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Property peril

Fire & Allied Perils

Factory and warehouse fire, explosion and allied perils, and the under-insurance gap that surfaces at claim time.

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The risk

The most common large loss, and the most commonly under-insured.

India's factories, warehouses and commercial premises face fire from electrical faults, hot work, chemical storage and ageing wiring. The Standard Fire & Special Perils and Bharat Sookshma/Laghu Udyam policy forms cover the peril, but sums insured set years ago rarely track today's construction and plant-replacement costs, leaving most operators 25-40% under-insured before a claim is even tested.

Exposure profile

Where this risk lands on your balance sheet.

The exposures we evaluate first when scoping a programme against this risk.

01
Building & plant reinstatement gap
Sums insured fixed at historical cost; rebuilding at today’s prices leaves a shortfall the average clause then penalises.
02
Stock & finished-goods accumulation
Peak-season stock values routinely exceed the declared sum insured, discovered only at claim time.
03
Explosion & allied perils
Boiler, gas, dust and chemical explosions; riot, strike, malicious damage and natural perils ride alongside the fire risk.
04
Business interruption after the fire
The building is rebuilt; the gross profit lost during downtime is the larger, often-uninsured exposure.
Industries most exposed

Who carries the most of this risk.

The sectors where this exposure is most acute, each links to its industry page.

01
Chemicals & Petrochemicals
Flammable process inputs and bulk solvent storage.
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02
Textiles & Garments
High fire load and dense, fast-burning stock.
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03
Warehousing & Cold Storage
Concentrated stock values under one roof.
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04
Steel & Metal Fabrication
Hot work, furnaces and grinding sparks.
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05
Pharmaceuticals & Life Sciences
Solvents, clean-room loss and regulated rebuild.
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06
Shopping Malls & Complexes
Occupancy density and high footfall liability.
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Recommended cover

The programme that responds to this risk.

Each cover links to its full product page. The combination, limits and wording are what we structure on your behalf.

01
Fire & Burglary
SFSP / Bharat policy with a reinstatement-value review and natural-peril extensions.
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02
Plant & Machinery
Cover for fire-damaged plant plus loss-of-profit on stalled lines.
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03
Office Package Policy
Bundled fire, burglary and liability cover for commercial premises.
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04
Shopkeeper's Policy
Fire and allied perils for retail premises, stock and fixtures.
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Want a risk-specific programme review?

Speak with an advisor who has structured cover against this risk for clients in your sector.

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FAQ

Common Questions

Usually what is in it. On a manufacturing site the plant and the stock frequently exceed the structure by a wide margin, and on a rented premises the building is not even the occupier's exposure. Insuring the shed and under-declaring the contents is a common and expensive arrangement.
Because the average clause applies. If the sum insured is below the value at risk, a partial claim is reduced in the same proportion, and most fire claims are partial. A business insured at seventy per cent of value is effectively self-insuring thirty per cent of every claim, not just of a total loss.
On what it would cost to rebuild or replace today, including debris removal and professional fees. Not the book value, which is an accounting figure, and not the purchase price, which is history. The gap between the two is where under-insurance comes from.
Concentration and separation. Everything under one roof with no fire wall, stock stacked against the structure, and a single point where power or water enters. Distance between buildings does more to limit a fire loss than almost any device inside them.
On the standard Indian fire wordings they are generally included rather than optional, which surprises people who expect to buy them separately. What is worth checking is the excess on each and whether the sum insured would actually rebuild the site.