Fire Insurance for Godown: Everything You Need to Know

Fire insurance is a special type of insurance designed to safeguard individuals and business owners from huge losses caused by fire. In other words, it can be called a saviour as it helps business owners by reducing the financial burden that they have to go through after a fire incident.

The reimbursement made by the insurer helps the insured in mitigating the outcomes of fire i.e. damage to property structure, inventory, equipment, etc.

Unlike residential properties, warehouses are more exposed to risks like fires. They can cause extensive damage, cause huge financial losses to businesses and interrupt business operations.

Moreover, while godown insurance in India does tend to cover damage and loss due to fire, the coverage is often provided as a part of a broader plan and may not always cover every fire-related event.

So, it is often recommended to pair your godown insurance policy with a fire insurance policy to ensure your stock and inventory in your warehouses are covered. This is especially true if your stock consists of highly flammable material.

Fire insurance for godowns is generally suitable for medium and large enterprises as businesses of this size often use godowns for storing their stock and inventory.

Due to this, opting for a fire insurance plan for your godown is necessary for the continuous development of your business as even a small fire can disrupt your business to a great extent.

While each fire insurance policy has its own level of coverage, there are some common inclusions and exclusions that you should note in order to make the right purchase.

Typical Inclusions in Fire Insurance for Godowns

• Fire caused out of nowhere.

• Fire caused due to lightning.

• Fire breakout in godown because of nearby bush fires or forest fires.

• Fire caused by natural calamities, such as landslides, storms, earthquakes, cyclones, volcanic eruptions, typhoons, tornadoes, floods, etc.

• Break out of fire due to spontaneous combustion.

Typical Exclusions in Fire Insurance Policy for Godowns

• Fire caused by man-made disasters, like chemical spills in the godown, civil disorder, war, invasion, riots, or overloading.

• Explosion or implosion in the godown because of boilers or other heat-generating equipment.

• Fire caused due to the negligence of the insured, for example, electrical short circuits.

• Fire insurance will not cover any claims if the owner of the company starts the fire intentionally.

It is extremely important to be aware of the process of raising a claim for fire insurance for godowns, as multiple conditions need to be fulfilled to get your claim request approved by the insurance company. So, let’s learn about those conditions below:

Documents Needed for Raising a Fire Insurance Claim

Before raising a claim request for your insurance policy, you must gather the necessary documents. Here is a list of the things you would need to file a claim correctly:

• A copy of your insurance policy

• Claim form

• Photographs

• Fire Incident Report: It is obligatory to present this report when raising a claim request so if your godown has caught fire, you should call fire services immediately even if you somehow manage to extinguish the fire before the arrival of firefighters.

• Forensics report

• Published newspaper report on the incident (if any)

The Process of Filing a Claim for Fire Insurance for Godown

• Inform your insurer about the fire incident so that the insurance company can start the investigation.

• Fill out the claim form.

• Attach the documents listed above.

• Submit the claim form to your insurer.

• Upon receiving the form, the insurer will start verifying the details and start the claims process accordingly.

• If the insurer finds the information correct, the request will be approved, and you will get reimbursement (as per the terms and conditions of your policy) within the specified time.

In order to purchase fire insurance for a godown, you need to find a reliable insurance provider.

• After selecting the insurance company, visit their website and navigate to their business insurance section.

• Once there, check their fire insurance policies and fill out the policy application form, where you will have to enter some details, like your company name, email address, phone number, and the category of fire insurance you want (select storage).

• In addition, you will have to provide a business description, i.e., whether you deal with hazardous or non-hazardous goods.

• Click on submit.

• Enter the OTP and confirm.

• On confirmation, a representative will contact you within a few hours and suggest a suitable fire insurance policy.

Important Note: If you want to get an approximate idea of the premium you will have to pay for a fire insurance policy for Godown, you can use an online Godown insurance premium calculator.

There are a couple of prerequisites for buying fire insurance for a godown, these are:

• The godown should not have structural defects that can lead to fire in any way.

• The godown must adhere to the local safety guidelines. Providing evidence of compliance with safety regulations is necessary to buy fire insurance for your godown.

• The godown should also have fire safety measures implemented duly.

The criteria that decides whether you are eligible for buying fire insurance or not depends on the chosen insurance company as each insurer has its own rules.

For this reason, when buying this type of insurance, you should read the policy completely to clear your queries on time.

Buying fire insurance for godown is a task that needs considerable attention. There are many aspects you should know to make an effective decision. Some of them are:

Check the Inclusions and Exclusions: To ensure that you have the necessary coverage for unforeseen events, you should always read the policy thoroughly and check for exclusions, particularly.

Make a Comparison: To find the insurance plan that satisfies all your business needs, compare different insurers and policies. This will help you get the maximum coverage at affordable rates.

Take Note of the Claim Settlement Process: It is far better to select an insurance company with a smooth settlement process than one that does not finalise the claim quickly.

So, remember to check the details of the insurance company's claim settlement process that you have decided on.

Know the Risks: It is crucial to assess the risks your godown is exposed to. For example, you should consider the location of your godown, the category of goods you deal with, and the strength of the building structure.

Consider the Premium: The premium you pay should justify the coverage provided. The higher the premium, the more coverage you should get.

Fires tend to pose a unique risk to businesses due to the amount of destruction and irreparable damage they can cause. To avoid facing such situations, buying fire insurance for your godown is an ideal solution.

However, to make the right purchase, it is essential to understand the smallest details about this insurance (such as inclusions and exclusions, eligibility criteria, etc.).

We at Tata AIG offer fire and burglary insurance policies that cover the needs of a wide variety of businesses. The coverage provided under fire insurance includes property damage as well as partial or complete loss of goods stored on the premises.

What is the time period of fire insurance?

Usually, the term of a fire insurance policy is 1 year. The completion of 1 year marks the policy’s expiry. However, you can renew your policy if needed.

What is the purpose of fire insurance?

The main purpose of a fire insurance policy is to safeguard the insured from losses incurred by fire. The reimbursement provided by the insurance company helps the policyholder repair and reconstruct the damaged property.

Is theft covered under fire insurance?

No, theft is not covered under fire insurance. This type of insurance policy only provides financial coverage for damage incurred because of fire.

If you want to include theft protection in your fire insurance, you can opt for fire and burglary insurance to get additional security and extended coverage.