Apart from the perils that are covered by the standard fire insurance policy, you can opt for add-on covers with your fire insurance policy to cover additional risks upon payment of the additional premium amount. The type of covers available with a fire insurance policy is as follows:
Damage caused to the stock lying in the cold storage due to power failure:
It provides for the deterioration of stock in cold storage due to unexpected power outages due to any resulting damage at the power station for more than 24 hours.
Fire in the forest:
The standard fire insurance only covers bush fire and specifically excludes forest fires. So, this add-on helps in covering this risk as well.
Impact damage caused by a vehicle owned by the insured:
It covers the impact damage, caused by the railroads or vehicles, forklifts, cranes owned by the insured and any item dropped from there.
It covers the combustion caused by fuels, own fermentation, or natural healing.
Earthquakes fire and shock:
Covers damages caused by earthquakes, landslides, and rockslides.
Leakage and contamination cover:
This add-on provides coverage for accidental leakage and contamination that has not been caused
It provides for any damages, caused to the business due to terrorist activities.
Any cost of removal of debris (more than 1% of the claim amount):
Any cost incurred to remove debris following the damage or destruction due to fire, add-on covers as well.
Architects, surveyors, and consulting engineer’s fees (more than 3% of the claim amount):
These expenses include in this add-on if they incur in case of reinstatement of the building.
Spoilage material damage covers:
It covers loss of stock in the process and damages to machinery and other equipment.
Omission to insure additions, alterations, or extensions:
This add-on provides protection for additional machinery, plant, or building that the insured may acquire in the future.
Temporary removal of stock:
The temporary removal of stock covered based on the pro-rata allocation of the average stock moved to the total stock insured.
It provides for reimbursement of rent, required to pay for temporarily shifting the business to other premises due to damage.
This add-on covers those costs that are necessary to be incurred to start the business again following damage or destruction of the business premises.
Case on Additional Type Covers with Fire Insurance Policy
Mr. Saurabh has a restaurant business with outlets spread all over India. Recently, he opened a new branch in Ahmedabad to spread his business in Gujrat to explore new opportunities. To protect his business against the risk of fire, he bought a standard Fire insurance policy from an insurance company with an additional add-on to provide coverage for earthquakes as well. He paid an additional premium to cover this extra peril with the standard fire insurance.
The business was doing well. One day Saurabh got a call from the manager of the restaurant that there was a major earthquake in Ahmedabad that damaged the whole city. His restaurant also experienced some cracks and damages in the premises that need certain repairing.
He filed a claim with the insurance company since his fire insurance also covered the damages due to the earthquakes. All his claims were approved, and he was compensated with the full amount that was needed to repair the building.