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Fire Insurance for Factory

  • Author :
  • TATA AIG Team
  • Published on :
  • 15/04/2024
  • 2 min read

Factories and industries are crucial aspects of economic growth and fulfilling the demands of the growing population. While they drive growth, they are also prone to accidents and damages caused due to unprecedented factors. One of the major perils is fire. And the best way to protect factory infrastructure and stored goods is fire and burglary insurance.

A fire insurance policy, in this case, can help factory owners protect their businesses from a hefty financial loss caused by such unforeseen events. In this article, we will discuss the importance of fire insurance for factories and how it can help factory owners protect their assets from potential risks.

What is Fire Factory Insurance?

Fire insurance for factories is a specialised insurance cover specifically tailored to protect factory infrastructure, machinery, and finished goods. These insurance plans offer coverage against potential risk and financial losses incurred due to fires.

These insurance policies provide compensation for replacement and recovery from destruction so that the business can recover as quickly as possible. It also provides protection of physical assets, like buildings, machinery and equipment, raw materials, etc.

Fire insurance policies have a specific list of inclusions and exclusions that help policyholders determine their liability of claims and understand how fire insurance works in their case.

Importance of Fire Insurance for Factory

Keeping valuable assets in your factory uninsured can result in huge financial losses from potential risks. Even a small fire accident can cause damage to the instruments or the infrastructure, resulting in losing crores of rupees. Thus, buying comprehensive fire insurance is the best way to ensure the overall protection of your factory.

Here are several reasons that explain why it is important to have fire insurance for factory:

Asset Protection: Factories usually have expensive machinery, raw materials, infrastructure, and finished products. In the event of a fire, fire insurance can protect these assets and help owners recover from the financial loss. The policy offers coverage for the replacement and repair of these assets.

Liability Coverage: Fire in a factory may invite legal liabilities if it spreads to nearby areas or causes harm to factory workers. A fire insurance policy often offers liability coverage, which covers potential legal liability claims.

Risk Mitigation: Due to the presence of flammable materials and electrical equipment, fire poses a significant risk to factories. Thus, to avoid incurring huge losses or financial damages, it is best to mitigate risks beforehand.

Wide range of inclusions: Such an insurance policy offers coverage for many potential hazards. This includes earthquakes, lightning, storms, floods, inundation, floods, etc. Additionally, depending on the type of coverage you decide to go for, there may be additional inclusions in your policy.

Eligibility for bank loans: Factories that are insured with a fire and burglary insurance plan have higher chances of getting bank loans approved.

Coverage for loss of profit: A fire can result in disruption of daily operations and significant loss of revenue. The insurance policy will help business owners by providing coverage for the loss of income during the recovery period. This helps the business to recover and resume quickly.

Peace of Mind: Knowing that the factory and related valuable assets are protected, business owners and stakeholders will have peace of mind. This policy can reduce fear and anxiety and remain focused on growth.

Inclusions and Exclusions in Fire Insurance for Factory

Inclusions

The following perils are covered by fire insurance:

  • Fire

  • Explosion

  • Natural calamities like earthquakes, storms, floods, etc.

  • Theft

  • Electrical breakdown

  • Implosion

  • Riots, malicious damage

  • Bushfire

**Exclusions

  • The following are the exclusions from the policy:

  • Negligence

  • Intentional damage or loss

  • Normal wear and tear

  • Deterioration

  • Loss or damage due to pollution

  • Loss or damage due to radioactive contamination

  • Vacant or unoccupied property

  • Criminal acts

  • Violations of property use

  • Loss or damage due to government violations

  • Leakage from automatic sprinkler installations

How to Reduce Premiums of Insurance for Factory

Several factors can help you reduce your premium of the factory insurance; they are:

  • Low claim history

  • Adequate security measures at the factory premises, like CCTV cameras and 24*7 security guards

  • Conducting regular and timely AMC for all the factory equipment and machinery.

  • Low or no basement exposure

  • Taking adequate fire safety measures, like installing water sprinklers, hydrants, extinguishers, etc.

Conclusion

Factories need fire insurance that is specialised and tailor-made for industry and factory owners. Such a fire insurance plan provides protection against unprecedented risks and potential damage to valuable assets and factory buildings.

The SME insurance policy by Tata AIG offers coverage for replacement and repair costs caused by fire while letting you focus on the growth of your business.

FAQS

How much does factory insurance cost?

The premium amount of the insurance is determined based on many factors such as location, claim settlement record from the past, size and nature of the business, and the number of safety measures taken on the factory premises.

How long does fire insurance protect my business?

The period of protection is dependent on the policy tenure. However, the policy can easily be renewed online with just a few steps.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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