wealthfactsheet-general

2. Fire Insurance.
Fire insurance is one of the most basic of general insurance cover. Fire insurance can be used to cover for both your home and your business.

However one must remember that the Fire insurance covers the re-construction costs of the property (home/factory). It is never the cover of (1) the value or valuation of the property, (2) its contents or whatever is in it.

People tend to mistaken that if they insure their home, they think it is the value of the home. Example, before a fire occurs, the value of the property is say $1 million. So the insured orders an insurance coverage worth of $1 million on his property.

When a fire hits the property, the insurance company will send down its surveyors to access the damage and said that it is total loss and place a value on it. After calculation, it conclude that the re-construction costs is $400,000.

You jumped and said you were insured for $1 million. And you are wondering, who is right and who is wrong?

Putting all into perspective, firstly you were wrong to insure it for $1 million. You should have gotten the insurer to give an indication on what is the -re-construction costs first. Then insure base on the re-construction costs.

Secondly, you should never insure at valuation. Valuation is what the market thinks the property should be value at. Fire insurance is the re-construction costs and not the value of the property. They are two entirely different matters.

Thirdly, fire insurance covers all fixtures and fittings in the home or office premise. Anything that is movable will not be included.

Fire insurance is suppose to indemnify an insured up to the point where it was before the fire hit (the original condition before the fire). You can never profit from fire insurance.

Other types of Non-Life/General Insurance:
1. Motor Insurance
2. Fire Insurance
3. Travel Insurance
4. Contents Insurance
5. Property Insurance
6. Business Insurance
7. Liability Insurance
8. Marine Insurance
9. Others...