A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured, within the time specified in the contract. The indemnity is subject to change depending upon the policy.

What is the extent of coverage under a Fire Insurance Policy?

Fire insurance provides protection for the estimated value of the physical house. However, there are a number of exclusions to the same, for example medical bills, loss of human life and pets, loss of personal belongings, structures outside the property, damage to the landscape and expenses for accommodation for the time being. These things can be covered under a package of extended property insurance.

Fire Insurance policies

Valued policy: This policy is a departure from the standard contract of indemnity. The amount of indemnity is fixed and the actual loss is not taken into consideration.

Floating policy: This policy is subject to the ‘average clause’. The extent of coverage expands to different properties belonging to the policyholder under the same contract and one premium. The policy may also provide protection to goods kept at two different stores.

Specific Policy: The insurer is liable to pay a set amount lesser than the property’s real value. In this policy, the property’s actual value is not considered to determine the indemnity. The average clause, which requires the insured to bear the loss to some extent, does not play a role in this policy. In case the insurer inserts the clause, the policy will be known as an average policy.

Comprehensive policy: This all-in-one policy indemnifies for loss arising out of fire, burglary, theft and third party risks. The policyholder may also get paid for the loss of profits incurred due to fire till the time the business remains shut.

Advantages:-

1) get a copy of your insurance policy and read it carefully.

2) Start to assemble the lists of your contents. Where possible, track down receipts, and try to remember where you purchased each item and the cost of it.

3) Keep receipts for every expense and cost you have incurred as a result of the evacuation and/or loss of your home.

4)  Determine the replacement cost of each of the items in your home – sometimes a department store catalogue is a quick method for standard household items.

5) Continue to make your mortgage payments, unless other arrangements are made with your lender.

Dis-advantages

1) Accept unconditionally everything you are told by your insurance adjuster. You should keep in mind that the adjuster is paid by your insurance company and reports to your insurance company.

2) Deliberately over-state or over-inflate your claim. If you claim that an item was lost and it is proved that you made that claim with the intention of defrauding your insurance company, your entire insurance policy may be cancelled and you would not be entitled to any compensation.

If you have further query please contact Canada Insurance Plan.