Fire is a dangerous element that everyone dealt with in everyday life. Whether it is a house, office, or industrial infrastructure fire can obliterate anything in minutes. The most unfortunate thing about the fire is that no one knows when a fire-related accident will occur. Along with fire safety measures, fire insurance can give all-around protection from fire-related accidents.
It helps the owner financially recuperate damage from fire accidents. For this reason, many industrial and commercial properties must have fire insurance. Let’s learn how does fire insurance works and what are advantages and disadvantages to associate with fire insurance.
How does it work?
It is a type of property insurance, which covers only fire-related incidents on the property. Here the policyholder makes a legal agreement with the insurance company that the insurance company will reimburse the policyholder in case of a fire-related accident. In return, the policyholder needs to pay a monthly or yearly premium on the fire insurance policy. The policyholder is also required to implement all fire safety protocols on the property.
Any industry where the risk of fire hazard is high requires obtaining fire insurance by law. Besides these industries, any property owner can also obtain fire insurance. The insurance will cover any loss due to natural fire, forest fire, any fire from electrical wiring, or lightning. There are various types of fire insurance policies available in the market including comprehensive policy, specific policy, valued policy, replacement policy, etc.
However, all fire-related accidents are not covered under fire insurance. A few fire-related accidents are excluded from fire insurance. Fire insurance will not cover an incident if it occurs from nuclear waste, civil war and if the policyholder ignores fire safety protocol on the property. Along with the fire insurance, the policyholder can also purchase add-on coverage for a forest fire, Earthquake, flood, and other natural calamities.
Advantages of Fire Insurance
The biggest advantage of fire insurance is that it provides peace of mind to the policyholder. In case of any accident, the fire insurance will provide financial coverage for the damage. This financial coverage can help the owner restructure and revive the property in a new way. Another benefit of fire insurance is compliance. It helps the property owner take all precautions against the fire and make the property more secure from any fire-related accidents. In short, fire insurance increases fire-related awareness among the property owner.
Disadvantages of Fire Insurance
The biggest disadvantage of fire insurance is the regular premium fee on fire insurance. The premium on the fire insurance varies on the risk of fire-related accident probability. The property owner needs to pay an extra premium where the fire risk is high. Along with the insurance premium, the property owner needs to take all precaution safety measures against fire accidents.
Otherwise, the insurance company may decline the fire insurance coverage after the accident. The policyholder may need to purchase additional insurance coverage for any accidental damage from natural calamities.