Among the different risks that businesses in our country face, fire accidents are one such risk that results in noteworthy damage to inventory, property and assets. This is where the need for fire insurance comes in as one of the aspects of risk management for commercial property owners. It is designed to provide financial safety in case of damage caused by fire, which can easily devastate any business.
A fire insurance policy provides financial coverage for fire and associated risks, which can contribute towards businesses recovering from losses caused by those risks. Continue reading to know whether your commercial property has enough fire insurance to protect you from losses due to a fire accident.
Understanding Fire Insurance for Commercial Properties
To protect commercial buildings from losses caused by fire, businesses invest in fire insurance policies from reliable insurers like TATA AIG. Also called fire insurance for commercial buildings, this insurance is a property insurance type, which safeguards business owners from damages and losses to the property, goods and other assets in the commercial building.
A fire insurance policy is a powerful tool that protects businesses and their properties from unexpected events. However, you should purchase this policy only after thoroughly reading its exclusions and inclusions. Understanding the policy thoroughly enables business owners to be well-informed and prepared regarding the coverage of their insurance policy.
Does Your Commercial Property Have Sufficient Fire Insurance Coverage?
To know whether or not your commercial property has enough fire insurance, you have to ensure the following are covered under your insurance policy:
Damage Caused by Fire
A standard commercial property fire insurance will first and foremost provide coverage for damages that result because of fire, which include destruction of assets, property and inventory. Generally, this coverage includes damage from soot, flames and smoke.
Extension for Perils
Another coverage that your commercial building fire insurance should provide includes perils, such as explosions, lightning, strikes, riots, impact damage (for example by four-wheelers), malicious damage, cyclones, storms, aircraft damage and floods.
Compensation for Business Interruption
Some business fire insurance policies may provide compensation to the insured in case of financial losses that the insured incurs due to interruption of business or temporary shutdown caused by a covered peril or by fire. This compensation helps in covering the ongoing expenses during this downtime.
Additional Cost Coverage
Your commercial fire insurance policy may also provide coverage for additional costs incurred to expedite business operation resumption or to minimise the overall loss. This coverage can include firefighting costs, temporary relocation expenses, and other noteworthy expenses.
Alternative Accommodation Rent
If your insured property turns uninhabitable or unusable on a temporary basis because of a peril (that is covered under the policy), the insurance may provide coverage for the cost of renting an alternative workspace or accommodation.
Removal of Debris
Coverage for the expenses related to removing debris that result due to a covered loss is provided under this policy. This coverage includes removing damaged equipment, structures and other debris from your insured property.
Availing Fire Insurance for Commercial Properties – Eligibility Criteria
It is important for businesses in our country to meet specific criteria to be eligible to own fire and theft insurance for business. While these criteria may be different from one insurance provider to another, there are certain general requirements most insurers look for. These include the following:
- Physical Location – It is important for the business to own a physical location that the business uses for commercial purposes. The physical location must be a permanent structure, like a warehouse or a building, and must be leased or owned by the business.
- Valid Trade Licence – The business needs to possess a valid trade licence as well as other necessary approvals and permits from relevant authorities. These include building permits, safety certificates and other necessary regulatory approvals.
- Adequate Safety Measures – It is also important that there are sufficient safety measures for prevention of fire in the commercial property owned/leased by the business. These include smoke detectors, fire alarms, fire extinguishers and other necessary equipment that can assist with preventing or mitigating fire damage.
Conclusion
Standard fire insurance for commercial buildings should include the above-mentioned coverage options to provide sufficient coverage to your commercial property. It is important to note that fire-related incidents come with significant operational and financial risks, which can be mitigated by opting for a fire insurance policy that not only helps with risk management but also ensures continuity of business and offers you peace of mind.