Insurance, Business and Finance by Peter Panmovie

Fire can happen any time. It may be due to unattended cooking, faulty wiring, sparks from somewhere, arson, natural elements, and other such things. Statistics show that fire is the cause of maximum number of deaths and that most of them take place at home. Fire causes extensive damage, loss of life and property and it is very essential to buy fire insurance to protect oneself.

A fire insurance policy is a contract between an insurance company agreeing to pay a pre-decided amount of money which is estimated as the cost of the things which were damaged or lost by the fire. This is paid if the fire takes place during the time specified in the contract.

The fire insurance protects for the estimated value of the house though there may be several exclusions like personal belongings, pets, structures outside the house like a garage, damage to the landscape or expenses for alternate accommodation till the house is refurnished or restructured, after the fire. These may be covered under a package of extended property insurance.

There are different types of fire insurance. One is a specific policy where the insurer is liable to pay a lesser amount than the actual and real value of the property. Another is a comprehensive policy which is an all-in-one policy where fire, burglary, theft, third party risks are all covered and the insurer gets money even for the loss of profit due to the fire till his business is restored.

In the Valued policy the amount is fixed and the actual loss is not taken into consideration. If you buy the floating insurance policy, it covers even different properties belonging to the policy holder and he needs to buy the same contract and pay one premium. It may also cover the goods kept at two different places.

And if you choose the replacement or reinstatement policy you may not get the money for the lost property but the lost property may be replaced by the company.

Other types of fire insurance may pay the replacement costs regardless of depreciation or appreciation of your property. If you buy an extended replacement policy then you will get paid for the cost of your lost property if it has increased. This generally is limited to twenty percent. Some policies may provide replacement of lost property minus depreciation. Some insurance sellers may separate high value items from the other household items and cover them separately. Some insurers may insist on coverage option of having to pay for alternate living arrangements if a fire leaves the home uninhabitable. In such cases the policy will help in paying hotel expenses or alternate living arrangements.