Types of Fire Insurance
The main types of fire insurance policies are as follows:
Specific Policy: In this policy, the liability of insurer is limited to a specified amount which may be less than the real value of the property insured.
Valued Policy: Under it, the insurer agrees to pay a fixed amount in the event of loss irrespective of the actual loss suffered by the insured. Such a policy is taken for things which cannot be valued at the time of loss.
Floating Policy: It is taken for goods kept in various godowns and the quantity and value of which varies from time to time.
Replacement Policy: It gives an option to the insurer to pay the loss in cash or to replace the property damaged by fire. It is also called reinstatement policy.
Loss of Profit Policy: This policy protects the insured against loss of profit due to dislocation of business by fire. The insurer agrees to pay the expected amount of lost profit in addition to the loss to property. It is also called consequential loss policy.