What are the types of fire policies?

1. Specific Policy

It is policy which covers the loss of the assured up to a specific amount which is less than the real value of the property. Specific policy is a case of under-insurance to check under-insurance, the insurers usually insert average clause in the policy in which case the policy is known as average policy.

2. Comprehensive Policy

It is a policy which covers losses against fire, theft, burglary, third party risks, etc. such a policy is also known as “all-in-one” policy. It may also cover loss of profits during the period the business remains closed due to fire.

3. Valued Policy

It is a policy in which the amount payable in case of loss is fixed at the time the policy is taken. In the event of loss, the fixed amount is payable irrespective of the actual amount of loss. A valued policy can be legally challenged because it is not a contract of indemnity.

4. Floating Policy

It is a policy which covers property at different places against loss by fire. It might, for example, cover goods lying in two warehouses at two different places. It is always subject to average clause

5. Replacement or Reinstatement Policy

In order to prevent fraudulent devices by the assured, the insurers usually insert a clause in the policy, called the re-instatement clause, whereby the insurer undertakes to pay the cost of the replacement of the property damaged or destroyed by fire.