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 following add-on covers are available with the fire insurance:
- 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 outage due to any resulting damage at the power station for more than 24 hours.
- Fire in the forest: The standard fire insurance only covers the bush fire and specifically excludes the forest fire. 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 that are caused by the railroads or vehicles, forklifts, cranes owned by the insured and due to any item dropped from there.
- Spontaneous combustion: It covers the combustion caused by fuels, own fermentation, or natural heating.
- Earthquakes fire and shock: Covers damages caused by earthquakes, landslides, and rockslide.
- Leakage and contamination cover: This add-on provides coverage for accidental leakage and contamination that has not been caused
- Terrorist activity: It provides for any damages that are caused to the business due to terrorist activities.
- Any cost of removal of debris (more than 1% of claim amount): Any cost incurred to remove debris following the damage or destruction due to fire is covered by this add-on.
- Architects, surveyors, consulting engineer’s fees (more than 3% of claim amount): These expenses are included in this add-on if they incurred in case of reinstatement of the building.
- Spoilage material damage cover: It covers for loss of stock in 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 insured may acquire in future.
- Temporary removal of stock: The temporary removal of stock is covered based on the pro rata allocation of the average stock moved to the total stock insured.
- Rent loss: It provides for reimbursement of rent that is required to be paid for temporarily shifting the business to other premises due to damage.
- Startup expenses: This add-on covers for those costs that are necessary to be incurred to start the business again following damage or destruction of the business premises.
Case on Additional Covers with Fire Insurance Policy
Mr. Saurabh has a restaurant business with the outlets spread all over India. Recently, he opened a new branch in Ahmedabad to spread his business in Gujrat to explore the 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 has damaged the whole city. His restaurant also experienced some cracks and damages in the premises which need certain repairs to be done.
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.