Insurance against fire

Insurance against against fire usually referred to as fire and related perils is slowly gaining preference in the Kenya industries with companies taking more keen interest in the cover. But what does it entail to have a fire cover against your premise?

Currently fire insurance accounts for a fairly high proportion of total non- life insurance premium income in Kenya. Many insurers treat fire as the main insurance business. Other classes of insurance are considered as “accommodation “business. The basic fire policy is called the standard fire policy because it covers same perils that is, fire, lightning, and limited explosion.

Fire

Fire is the actual ignition of something that should not be on fire, the cause being accidental or fortuitous. There are exclusions under this peril however.

Lightning

Any loss covered by lightning is covered under fire policy.

Explosion

Explosion cover is limited to explosion of boilers or gases used for domestic purposes,The use , however , will determine if the boiler or gas is domestic. In this regard a boiler located in the factory but used to boil water for making tea or washing hands is regarded as domestic.

Special perils under fire policy

The standard fire policy may be extended to cover other perils which are classified and described here below.

Social perils

These are perils with human source and they include strikes, riots, malicious damage and civil commotion.

Chemical perils

Chemical perils include explosions and spontaneous fermentation or heating. The latter peril should be under written with care because:

• The property to be insured is usually prone to self jesting;
• if property self-ignites it is very difficult to extinguish the fire
• salvage prospects are low
• very careful control of storage is essential; and
• insurers will need to incur costs of survey before accepting the risk

Natural Perils Natural perils include:

• storm, that is atmospheric disturbances of unusual nature
• flood, that is, escape of water from the normal confines of any natural or artificial water works;
• earth quake;
• subterranean or underground fire or fire of volcanic nature; and
• subsidence, ground heave or land slip. Subsidence is uneven settlement of made up ground e.g. movement of foundations. Ground heave occur when ground that previously had low moisture is suddenly able to accept more moisture. A land slip is a min miniature land slide. It is a rapid movement down ward under the influence of gravity of a mass of rock or earth on a slope.

 Miscellaneous perils
These are perils that cannot be classified under any of the above categories and are mainly escape of water, damage caused by any aerial device or articles dropped thereof and impact damage, especially to buildings caused by vehicles.

Long – term agreements under fire policies
This is where the insurer gives a premium discount in consideration of the insured offering to renew the contact for a given term, for example three or five years. The insured is under obligation to renew. Failure to do so will require that the insured pays back the enjoyed discount however, if the insurer changes the terms and conditions of the contract, the insured is not bound to renew.

Business Interruption Insurance
The policy is offered to protect future earnings of an enterprise after damage from an insured peril such as fire, including special perils. The fire and related perils policy ( material damage) covers buildings and contents or the capital items of a business. The material damage policy does not cover loss of profits occasioned by fire or any other peril insured. This is only covered under the business interruption policy. The perils covered under the business interruption policy are the same as those covered under the material damage policy.

The most common business interruption policies are those that cover losses from

• Fire and special perils
• Computer damage and breakdown
• Engineering machinery breakdown

In a paraphrase, the purpose of business interruption insurance is to cover:

• Net profit which would otherwise have been earned;
• reimburse those standing charges or fixed expenses reduction in turn over or sales;
• Meet such additional costs as are insured to enable the business to recover more quickly to reduce the loss, for example, lease of alternative premises.

 Its for this reason that companies should ensure that their workplace is insured against fire and eventuality.