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Features of fire insurance

A fire can occur anywhere. It can be highly unpredictable and the damage it can cause can be catastrophic. Fire insurance provides protection to the policyholder during these tumultuous times.
It is imperative that you are aware of the various types of fire insurance policies so that you are in the post possible position to protect yourself and your finances in the event of the unthinkable.
Further, it is not only important to be well versed with the types of fire insurance policies, but also its features. This article will talk about some of the general features of fire insurance.

Features of fire insurance

The following general features are shared by most fire insurance policies:

Coverage: The insurance company will decide on the coverage provided to you by analyzing the following:

  • Type of fire insurance policy
  • Location of property
  • Potential repair and restoration cost
  • Additional riders

Premium: The insurance company will be entitled to an insurance premium in exchange for indemnifying the policyholder against fire hazards.

 

Legal Document: The fire insurance policy will be a legal document that can be challenged in a court of law. If either party chooses, he/she can knock on the courts of the country and ask for a settlement.

 

Indemnity: The insurance company will indemnify the policyholder only till the extent of the damage suffered. That means that if you have taken a fire insurance policy worth Rs 10 Lakhs and damages caused to you via a fire is 5 lakhs, the insurance company will only pay you Rs 5 Lakhs even though you have coverage of Rs 10 Lakhs.

 

Riders: A policyholder can choose additional riders to add to their policy. This will increase the premium component. For instance, a person can add a rider that states that the insurance company will provide an additional temporary income that the person can use as rent money.

 

Governed by the principles of insurance: A fire insurance policy is governed by the following principles of insurance:

  • Utmost good faith
  • Insurable interest
  • Proximate cause
  • Indemnity
  • Subrogation
  • Loss minimization
  • Contribution

All parties are expected to honor these principles of insurance. A policy can be voided if these principles are dishonored.

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