Your legal property is vulnerable to disasters such as theft, accidental fire, and natural causes (i.e. hurricanes, floods, lightning strikes, etc.). Fire Insurance is specially designed backup plan which can be availed if you own a commercial building or operate a business. The policy acts as a cushion that absorbs your losses by replacing or sharing them with the owner of the lost stock or property.
Like most other insurance plans, Fire Insurance also requires you to decide on the maximum amount of coverage you need; i.e. select the assets and properties you wish to place under the previous umbrella, then select the total coverage amount for those assets and properties.
What Should You Put Under Fire Insurance?
You may be dealing with one of the situations below, and this basis calculates the assets to be placed under fire insurance policy:
- Operates an office in its own building
- Operational office in a rented place
- The owner of the building, but someone else operates the offices within it
This is the first criterion that determines the assets you can insure. Therefore, if you run your office in a rented space, you can only insure any gadgets, furniture or equipment that you bring to this place, anything belonging to the property owner will be insured by him.
Steps to Make Sure It’s All Covered
Determine what needs to be insured:
First of all, make a list of contents that need to be insured. The amount insured will depend on the type of business one is running or the contents one has in his or her office. It will also depend on whether one owns the entire commercial property or owns the same rented space.
|Example||Fill to be insured|
|Mr. Rohan Bhattacharya owns a newspaper office in the commercial complex.||Owned office space, press, computers and technical know-how, machinery and equipment, power and air-conditioning sockets, important documents if any.|
|Mr. Srinivas has rented a furniture shop in the mall.
|Raw materials (if any), finished stock, paintings (if any), electrical equipment and machinery.|
|Messrs KoBi Ltd. owns a commercial complex and a mall which has leased space for commercial operations.||The building structure includes all electrical elements, doors and windows, parking spaces, boilers, air conditioning, decorations or works of art and complex spaces and fences.|
|Suneeta Bilal, a fashion designer, has put out a collection in her shop with mannequins, designer dresses, electronic display units, chandeliers etc.||This would include all luxury and decorative items with existing supplies, electrical equipment used in offices, computers, air conditioners, etc.|
Classifying Content Based on Insurable Value:
The sum insured of a property should generally represent its market value. However, based on the type of asset, the sum insured will continue to change from year to year. Let’s look at an example of the same:
Imagine a machine purchased for Rs. 1 lakh. Now after 10 years, its market value after depreciation is Rs. 50,000.
- Market value: In case it breaks and insured for its market value (MV), then the insured will only receive Rs. 50,000 in this case which doesn’t even cover the depreciation. (Used and stock machines including raw materials, finished products are insured at MV)
- Replacement Value: If insured at its recovery value (RIV), the insured will receive a fee equivalent to the current market value (Rs. 1,50,000) of a similar new machine. Accordingly, depreciation will also be covered, and the insured will remain in the same financial position as before the loss. New tools, furniture and equipment and building structures can be assessed at this level to minimize losses
- Declared or Agreed Value: This can be used for valuable items such as paintings, works of art, where a reputable appraiser will set a damage fee on the items.
A standard fire insurance policy covers many risks, but you may want to use some additional coverage, for example: earthquakes, terrorism, etc.
Depending on your location and geographic area, certain risks specifically included in the fire policy may not apply. These can be removed, and help lower your premium costs for the policy. Example: Most businesses located in mountainous areas are free from the risk of flooding.
Get the last quote
The final step is to get quotes from various insurance companies and choose the one that suits your needs and is within your means. Get the amount insured increases or decreases with changes in the structure of the property and changes in exchange rates.
There are more than 20 insurance companies providing fire insurance in India, and of course it is difficult to get it done without expert help. On line insurance advisors such as SecureNow, offering their full assistance, from purchasing decision to claiming the policy. They can provide multiple quotes from various insurance companies and help you follow the steps suggested above so you can relax with adequate cushioning.