What is the importance of Fire Insurance?

Oluwafemi Smith
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1K Views
Mar 15, 2022

You will agree that fire is just a tool, and should never be seen as an element of destruction. Fire is served in the process of cooking, preservation, creation of precious stones, and as well used in destroying items. While all these are initiated by men intentionally, on some other days, the fire could occur due to unforeseen scenarios like short-circuit, domestic accidents, and mere carelessness.

Stories from fire accidents in the latter are never pleasant but usually tend to destruction, setback, and damages that could have been curbed if only there was a clause as insurance tied to their stories.

In today’s read, I will be sharing with you the importance of fire insurance, the types, the 3 elements of fire insurance, how fire insurance works, what a fire insurance policy covers, how to claim one, how claims are settled, and some strings tied to fire insurance on the long run.

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What are fire insurance and its types?

Fire insurance is a type of contract between the insurer and the insured in which the insurer guarantees the insured. In exchange for a yearly payment called premium, the insurance assists the insured in covering the risk of property damage due to unintentional fire situations.

There are 15 types of fire insurance policies that address all cadre of possible fire hazards, they are:

1. Valued Policy.

2. Valuable Policy.

3. Specific Policy.

4. Average Policy.

5. Escalation Policy.

6. Excess Policy.

7. Consequential Loss Policy.

8. Floating Policy.

9. Sprinkler Leakage Policies.

10. Declaration Policy.

11. Maximum Value of Discount Policy.

12. Comprehensive Policy.

13. Add on Covers Policy.

14. Adjustable Policy.

15. Reinstatement Policy.

What is the importance of fire insurance?

The importance of fire insurance cannot be over-emphasized in today’s world, since it does more in protecting your house, furnishings, and other valuables from being harmed by fire.

How does fire insurance work?

Fire insurance is a legal agreement between an insurance provider and a policyholder that assures that any loss or damage to the policyholder's property will be covered.

It is commonly obtained in addition to conventional homes insurance to cover damages and losses caused by fire.

What are the 3 elements of fire insurance?

In the case of fire insurance, the insured must have an insurable interest in the insurance's subject matter. The insurance contract is invalid if there is no insurable interest. Unlike life insurance, insurable interest must be present both at the time of insurance and at the time of loss in the case of fire insurance.

A fire insurance contract is a contract of absolute good faith. When providing information to the insurance company on the policy's subject matter, the insured should be genuine and honest. He has a responsibility to accurately disclose all information about the nature of the property and the dangers associated with it. The insurance firm should also inform the proposer of the policy's details.

A fire insurance policy is a rigorous indemnity contract. In the case of a loss, the insured can sue the insurer for the full amount of the loss. This is subject to the subject matter's maximum insurance coverage.

What is the difference between fire insurance and homeowners' insurance?

The fundamental distinction between fire and home insurance is that fire insurance covers damage caused by fire, lightning, and smoke. This can only happen when there is an actual fire incidence. Home insurance, on the other hand, covers losses caused by natural disasters, man-made disasters, fire, and burglary, among other things.

What does a fire insurance policy cover?

The fire insurance policy covers any damages or losses caused by a fire. It pays for the cost of repairing or replacing damaged items in your house, as well as living expenses if you have to move out while your home is being repaired or replaced.

How do I claim fire insurance?

1. Make use of whatever financial or resource advances that are available.

2. Calculate your losses.

3. File a claim with your insurance provider.

4. Have a Surveyor's Loss Estimate

5. Ensure no detail is missed out.

Who can avail of fire insurance?

Fire insurance is open to anyone with property or considered asset that requires security in case of any fire hazard to ensure that one is taken care of to forestall a loss in financial value.

How is fire insurance premium calculated?

Considering that the fire insurance premium is determined by the overall value of the assets and property, the premium would be calculated using the building's market value as well as the purchase value of all the contents.

What is the consequential loss in the fire insurance?

A consequential loss is an insurance phrase describing a loss of income caused by a company's inability to operate normally due to damaged property or equipment.

In conclusion, the benefit of fire insurance is usually not fully appreciated until there is a fire hazard. Don’t be on the wrong side, get fire insurance today.