Fire Insurance Claims

1. FIRE INSURANCE-
CLAIMS OF FIRE INSURANCE

2. INTRODUCTION
Insurance that is used to cover damage to a property caused by fire.
Fire Insurance is a specialized form of insurance beyond property insurance.
Meaning Of Fire Insurance
Examples
Buildings
Furniture
Goods
Pipelines

3. RISK COVERED UNDER FIRE
INSURANCE
Fire
Lightning
Explosion
Aircraft Damage
Bush fire
RISK NOT COVERED UNDER FIRE
INSURANCE
War
Invasion
Civil War
Military Power
Act of enemy

4. FIRE INSURANCE CLAIMS
Business enterprises get insured against the loss of stock on the happening of certain
events such as fire, flood, theft, earthquake etc.
Insurance being a contract of indemnity.
Fire Insurance claim can be studied under two parts as under: -
1. Claim for loss of stock.
2. Claim for loss of profit.

5. CLAIMS FOR LOSS OF STOCK
Total Loss(Goods
fully destroyed )
Fully
insured
Partial Loss (Goods
Partially destroyed )
Fully
insured
Under
insurance
Under
insurance
Without Average
clause(General clause)
With Average clause
Actual Loss Sum Insured
Whichever is lower
or
Loss by fire

6. When a fire occurs, apart from the direct loss on account of stock or other assets
destroyed
 There is also a consequential loss because, for some time, the business is disorganized or
has to be discontinued, and during that period, the standing expenses of the business-like
rent, salaries etc. continue.
This loss can be insured against by a "Loss of Profit" or "Consequential Loss" policy
Any claim Under this policy is admitted provided the claim for loss is also admitted under
a different policy.
CLAIMS FOR LOSS OF PROFIT

7. Actual loss
• Actual loss=Stock on the date of fire –Salvage value
• Insurance company will only compensate for actual loss

8. Loss of stock
Steps
First identify the stock on date on fire
Second actual loss
Third claim

9. Without Average clause(General clause)
• Stock on the date of fire – 1,00,000
• Salvage -20,000
• And the policy value is 50,000
• Actual loss will be here 80,000 but the company will pay only 50,000
as the policy amount is 50,000

10. With Average clause
Amount of claim = Loss of stock × sum insured / Insurable amount (T.C)
Insurance amount= 1,00,000
Sum assured=50,000
Loss of stock=1,00,000- 20,000(Salvage value)
=80,000 -----Actual Loss
=80,000 *50,000/1,00,000

11. REFERENCES
• https://gargicollege.in/wp-content/uploads/2020/03/Fire-
insurance.pdf
• https://nios.ac.in/media/documents/VocInsServices/m4-1f.pdf
• http://niilmuniversity.in/coursepack/Insurance/Principles_&_Practice
s_of_Fire_Insurance.pdf

12. THANK YOU