# Scope of financial services ?

1 Bank :
A bank is a financial intermediary that is licensed to accept deposits from the public and
create
credit products for borrowers.
2 Investment
. Some financial intermediaries, such as mutual funds and investment banks, employ
in-house
investment specialists who help clients grow their
3 Risk Management.
Financial institutions assist individuals and businesses in managing financial risks. They
provide
insurance products, such as life …
4 Insurance
They offer insurance services to both individuals and organizations. The insurance can be
related to the protection against financial risk, life insurance …
5 Investment management
is the professional asset management of various securities – typically shares and bonds, but
also other assets,
6 Investment Banks.
Investment banking helps individuals, organizations, governments, and other institutions
raise
capital and provide financial consultancy
7 Mutual funds
It is the pool savings from individual investors. They are managed by fund managers who
identify investments with the potential of earning a high rate of
8 Accounting policy
accounting, banking, insurance and other financial companies, there are ... Privacy Policy.
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9 corporate finace
Corporate Finance Roles. Corporate finance is one of the financial roles pertaining to raising
funds for business operations.
10 credit rating
Credit rating means giving an expert opinion by a rating agency on the relative willingness
and
ability of the issuer of a debt instrument to meet the financial.
2. Types of merchant bankers?
1 Institutional Base:-
Where merchant banks function as an independent wing or as
subsidiary of various Private/ Central Governments/State Governments Financial institutions.
2 Banker Base:-
These merchant bankers function as division/ subsidiary of banking organization. The parent
banks are either nationalized commercial banks or the foreign banks operating in India.
3 Broker Base:-
In the recent past there has been an inflow of Qualified and professionally
skilled brokers in various Stock Exchanges of India. These brokers undertake merchant
baking related operating also like providing investment and portfolio management services.
4 Private Base:-
These merchant banking firms are originated in private sectors. These organizations
are the outcome of opportunities and scope in merchant banking business and they are
providing skill oriented specialized services to their clients
# fuctions of merchant bakers?
1 Syndicated loan :
Merchant bankers help arrange funds for large corporate borrowers by syndicating
loans from multiple lenders.
2 issue management:
consists of collection of application forms and statement of amount received from
bankers, screening applications, deciding
3 Portfolio management
Merchant banking companies provide portfolio management services to
high-net-worth individuals and corporate investors.
4 Underwriting
Large companies often employ the services of merchant banks in acquiring capital
through the stock market.
5 Merger and Acquisition
These banks act as an intermediary and provide advisory services for mergers and
acquisitions to various corporate entities
6 Project management.
Merchant bankers offer help to clients in several ways in the process of project
management.
7 Promotional activities
. In India, merchant bankers play the role of promoter of industrial enterprises. They
help entrepreneurs in conceiving ideas
8 Leasing Services.
Merchant banks provide leasing services to companies in the form of capital goods, vehicles
and office equipment.
9 Raising finance.
When working for corporations and institutions, a merchant banker may help customers
raise
capital through stock, debenture issuances,
10 Arranging private placements
Merchant bankers assist companies in raising capital through private placements, offering
securities to a select group of investors. They ensure compliance
# credit rating agencies in india ?
A credit rating agency (CRA) is a company that rates debtors on the basis of their ability to
pay
back their interests and loan amount on time and the probability of them defaulting. CRAs
were
set up to provide independent evidence and research-based opinion on the ability and
willingness of the issuer to meet debt service obligations, quintessentially attaching a
probability
of default to a specific instrument.
Credit rating agencies in India came into existence in the second half of the 1980s. In
India,CRAs are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the
Securities and
Exchange Board of India Act, 1992.
# advantages of Forfaiting?
1 Risk Mitigation:
Credit Risk Transfer: The most significant benefit of forfaiting is transferring credit
risk from the exporter to the forfaiter. This means that once the receivables are sold,
the exporter is no longer responsible for the risk of non-payment by the importer.
2 Improved Cash Flow and Liquidity:
Immediate Cash Access: Forfaiting converts deferred receivables into immediate
cash, enhancing the exporter’s liquidity..
3 Facilitates Larger Deals and Market Expansion:
Enabling Larger Transactions: Since forfaiting covers larger amounts typically
involved in international trade, it enables exporters to take on bigger deals and
contracts
4 Balance Sheet Benefits:
As the receivables are sold off, they are removed from the balance sheet, which can
improve financial ratios and the overall financial health of the exporting company.
5 Administrative and Efficiency Gains:
Reduction in Administrative Burden: Managing receivables, especially in
international trade, involves considerable administrative work. Forfaiting eliminates
this burden.
6 Flexibility and Customization:
Tailored Solutions: Forfaiting agreements can be customized to suit the specific
needs of the exporter, including the choice of currency, amount, and terms of sale.
7 Non-Recourse Nature:
No Recourse to Exporter: In forfaiting, the sale of receivables is on a non-recourse
basis, meaning the exporter is not liable to repay if the importer defaults. This offers
a significant peace of mind and security.
8 Enhances Creditworthiness:
Improves Company’s Credit Standing: By ensuring timely payment and reducing
debt levels, forfaiting can enhance the creditworthiness of the exporting com
# Limitations of Lease Finance?
1 It may result in higher payout obligation in case the equipment is not found useful
and the lessee opts for premature termination of the lease agreement.
2 Financial activities of business may be affected in case the lease is not renewed.
3 There are chances that a lease arrangement might impose certain restrictions on
the use of assets. For example, it may not allow the lessee to make any alteration or
modification in the asset.
4 The lessee never becomes the owner of the asset. It denies him of the residual
value of the asset.
# Advantages of venture capital?
● No security necessary
● Venture capitalists offer an opportunity for expansion
● Venture capitalists are helpful in building networks
● Businesses can raise a large amount of capital
● Venture capital is a source of valuable guidance, consultation, and expertise
● No obligation to repay the venture capital
● Venture capitalists are generally trustworthy
● Venture capitalists can help with hiring and building a team.
# stages of venture capital?
1 pree seed capital
The first stage of venture capital is commonly referred to as pre-seed capital. It's aptly
named
because it provides the initial funding necessary to launch a business and get it off the
ground
2 Startup Capital
After the pre-seed stage, startup companies receive funding from venture capitalists
in what is known as the "startup capital" stage. After researching the industry and
developing a business strategy, businesses can start promoting and selling their
products.
3 Early Stage
Though it sounds contradictory, this stage usually occurs after the pre-seed and
startup stages. This is because money from this stage is commonly used for
manufacturing, production facilities, sales, and increased marketing.
4 Expansion Stage
At the fourth stage of venture capital, the real progress begins. With a strong
foundation now set, additional funding can be put towards developing new products,
growing into other markets, and maybe even purchasing competing startups
5 Later Stage
The last phase of venture capital involves drifting toward a liquidity event, for example, an
IPO (Initial Public Offering) or an acquisition. Your financial needs have grown to the point
that you need help promoting important occasions.
# Weakness of merchant banks / Problems of merchantbanks?
1. SEBI guidelines have authorised merchant bankers toundertake issue
related activities only with an exception ofportfolio management. It restricts the scope
of merchant bankactivities.
2 SEBI guidelines stipulate a minimum net worth of Rs.1core for authorisation of
merchant bankers. Small butprofessional merchant bankers are facing
difficulty foradhering such net worth norms
3. Non cooperation of the issuing companies in timelyallotment of securities and refund
application money isanother problem of merchant
banker
Role of Merchant Banking in India?
1 It is to be noted that they only provide services to large corporations, which is what
sets them apart from the local commercial banks.
2 Such banks could be sections of greater business or investment banks, and they
generally execute their business worldwide.
3 As these banks do not provide money to the companies in a traditional sense, it
also means that the returns would be significantly different.
4 Sometimes these banks go through the traditional route of the companies paying
them back, but there are times when they get equity or some sort of shares of the
company as the payback.
5 One also needs to understand that the meaning of merchant banking in India
differs from place to place.
6 Merchant banks are often confused with investment banks; however, they
significantly differ from investment banks in terms of function and service providing.
# importants of financial services?
1 Promotes Investments
The presence of financial services in the country not only creates a substantial
demand for products and their producers, but it also meets the demands from one
consumer to another for maximum investment.
2 Promotes Savings
Financial services like mutual funds and bonds provide an individual with
opportunities for opening different kinds of savings. Therefore, differential investment
options are now open for pensioners to gain reasonable returns with out any risk.
3 Minimises Risks
With the presence of the insurance companies, the risks of financial services are
minimised. Therefore, various types of risks are not only covered to offer protection
in business conditions, but financial services also make it easier to curb losses from
natural calamities.
4 Maximises Returns
The financial services cater to businessmen for giving maximum returns. This is only
possible because of credit availability at a very reasonable rate. They also go on
leasing assets of very high value as well. This enables the sellers and producers to
increase turn over which proliferates in profit growth.
5 Provides Greater Yields
Even though yields and returns might have a remote similarity, it however is way
different from another. Yield attracts more producers to join the markets and increase
their production to attract more customers.
# characteristics of financial services?
1 Intangibility
Financial services are intangible in nature, unlike physical commodities. The
institutions providing these services should build a good brand image in the
public sphere and create confidence amongst their clients.
2 Customer-Centricity
Financial services are customer-centric. The financial service industry is a
customer-intensive
and customer-focused industry.
3 Inseparability
The production and supply of financial services must be performed, simultaneously. For
example,
an individual who wants to have a haircut has to depend on the availability of the barber to
avail
of the service.
4 Heterogeneity
Firms engaged in providing financial services must be proactive in anticipating what the
market
wants and reacting to the specific needs and wants of their customers
5 Marketability
The marketing of financial services has become intensive at present. Banks did not have
marketing teams in the past. Persons engaged in marketing have to be ethical as customers
base their financial decisions, on trusting the marketers.
6 Simultaneous Functions
The creation of financial services and their delivery have to be simultaneous. They have to
be created and delivered to the target clients immediately.
7 Perishability
Unlike other services, financial services perish, if not used. They cannot be stored and
provided,
based on the requirements of customers
# Define life insurance contract
Life insurance is a contract between a life insurance company and a policy owner. A life
insurance policy guarantees the insurer pays a sum of money to one or more named
beneficiaries when the insured person dies in exchange for premiums paid by the
policyholder
during their lifetime.
# Features of life insurance contract?
1 premium
4 Free Look Provision
A life insurance policy usually provides a free look provision. It is a trial period that can last
for
The period varies as per your mode of purchasing the policy.
5 Tax Benefits
Life insurance policies also come with the benefits of tax exemption and tax benefits are as
per
the Income Tax Act 1961 and are subject to any amendment made thereto from time to time
6 Maturity Benefits
When your policy ends, you are entitled to receive a whole sum amount. However, this also
depends on your plan. A term plan might not offer any maturity benefit, whereas a savings
plan
comes with maturity benefits.
# various Service rendered by merchant bankers?
Services Offered by Merchant Banks
1. Marketing and underwriting of new issues
2. Merger and acquisitions
3. Corporate finance management and advisory
4. Project financing and management
5. Management of customer security
6. Portfolio services
7. Investment banking
8. Trade finance and advisory
9. Venture capital fundraising and advisory
10.Management of assets
# Types of leasing?
1. Finance leasing
A long-term lease over the expected life of the equipment, usually three years or more, after
which you pay a nominal rent or can sell or scrap the equipment - the leasing company will
not
want it any more.
2 Operating leasing
it is useful if you don't need the equipment for its entire working life the leasing company will
take the asset back at the end of the lease
3 Contract hire
the leasing company takes some responsibility for management and maintenance, such as
repairs and servicing you don't have to show the asset on your balance sheet Book traversal
links for Types of leasing
4 SALE AND LEASEBACK
In a sale and leaseback, a company owning the asset sells it to the lessor. The lessor pays
immediately for the asset but leases the asset
to the seller.
5 FULL AND NON PAY-OUT LEASE
A full pay-out lease is one in which the lessor recovers the full value of
the leased asset by way of leasing. In case of a non pay-out lease, the lessor leases out the
same asset over and over again.
6 SPECIALIZED SERVICE LEASE
The lessor or the owner of the asset is a specialist of the asset which he is leasing out. He
not only leases out but also gives specialized
personal service to the lessee.
7 IMPORT LEASE
In an Import lease, the company providing equipment for lease may
be located in a foreign country but the lessor and the lessee may belong to the same country
8 SALES AID LEASE
In case, the lessor enters into any tie up arrangement with manufacturer for the marketing, it
is called sales aid lease.
# Fund based Services?
1. Equipment leasing/Lease financing:
A lease refers to an agreement where a company obtains the right to use a capital asset,
such as machinery, by paying a predetermined
fee known as lease rentals.
2 Hire purchase and consumer credit:
Hire purchase serves as an alternative to leasing. It involves a transaction where goods are
bought and sold under the condition that
payment is made in instalments.
3. Bill discounting:
The discounting of bills is an interesting fund-based financial service offered by finance
companies. When it comes to a time bill, which is
payable after a specified period, the holder does not have to wait until maturity or the due
date.
4. Venture capital:
Venture capital pertains to the capital made accessible for financing new business ventures.
It entails providing financial support to
expanding companies
5. Housing finance:
Housing finance is the provision of financial assistance forbconstructing houses.
6. Insurance services:
Insurance service there is a contract between two parties: the insuredband the insurer. The
insured is the person who obtains coverage for
their life or property through an insurance policy.
7. Factoring:
Factoring is an arrangement where a factor purchases the account receivables resulting
from the credit sales of goods or services and
provides an immediate cash payment to the supplier or creditor.
8. Forfaiting:
Forfaiting is a financing method commonly used for receivables associated with international
trade. It involves a non-recourse purchase by a banker or other financial institution of
receivables
arising from the export of goods and services.
9. Mutual fund:
Mutual funds serve as financial intermediaries that gather savingsbfrom individuals and
allocate them into a diversified portfolio of
corporate and government securities
# features of housing Finance?
1 Lower interest
The home loan interest rate is much lower as compared to any other loan types available. If
you come across a cash crunch, you may get a top-up on the ...
2 Balance transfer
Easy Balance Transfer. Transfer loan balance with ease from your existing home loan to the
new loan account without any hassle.
3 Flexible repayment
Flexible repayment tenures: A home loan comes with longer repayment tenures that could
extend up to 30 years
4 Long tenure
Long Tenure: Since the loan amount involved in housing loans is high, the tenure to repay
that loan can go up to as high as 30 years
5 Tax deduction
Benefits of Taking a Home Loan. The foremost benefit of a home loan is the income tax
deduction you can claim on the interest and principal repayments
6 Instant top up loan available
Top-up facility: You could take a top-up against your existing home loan instead of a personal
loan.
7 Low processing fee
Home loan interest rates have never been this low in the past 15years. With the current
range of home loan offers, you might be able
to receive a low rate.
8 No prepayment penalty
No Hidden Charges; No Pre Payment Penalty; Interest charges on Daily Reducing Balance;
Repayment up to 30 years; Home Loan
Available as Overdraft
9 Online home loan sanction facility
Lowest Interest Rates. Home loan interest rates have never been this low in the past 15
years.
# channels of retail banking products?
● Branch Banking.
● Internet.
● Host to Host.
● ATMs.
● Cash Dispensers.
● Hand Held Devices.
● Kiosks.
● SMS.
# What Is Bill Discounting?
Bill discounting is a trade-related activity in which a company sells its
outstanding invoices to a financier (a bank or another financial
institution) that agrees to pay the company for them at a future date.
# BILL DISCOUNTING PROCESS:
1 A seller supplies goods or services to a buyer and raises an invoice.
2 The buyer accepts the invoice. This approval means the buyer
acknowledges the invoice and promises to make the payment on the due date.
3 The seller approaches the financial institution to get the bill discounted.
4 The financial institute verifies the creditworthiness of the buyer and
the legitimacy of the bill.
5 Once approved, the bank disburses the funds to the seller after deducting the pre-defined
fee, discount, or appropriate margin.
6 Thus, the seller gets a quicker payment for the invoice, which can be used for other
business purposes.
7 At the end of the original credit period, the buyer makes the payment to the financial
institution
# Difference between Forfaiting and Factoring?
1 Factoring is typically used for short-term accounts receivable (invoices that are due within
90 days or less Forfaiting is typically used for long-term accounts receivable
2 Factoring is typically used for domestic sales
Forfaiting is typically used for international sales
3 In factoring, the factor assumes some risk because they are responsible for collecting the
payment from the customer.In forfaiting, the forfaiter assumes no risk because they are not
responsible for collecting the payment from the customer.
4 Factoring is more commonly used for the sale of short-term, low-value domestic or
international receivables.Forfaiting is typically used for the sale of long-term, high-value
export receivables
5 Factoring typically involves higher fees than forfaiting because the factor is assuming more
risk. Forfaiting involves comparatively lower fees.
6 Used for ordinary goods Used for capital goods
7 Finance limit80–90% of the invoice 100% of the invoice
# Role of Financial System?
1 Savings-investment relationship
The above three major functions are important for the running and development activities of
any economy.
2 Growth of capital markets
Another important work of finance is to boost the growth of capital markets. Businesses need
two types of capital – fixed and working.
Fixed capital refers to the money needed to invest in infrastructures such as building, plant
and machinery.
3 Foreign exchange markets
In order to support the export and import businessmen, there are foreign exchange markets
whereby businesses can receive and
transmit funds to other countries and in other currencies
4 Government securities
Governments use the financial system to raise funds for both short term and long term fund
requirements. Governments issue bonds and
bills at attractive interest rates and also provide tax concessions
5 Infrastructure and growth
The economic growth depends on the growth of infrastructural facilities of the country. Key
industries such as power, coal, oil
determine the growth of other industries.
6 Trade development
Trade is the most important economic activity. Both, domestic and international trade are
supported by the financial system. Traders
need finance which is provided by the financial institutions.
7 Employment growth
Financial system plays a key role in employment growth in an economy. Businesses and
industries are financed by the financial systems which lead to growth in employment
8 Venture capital
Increase in venture capital or investment in ventures will boost growth in the economy.
Currently, the extent of venture capital in India is less
# Define credit rating?
Credit rating is a score or grade that a company or organization gives to a possible borrower
and that indicates how likely the borrower is to
repay a loan. Credit ratings are based on how much money, property,and debt a borrower
has and on how well the borrower has paid past
debts.
# features of credit rating?
1. Credit rating is basically aiming at guiding the lay investors about corporate entities.
2. Ratings are chalked out exclusively for the purpose of grading debentures, bonds,
Government bonds, municipality bonds, public
deposits, commercial paper etc. according to their investment qualities.
3. Rating is a current assessment of the creditworthiness of an issuer of securities with
respect to specific obligations.
4. Credit rating provides lenders with a simple system of gradation.
5. Credit rating is an opinion of credit rating agencies indicating relative safety of timely
payment of interest and principal on a
debenture, preference share, fixed deposit or short- term instrument by a company.
6. Credit rating is exhibited either in alphabetical manner or alphanumerical way for quick
understanding by lay and prospective
investors.
7. Credit rating is not a. general evaluation of the issuing organization but a specific
disclosure reflecting the opinion on repayment capacity
of the issuer body.
8. Rating is not based on audit.
# process of credit rating?
1 Rating committee
During the rating committee meeting, the primary analyst makes a brief presentation on the
credit strengths and weaknesses of the rated entity
2 Communication of decision Communication to management and appeal: The decision of
the
rating is shared with the issuer and if he/she does not agree with the decision,
3 Analyst team assignment Analyst Team Assignment ... When the agreement process is
completed, an analytical team is assigned the responsibility of analyzing the issuer's credit
risk
4 Obtaining financial information
In this, the analytical team will collect all the required information from the client or issuer
company.
5 Analysis
It may be noted at this stage of analysis that, every rating agency has a comprehensive in
house data base on the industry and economy
6 Contract
The issuer company and the agency sign an agreement. According to
this contract that they sign, the agencies are asked to keep the information of the issuer …
7 Discussion meeting
Discussion Meeting. When all the analysis has been done, the team will discuss the findings
at length with the internal committee, comprising
8 Issuer review
Request from issuer and analysis: The first step to credit rating is that the enterprise applies
to the rating agency for the rating of a particular instrument.
# Financial instruments in money market?
1 Commercial paper
Commercial Paper. This type of money market instrument serves as a promissory note
generated by a company to raise short term funds
2 Treasury bills
Treasury bills or T-Bills are short-term debt money market instruments introduced in 1917.
The RBI issues T-Bills on behalf of the Government of India …
3 Repurchase agreement
Repurchase agreements—also known as repos or buybacks—are Treasury securities that
are purchased from a dealer with the agreement that they will be sold
4 Banker's acceptance
You can also trade bankers' acceptances at a discount in the secondary money markets.
Therefore, unlike post-dated cheques, a
banker's acceptance
5 Corporate bonds
Unlike corporate bonds, Treasury Bills, commonly known as T-bills,
are undisputedly money market instruments.
# instruments in capital market?
1 Derivative
Derivatives are capital market instruments that derive their value from an underlying asset.
The underlying assets can be bonds, stocks, metals, commodities ...
2 Stocks
Stocks. Stock is a capital market instrument issued by companies to
raise capital. It is also known as equity share. Investment in company stocks
3 Bond
Bonds are safer because they assure a certain rate of interest by a certain date. The interest
may fluctuate but will not dip below the rate
of interest …
4 Exchange-traded fund
ETFs and mutual funds may also be equity-based instruments. Exchange-traded derivatives
in this category include stock options
and equity futures
5 Foreign Exchange Market
Derivatives, another type of financial instrument, derive their value from underlying assets
like stocks, bonds, commodities, currencies,
interest rates,
# benefits of mutual funds in economy
1 Diversification
One of the most prominent advantages of investing in mutual funds is diversification. It is the
process of spreading a given investment over
multiple assets classes.
2 Professional Management
A lot of investors do not have the time or resources to conduct their research and purchase
individual stocks. This is where professional
management becomes quite useful. Several people invest in mutual funds for the
professional expertise it provides to one’s investments
3 Tax Benefits#
The tax benefits associated with a particular kind of mutual fund is perhaps what draws most
investors to this investment vehicle. To
encourage investments in mutual funds, the Government of India offers several tax benefits.
4 highly Liquid
One can easily sell mutual funds to meet their financial needs. Upon liquidation, the money
is deposited in your bank account in few days.
Additionally, there are mutual funds that provide faster disbursal
5 Well-regulated
All mutual funds are regulated by the capital markets watchdog Securities and Exchange
Board of India (SEBI).
6 Easy Investment
It is very easy to invest in mutual funds, i.e. you can do this either online or offline. You
simply need to visit your Asset Management Company’s (AMC) website and submit the
necessary documents to start on your investment journey.
# role of parties?
1 The Borrower - who owes payments in relation to the loan granted by the originator;
this receivable generates future cash flow which will be securitised.
2 The Originator - the entity owning or assigning the assets to be securitised. For
example, a financial or insurance company, a commercial bank or a securities firm or
any other party owning receivables - assets which generate future cash flow.
3 The securitisation undertaking - the Special Purpose Vehicle (SPV) which is set-up to
buy the underlying assets, receivables, a portfolio of mortgages, real estate, or future
cash flow against which a security will be issued
4 The Investors - who buy the securities issued by the SPV and then receive interest
and coupons, the yield is defined by the cash flow generated by the underlying assets.
They can be institutional investors, family office, HNWI, pension funds, insurance
companies or investment fund managers.
# Types of loan products offerd by bank ?
1 Home loan
Home loans are secured loans that are utilised to purchase land or property
2 Medical loans
. Medical loans are designed to help individuals cover medical expenses during
emergencies or planned treatments.
3 Education loans
Education loans are financing instruments that aid the borrower pursue education. The
course can either be an undergraduate degree,
4 Personal loans
Personal Loans. Personal loans are unsecured loans that can be used to meet any type
of financial requirement
5 Vehicle loan
Vehicle Loan. This loan is purchased for buying new vehicles or used one, whichever
form it may be like a two or four-wheeler vehicle.
6 Payday loans
Payday Loans. Payday loans are a type of short-term loan, usually lasting just until your
next paycheck
7 Business loan
Small business loan. Small business loans are a type of credit that allow entrepreneurs
to access capital to expand their growing businesses.
8 Secured loans
Loans can be secured or unsecured. Mortgages and car loans are secured loans, as
they are both backed or secured by collateral
# features of Fire insurance policy?
1 Property Coverage: Fire insurance policies primarily provide coverage for damage or
loss to property caused by fire and allied perils. These perils may include lightning,
explosion, riot, strike, malicious damage, and impact damage.
2 Scope of Coverage: Fire insurance policies can cover various types of properties, such
as residential buildings, commercial spaces, industrial premises, and even movable
assets like machinery, equipment, and furniture.
3 Valuation of Property: Insured property can be valued based on either its replacement
value or its market value. Replacement valve covers the cost of replacing the damaged
property with new items of the same kind and quality, while market value accounts for
depreciation.
4 Premium Determinants: The premium for a fire insurance policy is influenced by
factors like the type of property, its location, construction material, occupancy, fire
prevention measures in place, and the sum insured.
5 Add-On Covers: Policyholders can enhance their coverage by opting for add-on
covers. These might include coverage for consequential losses, additional expenses
incurred during reconstruction, and coverage for specific perils like earthquake or flood.
6 Deductibles and Limits: Fire insurance policies often come with deductibles, which are
predetermined amounts that the policyholder must bear before the insurer starts
covering the loss. Policies also have coverage limits, beyond which the insurer might not
compensate for losses.