All peril deductible clause in a fire insurance is a situation where all the risks are covered. The policy is much closer to what a comprehensive insurance policy is. In case of all peril deductible clause in a fire insurance, the insurer will cover all the risks or perils, with a deductible clause. It means, at the time of a claim, the insurer would have to bear a certain portion of the claim.
In the insurance world, the deductible is the amount that a policyholder is required to pay at the time of the claim, and the insurer would settle the remaining claim amount. In case of all peril deductible in fire insurance, the deductible clause will become activate irrespective of what the cause of loss is provided; the claim falls under the purview of the office insurance.
Here it is important to understand the difference between all peril deductible and named peril deductible. In 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 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 is not covered, it will be specifically mentioned in the policy document.
While choosing the all peril deductible, make sure to go with the right deductible clause. There is no point in having the fire insurance policy if the major part of the claim is required to be paid by you. So carefully choose the deductible limit which you can afford to pay. Though 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 and therefore, take every attempt to ensure it is comprehensive enough to offer you sufficient cover. While all peril is a good clause, choose deductible amount carefully.
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 a fire insurance to get financial coverage in case something goes wrong.
After consulting and comparing all the available fire insurance options, he decided to buy fire insurance from Insurer X which comes with all peril deductible clause. 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 which stated that if the loss happened due to an insured peril, Jivesh had to bear a portion of the claim amount and the remaining would be paid by the insurer.
Last year, the fire occurred at Jivesh’s office after short-circuiting in 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 who sent a surveyor to inspect and compute the extent of the loss.
The surveyor inspected the site and computed the loss as Rs 5 lakh. As Jivesh’s fire insurance policy had all 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 the remaining Rs 50,000 was paid by Jivesh.
The purpose of Jivesh’s all peril deductible was to offer extensive cover and included all the risks. It did not exclude any risk and offered a comprehensive cover. It had a deductible clause, according to which Jivesh paid a certain amount as deductible and the remaining was paid by the fire insurance company.