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What is Perils of Fire Insurance? Check Standard Fire and Special Perils Policy

Updated On Jan 24, 2024

Under fire peril insurance, an insurer agrees to provide you economically for financial loss sustained as a result of a certain asset being damaged or destroyed by fire or other perils. In exchange, the insured person has to agree with certain terms and conditions and has to pay an amount as a premium to the insurer or insurance company to avail of the policy benefits and renew it without fail. In this blog, we are going to describe everything about fire peril insurance in detail.

Types of Fire Insurance

Under the Standard Fire & Special Peril Insurance (SFSP), there are 5 fire insurance policies. They are as follows:

  • Specific Policy

    In this policy, a specific sum assured is determined for a particular property, and in case of loss, the actual loss doesn’t exceed the insured amount.
  • Comprehensive Policy

    This policy provides extensive coverage for not only fire but other perils like robbery, burglary, etc. 
  • Valued Policy

    The indemnity of the policy is determined based on the value of the property and not on the current market value. Therefore, the agreed value at the time of purchase is the deciding indemnity here. 
  • Floating Policy

    If you deal with multiple fluctuating stocks, then this policy provides coverage to more than one good under a single premium. 
  • Valuable Policy

    The current market price of the damaged asset decides the claim amount. 

List of Perils Included

  • Fire
  • Lightning
  • Explosion/implosion
  • Aircraft Damage
  • Riot, Strike, and Malicious Damage                
  • Storms, Cyclones, Typhoon, Tempests, Hurricane, Tornados, Flood and Inundation
  • Impact Damage
  • Missile testing operations
  • Leakage from Automatic Sprinkler Installations
  • Subsidence and Landslide, including Rock slide
  • Bush Fire
  • Overflowing or bursting of Water Tanks, and Pipes

Though there are varieties of perils included in this policy, many are excluded too. They are: 

  • a) Properties that own fermentation, natural heating, or spontaneous combustion
    b) Burning of the property insured by order of any Public Authority
  • Boilers, vessels, and machinery resulting from their explosion/implosion.
  • Damage caused by pressure waves of aircraft.
  • a) Interruption or cessation of any process or kind.
    b) Destruction by order of the Government or any lawfully constituted Authority
  • The destruction is caused by earthquakes, volcanic eruptions, or other natural convulsions.
  • Cracking, settlement, or bedding down of new structures
  • a) Repairs, extension, or removal of the Sprinkler Installation
    b) Defects in construction known to the Insured
  • Forest fire
  • Civil war, invasion, mutiny, conflicts, and other war-related danger
  • Damage due to pollution or contamination
  • Theft and break-ins
  • Terrorism Damage
  • stocks in cold storage caused by cold temperature
  • Loss of earnings, loss of market. 

Conditions under the Fire Peril Policy

Here are some important conditions to learn about the fire peril commercial & business insurance policy:

  • Voidable Condition

    The policy shall be voidable in the event of misrepresentation, misdescription, or non-disclosure.
  • Ceasing Condition

    All insurances under this policy shall cease to effect after seven days from the date of fall or displacement of any building or part.
  • Material Alteration Condition

    Under this condition, the insurance coverage for that specific property will no longer be valid.
  • Termination Condition

    The insurance company can terminate the policy at any point they want, and the premium is refunded at a short period scale on a fifteen-day notice. The insurer can also terminate the policy on a fifteen-day notice and refund the premium for the unexpired term on a pro-rata basis.
  • Right of Entry Condition

    In this condition, the insurance company has full authority to take possession of the insured premises, examine, sort, arrange and, if required, sell them.
  • Fraud Dealing Condition

    The insurer surrenders all the benefits of the policy if the insured submits a fraudulent claim or supports a claim with false information.
  • Pro-rata Average Condition

    If the value of the property at the time of the claim exceeds the sum insured, the insured becomes responsible for the difference and bears a rateable proportion of the loss.
  • Multiple Policies Condition

    If more than one policy covers the same property, the company will pay only the rateable proportion of the loss. The rateable proportion is calculated based on the sum insured under the specific policy compared to the total sum insured across all policies covering the property.
  • Communication Requirement

    All notices and communications required by these conditions must be provided in written or printed form.  

Assets Covered by Fire Insurance Policy

  • Under-construction building and interiors, partitions, and electricals
  • Plants, Machinery including new and second hand, equipment and accessories
  • Other contents like cables, pipelines, furniture, fixtures, household goods, etc


In this world, everything is uncertain. We all need to keep a backup so that we are not vulnerable to any kind of adversity. One such uncertainty is fire. It can knock down all your possessions and bring you into debt. If you don’t have fire peril insurance coverage, you are most likely to cover the expense incurred all by yourself. So to be prepared for unforeseen misfortune, you must get Fire peril insurance in advance.


Q. What is the difference between fire and fire peril insurance?

A. Fire insurance provides coverage only for damage caused by fire or ignition. Whereas fire peril insurance covers damages caused by fire, lightning, explosion, and many more. 

Q. How long does the insurance policy protect the insured?

A. A fire peril insurance policy is issued for one year. 

Q. Can you ask for changes in policy during the policy tenure?

A. Yes, if your insurer allows so, then you can change. But you have to pay for any additional coverage. 

Q. Who is eligible for this policy? 

A. Anyone falls under the category of Business person, service supplier, manufacturer, retailer, or building owner, and possesses household articles. 

Q. How to increase the sum insured limit for built covers?

A. According to the IRDAI guidelines, you cannot increase the sum insured limit in the built covers. 


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.