Fire and Property Loss Assessment
Fire and Property Loss Assessment
This domain tests the standard fire and special perils (SFSP) policy, investigation of fire cause, and property damage valuation. Expect questions on coverage, exclusions, average clause and documentation.
Cover and exclusions
- SFSP covers fire, lightning, explosion/implosion, aircraft damage, riot/strike/malicious damage, storm/tempest/flood/inundation, subsidence/landslide, and missile testing, subject to policy terms.
- Common exclusions: war and nuclear risks, wilful act, spontaneous combustion, fermentation, subterranean fire, and electrical short-circuit damage to the appliance itself.
- Add-on covers include architects’/surveyors’ fees, removal of debris, and escalation.
Investigation
- Establish origin and cause; distinguish accidental fire from arson or electrical failure.
- Preserve evidence, photograph the scene, collect fire brigade and police reports.
- Verify sum insured, policy period, warranties and previous claims.
- Quantify damage item by item; separate salvage; check for underinsurance.
Valuation
- Market value: replacement cost less depreciation.
- Reinstatement value: cost to rebuild/replace without depreciation, subject to policy conditions.
- Apply average clause where sum insured is less than the value at risk.
Worked example
Building value ₹1 crore; sum insured ₹75 lakh; fire loss ₹40 lakh; salvage ₹5 lakh; excess ₹25,000. Average ratio 0.75. Adjusted loss = 40 × 0.75 = ₹30 lakh. Less salvage = ₹25 lakh. Less excess = ₹24.75 lakh payable. If the policy is reinstatement value and the building is old, do not deduct depreciation.
Traps
Ignoring average; paying debris removal outside the sub-limit; missing salvage; treating electrical short-circuit damage as fully covered; accepting a fire brigade report as proof of cause without inspection.