Kinds of Fire Insurance Policies


The various fire insurance policies which are issued in order to meet different demands of the insured are discussed below

 Valued Policy

A valued policy is a policy in which the value of the property insured is agreed upon at the time of taking out of the policy. In case the property is destroyed or damaged by fire, the insurer is required to pay the agreed value (amount) to the insured. Usually, this type of policy is issued where the value of the property cannot be determined after loss or damage, cg. Works o art, jewellery, paintings, pictures, sculptures, rare articles etc. These policies are not based on the principle of indemnity because the loss is not indemnified on the basis of market price. The main advantage of this policy is that the insured is relieved of providing the value of property at the time of loss by giving proof of purchase. The disadvantage of this policy is that the new additions can not be added to the valued policy.

Valuable Policy

A valuable policy is just opposite to the valued policy Under this, the value of the property is to be determined only at the time of loss. Thus, it is the market value which is paid in the event of loss. In this case, the principle of indemnity is strictly followed.

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