Answer the following questions in short:
State the different types of fire insurance policies.
ANSWER:
The following are the different types of fire insurance policies:
i. Valued policy - Under this policy, the insurer is liable to pay the insured the value stated in the policy, irrespective of the actual value of loss suffered by the insured.
ii. Specific policy - Under this policy, the insurer is liable to make the payment for the loss incurred for a certain specified amount. In case the loss is greater than the amount specified in the contract, the insured has to bear that extra loss incurred.
iii. Floating policy - This policy is usually taken by big businessmen to cover the risk of fluctuations in the stock of goods held in different stations, ports, etc.
iv. Reinstatement policy - In this policy, the insurer can re-establish the destroyed property or goods destroyed by fire instead of making payments in cash.
v. Average policy - In this type of policy, the insurer is liable to pay only that percentage of the loss for which the insurance is taken.
vi. Comprehensive policy - This policy covers all types of risks, including risk from fire, theft, burglary and riot.
vii. Excess policy - This policy is taken to seek protection against price fluctuations in the market. Under this policy, two policies are taken: one is for a minimum amount beyond which the price will never fall and the other one is for a maximum amount by which the price is expected to fluctuate.
viii. Blanket policy - In this policy, all the fixed as well as current assets lying at different places are covered in one single policy.
