Page 333 - Fire Insurance Ebook IC 57

The Insurance Times

Question & Answers

Q1. Discuss the concept of basis rate.

Ans. The basis rate for consequential loss resulting from
material damage caused by the perils covered under
standard fire policy should not be less than 1.25 times
the full 'Average Fire Rate', of the items covering the
contents of the process blocks, of the premises occupied
by the insured. Some of the guidelines are as follows
(i) In calculating the basis rate, the contents of any
storage/utility blocks should not be taken into
account, even if they are in communication with
the process blocks.
(ii) Pilot plants and laboratories are to be considered as
process blocks for rating purpose.
(iii) For businesses where no manufacturing process is
carried on, the basis rate is 1.25 times the average
fire rate of the contents of the whole premises.
(iv) The average fire rate is the percentage of the
aggregate net premium in respect of the whole of
the standard fire and special perils insurance of
contents of Process blocks. For discounted

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