What Is Fire Insurance And Its Types?

A fire insurance in Louisiana is a contract that is made legally by an insurance company with a policyholder, to assure, whatever property is lost by the policyholder, during any fire accident, will be covered/paid by the insurance company. Fire mishaps take place unexpectedly and it can not only destroy properties but can as well ruin flourishing businesses. That is why it is imperative to opt for fire insurance in Louisiana. However, if you already have a house insurance in Louisiana, check out whether fire damage coverage is there or not, because many home insurance companies provide coverage to fire. 

The following are the factors that are taken into consideration while finalizing the most suitable fire insurance policy – 

• The type of risk involved 

• The nature of the property to be protected

• The belongings of a property

• Occupancy hazards 

• Exposure hazards

• The time element

The following are the various types of fire insurance in Louisiana – 

1. Valued Policy:

This policy is meant for properties like jeweler, work of arts, paintings and etc. whose value cannot be estimated once they are damaged or destroyed. That is why, the value of the subject matter is discussed and agreed upon, at the time of taking the policy itself and it will have no effect on the market value at the time of loss. 

2. Specific Policy:

Under this type of fire insurance, a specific amount is agreed upon to insure the risk. For example, if an insurance policy of $50, 000 is taken, then at the time of mishaps, if there is loss of $40,000, the amount will be covered, but if the amount exceeds the insured amount, like $70,000 or $80,000, then the policyholder will receive aid of only $50,000, not a single penny extra than what was insured. 

3. Average Policy:

This policy is called so, because the “average clause” fits in. This clause is meant for penalizing the policyholder for taking insurance amount less than the property value. For example, if a person insures $20,000 for a property worth $40,000 and during fire accident s/he incurs loss of $60,000, then s/he will receive only $10,000 from the insurance company.

4. Floating Policy:

This type of fire insurance in Louisiana is applicable for covering up risk of goods and properties lying at various location. However, all the belongings should belong to the same policyholder. For example, a businessman with import and export business can avail it. 

5. Comprehensive Policy:

As the name suggests, it covers all types of risks – fire, explosion, lightening and etc.

6. Consequential Loss Policy:

This policy can be opt for, to cover consequential loss or loss of profits. For example, due to fire if a factory needs to be relocated, production will automatically go down until everything gets settled. This one will come handy in such situations. 

7. Replacement Policy:

This fire insurance in Louisiana will ensure the cost of replacing a property that got damaged in fire. However the replacement will be done as per the ongoing marketing value of the particular belonging.

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