November 9, 2021

Does your Small Business need Fire Insurance?

Does your Small Business need Fire Insurance?

Commercial accidents are pretty common occurrences in India. With a limited number of fire stations in the country and faulty safety measures that ultimately never work, the need for fire insurance is only increasing year after year. Additionally, the rise in natural disasters like cyclones, forest fires, and civil unrest leading to riots and strikes all contribute to massive damages for businesses across India.

Cities are experiencing harrowing instances of hotels, residential complexes, hospitals and factories burning down or being devastated by tsunamis and floods. These instances result in injuries and deaths of many individuals, not to mention millions of dollars of property damage.

In such an uncertain world, it becomes essential for business managers to secure their commercial property with Fire and Allied Perils Insurance.

Fire Insurance can help your business in a number of ways. It allows you to cover the cost of damaged stocks, reinstate or replace damaged fixed assets, cover theft occasioned by fire or allied perils, protect your business from terrorist attacks, and much more. Let’s look at some factors that make Fire Insurance a necessity for any business, irrespective of size:

  1. A financial safety net - Fire Insurance covers assets like plant and machinery, buildings, stocks, furnitures and fixtures. If there’s any loss or damage to these assets in the event of a fire, lightning strike, flood etc., it can put a massive dent in a business’s finances. In fact, suppression materials and other measures taken to control a fire, flood, riot or terrorist attack can also end up damaging your property. Fire insurance helps you rebuild and recover from all these losses.
  2. Cover against a wide range of risks - Fire Insurance comes with coverage for a myriad of risks like riots, terrorist attacks, missile testing operations, aircraft impact, and many more. Specifically, any loss or damage from natural disasters such as cyclones, earthquakes, volcanic eruptions, flood, tornado, and landslides are all covered under a Fire Insurance policy. This well rounded coverage ensures that your business is protected in almost all possible circumstances.
  3. Restarting business after loss - Sometimes destruction from fire and other perils can lead to a complete shutdown of the damaged property. This property may be your primary factory or main office and your only source of income. Even if it isn’t, halted business operations in any one outlet can lead to enormous loss of profits, wasted resources, and increased costs. This in turn can result in a complete shutdown of your business. Fire Insurance can help by offering you temporary accommodation to host your business's integral operations while your damaged work area is reinstated and rebuilt. It can also provide you with startup expenses (up to a certain amount) to help you start up operations after an unfortunate event.
  4. Cover for important assets - Assets like computer programmes, floating stocks, furniture, manuscripts, business books, money and securities are covered by Fire Insurance policies up to a certain amount. In addition to this, other expenses like additions, and alterations to buildings and the professional fees of architects, engineers, etc. are also covered. In fact, the personal effects of directors, officers, or visitors are also insured up to a given amount. With this kind of coverage, you can very well bank on your business bouncing back from almost any loss to almost any asset.

During the claims process, the insurance company evaluates the insured’s actions in mitigating damage to the insured property. Therefore, you must follow all fire and other perils safety protocols and maintain adequate security provisions in the premises.

  • Your insured premises, building or property must be installed with functioning smoke detector systems and fire alarms in accordance with proper fire safety standards. These systems must be regularly checked and maintained
  • The presence of a fire extinguisher or other suppressor material at each office or factory is essential. Workers should be properly trained in the usage of a fire extinguisher
  • The property must be equipped with a robust locking system, to avoid any theft or burglary
  • You must not keep the insured property unoccupied for a period of more than 30 days, as this can nullify your insurance
  • In the event of a fire, flood, strike or any other insured peril, you must immediately inform the fire department or any other appropriate public authority

What kind of covers does your Fire Insurance policy offer? Find out here

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.