Fire Insurance Policy : Major Things to Consider..!

by Mr. Anuj Tyagi, HDFC Ergo

 It is essential to understand below mentioned points before you purchase fire insurance.

Sum insured ..!

^ It is important to insure the property for the right amount. Sum insured (SI) represents the maximum limit up to which the insurers are liable in the event of loss under the fire insurance policy.

^  The value of SI should be identical to the value of the property either on market value (MV) basis or / reinstatement value (RV) basis.

^  The premium rate does not change whether one opts for MV or / RIV, the SI representing the values are essentially different. Thus, one cannot have MV declared as sum insured and policy issued on RIV basis, because in such case, the under insurance is applied. This is where, one needs to be careful to make sure that the sum insured selected is adequate.

Deductible Excess..!:

^ One should not neglect to make note of the deductibles / or excess applicable. This is an amount which is to be compulsorily borne by the insured.

^ Any loss below this amount, is not payable by the insurers, and losses exceeding this amount, will be paid for the balance amount.

About the author..

Mr. Anuj Tyagi is Head ­Corporate, Rural and Agri Business at HDFC Ergo

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