Types of Fire Insurance policies


Floating Policy 

Under a floating policy, properties and assets which remain in different places and localities are insured by  policy. This policy is specifically designed to meet the requirements of big traders or manufacturers whose goods may be lying at different places. It is difficult for trader to take a policy for a specified amount or a specific policy or each stock of goods. This policy is useful to cover fluctuating stocks in different localities.

Excess Policy 

This policy is a combination of floating and average policies. In this case, the insured takes two policies one First Loss Policy and second Excess Policy'. The First Loss Policy' will cover that value of stock below which the value never goes. Excess Policy' will cover the maximum additional amount by which the stocks rise at different periods. For example, a businessman's stock varies between Rs. 70,000 and Rs. 100,000. He may take the "First Loss Policy for Rs. 70,000 and "Excess Policy for Rs. 30,000. The first loss policy will cover the minimum level of stock Rs. 70,000 and the excess policy will cover an additional amount of Rs. 30,000

Stock Declaration Policy 

This is a special type of fire insurance with regard to stock. The value of stocks in storage often fluctuate from time to time. As a result, it is difficult to provide adequate insurance coverage at all times. If a merchant insures his stock for the maximum amount of stock, then he will have to pay a higher premium and if he insures for a lower amount, a major part of his stock may not have coverage. But a declaration policy provides the insured with full protection to his stocks and he is required to pay premium only on the average value of the the stock. For finding out the average value, declarations of maximum stocks are made periodically. 

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