Establishing a business and equipping your office space with all the amenities is not easy and requires years of effort. You put down a significant amount of money to buy a plant or machinery, as well as equipment such as laptops and computers. However, one mishap, a fire, might completely destroy everything in minutes. Fire insurance can help you deal with this.
But before you invest in this insurance, learning about what this policy covers is crucial. This article will define fire insurance by talking about its key perils.
Let’s look closely at fire insurance perils
1. Lightning
Lighting is a natural phenomenon that occurs when an electric spark in the clouds strikes the ground, with the air acting as an insulator.
If you run a factory or a firm that uses inflammable items and lightning strikes the premises, the fire spreads quickly, causing considerable loss. However, you can rest easy because fire insurance covers this situation.
2. Accidental Explosion/Implosion
When a chemical reaction or gas leak causes an explosion or implosion, the outcome is a fire that spreads quickly and causes widespread damage. Fire insurance covers these losses. However, damage to the exploded object is subject to exclusions.
Here is an example for better understanding.
Suppose you run a manufacturing unit that makes use of boilers and flywheels. One day, a few boilers malfunction and explode, causing fire and damage to your building andmachinery. During the incident, the flywheel also bursts, causing damage to the surrounding wall.
In this instance, your policy will only cover all damages, excluding explosion damage to the boiler and its contents or implosion damage to the flywheel and wall.
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3. Aircraft Damage
This clause addresses the harm caused by an aircraft crash. Consider the following scenario: one day, an airplane flies around your factory when it unexpectedly malfunctions and crashes onto your premises. The crash will cause a major fire, destroying your building, finished goods, and stocked inventories.
The insurance also covers a situation in which an airplane crashes in the air, and its burning components fall on your building's premises, causing a fire.
4. Riots and Strikes
Employee strikes are common these days. But what if a group of employees set fire to your office because their demand was not met? Fire insurance comes in handy in this situation because it covers fire damage caused by external or internal violence or terrorist attacks.
5. Natural Calamities
Natural disasters like floods and cyclones that strike commercial premises destroy the property structure and its contents. Similarly, if a cyclone or hurricane occurs with heavy rain and strong winds, there will be loss to the stuff kept in the open or significant damage to roofing that is not composed of concrete.
Fire insurance covers the cost of reconstructing the damaged structure, as well as the repair or replacement of machinery, appliances, furniture, and personal possessions.
It is worth noting that fire insurance does not typically cover volcanic eruptions or earthquakes.
6. Impact Damage
This refers to the event in which a tree falls on the office roof or a vehicle, such as a heavy truck, collides with the wall, causing damage to the building and its contents.
Fire insurance compensates for such losses.
7. Subsidence and Landslide
Subsidence occurs when the land beneath your office building begins to sink or settle in a river or ocean.
On the other hand, the most common example of landslide-related loss is a commercial structure set on a mountain cliff, which slides due to heavy rain, causing entire or partial damage to the property.
Fire insurance covers both of the aforementioned possibilities. However, there are several exclusions, such as:
8. Tank Bursts
This clause covers the loss or damage to the insured property caused by water or otherwise because of the cracking or overflowing of water tanks, pipes, or other apparatus.
One night, a water pipe in your factory bursts due to high pressure and floods the premises. The water damages your machinery, raw materials, and finished products. In this case, your policy will cover the loss or damage caused by the water, subject to the terms and conditions of the policy.
9. Other Conditions
Fire insurance also covers damage caused to insured property because of the following incidents:
With so many uncertainties in the corporate world, being prepared ahead of time is critical to avoiding a cash crisis. Fire insurance provides peace of mind by providing total financial protection in the case of a fire or other unforeseen disaster causing damage to the insured property and its contents.