What's the Basic Differences Between PAR and Fire Insurance? **

Property All Risk insurance and Fire insurance have the same object, building like home, hospital, school, office building and so for, but have a different scope of coverage. Basically all the risks insured by the fire insurance policy with all its expansion has been contained within the risks that insured on the Property All Risks insurance. So what is the basic difference between fire insurance and  Property All Risk insurance?

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Open Perils and Named Perils

Property is insured in 2 main ways - open perils and named perils.

Open perils cover all the causes of loss not specifically excluded in the insurance policy. For example Industrial All Risk insurance. Common exclusions on open peril policies include damage resulting from earthquake, flood, nuclear incident, acts of terrorism and war.

Named perils require the actual cause of losses that listed in the insurance policy to be provided. More common named perils include such damage-causing events as fire, lightning, explosion, aircraft, smoke and theft. This way refers to the contents of a fire insurance policy.

In the Fire Insurance Policy mentioned any risks that are guaranteed by specific, consisting of  :

           1].   Main Coverage

                  The main risks are covered in fire insurance can be summarized
                  abbreviation as FLEXAS, which stands for : 
                  Fire, Lightning, Explosion, Impact of Aircraft and Smoke.

           2].   Extended Coverage

                  Strike, Riot and Malicious Damage (RSMD).
                  Terrorism and Sabotage
                  Windstorm, Flood, inundation
                  Impact damage 
                  Subsidence, landslide
                  Debris Removal and so forth.

In Indonesia, for extension of guarantee against the risk of earthquake and burglary will be issued in separate policy. These policies should be preceded by the closure of fire insurance or Property All Risks insurance.

           3].    Exclusion (Risks that are excluded).

So fire insurance policy called "Named Perils" Policy.

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What about the Property All Risks insurance policy?

On policy of Property All Risk or Industrial All Risk is not explicitly mentioned any risk that is guaranteed.  In the PAR / IAR policy which specific issue mentioned is Exclusion (Risks that are excluded). In other words policy of PAR / IAR ensure all risks during the risk is not excluded. Property All Risks insurance policy is open perils, usually called "unnamed Perils" Policy. This policies auomatically cover all causes of loss not specifically excluded in the policy.

Common exclusions on open peril policies include damage resulting from Earthquake, Burglary, Flood, Nuclear Incident, Acts of Terrorism and War. The risks that are excluded may vary depending on considerations of risk of each country.  In Indonesia Earthquake and Burglary risks warranty will  will be issued in separate policy.