Running a business is not easy; there are many uncertainties and hurdles. You never know which new technology or innovative products will make your offerings obsolete, which new government policy will impede your functionality, and so on. While these are the difficulties you may develop a strategy to address, a few factors can cause your company to suffer a significant loss. We are discussing the loss inflicted by fire.
But don't worry, with fire insurance, you can handle this issue as well. This coverage, as the name implies, pays for any damages sustained by your business due to an accidental fire.
Despite this coverage, many firms fail to receive compensation because they are unaware of the claim process. To help them, here is our guide to the fire insurance claim process.
Step 1: Inform the Insurer
Inform the insurer as soon as a fire breaks out and destroys your assets.
In the worst-case scenario, if you do not have the financial resources to deal with the situation, request your insurer to offer funds to vacate the premises, move to temporary accommodation, or shift the unburnt things.
You can settle these advances when you receive the final payment from your insurer.
Step 2: Loss Estimation
Following notification, evaluate the loss your company suffered due to the fire. Ensure you have enough evidence to back up the loss sustained. Take as many photos and videos as possible of the goods destroyed in the fire.
Avoid the following blunders, as they will invalidate your claim or reduce the claim amount:
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Never throw away entirely broken items since they will not be considered a loss if the insurer does not find them during the inspection.
Avoid repairing or replacing such equipment for the same reasons stated above.
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Step 3: Claim Submission
Insurers let you raise a claim online or offline. If you are filing an online claim, follow the instructions below:
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Visit your insurer’s website.
Go to the claims section.
Complete the claim form with all essential details.
Upload the evidence you have, along with any other required documents.
You must visit your insurer’s branch in person for an offline claim and submit the necessary paperwork before the designated officer.
Step 4: Claim Investigation
Next, the insurer will assign a surveying officer to assess the loss. They will review if the reason for the fire is covered under the policy. They will also check if the estimate for loss you provided is accurate.
Learning about the following fire insurance exclusions is essential to ensure you clear this stage smoothly.
Fire insurance won't cover any loss if you deliberately damage the property.
Loss due to fire caused by nuclear war, war-like operation, and invasion is not covered.
Loss to such property/goods missing at the time of assessment will not be covered.
A fire insurance policy does not cover any cost you incurred for preparing the claim.
Fire insurance does not cover any loss incurred due to electricity leakage.
Any items stored in cold storage that catch fire because of temperature changes are not covered.
The insurer will not provide coverage if the fire is caused by contamination or pollution.
Step 5: Final Settlement
The insurer’s claim department will review the report submitted by the investigating officer. If everything checks out, you will be compensated for the loss within the next few business days.
Depending upon the cause of the fire and the insurer's guidelines, you will require the following documents:
- Fire insurance policy document
- Duly filled claim application form
- Snaps and videos of the incident
- Forensic report (if applicable)
- Copy of FIR
You must be aware of the following factors before making a claim:
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You can file a claim only if you have an insurable interest in the damaged property. That means the property loss should have a direct financial impact on you.
- You must supply the insurer with all the information that affects the claim. For example, if your premise is near a chemical or petroleum plant with a high fire risk, you must mention that.
- Fire insurance is an indemnification agreement. It means you will be paid for the actual loss suffered rather than a lump sum payment, as is the case with life insurance, which offers a fixed sum assured.
- You will only be compensated for your claim if the loss of your possessions was caused directly by fire and not by other reasons, such as water intrusion, theft, etc.
- No claim will be entertained if you transfer the policy to someone else without notifying your insurer.
- Fire insurance policies are valued at either market or replacement value. Market value is the amount you would have received if you had sold the property immediately before the fire incident. Replacement value refers to the amount required to replace a damaged property with a new one.
Submitting a fire insurance claim is not complicated. You simply need to understand your policy’s exclusions and key provisions for fire insurance. Also, make sure you have all the necessary documents and clear photographs of the fire incident to expedite the claim process.