In India, the fire insurance is tariff business which means the terms and conditions of the fire insurance policy are same for all as these are approved by the authority . till 2006 the premium rates of fire insurance were also fixed which were known as tariff rates but now the insurance are fire to charge any premium rate. Insurance that is used to cover damage to a property caused by fire. Fire insurance is a specialized form of insurance beyond property insurance, and is designed to cover the cost of replacement, reconstruction or repair beyond what is covered by the property insurance policy. Policies cover damage to the building itself, and may also cover damage to nearby structures, personal property and expenses associated with not being able to live in or use the property if it is damaged.
Rules and regulations
1. POLICY:
1) Only Standard Fire and Special Perils Policy ( Policy) with the permitted “Add- on” covers (as appearing under Section VIII) if any, can be issued. Insurers may charge rates higher than those given under the Tariff.
2) The wording of the policy shall be as shown in Section II of the Tariff.
3) It is permissible to exclude Storm, Tempest, Flood, Inundation group of perils (STFI) and/or Riot, Strike, Malicious and Terrorism Damage perils (RSMTD) at inception of the Policy by deleting the relevant perils from the Policy. Reduction in premium rate may be allowed for such deletion (s) as shown under the relevant sections of the Tariff.
4) Policy(ies) should be read together with proposal form, schedule, specification, endorsements, warranties and clauses as one contract for which suitable format’s) may be devised by the insurers.
5) Policy(ies) covering Buildings and/or contents shall show block wise separate amounts on (i) Building (ii) Machinery and accessories (iii) Stock and Stock-in-Process and (iv) Furniture and other contents.
6) Any risk, which has not been provided for in the Tariff, shall be referred to the Committee for rating. A provisional premium rate of Rs. 2.50 per mille shall be charged in such cases for covering the risk.
2. VALUED POLICIES:
Valued Policy(ies) can only be issued for properties whose Market Value cannot be ascertained. eg: Curios, Works of Art, Manuscripts, Obsolete machinery and the like subject to the valuation certificate being acceptable to the insurers.
3.LONG-TERM POLICIES: .
Policies for a period exceeding 12 months shall not be issued except for “Dwellings”.
4. MID-TERM COVER:
Generally, it is not permissible to grant mid-term cover for STFI and/or RSMTD perils. The following provisions shall apply, where such covers are granted mid-term: Insurers must receive specific advice from the insured accompanied by payment of the required additional premium. Cover shall commence 15 days after the receipt of the premium. The premium rates as under shall be charged on short period scale( as per Rule 7) on full sum insured for the balance period i.e.. upto the expiry of the policy.
5.PARTIAL INSURANCE
a) to issue a policy covering certain portions only of a building. Not-withstanding this, the plinth and foundations or the foundation only of a building may be excluded.
b) to issue a policy covering only specified machinery ( except Boilers), parts of machine or accessories thereof housed in the same block/ building.
9. RULES FOR CANCELLATIONS
For Cancellation of insurance
a) at the option of the Insured Retention of premium shall be at Short Period Scale
b) at the option of the insurer Refund of premium shall be on pro-rata basis
10. FLOATER POLICY
Floater Policy(ies) can be issued for stocks to take care of frequent changes in Sum Insured at various locations ( Process blocks, godowns and/or open). Stocks at various locations can be covered under one Sum Insured.
N.B.1: In case Stocks in a process block are covered under the Floater Policy and the rate for the process block is higher than the storage rate, the process rate plus 10% loading shall apply
N.B.2: Presence of ” Kutcha” construction may be ignored.
11. DECLARATION POLICIES
To take care of frequent fluctuations in stocks/ stock values, Declaration Policy(ies) can be granted subject to the following conditions:
a) The minimum sum insured shall be Rs 1 crore.
b) Monthly declarations based on the average of the highest value at risk on each day or highest value on any day of the month shall be submitted by the Insured latest by the last day of the succeeding month. If declarations are not received within the specified period, the full sum insured under the policy shall be deemed to have been declared.
c) Reduction in sum insured shall not be allowed under any circumstances.
d) Refund of premium on adjustment based on the declarations/ cancellations shall not exceed 50% of the total premium.
e) The basis of value for declaration shall be the Market Value unless otherwise agreed to between insurer and insured.
f) It is not permissible to issue declaration policy in respect of
I. Insurance required for a short period.
II. Stocks undergoing process.
III. Stocks at Railway sidings.
12. FLOATER DECLARATION POLICIES
Floater Declaration policy(ies) can be issued subject to a minimum sum insured of Rs 2 crores and compliance with the Rules for Declaration Policies except that the minimum retention shall be 80% of the annual premium.
13. CLAIMS EXPERIENCE DISCOUNT
Only the risks rateable under Sections IV, V, VI & VII of this tariff shall be eligible for claims experience discount. Claims experience discount can be considered on the basis of :
(a) incurred claims ratio of the preceding three policy periods and
(b) the incurred claims ratio of all the policies covering the Insured’s interest on the principle of one risk -one rate.
14. FIRE EXTINGUISHING APPLIANCES DISCOUNT
The discounts as per the scale given below may be granted by the Insurers to protected blocks of the risks ratable.System shall be erected and tested as per the relevant Regulations of the TAC and certificate from Professional’s) / Professional agency(ies) confirming the efficacy of the system and its compliance with the rules shall be submitted by the Insured. The installation shall be maintained in efficient working order at all times and annual maintenance contract with an external agency shall be in force.
15. RATING OF RISKS IN MULTIPLE OCCUPANCY INDUSTRIAL ESTATE
Risks in Multiple Occupancy Industrial Estate shall be rated `Per se’. If the entire building of the Industrial Estate is insured under one sum insured, a rate of Rs. 1.50%o shall be chargeable to ‘building’.
16. SILENT RISK
1 Factories where no manufacturing /storage activities are carried out. Rate- Rs. 1.00%o
2 Factories which go silent for 30 days or more. Retention of the premium shall be based on the appropriate storage / silent risk rate of Re.1.00%o whichever is higher
If no activities are carried under manufacturing units or utilities located outside the compound wall for exceeding 30 days or more continuously the lower rate will be applicable which is defined by the insurer if no manufacturing activity is carried out but material is stored, the stored rate or silent risk whichever is higher shall be applicable..