril is caused by pollution, the damages suffered will not be covered.
- Aircraft damages that happen due to pressure waves
- Earthquakes, volcanic eruptions, etc., cause any type of loss or damage. However, fire insurance policies provide extensive coverage for these instances. The policyholder can get coverage for them by opting for the extension cover.
- A standard fire insurance policy does not cover items such as artwork, money, important documents, precious stones, etc. To avail coverage for these items, the policyholder should clearly detail their particulars when purchasing the policy.
- Any type of loss or damage in cold storage if there is a change in temperature
- Any type of loss or damage caused to the electrical equipment, apparatus, furniture, fixtures, etc. which happens due to short circuits, over-usage, extreme pressure, etc.
- Any type of loss of valuables belonging to the policyholder from theft, burglary, or housebreaking either before the peril happens or after there has been damage.
- The plan does not cover the costs of surveyors, engineers, architects, etc., but there is an extension available to cover these costs. The policyholder can purchase the extension for coverage.
- Selecting the debris removal extension under the policy allows the policyholder to obtain coverage for the costs of removing debris after the damage.
- The plan does not cover any type of consequential losses.
- The policy does not cover loss of earnings or losses due to production delays after the damage.
Besides these exclusions, fire insurance policies also have an excess clause. Under this clause, in every instance of claim, the limit of excess would have to be borne by the policyholder. The insurance company would then pay the remaining claim. For instance, if the excess limit is INR 10,000 and the claim is INR 25,000, the insurance company would pay INR 15,000 and the remaining INR 10,000 would have to be borne by the policyholder.
Summary: Major Exclusions in Fire Insurance
So, these are the common exclusions under fire insurance policies. The policyholder should know these exclusions so that he/she might know when to make a claim under the policy.
Frequently Asked Questions (FAQs)
Q1: If an aircraft crashes into my building and causes a fire, is it covered?
A) Yes, “Aircraft Damage” is a standard peril. However, damage caused solely by pressure waves (supersonic booms) without any physical impact or resulting fire is typically excluded.
Q2: Are my company’s secret blueprints and title deeds covered under a fire policy?
A) No. Important documents, manuscripts, and business books are excluded by default. To cover them, you must provide a specific list and an agreed value for these items at the time of purchasing the policy.
Q3: Why does the policy exclude “Pollution and Contamination”?
A) Insurers exclude general pollution because it is often a gradual process. However, there is a catch: if a covered fire happens first and that fire causes a chemical leak (pollution), then the resulting cleanup costs might be covered under specific clauses.
Q4: Can I get insurance for an earthquake under my fire policy?
A) Yes. While it is an exclusion in the “Basic” plan, almost all insurers in 2026 offer an Earthquake (Fire and Shock) Extension. Given India’s varying seismic zones, this is considered a mandatory add-on for most businesses.
Q5: What happens if a fire occurs during a “Civil War” or “Rebellion”?
A) Losses arising from war, invasion, or warlike operations are Absolute Exclusions. These are considered “Catastrophic Risks” that the commercial insurance industry is not capitalized to handle, and are generally excluded worldwide.
About The Author
Shivani
MBA Insurance and Risk
She has a passion for property insurance and a wealth of experience in the field, Shivani has been a valuable contributor to SecureNow for the past six years. As a seasoned writer, they specialize in crafting insightful articles and engaging blogs that educate and inform readers about the intricacies of property insurance. She brings a unique blend of expertise and practical knowledge to their writing, drawing from her extensive background in the insurance industry. Having worked in various capacities within the sector, she deeply understands the challenges and opportunities facing property owners and insurers alike.