Standard Fire and Special Perils Insurance Policy

Standard Fire and Special Perils Insurance Policy

Fire Insurance policy (Standard Fire and Special Perils Insurance Policy) is a specialized form of insurance that covers financial loss to insured for damage to its property due to Fire & other special perils. The popular name for this policy is Standard Fire and Special Perils or SFSP policy. Fire Insurance policy covers perils like Fire, Lightning, Explosion, Implosion, Aircraft damage, Riot, Strike and Malicious Damage (RSMD), Storm, Tempest, Flood, Inundation (STFI), etc. Any financial loss occurring due to damage to property of insured because of any of these perils will be indemnified by the Fire Insurance Policy (Standard Fire and Special Perils Insurance Policy). Insured can take Fire Insurance policy to cover its property, stock, plant & machinery, furniture & fixture, and specific items like bullion, drawings, coins, work of arts, etc.

Apart from aforementioned risks Fire Insurance can also give cover for Impact Damage, Deterioration of  stock in cold storage because of power failure, Omission to insure, Spoilage material damage cover, Leakage and contamination cover, temporary removal of stocks.

Proposer can get following items covered in a Fire Insurance policy (Standard Fire and Special Perils Insurance Policy)

  • Building: Completed Building, Under-construction Building, Plinth & Foundation, Interiors, Electricals, Partitions, etc.
  • Plant & Machinery: New Machine, Old Machine, Obsolete Machine, Equipments, Accessories, etc.
  • Stocks: Raw Material, Finished Goods, In-process, In-trade
  • Contents: Furniture & Fixture, Fittings, Cables, Pipings, Spares, Household goods, etc.
  • Explicit Items: Stamps, Explosives, Bullion, Arts work, Drawings, Precious Stones, Curious etc.

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Any entity (individual, proprietor, partnership firm, private company, public limited company, institution, organization) which owns a Building, Plant & Machinery, Stocks, Furniture & Fixture, Precious items such as Work of Arts, Drawings, Stones, Curious, etc. must protect its financial interest in these objects by getting these covered under Fire Insurance policy (Standard Fire and Special Perils Insurance Policy)

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  • Fire
  • Bush Fire
  • Lightning
  • Aircraft damage
  • Explosion / Implosion
  • Riot, Strike, Malicious and Terrorism damage (hereinafter called RSMTD Perils)
  • Storm, Tempest, Flood, Inundation, Hurricane, Cyclone, Typhoon and Tornado
  • Subsidence / Landslide including rockslide
  • Impact by any Rail / Road vehicle or animal
  • Bursting or overflowing of water overhead tanks
  • Leakage form Automatic Sprinkler Installation
  • Missile Testing
  • Pollution resulting from any of the above perils

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Perils Covered: Following Perils can also be covered by paying additional premium.

  • Terrorism
  • Forest Fire
  • Spontaneous Combustion
  • Earthquake
  • Deterioration of stock in cold storage following a power failure
  • Temporary removal of stocks
  • Spoilage Material Damage Cover
  • Leakage and contamination cover
  • Omission to insure additions, alterations, or extensions

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Expenses Covered: Following Expenses can be covered by paying additional premium.

  • Architects, Surveyors, Consulting Engineer’s fee in Excess of 3% of admissible claim amount
  • Debris removal in Excess of 1% of admissible claim amount
  • Insurance of expenses for Rent of Alternative accommodation
  • Loss of Rent
  • Start-up expenses

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Whenever the insured suffers financial loss due to Perils covered in Fire Insurance Policy (Standard Fire and Special Perils Insurance Policy), a claim under this policy should be intimated to the Insurance Company.

In order to register the claim under Fire Insurance Policy (Standard Fire and Special Perils Insurance Policy) insured should follow the following steps.

  • Intimate Insurance Company immediately about the loss
  • Describe the cause of loss or how the fire took place
  • Give details about the property / stock / furniture etc. damaged in fire
  • Co-operate with the Surveyor deputed to do the loss assessment by insurance company

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In case of Fire claim following documents will be required by Insurance Company to process the claim.

  • Claim Form duly signed by insured
  • Photographs of damaged property
  • FIR copy (if filed)
  • Fire Brigade Report (if fire brigade was used)

In case of damage due to Flood, Storm, Cyclone, Earthquake, Subsidence, Landslide few more documents will be required.

  • Meteorological report
  • Newspaper cutting with report of such incidence

In case the damage is caused due to Riot, Strike, Malicious Damage, & Terrorism following additional documents will be required.

  • Newspaper cutting where such an incidence has been reported
  • FIR Copy

In case of damage due to Explosion following additional documents will be required.

  • Factory Inspector or Director of Industrial Safety & Welfare’s report on cause of loss

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Following are some of the standard exclusions under Fire Insurance Policy (Standard Fire and Special Perils Insurance Policy). Some of these exclusions can be removed by paying additional premium.

  • 5% of each claim or Rs.10,000/- whichever is lower in case loss is caused by Act of God (lightning, STFI, Subsidence, Landslide, etc.)
  • Rs.10,000/- in case of all other claim except mentioned above
  • More than 3% expenses incurred on Surveyor, Architect or Consulting Engineer’s Fee
  • More than 1% expenses on Removal of Debris
  • Loss caused by own fermentation, spontaneous combustion
  • Unoccupied property for more than 30 days
  • Consequential Loss, Loss of profit, Loss of earning, etc.

Following Perils are not covered as Standard Perils but can be cover against these can be taken upon payment of additional premium

  • War & Allied Perils
  • Nuclear Perils
  • Loss of property by theft after fire
  • Pollution or contamination

Following Properties are not covered under Standard Fire and Special Perils Insurance Policy

  • Cold storage items due to change in temperature
  • Damage of any electric machine due to excessive heating, leakage or electricity, etc
  • Precious items like Bullion, Work of Art, Manuscripts with value over Rs.10,000/- unless specified clearly
  • Damage of Boilers or other vessels by its own explosion/implosion in which steam is generated on its own

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