Be secure from loss due to fire
Insurance is extremely important for residential buildings as well
It is widely known that fire insurance covers building and contents. Building not only covers the structure but also the permanent fixtures, sanitary fittings and such other permanent fittings. Similarly garages, covered porches, canopies and even boundary walls can be covered under the fire policy. It can also cover private roads, swimming pools and foundations. Though foundations do not carry any fire risk, the same is susceptible to damage from earthquake. However, all these properties need to be declared specifically while seeking insurance.
Key areas to be considered before
purchasing fire insurance policy
It is essential to understand below mentioned points before you purchase fire insurance.
Valuation of the property and adequate insurance protection
Sum Insured (SI)
One of the most important thing to understand here is "Sum insured"( SI). It is important to insure the property for the right amount. Sum insured represents the maximum limit up to which the Insurer's are liable in the event of loss under the Fire Insurance Policy. The value of sum insured should be identical to the value of the property either on Market value basis or Reinstatement Value basis.
Market Value v/s Reinstatement / Replacement Value
Market value represents the value of the property for the same make, model and age. This essentially takes into consideration the value of wear and tear or depreciation into consideration. Replacement or Reinstatement value is usually expressed in simple terms as NEW FOR OLD i.e. no depreciation or wear and tear is deducted at the time of claims payment.
While the premium rate does not change whether one opts for MV or RIV, the sum insured representing the values are essentially different. Thus one cannot have MV declared as sum insured and policy issued on RIV basis, because in such case the UNDER INSURANCE is applied. This is where, one needs to be careful to make sure that the sum insured selected is adequate. The terms Under Insurance implies that if the Insured is found to be insured for a lesser value that it's MV / RIV, he is required to bear the proportionate loss.
Deductible / Excess
One should not neglect to make note of the deductibles/excess applicable. This is an amount which is to be compulsorily borne by the Insured. Any loss below this amount is not payable by the Insurers and losses exceeding this amount will be paid for the balance amount. While the minimum deductible is fixed, insurers may also increase the deductible considering the overall exposure of the risk.
Information required for quotation
When you approach an insurer for the fire insurance, they will ask you to fill up a RFQ (Request for Quotation) form seeking specific details to provide the quotations. Normally the information asked for is as follows:
l Occupancy
l Construction and age of building
l Basement exposure
l Loss history
l Previous insurance details
l Fire protection facilities
l Presence of water bodies in the location and distance thereof
l Any other special feature
Important to read the policy document
Last but not the least; once you purchase the policy, you should read the policy document carefully and make sure to check the below aspects:
1. Correctness of the details captured in the policy such as name, address etc.
2. Perils and add-ons covered under
the policy
3. Deductibles or excess under
the policy
4. Specific warranties, restrictions or exclusions inserted in the Policy
5. Terms and conditions to be followed by the Insured during the
policy period
6. Claim procedure in the event of
the claim
7. Dos and Don'ts as may be provided by the Insurer
This will make sure that you won't get any surprises while making a claim.
Insurance is extremely important for residential buildings as well
It is widely known that fire insurance covers building and contents. Building not only covers the structure but also the permanent fixtures, sanitary fittings and such other permanent fittings. Similarly garages, covered porches, canopies and even boundary walls can be covered under the fire policy. It can also cover private roads, swimming pools and foundations. Though foundations do not carry any fire risk, the same is susceptible to damage from earthquake. However, all these properties need to be declared specifically while seeking insurance.
Key areas to be considered before
purchasing fire insurance policy
It is essential to understand below mentioned points before you purchase fire insurance.
Valuation of the property and adequate insurance protection
Sum Insured (SI)
One of the most important thing to understand here is "Sum insured"( SI). It is important to insure the property for the right amount. Sum insured represents the maximum limit up to which the Insurer's are liable in the event of loss under the Fire Insurance Policy. The value of sum insured should be identical to the value of the property either on Market value basis or Reinstatement Value basis.
Market Value v/s Reinstatement / Replacement Value
Market value represents the value of the property for the same make, model and age. This essentially takes into consideration the value of wear and tear or depreciation into consideration. Replacement or Reinstatement value is usually expressed in simple terms as NEW FOR OLD i.e. no depreciation or wear and tear is deducted at the time of claims payment.
While the premium rate does not change whether one opts for MV or RIV, the sum insured representing the values are essentially different. Thus one cannot have MV declared as sum insured and policy issued on RIV basis, because in such case the UNDER INSURANCE is applied. This is where, one needs to be careful to make sure that the sum insured selected is adequate. The terms Under Insurance implies that if the Insured is found to be insured for a lesser value that it's MV / RIV, he is required to bear the proportionate loss.
Deductible / Excess
One should not neglect to make note of the deductibles/excess applicable. This is an amount which is to be compulsorily borne by the Insured. Any loss below this amount is not payable by the Insurers and losses exceeding this amount will be paid for the balance amount. While the minimum deductible is fixed, insurers may also increase the deductible considering the overall exposure of the risk.
Information required for quotation
When you approach an insurer for the fire insurance, they will ask you to fill up a RFQ (Request for Quotation) form seeking specific details to provide the quotations. Normally the information asked for is as follows:
l Occupancy
l Construction and age of building
l Basement exposure
l Loss history
l Previous insurance details
l Fire protection facilities
l Presence of water bodies in the location and distance thereof
l Any other special feature
Important to read the policy document
Last but not the least; once you purchase the policy, you should read the policy document carefully and make sure to check the below aspects:
1. Correctness of the details captured in the policy such as name, address etc.
2. Perils and add-ons covered under
the policy
3. Deductibles or excess under
the policy
4. Specific warranties, restrictions or exclusions inserted in the Policy
5. Terms and conditions to be followed by the Insured during the
policy period
6. Claim procedure in the event of
the claim
7. Dos and Don'ts as may be provided by the Insurer
This will make sure that you won't get any surprises while making a claim.
No comments:
Post a Comment