Fire and allied perils · India
For most Indian businesses the answer is no, and almost nobody says so. Since April 2021 fire cover up to fifty crore of value at risk has to be written on an IRDAI standard product, and insurers are forbidden from changing a word of it. Above that line the wording is negotiable again, and it is where quotes at the same premium stop being the same deal.
Value at risk means all insurable asset classes at one location at the start of the policy, not the sum insured you happen to have chosen.
| Value at risk, one location | Product | Wording | What to compare |
|---|---|---|---|
| Up to ₹5 crore | Bharat Sookshma Udyam Suraksha | Fixed by IRDAI | Price, service, claims record |
| ₹5 crore to ₹50 crore | Bharat Laghu Udyam Suraksha | Fixed by IRDAI | Price, service, claims record |
| Above ₹50 crore | Bespoke fire and allied perils | Negotiable | The wording, clause by clause |
If the value at risk crosses ₹5 crore during the year, in either direction, the policy is meant to move to the other product. That is a real obligation and one of the more common things we find unattended on a review.
On price, because pricing was de-tariffed in 2007 and every insurer rates the same risk differently. On add-ons, because the standard products carry optional covers an insurer may or may not offer to quote. And on everything that happens after a loss, which is not in the document at all.
That is the honest case for looking at a broker's data rather than a brochure. When the words are identical, an insurer's record is the only thing left to judge, and we publish how fast each one settles, how often people complain about them and whether they could absorb a large loss.
Both products are the same document under different letterheads, so this table is true whichever insurer sells it to you. Every line was read out of the policy wordings filed with IRDAI, not from a brochure.
| Point | Up to ₹5 crore | ₹5 to ₹50 crore | Above ₹50 crore |
|---|---|---|---|
| Which product applies Clause A(2) | Total value at risk across all insurable asset classes at one location not exceeding Rs 5 crore at the commencement date. | Total value at risk above Rs 5 crore but not exceeding Rs 50 crore at the commencement date. | Above Rs 50 crore of value at risk. Wording is negotiable, and two quotes at the same premium may not be the same cover. |
| If the value at risk crosses the band mid-term Clause A(2) This is why a mid-year revaluation matters. A unit that grows past a threshold and never revalues is on the wrong product at renewal. | If value at risk rises above Rs 5 crore during the policy period, the policy is replaced on expiry by the applicable product. | Same rule in both directions: above Rs 50 crore or back below Rs 5 crore, the policy is replaced on expiry by the applicable one. | Not applicable. This is the band the others move into. |
| Underinsurance, and the waiver most owners do not know they have Clause F(3), F(4) The single most valuable line on this page. Below Rs 50 crore the averaging cliff sits at 85% of value, not at 100%. | Underinsurance is waived up to 15%. A proportionate share of the loss falls on you only where the sum insured is below 85% of the value of insurable assets. | Identical. The wording reads "We will waive underinsurance upto 15%". | Nothing is guaranteed. Some bespoke wordings waive average to 85%, many do not, and the difference is rarely visible in the quote. |
| Underinsurance is applied item by item Clause F(2), F(5) | Every item of insured property is tested separately, so a building insured correctly does not rescue understated stock. Underinsurance does not apply to cover for specific contents. | Identical. | No standard wording exists above this line. Read it. |
| Basis of settlement Clause E, basis of sum insured | Reinstatement value for building, plant and machinery, furniture, fixtures and fittings and other contents. Not written-down value. | Identical. | Reinstatement or indemnity, and it is negotiable. Indemnity deducts depreciation and leaves you short of the cost of rebuilding. |
| How stock is valued Clause E, basis of sum insured Worth checking against how your accounts value stock. The policy basis and the ledger basis are frequently not the same number. | Raw material at landed cost at your premises. Stock in process at input cost at the time of loss. Finished stock at manufacturing cost, or contract price for goods sold but not delivered. | Identical. | No standard wording exists above this line. Read it. |
| New plant bought mid-year Clause C(4.1), in-built The 7-day notification is the part that gets missed. It is an in-built cover you already paid for, lost by not sending an email. | Additions, alterations and extensions are covered without extra premium, but you must tell the insurer within 7 days of it becoming known to you, the item must not be otherwise insured, and the cover is capped at 15% excluding stocks. Underinsurance still applies. | Identical. | No standard wording exists above this line. Read it. |
| Stock held at more than one location Clause C(4.2), floater The audit-trail requirement is a condition, not a formality. A godown nobody declared is a godown that is not covered. | Covered on a floater basis provided every location is declared and shown in the schedule, stock is declared as a single aggregate sum insured, and you keep an internal audit procedure that can establish the amount at risk and its location at any time. | Identical. | No standard wording exists above this line. Read it. |
| Ceiling on add-on covers Add-on covers | Indemnity including add-ons cannot exceed the total sum insured plus any separate sub-limit taken for the add-ons, or Rs 2,000 crore, whichever is lower. | Identical. | No standard wording exists above this line. Read it. |
Read from Bharat Sookshma Udyam Suraksha, standard policy wording (UIN IRDAN159RP0020V01202021) and Bharat Laghu Udyam Suraksha, standard policy wording (UIN IRDAN152RP0003V01202021), both hosted on irdai.gov.in. Checked 2026-08-14. Insurers may not alter these wordings, so the same text appears in every insurer's version of the product.
Outside the standard products, two quotes at the same premium routinely carry materially different cover. These are the lines that decide it, roughly in the order they cost people money.
| Clause | Why it moves money |
|---|---|
| Basis of settlement | Reinstatement value or indemnity. Indemnity deducts depreciation and leaves you short of the cost of actually rebuilding. This single line moves more money than any other in the policy. |
| The average clause and any waiver of it | Whether partial losses are scaled down when the sum insured is short, and whether the insurer waives that below a stated margin. Some bespoke wordings waive average up to 85 per cent of value; many do not. |
| Escalation | An automatic uplift to the sum insured through the year. Without it, a policy written in April is underinsured by March in any inflationary year. |
| Debris removal, architects and surveyors' fees | Usually a percentage of the claim rather than an extra layer. The percentage varies, and on a total loss it is a real number. |
| Designation of property and unnamed locations | Whether cover follows stock to a location not listed. For anyone with a second godown or goods at a job site, this decides whether a loss is covered at all. |
| Temporary removal | Machinery sent out for repair. Frequently excluded, frequently assumed to be covered. |
| Spontaneous combustion and the storage warranty | Material for anyone storing cotton, coal, oilseed or bagasse. The warranty attached to it is often stricter than the site actually operates. |
| Business interruption indemnity period | Twelve months by default and rarely long enough. If a specialised machine has a nine-month lead time, twelve months is not an indemnity period, it is a gap. |
| Excess structure | Per event, per location, or a percentage of the claim. A percentage excess on a large sum insured can quietly exceed the loss you were worried about. |
| Claim notification period and warranties | How many days you have, and what conditions are drafted as warranties rather than conditions. A breached warranty can void cover in a way a breached condition does not. |
If you would rather not do it yourself, this is exactly what our three-insurer comparison puts in writing, at no cost to you.
Find the value at risk first, not the sum insured. If it is under fifty crore, stop comparing wordings and start comparing the insurer. If it is over, get both wordings in full, not the quote summaries, and read the ten lines above side by side. Quote summaries are marketing documents; the wording is the contract.
For a business whose value at risk is up to 50 crore rupees, no. Since 1 April 2021 fire and allied perils cover for those risks must be written on one of IRDAI's standard products, and the guidelines say plainly that no insurer shall change or alter any part of the wordings. The cover you buy is the same document whoever sells it.
Price, and how the insurer behaves at claim time. When the wording is fixed, those are the only variables left. That is why we publish settlement speed, complaint rates per 10,000 claims and solvency rather than comparing cover that is identical by law.
Bharat Sookshma Udyam Suraksha where the total value at risk across all asset classes at one location does not exceed 5 crore rupees. Bharat Laghu Udyam Suraksha above 5 crore and up to 50 crore. Above 50 crore you are outside the standard products and the wording is negotiable again.
The guidelines deal with this: if the value at risk rises above 5 crore, or falls below it, the policy moves to the appropriate product. It is one of the reasons a mid-term valuation matters, and one of the more common things we find wrong on a review.
A great deal, and this is where a broker earns their keep. The list below is what we read first. Two quotes at the same premium can carry materially different cover, and the difference usually only surfaces at claim time.
No. The standard-product rule described here covers fire and allied perils. Marine, liability, engineering and health wordings are not standardised in the same way, so comparison genuinely matters across all of them.