Fire Insurance Claims Process

The first hours

A fire claim begins with notice. The insured notifies the insurer, the fire brigade and, where needed, the police, and protects what is left from further damage.

Two documents carry most of the weight on cause. The fire brigade report records the time the alarm was received, the brigade's arrival time, the probable cause of the fire, the fire-fighting measures taken and the extent of damage observed. In suspicious cases a forensic investigation report is added. The surveyor weighs these along with their own inspection when assessing the cause and whether the policy covers it.

The surveyor and the time limits

A licensed surveyor and loss assessor is mandatory for non-motor losses above ₹1 lakh. For retail general insurance policies, IRDAI's 2024 Master Circulars set a timetable. A surveyor must be allocated within 24 hours of the claim being reported; the earlier rule was 72 hours. The survey report is due within 15 days of allocation, and the insurer must decide the claim within 7 days of receiving the report. Older material quotes longer periods.

The same circulars say that no claim shall be rejected for want of documents, and that the insurer may ask only for documents necessary for settlement. Different timelines can apply to large commercial claims.

If the insurer delays settlement beyond the prescribed time, IRDAI's policyholder-protection rules require it to pay interest at 2% above the bank rate.

Working out the amount

On a market-value (indemnity) basis, depreciation is applied to buildings, machinery, furniture and fixtures according to their age and condition. Stock is not depreciated. On a reinstatement-value basis there is no depreciation, provided the property is actually reinstated.

Salvage is damaged property that still has some residual value, such as partly burnt machinery that can be sold as scrap. Its value is deducted from the claim, and the insurer has the right to dispose of it. Where the sum insured is below the value at risk, the average clause reduces the claim under a classic fire policy.

Payment, disputes and fraud

A discharge voucher acknowledges receipt of the settlement amount. IRDAI has clarified that signing one does not stop a policyholder from seeking a higher amount before a court, a consumer commission or another forum established by law.

A fire deliberately set by the insured, or with the insured's connivance, is not covered, and a fraudulent claim forfeits the benefit of the policy. It can also be prosecuted as cheating (section 318) and mischief by fire (section 326) under the Bharatiya Nyaya Sanhita, 2023. A fire set by an outsider is a different matter: malicious damage is an insured peril.

Rules at a glance

Key points

• The first steps are to notify the insurer, the fire brigade and, where needed, the police, and to protect what is left.
• For retail policies: surveyor allocated within 24 hours, survey report within 15 days, decision within 7 days of the report.
• A licensed surveyor is mandatory for non-motor losses above ₹1 lakh.
• On a market-value basis buildings, machinery, furniture and fixtures are depreciated; stock is not.
• A discharge voucher acknowledges payment but does not bar a claim for more before a legal forum.

Common misunderstandings

• Signing a discharge voucher is not a final surrender of rights: the policyholder can still seek a higher amount before a forum established by law.
• The 24-hour, 15-day and 7-day limits are not universal: they are for retail policies, and large commercial claims can have different timelines.
• Not every deliberately set fire is uninsured: arson by the insured is excluded, but malicious damage by an outsider is an insured peril.

Questions people ask