A fire insurance policy entails an insurance company agreeing to pay the insured a specific amount equal to the expected loss caused by a fire within the time frame stipulated in the insurance contract. Depending on the insurance, the indemnity is subject to change.
What is the scope of a fire insurance policy’s coverage?
The estimated value of the physical house is covered by fire insurance. Medical bills, loss of human life and pets, loss of personal items, constructions outside the property, damage to the landscape, and temporary lodging expenditures are among the exclusions. These are all items that can be covered by a comprehensive package of extended property insurance.
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Different types of fire insurance plans
1. Value policy
This coverage is valuable since it differs from the conventional indemnification contract. The indemnification sum is fixed, and the actual damage is not taken into account.
2. Floating policy
The ‘average clause’ applies to this policy. Under the same contract and for the same price, coverage is extended to several properties owned by the policyholder. Goods maintained in two distinct stores may also be covered by the policy.
3. Specific policy
The insurer is obligated to pay a predetermined amount that is less than the property’s true value. The actual value of the property is not taken into account while determining the indemnity in this policy. In this policy, the average clause, which compels the insured to absorb some of the loss, does not apply. If the clause is included by the insurer, the policy is referred to as an average policy.
4. Comprehensive coverage
This all-in-one policy covers losses caused by fire. The insured may also be compensated for any lost profits incurred as a result of the fire while the firm is closed.
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Advantages of fire insurance policies in Canada
Below are the importance of fire insurance policies:
- New property
- Replacement of lost of business income
- Physical loss or damage to the personal property of business
- Betterments, office fixtures and improvisations
Disadvantages of fire insurance policies in Canada
- You might be forced to accept everything your insurance adjuster says without question. It’s important to remember that the adjuster is paid by your insurance carrier and reports to them.
- Exaggerate or embellish your assertion on purpose. If it is shown that you make a claim for a lost item with the objective of defrauding your insurance company, your entire insurance policy may be cancelled, and you will not be entitled to any compensation.