Business Studies XII Content
Types of fire insurance
- Comprehensive policy:
Fire insurance is called a comprehensive policy when it covers all other kinds of risks like riots, arson, loot, civil commotion, wars, strikes, accidents and others in single insurance.
- Blanket policy:
A blanket policy is that fire insurance policy in which a single policy is used to insure properties at one or different locations against the risk of fire. Sometimes an organization or a person can have properties at various locations and this type of insurance is useful fore covering the risk generated by fire for these all properties.
- Consequential loss policy:
A consequential loss policy is meant for compensating the loss not directly b fire but incidental to the fire event. Loss of fire is also covered but addition to that other kinds of losses due to expenses on salary, interest, inflation or hiring of temporary premises are also covered.
- Valued policy:
A fire insurance policy the value of property is fixed at the time of inspection is called valued policy. So in case of loss of property by fire, the insurance company pays the full of policy amount at the time of taking policy whether the property is fully damaged or not.
- Valuable fire insurance policy:
Under this policy, the value of claim is determined at the actual market price of the damaged property only after the destruction of the policy. The value is not fixed earlier as in valued policy.
- Specific fire insurance policy:
Under this policy, if the damage is less than the insured amount, insurance company compensates up to the mount damaged. If the damage is more than the insured mount insurance company compensates only equal to insured amount or identify loss to the extent of specific amount.
- Floating fire insurance policy:
if a single fire insurance policy is conducted for different property located at different place, then that type of policy is called floating fire insurance policy. For the convenience of client this policy is undertaken. An entrepreneur may have some of his goods and other at other storable places. Insuring them under separate policy can be very chaotic. That’s why floating fie insurance policy is done to offer financial security that can occur at different places through single policy.
- Average policy:
It can be defined s the policy in which losses born by both insurance and owner of insurance property. It is calculated under the following formulae.
Claim= (insured amount / value of property) * actual loss
- Adjustable fire insurance policy:
According to the changes of stock the insured amount is also changed. The premium is calculated according to the insured amount and the insured amount changed. Under this policy, the insured amount is based on the value of existing stock in the beginning and late exited according to information received on the changes of stock. For example, if the client has stock worth rs. 100000 then insurance for the same amount is made. Later on if the same stock is worth rs. 80000 or rs. 110000 than the insured amount may increase or decrease as the situation may be. The information about stock receive from the insured is the base for limiting the liability of the insurance policy.
- Reinstatement policy:
Under this policy, the insurance company undertakes to replace the property damaged by fire. In this policy, the actual loss is no indemnified in monetary terms but the insured goods are replaced.
- Declaration policy:
This policy is issued for the maximum value of stock to be insured. At the beginning of the contract, three-fourths of the premium payable is charged from the insured in advance. Every month the policyholder is required to declare the value of present stock. In case of any loss by fire, the compensation is made on the basis of declared value. At the end of the insured period, based on the values stock declared, the total of premium payable is worked out as average.
- Excess policy:
An excess policy is supplementary fire insurance policy, which is purchased to cover additional risks beyond the coverage of original first loss policy. The kind of fire policy is purchased by such merchants whose stock fluctuates from time to time. In such a case, first loss policy is purchased for minimum stock value and additionally an excess policy is purchased for an anticipated increase in the total value of stock.