Discuss the various types of fire policies.
There are a great deal of fire insurance policies designated to cater the needs of the insured.
These policies are:
I. Valued Policy:
This is a type of fire insurance policy where the value of the subject-matter of insurance is agreed upon at the time of making the contract. The insurer is liable to pay the amount specified or valued irrespective of the amount of loss caused due to fire. In this policy the principles of indemnity has no application. The insurer pays a fixed sum and does not indemnify for the losses. Valued policy is taken for those goods whose value becomes difficult to calculate in case of loss by fire. This type of policies are suitable for insuring works of art, jewellery and paintings where the value of the damaged articles becomes difficult to measure.
II. Valuable Policy:
Valuable policy is a type of policy where the amount of loss is not valued at the time of undertaking contract of insurance. It is determined at the time and place of loss on the basis of market value of the property. It is generally based on the basis of principle of indemnity.
III. Specific Policy:
A specific policy is a type of policy in which the property is insured for a specific sum irrespective of its value. The value of the whole subject matter is immaterial and as such it becomes a under insurance policy. For example, if a property is insured for Rs. 10000 though its actual value is Rs. 20000. In the event of loss to property, not more than Rs. 10000 can be recovered.
IV. Floating Policy:
Floating policy is taken out for those goods which are frequently changing in a warehouse. This policy can be taken on those goods which are lying on different localities or godowns. Since quantity of goods lying in the warehouse or at different places fluctuate from time to time, it becomes difficult for the owner to take a specific policy. Floating policies are suitable to those traders or products whose raw-materials or merchandise are lying at different localities or godowns.
V. Average Policy:
It is a type of policy where the average clause is inserted. Under this policy the indemnity is determined on the basis of the value of the property insured. In average policy under insurance contracts are penalized. If a policy is taken for Rs. 10000 against a real value of the property Rs. 50000. The loss is 800. The claim for the loss will be restricted to the proportionate of sum assured to the actual value of the property.
VI. Comprehensive Policy:
It is a type of fire policy where all types of risks like fire, burglary, riot, explosion and strikes are covered. This policy is otherwise called as all in one policy or all Insurance policy. Since this type of policy covers a wide range of perils, these are very popular in England.
VII. Blanket Policy:
It is a type of fire insurance policy which covers fixed and current assets of the assured in one policy.
VIII. Loss of profit policy:
This is a type of policy where the insured is indemnified for the loss of profit due to outbreak of fire.
IX. Re-instatement policy:
This is a type of fire insurance policy where the insurer undertakes to replace the property or goods lost by fire. In this policy instead of paying compensation for the goods lost by fire, the property is replaced in totality.
X. Excess policy:
When the value of stock in trade fluctuates, a insured may take out a policy for an amount below which stock should not full. This type of policy is termed as “First Loss policy”. In case of excess policy, the additional amount the stock will rise is considered. If the stock of a trader ranges between 70000 and 50000. He may take first loss policy for Rs. 40000 and an excess policy for Rs. 50000.