Explain the different perils covered in fire insurance.

Fire insurance is a contract of indemnity, taken by a person or organization seeking protection to indemnify against the loss of property by fire during an agreed period of time. Fire insurance is defined under Insurance Act, 1938 as "the business of effecting, otherwise than incidentally, to some other class of insurance business, contracts of insurance against loss by incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies." The fire insurance policy covers both movable and immovable assets having financial value.

The term "fire" in the context of insurance means production of light and heat by combustion. Following are the various distinct connotation of the word fire in insurance: 

• Fire needs to be actual, that is, there has to be actual flame witnessed, and not just smoke or charring. The occurrence of fire must be improper and a happening. 
• Fire should have occurred accidentally and not intentionally. 
• The cause of the fire must be an external factor.

Perils covered
A fire policy does not insure or pay for all types of losses incurred. The instances which are covered in fire insurance are: 

• Fire - Damage to property by its own heating or spontaneous combustion or fermentation is not treated as damage due to fire. Damage due to heating or drying process and burning of property insured by any public authority is also not considered.  

• Lightning - Lightning may result in fire damage or other types of damage too. Both fire and non fire losses are covered. 

• Explosion - A general definition of explosion is "a sudden violent burst with a loud report". Explosion covers implosion or caving caused by internal pressure being less than external pressure. It does not cover damage by boilers and steam vessels, except the ones used for domestic purposes. Industrial boilers are considered and covered based on different conditions. 

• Riot, strike, malicious and terrorism damage - Any act causing disturbance in public peace is considered to be a riot, strike or terrorist activity. Physical damage caused by any such activity or by action of lawful authorities in suppressing such disturbance or decreasing the consequence caused is included. Direct physical loss, destruction or damage by external violence is covered. Malicious act includes any act with malicious intent is included. Burglary, theft, larceny which does not constitute a malicious act are excluded, but are covered under burglary insurance.

• Impact damage - Impact caused by any rail/road vehicle or animal, which is not belonging to or owned by the insured or any occupier of the premises or their employees is covered.

• Subsidence and landslide including rockslide - Subsidence means sinking of land or building into the surface of the earth. Landslide is sliding down of land, usually on a hill. Destruction caused by subsidence of part of the site which is insured is covered. Normal cracking, coastal or river erosion, defective design, use of defective materials, structural alterations or excavations is not covered.

• Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and Inundation - Storm, cyclone, typhoon, tempest, hurricane and tornado are all various types of natural disturbances accompanied by strong winds or heavy rainfall. Flood or inundation is caused, when water rises to an abnormal level.

• Bush fire - Damage caused by burning, whether accidental or by clearing of lands is covered. But damage due to forest fire is excluded.

• Leakage from automatic sprinkler installation - Damage caused by water discharged accidentally from the automatic sprinkler installation, when there is no fire. This risk covers the water damage, and is payable as damage by fire.

A policy that covers all the above perils is called as „Standard Fire and Special Perils policy‟.