February 9, 2022

What does RSMD mean in Fire Insurance?

What does RSMD mean in Fire Insurance?


RSMD in Insurance stands for Riots, Strikes, and Malicious Damage. RSMD is a group of risks covered by Fire and Allied Perils Insurance. The Bharat Sookshma Udyam Suraksha, Bharat Laghu Udyam Suraksha, and Standard Fire and Special Perils policies provide coverage for any loss, damage or destruction to insured property such as building, stock, furniture, machinery, etc. caused by RSMD perils.

Other insurance policies like Homeowner’s Insurance or Business Interruption Insurance also cover loss due to RSMD perils.

Let’s examine each of the underlying risks below.

Riots  

A riot is a violent public disturbance that is characterised by crowds of people destroying and vandalizing property such as vehicles, shops, signposts, etc. Here, any incident of a riot or civil commotion where at least three people assemble and express their cause through disruptive and often violent means is covered when such activity results in physical damage to insured property and large financial losses.

Strikes

A strike refers to employees’ refusal to work as a form of protest. It is often accompanied by the business’s operations shutting down and sometimes its property getting damaged. Fire Insurance policies cover financial losses suffered by a business if its employees go on a strike, stage a walkout or organize some other type of disturbance that results in property damage.

Malicious Damage

Malicious damage refers to damage to a property that has been caused intentionally or deliberately by a third party. This cover includes vandalism and malicious mischief which are common property crimes in certain regions. Most insurers treat this risk as damage caused by a person who is not legally allowed to occupy the premises. It should be noted that property damage caused by any willful or deliberate act of the insured of their representative will not be covered by any Insurance policy.

The RSMD cover in Fire Insurance forms part of the Standard Covers in Bharat Sookshma Udyam Suraksha (BSUS) and Bharat Laghu Udyam Suraksha (BLUS) policies. This cover can not be deleted from coverage in these policies for a reduction in the premium.

However, in a Standard Fire and Special Perils (SFSP) policy, the RSMD cover can be deleted at the inception of the policy for a discount on the payable premium. Businesses opt to do this if they’re not particularly vulnerable to these risks in their day to day operations. In fact, this cover can later be added to the policy during the policy period on payment of additional premium if the business perceives its need.  

If your business has suffered damage or destruction due to an RSMD event, you'll need to disclose the following information and documents to the insurance company while filing for claims :

  • Duly filled claim form
  • Copy of claim intimation along with a copy of the policy and the premium receipt
  • Police First Information Report (FIR) report or Final Investigation Report of the incident
  • Fire Brigade Report of the incident, if there is one
  • Newspaper cuttings where the concerned incident of a riot or strike has been reported
  • Photographs of damaged property showing the extent of damage and / or a video detailing the loss
  • Value of damaged property just prior to the loss and the value of salvage - in order to assess the amount of loss
  • Fixed asset register, original bills, invoices, repairs or replacement bills and stock register

The RSMD cover provides coverage for some of the most common property crimes that can be detrimental to a business. Fire Insurance policies always come with a RSMD cover along with the FLEXA and STFI group of perils. This ensures an extensive coverage of the insured property from the risk of undue loss or damage.

Fire Insurance covers a lot more than just RSMD perils. Read about how a business can protect itself against natural disasters like floods

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.