What Is Fire Insurance ? 

Fire insurance is property insurance that provides additional coverage for loss or damage to a structure damaged or destroyed in a fire.It also includes your personal belongings and expenses for lodging and meals above and beyond your normal living expenses, up to your policy limits. It's subject to the same deductible and coverage limits as the rest of your policy.The policy pays the policyholder back on either a replacement-cost basis or an actual cash value basis for damages.It is a legal contract between an insurance company and the policyholder which guarantees that any loss or damages caused to the policyholder's property in a fire will be paid by the insurance company. Fire insurance provides coverage against incidents of accidental fire, lightning, explosion, etc.Generally, a fire insurance policy is issued for one year but it may be periodically reviewed. The insurance company informs the insured two weeks before the expiry of the policy so that it may be renewed. However, two weeks are given as grace period after the expiry of the policy. The insured can get it renewed within the grace period and insurance coverage continues in the meantime.

Why Do We Need Fire Insurance? 

Fire insurance plays a vital role by giving the certainty of paying financially against losses of an individual house and their goods  entrepreneur, businessman or industry-owner .It gives the financial security for home, home furniture, share, although the whole business sectors.The main importance of fire insurance is given below:

1. Role in Trade and Commerce: For increasing business and trade fire insurance makes vital rules. Business may be in loss because of the fire. To maintain or fulfill those losses, businessmen have to do fire insurance. Because of the fire insurance businessman can continue his business after any losses have occurred for the reason of fire by collecting the money from fire insurance.
2. Role in the Field of Industry: By the fire small or big industry can be fallen. This kind of industry can be protected by fire insurance by taking the damage from the insurance company. Fire insurance is also important in the industrial sector. If any losses occurred by the reason of fire the insurance company will fulfill the losses.
3. Distribution of Risk and Remedies: Insurance Companies take many insurance contracts from various businessmen for fire insurance but they have to give the demur-rage to only a few businesses where the fire damages the organization. The losses which occur by fire are distributed among all the contracts of the insurance company. The risk is distributed among all.
4. Rehabilitation: Fire insurance rehabilitates the person or businessmen who are hampered by the fire. They fulfill their damages by get the money from the insurer. That is why they get the chance to carry their business.
5. Protection of National resources and reconstruction: For protection of national resources and reconstruction fire insurance takes an important rule. The assets which are damaged by the fire can be restored or rebuilt by taking the money from the insurance company.
6. Official security: Nowadays the office is so important for any profitable or non-profitable  organization. In the office the organizations keep their important files, documents and assets. If any fire happens they will fall into great trouble. So they contract the insurance company against the fire damages. They can fulfill their damages if they lose the losses because of the fire. That is why the office is secured against the fire and the loss can collect and keep the office running.
7. Role in personal life: Fire insurance is also necessary for the personal life. It provides demur-rage against damages for the building, if any home furnishings are damaged due to the fire like furniture, carpets, clothes, It provides maintenance price for the electronic items, which is hampered due to the fireplace, like television, computer, air coolers.

Types of Fire Insurance

Comprehensive policy:

Fire insurance is called a comprehensive policy when it covers all other kinds of risks like riots, arson, loot, civil commotion, wars, strikes, accidents and others in single insurance.

Blanket policy: 

A blanket policy is a fire insurance policy in which a single policy is used to insure properties at one or different locations against the risk of fire. Sometimes an organization or a person can have properties at various locations and this type of insurance is useful for covering the risk generated by fire for these properties.

Consequential loss policy:

A consequential loss policy is meant for compensating the loss not directly by fire but incidental to the fire event. Loss of fire is also covered but in addition to that other kinds of losses due to expenses on salary, interest, inflation or hiring of temporary premises are also covered.

Valued policy: 

A fire insurance policy the value of property is fixed at the time of inspection is called a valued policy. So in case of loss of property by fire, the insurance company pays the full policy amount at the time of taking policy whether the property is fully damaged or not.

Valuable fire insurance policy: 

Under this policy, the value of claim is determined at the actual market price of the damaged property only after the destruction of the policy. The value is not fixed earlier as in the valued policy.

Specific fire insurance policy: 

Under this policy, if the damage is less than the insured amount, the insurance company compensates up to the amount damaged. If the damage is more than the insured mount insurance company compensates only equal to insured amount or identify loss to the extent of specific amount.

Floating fire insurance policy: 

If a single fire insurance policy is conducted for different properties located at different places, then that type of policy is called floating fire insurance policy. For the convenience of the client this policy is undertaken. An entrepreneur may have some of his goods and others at other store places. Insuring them under separate policies can be very chaotic. That’s why floating fire insurance policy is done to offer financial security that can occur at different places through a single policy.

Average policy:

It can be defined as the policy in which losses are born by both insurance and the owner of insurance property.                                                                                                                                    

Coverage under Fire Insurance Policy

It covers all the losses arising out of the accidental fire, subject to terms and conditions of the fire policy which is limited by the policy value and not by the extent of damage sustained by the property owner. In general, the following losses are covered:

• Actual loss of goods due to fire
• Additional living expenses due to damage to personal property
• Loss to adjacent building or property due to fire in the insured building
• Compensation paid to fire fighters
• Fire triggered by electricity
• Overflowing of a water tank or pipes.