A Layman’s Guide to Fire Insurance

As the name suggests, fire insurance is purchased to ensure coverage against losses and damages caused by fire. It is a type of insurance product that is offered by all leading general insurance companies in India. With adequate fire insurance covers the policyholder can cover the risk of any loss of property caused by an accidental and unintentional fire.

Origins and Basics

As people ventured more and more into the high seas, the need for marine insurance was soon realized. Fire insurance, on the other hand, was born recently, rising from the ashes of the great fire of London in 1666 that doused over 13,000 homes in a mere four days.

Fire insurance is designed to cover the insured person for the damage caused by a fire and compensate for the losses incurred. Control and prevention of fire are not a part of the policy coverage. A fire insurance policy is a contract between the insurance company and the policy buyer. The insurer agrees to compensate the insured person for any losses incurred while the insured person agrees to pay a premium amount for the coverage.

Scope and Exclusions of Fire Insurance

The extent of coverage of a fire insurance policy is subject to the sum assured in the policy document. Thus, the actual damage caused during the fire is not the scope of coverage and is instead compared to the sum assured. Besides, the coverage is also subject to the terms and conditions of the specific policy.

The scope of a typical fire insurance policy includes,

Exclusions from a fire insurance policy include,

Types of Fire Insurance Policy

The major types of fire insurance policies available in India include the following,

Key Principles of Fire Insurance Policy

Here are the key principles of fire insurance,

Choosing a Fire Insurance Plan

While selecting a fire insurance policy you must consider these factors,

Right coverage – Merely getting fire insurance coverage is not enough. Having adequate insurance coverage is essential to make sure that the policy compensates the policyholder sufficiently in the event of a loss. As a policy buyer, you must prepare a list of items that need to be insured along with the correct value of the items.

Scrutinizing the exclusions and scope – While selecting a fire insurance policy, you must understand what the policy covers, what is the extent of coverage in terms of monetary value, and what is excluded. Typically, damage caused by fire due to negligence, emergencies etc. are excluded. The exclusions of the fire insurance policy must be checked thoroughly to avoid rejection of your claim.

Manage the premium – The premium amount can be reduced by displaying prudent safety practices to the insurer. The insurance company is likely to inspect your safety measures while processing the fire insurance policy application. The presence of safety measures and equipment like smoke detectors and fire extinguishers can lower the premium rates.

Compare – Based on the above considerations, carefully compare the different fire insurance quotes received from various insurance companies.


In a densely populated country like India, fire-related incidents are very common. Besides electrical malfunctions and natural disasters add to the risk. Both businesses and households suffer significant financial losses as well as damage to property and assets. With fire insurance, you can mitigate the financial loss from such incidents and get compensated for the damages. Besides, fire insurance is compulsory for several types of businesses in India.

To protect your personal property and household with financial cover and ensure that your business is not interrupted by this unfortunate probability, having fire insurance coverage is a must.


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