Fire Insurance for Commercial Property

Commercial property fire insurance, also known as fire insurance for commercial buildings, is a type of property insurance. It protects businesses and business owners against fire losses and damages to the property, goods in the building and other assets within the commercial building.

The fire insurance policy is a valuable tool for businesses to protect themselves and their property against any unforeseeable event. However, it is crucial to thoroughly understand the policy's inclusion and exclusion terms before making a purchase. This understanding empowers business owners, ensuring they are well-prepared and informed about their insurance coverage.

Here are the points of inclusions, which are usually there in commercial building fire insurance:

Property Damage Coverage

A big fire breakout can cause significant damage to the structure of a building. In case of significant damage to the insured commercial building due to fire, the policy will cover the finances required for rebuilding or repairing. The damages covered under the fire insurance policy include damage to building structure, such as roof, floor, furnishing, equipment and other necessary components.

Coverage for Content Damages

Businesses use commercial buildings for storing their business pieces of equipment, assets, inventory and other essential contents. In the event of a fire incident, these contents in the commercial building get damaged and destroyed. With fire insurance at your aid, all these contents of the property get protection against any damages caused due to fire.

Liability Coverage

In some incidents, fire insurance for commercial property also protects against liabilities. It saves the business and business owners from legal liabilities and financial losses in case of any third-party damages and losses due to fire.

Business Interruption

In several cases, a business's commercial property is its operational unit. In case of a fire accident, the damages to the building and its contents can force the business to stop its operations.

The temporary interruption can result in financial loss. However, some fire insurance policies have add-on cover that provides for the financial loss caused by this temporary interruption.

Debris Removal

Fire incidents leave a lot of damage and debris in their wake; cleaning all this debris is also an expense that adds to the business's financial burden. However, some fire insurance policies have add-on cover for debris and wreckage removal after the fire accident. This cover includes removing and disposing of damaged materials.

ACV Coverage

A fire insurance policy may provide coverage for the replacement cost of the actual cash value (ACV) of the property damaged and destroyed in the fire. The replacement cost coverage pays for expenses included in the replacement or repair of the damaged goods with new ones of similar value. But remember that ACV coverage takes the depreciation cost into account while calculating the damage.

Tank Overflow

Suppose a water tank on the roof of your commercial building overflows, causing a short circuit and leading to a fire. The damage to the property's structure will be covered under the fire insurance for commercial buildings.

BushFire

If your commercial building is near bushes and drylands, it may catch fire and destroy the business's structure and assets. The financial loss and damage will be compensated under the fire insurance policy.

Lightning

Lighting can spark a fire, and if a business’s commercial property is struck by lightning and causes damage to the structure and its content, then the loss will be covered under commercial building fire insurance.

While a fire insurance policy does provide coverage against damages caused due to fire, there are certain clauses which are not covered under it.

Wars and Terrorism

Damages caused by wars, riots or terrorist attacks will not be covered under fire insurance. However, if businesses want to protect their commercial property from acts of terrorism, separate insurance for terrorism coverage is available.

Wear and Tear

It is the business's responsibility to conduct regular check-ins of the commercial property for any signs of wear and tear that might cause a significant incident. Any incident that happens due to regular wear and tear is not covered under a typical commercial fire insurance policy.

Intentional Damages or Arson

Fraud is a crime; any commercial property damage caused by intentional damage or arson by the owner will be considered unlawful activity. Thus, any damage caused to the property due to such actions will not be covered under fire insurance, and the insurance company will not be liable to pay any compensation.

Natural Calamities

Fire incidents often occur due to natural calamities like earthquakes, tsunamis, floods, etc. Damages involving any of these natural calamities may not be covered under fire insurance. In such cases, business owners can get other insurance that provides coverage for damages caused by natural calamities.

Vacant Property

Leaving your commercial property abandoned and vacant for a long duration without informing the insurer affects the policy conditions. If a fire incident occurs on that property and causes significant damages, then the insurance company is not liable to pay for it.

Negligence

It is the business owner's responsibility to maintain the property regularly. If they leave any hazardous items and instruments unattended that might directly cause fire incidents, the damage caused due to the owner’s negligence will not be covered under the fire insurance policy.

Criminal Acts

The fire insurance policy covers damage caused primarily by fire. Thus, any damages to the commercial property or its contents due to criminal incidents such as theft and vandalism will not be covered under the fire insurance.

Pollution

Another exclusion of fire insurance for commercial property is damages caused by pollution, such as air pollution, water or land pollution or chemical contamination of the commercial property.

A fire insurance policy is one of the critical SME insurance types for business owners. It protects them from all the financial and legal damages due to any accidental fire incident. The information mentioned here will help you understand what is covered under fire insurance other than fire loss and what is not included.

Based on their business needs, owners can buy a good fire and burglary insurance policy from a trusted insurer, such as Tata AIG. At Tata AIG, we provide necessary coverage and some additional benefits with its insurance policies. Our fire insurance policy is suitable for all business sizes, has great in-built covers and an easy claim procedure.

Protect your business and property from financial losses and liabilities by staying protected against any unfortunate events.

Who should buy fire insurance?

Fire insurance is suitable for many categories of businesses. These include:

Shop Owners who want to protect their property and goods from unfortunate events.

Business owners with commercial buildings have contents like furniture, artefacts, furnishing, etc.

Inventory business owner with godown containing assets and inventory.

Educational institutions, banks and research institutes can also buy fire insurance.

How much does fire insurance cost in India?

The cost of fire insurance in India depends entirely on the insurance company you choose and your coverage needs.