A fire insurance is an important policy which offers financial security in case of any loss or damage due to fire. Misfortunes can strike even when you have taken all the safety regulations. Therefore, it makes complete sense to go with a fire insurance and secure your business from the losses or damages due to fire.

A comprehensive fire insurance policy covers both manufacturing and non-manufacturing risks. Every business has to deal with some kind of risks or damages which can be sudden and uncontrollable. Risks are what can hinder the growth of your business and can happen even in places other than your industry settings.

With non-manufacturing risks, here means, risks or perils which arise at the non-industrial unit. If you own a hotel, restaurant or any other non-industrial office, there could be instances when a fire arises and damage your property. In such a case, the insurer would cover your risks and offer coverage. In case, due to fire, you would need to relocate to another place, the fire insurance company can come forward and pay youR rent to cover the additional accommodation expenses which you would have to pay at the new place.

Case

After completing hotel management course in Pune, Rajiv Saran worked for three years in one of the hotels in the city. Soon, Rajiv left his job and opened his small restaurant in Delhi where his family lives. Understanding the risks or perils, etc.; which can arise and hamper his business, Rajiv installed CCTV camera and fire extinguishers at his hotel.

One day, when he was busy attending his customers in a night, he saw smoke coming out from a nearby garment shop. The shop was closed at that time, and therefore, Rajiv immediately dialed the owner’s number and also informed the fire brigade.

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Though no one was physically hurt, the goods worth Rs 5 lakh got completely burnt. The immediate action taken by Rajiv helped the owner of the shop from a big loss. Later, it was concluded that the fire happened due to short-circuit in security alarm.

Taking the lesson from the incident, Rajiv scouted for ways to secure himself from accidents caused due to fire. When he contacted his insurance agent- cum-friend, he advised him to go with a fire insurance policy which would help him in case any loss or damage happened due to fire. After listening to the benefits of the fire insurance policy, Rajiv immediately decided to buy a fire insurance policy.

As Rajiv had a restaurant, the risks associated with him were considered to be non-manufacturing. Rajiv estimated various items which were there in his restaurant and purchased the fire insurance policy accordingly.

Last year in December, he was busy in making arrangements for a birthday party at his hotel, when an unfortunate event happened.

The fire erupted in the kitchen of the hotel due to short-circuit, and soon it spread to the other parts of the hotel as well. The prompt action of Rajiv made the timely exit of all the guests possible, however, he lost hotel property worth Rs 3 lakh in the fire accident.

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Though it was a difficult time for Rajiv, he had a fire insurance policy, and he approached the insurer for the claim settlement. The insurer carefully scruitinised the situation and sent its surveyor for the site inspection. The claim was found to be legitimate, and accordingly, the fire insurance company settled the claim. It was the claim related to non-manufacturing risks.

After the fire, Rajiv had to shift to another place because of the location, where the fire happened, required being cleared. As for the new location, Rajiv was required to pay rent for alternative accommodation; also the fire insurance paid those.

Here, the fire insurance company offered the following=

  • Cover for fire happened at the hotel, which was the non-manufacturing risk
  • Rent for alternative accommodation, which Rajiv had to bear when he shifted to a new location