Fire insurance policy : Types


Adjustable Policy 

This type of policy is taken on the existing stock for a specific period. The premium is paid in full at the time of taking a policy. If there is any variation in stock, the insured intimates the insurer. Now, the insurer ends the policy accordingly and the premium is adjusted. So in this type of policy, the amount of policy changes from time to time 9. Re-instatement or Replacement Policy In this type of policy, the Re-instatement or Replacement clause is inserted. The insurer undertakes to pay the cost of replacement of the property destroyed or damaged by fire. So in case of loss of property, the insurer will reinstate or replace the property instead of paying compensation in cash. This type of policy prevents the insured from making a false claim

Loss of Profit or Consequential Loss Policy 

Business transactions may have to be suspended for some time when a fire occurs. The business of the insured will then suffer a loss. That is, the insured will be suffering a loss of profits which he would have made, if no fire had occurred. So in addition to the loss of property by fire, the insured suffers a loss of profits also. The normal fire policy compensates only the loss of property. But a loss of profits insurance policy compensates even this loss of profits due to fire

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