November 1, 2022

Warehouse Insurance | Coverage, Exclusions, Benefits, Quotes

Warehouse Insurance | Coverage, Exclusions, Benefits, Quotes

Warehouse Insurance helps businesses protect their warehouses, godowns, stockrooms, and depots from common risks such as destruction due to an unexpected fire, explosion, robbery, riot, or natural disasters like floods and earthquakes.

Warehouse Insurance is a type of Property Insurance policy that is designed to meet the needs of manufacturers, importers, exporters, and those businesses that have a large amount of goods stored at one place. This policy provides all-round protection to commercial stock, allowing business owners to be reimbursed for any loss they may suffer due to an unforeseen disaster damaging their inventory.

Warehouses are integral to the manufacturing and distribution of goods. They are needed at every stage of the production process– from storing raw materials, to keeping semi-finished goods for further processing, and to eventually stockpiling finished goods for distribution to retailers and consumers.

Warehouses also play a strategic role in supply chain management by allowing manufacturers to keep a better track of their inventory and maintain an uninterrupted flow of goods to meet market demands. But, this also means that any disruption in a warehouse’s operation can have a damaging impact on the business at large.

Risks like fire, theft, riots, and floods pose a serious threat to the survival of any facility, especially a warehouse. These risks can cause irretrievable damage to goods, machinery, equipment, and the warehouse building. And the financial loss triggered by such destruction can very well force a company out of business. That’s why Warehouse Insurance has become essential for manufacturers and warehousing corporations to procure.

Warehouse Insurance covers financial losses arising out of damage to your godown or storage facility. This includes any important asset that is being stored or employed at the facility, such as:

  • Building structure, including walls, fences, and foundations
  • Inventory of goods- whether it is perishable goods, electronic products, garments, or even medical supplies
  • Machinery and Equipment- forklifts, cranes, service carts, and other tools
  • Furniture, desks, fixtures, and glass panes
  • Pipelines, security systems, air conditioning, and electrical installations
  • Water tanks and generator rooms
  • Stock stored in open premises (inside the boundary wall)
  • Important documents or cash stored on the premises (up to ₹50,000)

Warehouse Insurance can protect your commercial assets against the following common risks:

  • Fire, explosion, or lightning
  • Natural disasters like floods, earthquakes cyclones, and storms
  • Riots, strikes, or intentional damage by a third party
  • Burglary or theft
  • Damage to property due to an impact or collision
  • Damage due to automatic sprinkler leakage or bursting of pipes
  • Damage due to an implosion or explosion of a boiler or apparatus
  • Damage due to electrical arcing, short circuit, or other related risks
  • Damage due to terrorist activities or missile testing operations in the vicinity of the factory
  • Cost of debris removal
  • Professional fees of architects, engineers, and consultants (up to 5% of the claim amount)
  • Start-up expenses

Coverage under a Warehouse Insurance policy can be extended to include a number of other risks with the help of add-on covers. Add-on covers vary greatly between different insurance companies, but some of the most common ones are listed below-

  • Burglary and Theft coverage: This will cover any loss of goods, machinery, tools, etc. on account of a robbery, theft, or similar event
  • Money Insurance: Also known as Cash Insurance, this add-on policy can help recover any loss of cash or cash equivalents during the ordinary course of business
  • Loss of Profit Insurance: Under this policy, the policyholder can get reimbursed for any consequential loss of gross profit, or increased cost of working that may arise out of the occurrence of a covered event like fire, floods, riots, etc.
  • Machinery Breakdown Insurance: Some insurers also offer a separate Machinery Breakdown Insurance policy that helps cover cases of mechanical or electrical breakdown of warehouse machinery during the course of business

Add-on covers can be opted for at the time of purchasing the policy or even during the policy period with the help of endorsements. You may also need to pay an extra premium as the coverage under the policy gets expanded.

Like most Commercial Property Insurance policies, Warehouse Insurance also comes with its own set of exclusions. This policy will not provide coverage for any damage to warehouse property under the following circumstances:

  • Normal wear and tear of machinery, tools, or other property
  • Damage caused due to the negligence or wilful misconduct of the business owner or any employee
  • Any damage caused due to a war or a pandemic
  • Losses caused by radiation or other nuclear risks
  • Any damage caused to goods in cold storage due to changes in temperature
  • Any loss or damage caused by pollution, seepage, or contamination

Warehouse Insurance can help businesses better manage their storage units and stock inventories, offering them a number of benefits, such as:

  • Stock protection: Goods are one of the most important assets contained within a warehouse. They are also highly vulnerable to damage due to common perils like fire, floods, riots, or burglary. Warehouse Insurance helps reimburse you for any loss occurring to any stock stored at the warehouse during the policy period
  • Coverage against a wide range of risks: Under Warehouse Insurance, you can get covered against a host of risks, ranging from natural disasters such as floods, storms, and cyclones, to man-made hazards like malicious damage, theft, riots, and more
  • Affordable premium: A Warehouse Insurance policy can be bought at an incredibly cheap rate in India. Depending on how big your warehouse is and where it is located, this policy can be purchased for as low as ₹1,500 for ₹10 Lakh worth of stock

Warehouse Insurance is all-in-all the perfect tool to get your storage unit equipped to withstand any unexpected disaster or accident that may arise. Combined with Factory Insurance, it can offer comprehensive and affordable coverage to manufacturing facilities against a large number of perils.

Get the best quotes for your Warehouse Insurance policy delivered to your phone! Say 'hi' on WhatsApp here.

Is insurance mandatory for businesses?

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.