All peril deductible clause in fire insurance is a situation where all the risks are covered. The policy is much closer to what a comprehensive insurance policy is. In fire insurance, all perils are covered by the insurer with a deductible clause for the policyholder. At the time of a claim, the insurer bears a portion of the claim under the deductible clause.
In the insurance world, the policyholder pays the deductible at the time of the claim. The insurer settles the remaining claim amount. In case of all peril deductible in fire insurance, the deductible clause will become activated irrespective of what the cause of loss is provided; the claim falls under the purview of the office insurance policy.
Know the difference between all peril deductible
Here it is important to understand the difference between all peril deductible and named peril deductible. In the case of named-peril deductible, the deductible clause will be applied only if the loss happens due to one specific peril which is already named. On the other, the all-peril deductible in fire insurance means the deductible clause will arise in the case of all insured perils.
As all peril deductible in fire insurance covers all the perils or risks, it automatically means, coverage is available for all risks. In case something does not cover, it would be specifically mentioned in the policy document.
While choosing the all-peril deductible, make sure to go with the right deductible clause. There’s no point in having a fire insurance policy if you require to pay the major part of the claim. So carefully choose the deductible limit which you can afford to pay. Though a high deductible would lower your fire insurance premium as well; you would have to make arrangements for cash to settle the claim at the time of loss.
Remember, fire insurance is here to secure you financially. Therefore, make every attempt to ensure it is comprehensive enough to offer you sufficient coverage. While all peril is a good clause, choose the deductible amount carefully.
Case: All Peril Deductible clause in fire insurance
The entrepreneurship bug bit Jivesh Sharma who now decided to start his software company. Luckily, he found a good office space in Pune, and a month; he shifted to the place after completing all the repair work. Along with installing fire extinguishers at the office, Jivesh also purchased fire insurance to get financial coverage in case something goes wrong.
Read More: Which Perils Are Not Covered By Fire Insurance Policies?
After consulting and comparing all the available fire insurance options, he decided to buy fire insurance from Insurer X which comes with peril deductible clauses. It means, the insurance company promised to offer coverage against all types of risks and perils without excluding anything. However, the policy had a deductible clause. It stated, if the loss happened due to an insured peril, Jivesh had to bear a portion of the claim amount. And the insurer would pay the remaining.
Last year, the fire occurred at Jivesh’s office after short-circuiting its safety alarm and soon caught furniture & fixture. It took one hour for the fire brigade to douse the fire. As Jivesh had a fire insurance policy, he informed his insurance company which sent a surveyor to inspect and compute the extent of the loss.
Read More: Different Principles Applicable to Different Types of Fire Insurance Policies
The surveyor inspected the site and computed the loss as Rs 5 lakh. As Jivesh’s fire insurance had a peril deductible clause, he had to pay a portion of the claim as deductible.
Here, the fire insurance policy had a deductible clause of 50,000. The fire insurance company paid Rs 4,50,000, and Jivesh paid the remaining Rs 50,000.
The purpose of Jivesh’s all-peril deductible was to offer extensive coverage and included all the risks. However, it did not exclude any risk and offered a comprehensive cover. It had a deductible clause, Jivesh paid a certain amount as deductible according to it, and the fire insurance company paid the remaining.
