Do you know why March was chosen as the month to raise awareness of the causes and dangers of fire?
March marks the start of summer in the Philippines, apart from being one of the hottest months of the year. It’s also during this month when the most number of fires happen. This was why, in 1966, then President Ferdinand Marcos signed Proclamation No. 115-A declaring March as “Fire Prevention Month.”
More than 50 years later, we still lack fire prevention awareness. Year after year, the cases of fires and deaths in the country increase, averaging at 45 incidents daily.
Through the years, the top three causes of fires remain the same: faulty wirings, lighted cigarette butts, and open flames.
Making matters worse is the low fire insurance penetration rate in the Philippines, with the number of policyholders declining, based on data from the Insurance Commission. Many Filipinos fail to see the importance of fire insurance, dismissing it merely as an added expense.
Still having second thoughts about getting fire insurance? Know more about it and act now before it’s too late.
What is Fire Insurance?
Fire insurance is a type of insurance that protects against financial loss due to a structure destroyed by a fire.
In simpler terms, fire insurance helps cover some or all expenses for rebuilding your home, office, or any insured property that’s burned down.
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 one year and can be renewed every year.
In the Philippines, a fire insurance policy 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 package.
What Does Fire Insurance Coverage Include?
Types of Properties Covered
Fire insurance coverage includes any of the following buildings or its contents:
- Residential properties such as houses, condominiums, townhouses, etc. (may include household content like fixtures, lights, furniture, appliances, flooring, etc.)
- Commercial buildings such as hotels, restaurants, retail stores, malls, etc. (may include goods and stocks)
- Warehouse buildings
- Industrial buildings such as bakeries and factories (may include machinery and equipment)
- General structures such as schools, churches, hospitals, clinics, etc.
Types of Disasters Covered
Fire insurance covers only accidental fires, such as those caused by lightning, faulty electrical connections, or gas explosions. Incidents due to arson, or intentionally setting fire to insured property, 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.”
This means if an insurance policy includes coverage for allied perils, it also covers loss or damage resulting from any of the following events:
- Earthquake shock
- Vehicle impact/Falling aircraft
- Smoke damage from a faulty heating or cooking unit
- Malicious damage caused by any person
- Riot/Fire due to a strike or lockout
Is Fire Insurance Mandatory in the Philippines?
Fire insurance is not mandatory 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.
As for commercial buildings, a fire insurance policy is a requirement for the Fire Safety Inspection Certificate issued by the Bureau of Fire Protection (BFP). This certificate is a pre-requisite for a Business/Mayor’s Permit, Occupancy Permit, or any business license.
Thus, you can’t operate a business in the Philippines without fire insurance.
Why is Fire Insurance Important?
Mandatory or not, getting your property insured against fire is crucial for your own financial protection. The risk of fire in the Philippines is always present, what with its hot climate.
Fire can also happen anytime—you’ll never know when it could hit. Even if you’re doing everything to prevent fire in your home or office, fire from a neighboring property can turn your million-peso worth of assets into debris and ashes in a matter of hours.
Advantages of Fire Insurance in the Philippines
Fires can cause a huge loss. If you insure your property, you can gain the following benefits:
- Compensates for the cost of repair, replacement, or rebuilding of the insured structure and its contents
- Pays for other costs such as temporary accommodation (for homeowners) and medical bills of injured employees and death benefits to the families of deceased employees (for businesses)
- May also provide financial protection against floods, earthquakes, and other natural disasters
- Gives peace of mind and sense of security knowing that in case of fire, your family can have a new shelter or your business can continue to operate
How Much is Fire Insurance in the Philippines?
Fire insurance premiums in the Philippines cost from PHP 950 to PHP 2,000 per year for basic coverage of PHP 1 million.
Roughly, that’s PHP 80 to PHP 166 every month. For the same price as a cup of milk tea per month, you can already insure your investment.
How are Fire Insurance Premiums Computed?
Insurers consider the following factors in computing the actual premium of a policy:
- Nature of the use of the property (general/residential/warehouse/industrial)
- Materials the property is made of (wood, cement, steel, etc.)
- Number of occupants
- 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 to Get Fire Insurance in the Philippines
Not only is fire insurance affordable, it’s also easy to get. Filipinos have several options to purchase a policy:
- Traditional method – Talk to an insurance agent who will handle the insurance purchase on your behalf. The agent will then bring your policy to you.
- Direct method – Visit the office of an insurance company if you don’t have an agent yet.
- Online method – Request a quote on the insurance company’s website, pay the premium online (or through any accredited partner), and receive your policy through email.
For more convenience, if you already have life insurance or car insurance, you may opt to buy fire insurance from the same provider.
List of Fire Insurance Companies in the Philippines
Most non-life insurance companies offer fire insurance in the Philippines, including the following:
- AIG Philippines (bundled with property insurance)
- BDO Insurance Brokers
- BPI/MS Insurance
- Charter Ping An Insurance (bundled with property insurance)
- Chubb (stand-alone product for businesses)
- FGen Insurance
- Oriental Assurance Corporation
- Malayan Insurance
- MAPFRE Insurance (bundled with home insurance and casualty insurance)
- Mercantile Insurance
- Paramount Life & General Insurance
- Reliance Surety and Insurance
- SGI Philippines
- Standard Insurance
- Stronghold Insurance Company
For the full list of non-life insurance companies in the Philippines, visit the Insurance Commission website.
Losing your home or business to fire is worse than getting robbed. Not only does it destroy structures—but it also claims lives. Aside from preventing fire in your property, make sure it’s insured. A fire insurance policy is just a small price to pay for protecting your assets.
-  and  “Amid 42 daily fires, market getting cold to insurance” (BusinessMirror, 2019)
-  The Insurance Code of the Philippines (Official Gazette website)
-  Implementing Rules and Regulations of the Fire Code of the Philippines (BFP website)
-  Philippine Fire Tariff (Insurance Commission website)
-  List of Regulated Life and Non-Life Companies in the Philippines (Insurance Commission website)
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