What is a fire insurance policy?
A fire insurance policy is a written agreement between the insurance provider and the policyholder in which the insurer pays for the loss of use of the insured’s property damaged by a fire up to an agreed amount. The contract also states the annual premium that the policyholder should pay to the insurance company. Policies are valid for 1 year and can be renewed every year.
A fire insurance policy in the Philippines is typically offered as a stand-alone product. Some non-life insurance companies bundle it with more extensive home insurance, property insurance, or casualty insurance packages.
What types of disasters are covered?
Fire insurance only covers accidental fires like those caused by lightning, faulty electrical connections, or gas explosions. Incidents due to arson, or intentionally setting fire to insured properties, are not covered. Depending on your insurance policy, it may also cover other catastrophes.
According to the Insurance Code of the Philippines (Republic Act 10607), fire insurance includes coverage “against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies.”
What are allied perils?
Perils that are not included in the disasters mentioned earlier are called allied perils. If an insurance policy includes coverage for allied perils, it may also cover loss or damage resulting from any of the following events:
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Earthquake shock
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Typhoon/Flood
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Vehicle impact/Falling aircraft
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Explosion
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Smoke damage from a faulty heating or cooking unit
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Riots/Strikes
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Malicious damage caused by any person
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Riot/Fire due to a strike or lockout
This also includes man-made disasters such as explosions and falling aircraft, and events resulting to these disasters like loss of profits and business interruption.
Is fire insurance mandatory in the Philippines?
Fire insurance is only mandatory for commercial buildings and not for residential properties in the Philippines unless the property is financed through a housing loan or used as collateral in a loan. For example, it’s automatically included in a Pag-IBIG housing loan. Premiums for fire insurance and mortgage redemption insurance form part of the monthly amortization.
Are there any exclusions to fire insurance?
Affordable fire insurance usually has exclusions depending on the allied perils it covers and the situation it entails. For example, MAPFRE covers flood in their allied perils list but only includes certain areas to be covered. Malayan covers vehicle impact and falling aircraft but doesn’t cover glass parts of the property damaged in the accident.
How are fire insurance premiums computed?
Insurers consider the following factors in computing the actual premium of a policy:
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Nature of the use of the property (general/residential/warehouse/industrial)
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Materials the property is made of (wood, cement, steel, etc.)
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Number of occupants
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Location of the property
Owners of properties with a higher risk of fire, such as warehouses, industrial properties, and those located near a high-risk area like an explosives factory, pay higher insurance premiums.
On the other hand, properties within low-risk locations (i.e., near a fire station) and residential structures have lower premiums. For residential properties, those made of cement and/or steel have lower rates than those made of combustible materials like wood. Also, a house occupied by a family of at least five is insured for a higher price than one occupied by four people or less.
To estimate your premium, refer to the Philippine Fire Tariff that sets the minimum rates for fire insurance in the Philippines.
How do you get fire insurance here in the Philippines?
Not only is fire insurance affordable, it’s also easy to get. Filipinos have several options to purchase a policy:
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Traditional method. Talk to a fire insurance agent who will handle the insurance purchase on your behalf. The agent will then bring your policy to you.
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Direct method. Visit the office of an insurance company if you don’t have a fire insurance agent yet.
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Online method. Request a quote on the insurance company’s website, pay the fire insurance premium online (or through any accredited partner), and receive your policy through email.
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