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Fire Insurance

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1. You can add other perils -- such as windstorm, hail, smoke, explosion, vandalism and malicious mischief -- to your basic fire insurance for a relatively small fee. _____ _____
2. If you need comprehensive coverage your best buy may be one of the special cause of loss contracts that offers the broadest available protection for the money. _____ _____
3. You may buy coverage that will indemnify you i.e. compensate you for your losses in one of several ways: (a) it may pay actual cash value of the property at the time of loss (b) it may repair or replace the property with material of like kind and quality or (c) it may take all property at the agreed-upon or appraised value and reimburse you for your loss. _____ _____
4. You can insure property you don't own. You must have an insurable interest -- a financial interest -- in the property when a loss occurs but not necessarily at the time the insurance contract is made. For instance a repair shop or dry cleaning plant may carry insurance on customers' property in the shop or you may hold a mortgage on a building and insure that building although you don't completely own it. _____ _____
5. When you sell property you cannot assign the insurance policy along with the property unless you have permission from the insurance company. _____ _____
6. Even if you have several policies on your property you can still collect only the amount of your actual loss. All the insurers share the payment proportionately. Suppose for example that you are carrying two policies: one for $20,000 and one for $30,000 on a $40,000 building and fire causes damage to the building amounting to $12,000. The $20,000 policy will pay $4,800 or 20,000 divided by 50,000 or 2/5 of $12,000, and the $30,000 policy will pay $7,200 or 30,000 divided by 50,000 or 3/5 of $12,000 _____ _____
7. Special protection other than the standard fire insurance policy is needed to cover the loss by fire of accounts, bills, currency, deeds and evidence of debt money and securities. _____ _____
8. If an insured building is vacant or unoccupied you must notify your insurance carrier promptly. _____ _____
9. If either before or after a loss you conceal or misrepresent to the insurer any material fact or circumstance concerning your insurance or the interest of the insured the policy may be voided. _____ _____
10. If you increase the hazard of fire the insurance company may suspend your coverage even for losses not originating from the increased hazard. (An example of such a hazard might be renting part of your building to a dry cleaning plant.) _____ _____
11. After a loss you must use all reasonable means to protect the property from further loss or run the risk of having your coverage canceled. _____ _____
12. To recover your loss you must furnish within 60 days (unless an extension is granted by the insurance company) a complete inventory of the damaged, destroyed and undamaged property showing in detail quantities costs actual cash value and amount of loss claimed. _____ _____
13. If you and the insurer disagree on the amount of loss the question may be resolved through special appraisal procedures provided for in the fire insurance policy. _____ _____
14. You may cancel your policy without notice at any time and have part of the premium returned. The insurance company also may cancel at any time with proper notice to you. _____ _____
15. By accepting a coinsurance clause in your policy you receive a reduction in premiums. A coinsurance clause states that you must carry insurance equal to 80 or 90 percent of the value of the insured property. If you carry less than this you cannot collect the full amount of your loss even if the loss is small. What percentage of your loss you can collect will depend on what percentage of the full value of the property you have insured it for. _____ _____
16. If your loss is caused by someone else's negligence the insurer has the right to sue that negligent third party for the amount it has reimbursed you under the policy. This is known as the insurer's right of subrogation. However the insurer will usually waive this right upon request. For example if you have leased your insured building to someone and have waived your right to recover from the tenant any insured damages to your property you should have your agent request the insurer to waive the subrogation clause in the fire policy on your leased building. _____ _____
17. A building under construction can be insured for fire lightning extended coverage vandalism and malicious mischief. _____ _____

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This article is reprinted by permission of the SBA and The Travelers, Hartford, Connecticut.
For more information on SBA programs go to www.sba.gov


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