Fire Insurance vs Property All Risks (PAR): What's the Difference?

The Answer in 60 Seconds

A Fire policy in Singapore covers a defined list of named perils — typically fire, lightning, and explosion (domestic gas only as standard) — with optional extensions for storm, flood, earthquake, malicious damage, riot/strike, and others. Property All Risks (PAR) covers any accidental physical loss or damage to insured property except those specifically excluded — a wider trigger but with a long exclusion list. Per the General Insurance Association of Singapore property insurance FAQ, PAR "can have a longer exclusion list as compared to an insured perils policy, despite being termed 'all risks'." Both policies are subject to the average clause (under-insurance penalty) and both typically require compliance with SCDF Fire Certificate obligations as a warranty.

The Sourced Detail

The choice between Fire and PAR is one of the most common decisions on a Singapore SME's Property programme. The right answer depends on the assets, the operational risk profile, and what the lease or financing requires. Both products do related but structurally different things.

What a Fire policy actually covers

A Fire policy is a "named perils" cover. The base cover typically responds to:

Fire — including resultant smoke and water damage from firefighting
Lightning — direct strike damage
Explosion — limited as standard to domestic gas explosion in residential premises; commercial/industrial explosion is usually an extension

That's the standard trio. Everything else is an extension, separately rated and added to the policy schedule. Common extensions:

Storm, tempest, hurricane
Flood (inundation by external water)
Bursting/overflowing of water tanks, pipes, apparatus
Earthquake and volcanic eruption
Riot, strike, malicious damage, civil commotion (RSMD)
Aircraft and aerial devices
Impact (vehicles or animals)
Subsidence and ground heave

A Fire policy with all standard extensions added is sometimes called "Fire & Special Perils" or "Comprehensive Fire" — the perils list expands but the structure remains named-perils.

What a PAR policy actually covers

A PAR policy is an "all risks" cover. The base cover responds to "any accidental physical loss, destruction, or damage" to the insured property — unless the cause is in the exclusion list. The exclusion list is typically extensive:

War, civil war, hostilities (universal)
Nuclear risks (universal)
Wilful or fraudulent acts of the insured
Wear and tear, gradual deterioration, depreciation
Inherent vice, latent defect
Mechanical and electrical breakdown (separate Machinery Breakdown / EEI cover)
Pollution and contamination (gradual)
Theft (often a separate sub-limit or covered with conditions)
Cyber events affecting physical property (post-2020, almost universal exclusion)
Communicable disease (post-2020, near-universal exclusion)
Earthquake and flood (sometimes excluded outright; sometimes optional add-back)
Subsidence and ground heave (varies)

The advertising phrase "all risks" is misleading. A typical PAR exclusion schedule runs to 30–50 separate exclusions, some narrowly scoped, some broad.

The structural difference at claim time

The trigger logic is opposite:

Fire policy: the insured must show that the loss was caused by a covered peril (fire, lightning, or other named extension).
PAR policy: the insured shows that an accidental loss occurred. The insurer must show that the cause falls within an exclusion to deny.

This shifts the practical burden. Under PAR, an unexplained loss (cargo damaged by unknown cause, equipment broken with no clear culprit) is more likely to be covered — the insurer cannot point to a specific exclusion. Under Fire, the same unexplained loss requires the insured to fit the cause into a named peril, often unsuccessfully.

Where Fire is typically the more appropriate choice

Fire policies tend to be appropriate for:

Office occupancies with low contents value and predictable risk profile
Light commercial (small retail, professional services) where premium economy matters
Properties where the lease specifies "Fire and Special Perils" cover — common for HDB shop units and older commercial leases
Buildings with very stable occupancy and minimal operational complexity
SMEs with constrained budgets where the named-perils approach is sufficient given known risks

The Fire approach can work when the insured can confidently anticipate the perils that matter and add them as extensions.

Where PAR is typically the more appropriate choice

PAR is more typically used for:

Manufacturing premises with stock, machinery, and finished goods where damage causes are diverse
Warehousing operations with goods in care/custody/control
High-value contents (electronics, equipment, fittings) where unexplained damage exposure is real
Operations with significant Business Interruption (BI) exposure — PAR with BI extension is the standard combination
Complex SMEs where the named-perils approach risks gaps

Both share these features

Regardless of which structure is chosen, both policies typically have:

Average clause — under-insurance penalty proportional to the shortfall in sum insured. If insured for 60% of replacement value, a partial loss is paid at 60%.
Reinstatement vs indemnity basis — choice between replacement-as-new (reinstatement) and depreciated value (indemnity). See Article 65 for detail.
Excess — first amount payable by the insured per claim; varies by peril.
Compliance warranty — typically requires valid SCDF Fire Certificate where applicable, no breach of fire safety regulations, and compliance with permits and licences.
Premium warranty — premium must be paid within 60 days of inception (Singapore market standard) or the policy is automatically void from inception.
Notification clause — claims must be notified within the policy window (typically "as soon as reasonably practicable" or specific calendar days).

Premium and excess differences

PAR is typically priced 20–60% higher than a basic Fire policy, depending on occupancy class, sums insured, claims history, and territory. The differential narrows when extensions are added to the Fire policy — a "Fire & Special Perils" with comprehensive extensions can approach PAR pricing while still being technically a named-perils contract.

Excesses on PAR are sometimes higher, reflecting the broader trigger.

Business Interruption — a critical add-on regardless

Both Fire and PAR are typically extended with Business Interruption (BI) cover, which responds to lost gross profit and additional expenses incurred while the business is unable to operate post-loss. BI is structurally separate from the property cover but triggered by a covered property loss. The BI sum insured (gross profit) and indemnity period (12 or 24 months typical) are separately specified.

For most SMEs, BI exposure exceeds direct property loss exposure. A 6-month forced closure post-fire is typically more costly than the building damage. BI design needs as much attention as the property cover itself.

Common Mistakes / What Goes Wrong

Buying Fire because it's cheaper, then claiming for an unexplained loss. A leaking pipe that destroys S$80,000 of stock is not "fire, lightning, or explosion" — and may not be a named peril even with extensions. PAR would respond.
Buying PAR and assuming it covers everything. The exclusion list is long. Reading the schedule matters more than the policy name.
Setting the sum insured at market value instead of reinstatement cost. The average clause bites either way; reinstatement value is what actually matters.
Not adding earthquake or flood for premises in flood-prone zones. Singapore has identified flood-prone areas (per PUB published list); premises in these zones often need flood as a specific extension.
Forgetting BI. Direct property loss is often dwarfed by interruption loss. Without BI, a covered fire still puts you out of business.
Letting the SCDF Fire Certificate lapse. The compliance warranty is breached — most insurers will decline a claim on those grounds regardless of whether the lapse caused the loss.

What This Means for Your Business

Most Singapore SMEs end up on PAR for one practical reason: the broader trigger is more forgiving operationally. A small SME owner who cannot anticipate every possible damage cause is better served by a structure that defaults to "covered unless excluded" than one that defaults to "not covered unless listed."

But the choice is not always the SME's to make. Three things constrain it:

Lease requirements. Many commercial leases specify "Fire and Special Perils" as the minimum tenant cover. If your lease specifies Fire, you need at least Fire — you can layer PAR as a separate extension or upgrade if the landlord agrees.
Financing covenants. SME loans secured against the premises or business assets often specify the property cover the borrower must maintain. The bank's standard wording is often "Fire" with named extensions; switching to PAR may need lender consent.
Industry norm. Manufacturing and warehousing operations almost universally use PAR; pure office occupancies are split.

The decision should be made with the broker on a wording-comparison basis, not just a premium comparison. Two SMEs with identical risk profiles can land on different choices because their lease, lender, and operational tolerance differ.

Questions to Ask Your Adviser

Is my current property cover Fire (named perils) or PAR (all risks except exclusions)?
If Fire, which extensions are added to the schedule, and which common perils are missing?
If PAR, what are the top five exclusions that could affect my business, and can any be added back via endorsement?
What is the sum insured set on, and when was it last benchmarked against current reinstatement cost?
Is BI included, and is the gross profit sum insured and indemnity period appropriate to my recovery timeline?

Related Information

Published 4 May 2026. Source verified 4 May 2026. COVA is an introducer under MAS Notice FAA-N02. We do not recommend insurance products. We provide factual information sourced from primary regulators and route you to a licensed IFA who can match a policy to your specific situation.