Fire Floater Policy
What is Fire Floater Policy?
A fire floater policy in fire insurance covers stocks at various locations under a single sum insured. This is particularly useful when a business has frequent stock fluctuations or changes in stock value across multiple locations like warehouses or godowns. Instead of insuring each location separately, a floater policy allows for one comprehensive sum insured to cover all locations, simplifying the process and potentially reducing costs.
Key Features of a Fire Floater Policy:
This Are Some Key Features
- Multiple Locations
- Single Sum Insured:
- Flexibility
- Declaration Requirement
How Does a Floating Fire Insurance Policy Work?
Floating policies in insurance help cover business assets like moveable equipment that may not be stored at a specific location. It will cover claims arising out of loss or damage to these assets due to events concerning fires.
For example, let us take a construction company that has equipment (moveable property), like cranes, bulldozers, etc., that constantly need to be moved from one construction site to another.
While lightning strikes may not be a problem in some regions in India, they may be a cause for concern when operating in regions like Madhya Pradesh, Odisha or Jharkhand[1], resulting in fires and irreparable damage to equipment.
A floating policy in insurance will cover these damages as and when they arise, regardless of whether the equipment is stored inside or outside their place of business – provided that these goods belong to the company/insured.
Benefits Of Fire Floater Policy:
Below There Are Some benefits
- Convenience: Simplifies the insurance process by covering multiple locations under one policy.
- Cost-Effective: Can be more cost-effective than insuring each location separately, especially when stock values fluctuate.
- Ease of Management: Reduces the administrative burden of managing multiple policies.
What is Covered Under a Floating Fire Insurance Policy?
- Intentional Damage: Damage or property loss intentionally caused by the policyholder or anyone else acting on their behalf will not be covered.
- Negligence: Failure to maintain the insured property or failure to take precautions against potential loss by the policyholder will not be covered.
- Breaches of Law: Any losses or damages to business assets arising out of illegal activities will not be covered as breaches of law are considered a violation of policy terms by insurers
- Normal Wear and Tear: Damage that arises from regular usage of equipment or loss due to old age of the property will not be covered – E.g. Equipment failure due to old age, rust, gradual deterioration.
- Unoccupied Property: This may tie into negligence in some cases. Vacant buildings or other property that remain unoccupied for an extended period will not be covered under a floating fire insurance policy in case of fire damage.
- Policy Specific Exclusions: Exclusions will vary across the board depending on your chosen insurer and policy type.
What is not Covered Under a Floating Fire Insurance Policy?
Buildings or structures – both on-site and off-site. This includes newly erected structures.
Stock, inventory or merchandise owned by the company, located and stored in warehouses outside business premises.
Equipment or machinery used in construction, like scaffolding, cranes, tractors, etc. that do not have a set location are constantly moved around.
All office equipment, whether owned or leased, like computers, phone systems, furniture, etc.
Company vehicles used for transportation.
Companies that do not have a set or consistent physical address – circuses, carnivals, fairs, etc.
