Fire Insurance
Overview
Fire ruins more Nigerian businesses in an afternoon than almost any other single event: a market razed in Kano, a warehouse gutted in Aba, a block of shops lost in Onitsha. Fire insurance is the cover that rebuilds after that afternoon. Yet the word fire has a surprisingly strict meaning on a policy, and a claim can fail simply because the loss was heat without flame, or a fire that stayed exactly where it was supposed to be.
In this lesson you will learn what a standard fire policy actually promises, the three perils it always covers, and the famous three-part test that decides whether a loss even counts as a fire. You will see which special perils can be bolted on for extra premium, which perils are excepted forever, and exactly whose property fire insurance is written for. Master this and you can settle any fire scenario an examiner sets.
Objectives
- Describe the standard fire policy and state the perils it covers
- Explain the meaning of fire, lightning and explosion as insured perils
- Identify the special perils that may be added to a standard fire policy
- State the properties that may be insured and identify the typical buyers of fire insurance
Mind map
This topic is mapped out so you can see how the ideas connect.
Flashcards
Quick recall practice on the facts this topic is tested on.
Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Fire Insurance. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- In its pure form, a standard fire policy covers: A. Fire, flood and storm B. Fire, lightning and explosion of domestic boilers or gas C. Fire, riot and burglary D. Fire, earthquake and aircraft damage Answer: B
- For a loss to count as a fire under a fire policy, which of the following is NOT required? A. Actual ignition B. An accidental origin C. Something not meant to be on fire D. Damage exceeding the sum insured Answer: D
- Which of the following is a special peril rather than a standard one? A. Lightning B. Fire C. Flood D. Explosion of domestic gas Answer: C
- A trader deliberately sets fire to his own shop to claim on his fire policy. The claim will be: A. Paid in full B. Paid after deducting an excess C. Rejected, because the fire was not accidental in origin D. Paid only for the building, not the stock Answer: C
- Which of the following is an excepted peril under a fire and special perils policy? A. Storm B. War C. Burst water pipe D. Impact by a vehicle Answer: B
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Recommended Books
Revision Questions
Wondering what past questions for this topic looks like? Here are a number of questions about Fire Insurance from previous years
Question 1 Report
- Outline three properties covered in fire insurance.
- Enumerate six special perils covered in fire insurance.
- Explain three covers provided under standard fire policy.
Answer Details
Three properties covered in fire insurance
- Buildings, such as dwelling houses, factories, offices and warehouses.
- Contents of buildings, such as furniture, fittings, machinery and household goods.
- Stock in trade, such as raw materials, work in progress and finished goods held for sale.
Six special perils covered in fire insurance
These are perils that can be added to the standard fire policy on payment of extra premium:
- Storm and tempest.
- Flood.
- Earthquake.
- Riot, strike and civil commotion.
- Explosion (other than boiler pressure).
- Bursting or overflowing of water tanks, pipes and apparatus.
- Aircraft and articles dropping from them.
- Impact by road vehicles or animals.
Three covers provided under a standard fire policy
- Fire: Loss or damage caused by actual ignition and burning, whether the property is destroyed or damaged by heat, flame or the water used in putting out the fire.
- Lightning: Damage caused by a lightning strike, whether or not it results in an actual fire, for example a building or electrical equipment shattered by lightning.
- Explosion: Damage caused by the explosion of gas or boilers used for domestic purposes, and explosion in premises not being part of any industrial process.