Fire incidents can be destructive and disheartening as they occur. Fire accidents can cause substantial emotional and financial loss. It is prudent for businesses, irrespective of the size and sector, to avail of fire insurance policy to safeguard themselves financially from the losses that may arise from fire incidents. It’s helpful to comprehend the ‘goods held in trust’ clause in fire insurance.
Fire insurance is an insurance policy that provides financial protection against unpredictable perils. The fire insurance policy coverage includes unfortunate incidents caused due to fire, explosion, lightning, and implosion, as man-made calamities like a riot, strikes, malicious acts, bursting of pipelines, leakages, and natural calamities like storms, floods, cyclones, bush fire, etc. You can customise the policy based on your need and get additional coverage like riders to enhance the coverage suitable for your business.
Though a fire insurance policy provides comprehensive coverage, there are certain important things to be considered while buying a fire insurance policy. You need to consider the scope of coverage, limitations, and the various clauses in the policy to ensure your claim process in the future is hassle-free. In fact, not knowing your fire insurance policy better can lead to the rejection of claims or hassles during the claim process. Hence, it is important to know all the clauses in the fire insurance policy. ‘Goods held in the trust’ is one such clause.
What does the ‘goods held in trust’ clause entail in fire insurance?
The organization or a group of people holds and protects goods on behalf of others. In essence, the fire insurance policy’s ‘goods held in trust’ clause recognizes that it doesn’t provide coverage for goods insured by the policyholder. In case of loss or damage caused by covered perils, individuals hold these goods in trust, deposit, or commission, or jointly own them with others.
The Trust Clause – Example
Let us take an example to understand this. Let us say you have a garage that has a huge space in which you have stored some goods owned by your friend. You would keep this in your garage just as a gesture of friendship. Let’s consider a scenario: Regrettably, your garage catches fire, resulting in damage to all the goods. Therefore, it is important to note here that your fire insurance policy would compensate you for the loss excluding the loss of goods that belongs to your friend. At the time of estimation of losses due to the fire incident, the surveyor considers the ‘goods held in trust’ clause. So, your insurance company makes no compensation for the goods held in trust. In this case, fire insurance policy availed by your friend to cover the goods from unpredictable perils can only provide financial security to the goods.
There are many clauses like this in your fire insurance policy. Some of them are agreed bank clause, earthquake fire & shock, designation of a property, escalation clause, and temporary removal of stocks clause, etc. Here, a clear understanding of each clause is essential. Along with the clauses, it is important to read the fire insurance policy’s exclusions, terms, and conditions. All information is available for the online fire insurance policy, which can help you take a better decision.
It is important to know that losses and damages caused by electrical and mechanical breakdowns, war and nuclear perils, pollution, contamination, housebreaking, burglary, etc., are not covered under the fire insurance policy.
Hence, the financial protection against unforeseen damages and losses caused by fire incidents is extremely important to reduce the distress of the incident. You can buy a fire insurance policy online with a simple process to avail of complete protection against such perils.
