Page 45 - The Insurance Times September 2025

Consumers

Do’s and Don’ts for Purchasing a Fire Insurance

Policy (Corporate Buyers)

Dos 7. Work with a Reputed Insurer/Broker
Choose insurers with strong claim settlement
1. Assess Your Risk Thoroughly records and industry experience.
Conduct a professional risk assessment of buildings,
Brokers can help negotiate terms, add-ons, and
machinery, stock, and other assets.
premium structures.
Consider location-specific risks (industrial zones,
warehouses, chemical storage, etc.). Don’ts
2. Disclose All Material Facts 1. Don’t Underinsure to Save Premiums
Provide complete details of construction, occu- Underinsurance can trigger the average clause, re-
pancy, fire safety systems, and past incidents. ducing claim payouts drastically.

Transparency ensures valid claim settlement and 2. Don’t Ignore Policy Exclusions
prevents disputes. Losses due to war, nuclear perils, electrical break-
down, or negligence may not be covered.
3. Opt for Adequate Sum Insured
Cover the full reinstatement/replacement value of Avoid assumptions—clarify exclusions with your in-
assets, not just book value. surer.
3. Don’t Delay Intimating Claims
Include escalation clauses to account for inflation
Immediate notification is mandatory. Delays can
and increased asset values.
weaken or nullify claim validity.
4. Understand Policy Coverage and Add-Ons
4. Don’t Overlook Business Interruption Risk
Study inclusions: fire, lightning, explosion, riots,
Fire may halt operations. Not taking Fire Loss of
floods, storm, etc.
Profit cover can result in heavy financial strain.
Consider add-ons such as earthquake cover, loss of
5. Don’t Forget Documentation
rent, business interruption (Fire Loss of Profit
Maintain updated asset registers, stock records,
policy). fire safety compliance reports, and building layouts.
5. Comply with Fire Safety Norms Poor documentation complicates claim settlement.
Install and maintain fire extinguishers, alarms,
6. Don’t Neglect Policy Wording
sprinklers, and hydrants.
Avoid simply renewing without reviewing. Tailor
Keep inspection reports up to date; insurers often the policy to current risks and business changes.
mandate these.
7. Don’t Assume One-Size-Fits-All
6. Review Policy Terms Regularly Risks vary for manufacturing plants, IT offices,
Update the policy annually to reflect new machin- warehouses, and hotels.
ery, stock levels, or structural changes. Customize your coverage to suit specific business
Ensure multiple locations are covered if applicable. needs.

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