Things to Check Before Buying Fire Insurance

Most people think fire insurance is the same across insurers. It is not. Two policies that both say “fire and special perils” can pay out wildly different amounts after a real claim, because the fine print decides what counts as a covered loss and what does not. Buying general insurance for fire risk without checking the checklist below is how families end up with a 40% claim payout on a 100% loss.

This is the no-nonsense list. Read each item, ask the agent the question, and only then sign.

Why this checklist matters

A standard fire policy looks cheap — a few thousand rupees a year for a 50 lakh house. The cost feels insignificant against the asset, so people skim the document and trust the brand. The trouble is, the cheapest premium often comes with the narrowest definition of “fire” and the longest list of exclusions.

The price of fire insurance you don’t read carefully is paid in full at the moment of claim, not the moment of purchase.

1. Confirm the type of policy

India has two relevant products. Make sure you know which you are being sold:

• Bharat Griha Raksha — the standardised IRDAI policy for homes worth up to 5 crore rupees. Same wording across all insurers.
• Standard Fire and Special Perils (SFSP) — the older corporate-style policy. Words and exclusions vary by insurer.

For homes, Bharat Griha Raksha is almost always the better starting point. It removes the wording game.

2. Check the sum insured method

The sum insured can be calculated three ways:

1. Reinstatement value — the cost to rebuild the structure today. This is what you want.
2. Market value — the rebuild cost minus depreciation. Insurers love this; you will lose 30-50% on a claim.
3. Agreed value — a pre-decided figure, used for unique structures.

If the agent does not say “reinstatement value” clearly, walk away.

3. Verify what counts as “fire”

Standard fire policies cover not just fire, but a range of perils. Confirm in writing that the policy includes:

• Lightning
• Explosion or implosion
• Aircraft damage
• Riot, strike, malicious damage
• Storm, cyclone, flood, inundation
• Subsidence and landslide (often a separate add-on)
• Bursting or overflowing of tanks and pipes
• Bush fire and forest fire

Bharat Griha Raksha includes most of these by default. SFSP variants vary.

4. Check the exclusions list

Common exclusions that bite at claim time:

• War, invasion, nuclear risk — standard, fine.
• Wilful negligence — fair, but “negligence” can be argued.
• Property kept in unoccupied premises for over 30 days — a problem if you are away.
• Damage during construction, alteration, or repair without prior intimation.

Read the exclusions paragraph by paragraph. If you don’t understand a clause, ask the insurer to explain it in writing.

5. Confirm contents and personal possessions are covered

The structure is the easy part. The real value of a fire policy is the contents — furniture, electronics, jewellery, clothes. Bharat Griha Raksha gives 20% of the structure sum insured for contents automatically, with up to 50% available on request. SFSP requires you to declare everything separately.

6. Check the claim settlement ratio of the insurer

This is published yearly by IRDAI. For general insurance fire claims, look for an insurer with a claim settlement ratio above 90% over the last three years. A low number means more disputes, more lawyers, more wait.

7. Add the right riders

Standard policies don’t cover everything. Useful add-ons:

• Earthquake cover — essential if you are in seismic Zones III, IV, or V.
• Terrorism cover — cheap, often under 500 rupees a year.
• Loss of rent — useful for landlords. Pays rent if the property is unliveable post-fire.
• Alternative accommodation — covers temporary housing for the family.

8. Verify under-insurance is not built in

If you insure a property for less than its actual value, the insurer will pay only proportionally on a partial loss. Insure 100% of reinstatement value, not 70%. Bharat Griha Raksha removes this clause for most homes — confirm it does in your case.

9. Get the inspection done before the policy starts

For larger sums insured, the insurer will send a surveyor to inspect the property. Be present. Point out previous repairs, electrical issues, and structural changes. If something is hidden during inspection, the insurer can deny the claim later.

10. Save the policy in two places

One physical copy in a fireproof box. One digital copy in DigiLocker or your email. After a fire, you may not have access to your house. The policy document, sum insured details, and claim helpline are useless if they burned with the house.

Commonly missed items

• The policy renewal date — missing it by even a day means no cover during the lapse window.
• Updating the sum insured every 3-4 years for construction-cost inflation.
• Notifying the insurer of structural changes (new floor, new wing).
• Listing high-value items (over 20,000 rupees each) separately as agreed-value items.

Fire insurance is the cheapest peace of mind in general insurance — but only if the policy actually pays when it has to. Use this checklist as a buying tool, not a reading exercise. The Insurance Regulatory and Development Authority publishes the Bharat Griha Raksha standard wording at irdai.gov.in.