Types of Fire Insurance Policies

Fire Insurance contract is an insurance policy where insurer agrees to make good the loss of the insured that occurs out of a fire accident that it was during a period that was specified. The contract of fire insurance contains the maximum sum that can be claimed by the insured. It is important to note that in this contract of insurance, only the loss is paid by the insurer to the insured but not the maximum amount specified in the contract made in between the insurer and the insured. The maximum assured sum is paid only when the loss is more than the specified amount according to the contract. The fire insurance policies are of different types and they were specified here under.

Types of Fire Insurance Policies


  • Specific Fire Insurance Policy
  • Comprehensive Fire Insurance Policy
  • Valued Fire Insurance Policy
  • Floating Fire Insurance Policy
  • Replacement Fire Insurance Policy

Specific Fire Insurance Policy

In this type of fire insurance policy, the loss is covered up to a specific amount. That specific amount is usually less than the actual value of the asset or property. It is an under-insurance case. To check this, an average clause is inserted by the insurer and in this case it is called as the average policy.

Comprehensive Fire Insurance Policy

Insurance policy is a contract where the insurer agrees to make good the loss of the insured. In fire insurance, the loss occurred due to fire accident is made good. In this comprehensive fire insurance policy, the insurer agrees to make good the loss occurred out of not only fire accident but also occurred out of burglary. It can also be mentioned as an all in one policy. In this policy, the insurer also agrees to make good the loss, according to the contract, of the insured faced due to his work place shutdown subsequent to the fire accident.

Valued Fire Insurance Policy

The contract to pay the assured sum due to loss is fixed during making of the policy in this type of fire insurance policy. When the loss due to fire accident occurs, the insured gets assured sum as per the contract and that is irrespective of the actual loss that occurred due to the fire accident. It is not a contract of indemnity and also this can be challenged legally.

Floating Fire Insurance Policy

In floating policy, the loss of property due to fire accident that is in different places is covered. It is subject to average clause always.

Replacement Fire Insurance Policy

It is also known as reinstatement fire insurance policy. In this policy, the insurer replaces the property that was lost in the accident. The assured sum is not paid in cash but the property is replaced. This is a device to prevent fraudulent claims.

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