A fire insurance policy plays a crucial role by protecting the policyholder against various losses or damages which may arise due to fire. Along with the perils/expenses which are covered, there are certain coverages available that a policyholder can enjoy at inception or during the tenure of the policy. However, the policyholder would require paying an additional premium if he/she wants to enjoy the extra cover. Here are some of the risks which can be covered under a fire insurance policy by paying extra premium=
- Forest fire
- Terror activities
- Damage to stocks kept in cold storage premise due to power failure which should be due to an insured peril
- Earthquake
- Impact damage happened due to policyholders’ vehicles, forklifts, etc.
- Omission to cover additions, alterations,s or extensions as well
- Temporary stock removal
- Leakage and contamination cover
Along with the above perils, the policyholder can get extra coverage for expenses as well. There are some expenses that are not covered under basic fire insurance and therefore, you can pay extra and get those covered as well. Here are some of such expenses=
- Loss of rent
- Startup expenses
- Removal of debris
- Additional expenses of rent for alternative accommodation
- Fees of the architect, surveyor, and consulting engineer
Case: Fire insurance policy
L.K Engineering has its business spread in different parts of the country. Backed with over 300 employees, the company has so far successfully completed various projects both in India and abroad.
A few years ago, the company bought a fire insurance policy as well to get complete coverage in case of losses or damages due to fire. To get additional cover, the company paid extra to get cover for additional expenses of rent for alternative accommodation.
Last year, a fire occurred at the factory due to a spark in one of the electric machines. Soon the fire spread and engulfed other machinery and goods as well. It took five hours to douse the flame. After the fire accident, the factory had to keep closed for ten days.
L.K Engineering got a contract of exporting steel pipes to a buyer situated in Dubai, and when the accident happened, workers were busy completing the order. As the factory had caused major losses to the factory, the management of L.K Engineering decided to shift to another place to complete the rest of the order.
Luckily, L.K Engineering found another place, nearby to its original place. Along with the machines which were still in a workable state, other necessary equipment was immediately transferred to the new location. The company also took some machines on rent. Thankfully, the company completed the order on time and delivered the consignment to the buyer in Dubai.
Read More: How to file a claim under Fire Insurance?
However, due to a fire accident, L.K Engineering incurred losses not only related to its machinery but also related to renting. As it had to move to a new place, it paid rent for a new place as well. In this case, as the company had a fire insurance policy, it approached the insurer immediately after the loss.
Here the fire insurance company appointed a surveyor who visited the factory site to ascertain the losses or damages. Once the surveyor submitted the report, the insurer carefully reviewed it and agreed to settle the claim. Along with the claim related to fire loss, the insurer also paid additional rent expenses which L.K Engineering had to bear after relocating to a new location.
After the fire loss, L.K Engineering had to move to a new location for which it also paid rent. As the company had bought an additional cover of rent for alternative accommodation along with its fire insurance policy, the insurer came forward to cover that as well.
It was a great respite for L.K Engineering who otherwise would have to bear an extra expense in the form of additional rent.
Read More: How is Proximate Cause Determined in a Fire Insurance Policy?
Here, the fire insurance company settled two claims of L.K Engineering=
- The claim related to the loss of machinery and equipment due to a fire
- The claim related to additional expenses of rent for alternative accommodation
