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. And as natural disasters like floods, cyclones, and forest fires continue to be on the rise, businesses all across India are at the risk of suffering irretrievable damage.

Cities are experiencing harrowing instances of hotels, residential complexes, hospitals and factories burning down or being devastated by tsunamis and floods. The loss of property caused by these events can range in tens of crores, sending small businesses like kirana stores, cafes, and retail shops to absolute ruin.

In such an uncertain world, it becomes essential for business managers to have some kind of security for their commercial property. And for most, this search ends with Fire Insurance.

Fire Insurance can help your business in a number of ways. Unlike the name suggests, Fire Insurance actually protects your business from a lot more than just fire. It allows you to cover the cost of damaged stocks, reinstate or replace damaged fixed assets, cover instances of theft or robbery, 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 provides financial reimbursement for any loss of assets like plant and machinery, buildings, stock, furniture, and equipment or tools. Any accidental damage to these assets 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, strikes, terrorist attacks, missile testing operations, and damage due to collision. It specifically covers any loss or damage caused by natural disasters such as cyclones, earthquakes, volcanic eruptions, flood, tornado, and landslides. 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 head 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 safety protocols and maintain adequate security provisions at your business 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 contract
  • In the event of a fire, flood, strike or any other insured peril, you must immediately inform the fire department, police or any other appropriate public authority

What does Fire Insurance cover?

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.