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Updated on October 1, 2009

The principal types of fire insurance policies are given. below:

1. Valued policy

When the agreed value of the subject matter is mentioned in the policy is named as valued policy. This value may not necessarily be the actual value of the property. In the event of toss by fire the insurer pays the admitted value of the property.

2. Unvalued policy

An unvalued policy in one in which the value of the subject matter is not declared at the time of policy taken. But in case of loss the value is computed by assessment. This is also called an open policy.

3. Specific policy

In case of specific policy, the property is insured for a definite sum. If there is loss, the stated amount will have to be paid to the policyholder. But the actual value of the subject matter is not considered in this respect. For examples if a policy is taken for Rupees 20,000 upon a building whose actual value is Rs.1,00,000 and afire occurs causing the amount of loss Rs.20,000. The insurance company will pay the whole amount of loss of Rs.20,000 irrespective of the fact that the building was insured for one-fifth of its value.

4. Average policy

An average policy is one which contains the average clause. This clause required the insurance company to pay only that portion of the loss which is borne by the insured amount to the actual value of the subject matter of the insurance. For example a value of the property is Rs.1,00,000. It is insured for Rs.60,000 (60% of the total value) and the amount of loss is Rs.60,000. The insurance company will not pay Rs.60,000 to the policyholder but will pay Rs.36,000 (60% of Rs.60,000).

5. Floating policy

A floating policy is that which covers the fluctuating risk of several goods lying in different localities for supply to various markets. Such a policy is usually taken out under one sum and one premium by the businessman whose goods are lying at docks and warehouses.

6. Stock declaration policy

This policy is taken for covering the stock where great fluctuations in the value can happen throughout the contract period. On such policy 75% of the premium has to be deposited in advance. The maximum liability of insurance company is specified in the policy by the insured. At the end of year the average stock and final premium is calculated.

7. Loss of profit policy

Such type of policy covers the loss of profit which sustains as a result of fire. This policy is also known as consequential loss policy.

8. Standard fire policy

This policy is issued for compensation of all direct loss or damage caused by lighting and burning. Such policy also covers damages by earthquake, hair flood, explosion, cyclone and riot.

9. Reinstatement policy

Under this policy insurance company pays more than the actual value of the property destroyed by fire in order to cover the cost of replacement of the said property. It is also called as “Replacement Policy”. This type of policy is not very common in these days.

10. Schedule Policy

A schedule policy is one which insures many properties under collective terms and conditions, Details of the properties and their respective rates of premium are listed in one policy only for the convenience of the insured.

11. Sprinkler leakage policy

This type of policy covers the loss of building as a result of the damage by he

leakage of liquid or water.

12. Excess policy

This policy is issued for the stock of merchandise whose value is constantly fluctuating. In such case it is not suitable to take one policy for certain sum. So the insured takes an ordinary policy for minimum value of the stock and excess policy for excess value of the stock. The actual value of the stock will be reported periodically

13. Maximum value with Discount policy

Under this policy one third discount of the premium paid is refundable to the insured at the maturity of the policy. This policy covers the risk for maximum amount.


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    • profile image

      Namitha Reddy 17 months ago

      Wasn't useful at all.:/

    • profile image

      anarul 2 years ago

      thanks a lot

    • profile image

      rebin 2 years ago

      tnx alot....

    • profile image

      rebin 2 years ago

      tnx a lot....

    • profile image

      AKSHU 4 years ago

      thnxxx a lott

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      Haneesh Katnawer 5 years ago

      Can you please mention the reference of this article?

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      trex 7 years ago

      quite educative.kudos

    • profile image

      rv 7 years ago

      thank a lot

    • nilum profile image

      nilum 7 years ago


    • profile image

      ram 7 years ago

      very useful to u thanks

    • nilum profile image

      nilum 8 years ago

      Thanks lyricsingray..... my pleasure to share what i know

    • profile image

      lyricsingray 8 years ago

      Very very good to know - wish these tragedy's never occurred need assistance-thanks!Kimberly

    • nilum profile image

      nilum 8 years ago

      :-) Thanks for commenting Dear

    • Waren E profile image

      Waren E 8 years ago from HAS LEFT THE BUILDING............

      Thanks for breaking down such a complicated topic,it was very easy to grasp in that way!