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Cover Overview: Fire and Perils Insurance

No matter your business’ size, industry or location, the threat of a fire still looms. It only takes a few seconds and a few ingredients for a fire to ignite—and another instant for it to engulf your business. You cannot eliminate the possibility of fires; regardless of fire prevention strategies you invest in, the threat will persist. Bolster your fire prevention strategies and protect your business by purchasing robust cover as part of your commercial property insurance policy.

The Cover

Fire and perils insurance is a standard and popular policy for business owners. The typical fire policy provides cover in the event of loss, destruction or damage to property caused by the following perils:

  1. Fire: typically excludes damage from an earthquake or subterranean fire, and damage from spontaneous fermentation or heating
  2. Lightning
  3. Explosion:  typically restricts cover to damage caused by explosion of boilers or gas used for domestic purposes only

Individual policies vary; you may be able to negotiate extended fire cover with your insurer, but this scope of fire cover is the general accepted baseline.

The Extensions

While the ‘fire’ part of your fire and perils policy is standard for most insurers, the ‘perils’ part of your policy is much more bespoke—it encompasses a wide variety of risks that your insurer is willing to insure. Some insurers will let you pick and choose which extensions you want, but it is increasingly common for insurers to issue policies covering fire and all of the special perils listed below.

  • Explosions: some insurers will extend basic fire cover to protect against explosions, but still exclude damage caused by explosion of boilers or gas used for domestic purposes only
  • Aircraft
  • Riots and civil commotion
  • Malicious damage and vandalism
  • Earthquake
  • Subterranean fire
  • Spontaneous fermentation or heating
  • Storm and flood
  • Escape of water
  • Impact
  • Sprinkler leakage
  • Subsidence, heave and landslip

The Exclusions

Although the list of available extensions is long, insurers do not offer a free-for-all when crafting your fire and perils policy. They still must exclude certain perils to keep their insurance products cost-effective. Fire and perils insurers may refuse to insure loss, destruction or damage caused by the following:

  • War risks
  • Radioactive contamination
  • Terrorism
  • Pollution or contamination
  • Marine policies
  • Consequential loss
  • Sonic bangs
  • Cyber-related risks

Stamping out Your Fire Risk

Although you can never totally eradicate your fire risk, by purchasing a reliable and bespoke fire and perils policy you can be sure that your business can rise from the ashes of a devastating fire. Trust the insurance professionals at Sirelark Risk Services to find you a sturdy policy that gives you peace of mind and the tools to recover from whatever perils come your way.

The content of this Cover Overview is of general interest and is not intended to apply to specific circumstances. It does not purport to be a comprehensive analysis of all matters relevant to its subject matter. The content should not, therefore, be regarded as constituting legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice. Further, the law may have changed since first publication and the reader is cautioned accordingly. © 2014 Zywave, Inc. All rights reserved.

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