Factory and Warehouse Insurance Policy - Definition, Coverage, Exclusions, Add-On Covers, Types, Claims Process, Companies | Best Quotes

What is a Factory Insurance Policy? - Definition

A Factory and Warehouse Insurance Policy is a type of Fire Insurance Policy which reimburses the Insured Party for any Loss or Damage to the Insured Assets due to named Perils such as Fire, Explosions natural calamities like Earthquake, Storms, Cyclones, etc. A Factory Insurance Policy provides coverage to all Factory Assets, such as Buildings, Plant & Machinery, Inventory Stocks in a single Insurance Policy.

What are the coverages under a Factory and Warehouse Insurance Policy?

A Factory and Warehouse Insurance Policy provides coverage for Loss or Damage to Insured Assets due to Perils listed below:

1. Fire Damages
2. Lightning:
3. Explosion/Implosion
4. Aircraft Damage
5. Riots, Strikes and Malicious Damage Cover
6. Impact Damage
7. Subsidence and Landslide including Rockslide
8. Bursting and/or Overflowing of Water Tanks, Apparatus and Pipes
9. Missile Testing Operations
10. Leakage from Automatic Sprinkler Installations
11. Bush Fire

What are the Add-On Covers under a Factory Insurance Policy?

A Factory and a Warehouse Insurance Policy provides the following Add-On Covers:

1. Removal of Debris Cover (in excess of 1% of claim amount): The Removal of Debris Add-On Cover covers the costs of clearing debris from the Insured Premises after an Insured Event.
2. Omission to Insure, Additions, Alterations or Extensions: The Omission to Insure Addition, Alteration, or Extension Add-On Cover provides automatic coverage to new fixed assets like Buildings, Plant and Machinery and other Contents which the Insured has erected or acquired after the commencement of the Policy and the same has not been separately declared in the Policy. This extension does not provide coverage to those fixed assets which were erected and existed prior to Policy Commencement buy only those assets which were erected after Policy Commencement.
3. Architects, Surveyors and Consultant’s Fees (in excess of 3% of Claim amount): The Architects, Surveyors and Consultant’s Fees Extension provides cover for expenses incurred towards Architects, Surveyors and Consulting Engineers fees for plans, specification tenders, quantities and services for the reinstatement for the Building, Machinery, Accessories and equipment insured under the Factory Insurance Policy
4. Escalation Clause: Escalation Clause allows for an automatic pro-rata increase in the Policy Sum Insured in respect of capital assets from Policy Inception to Expiry. The Policy Sum Insured is increased each day by 1/365th of the specified percentage increase per annum. The Escalation Clause takes care of rise in value of Fixed Assets due to Inflation.
5. Spoilage Material Damage Cover: Spoilage Material Damage Cover provides coverage to loss of Stock-in-Process and Damage to Machinery or Equipment due to retardation, interruption or cessation of any process or operation caused by Insured Perils.
6. Leakage and Contamination Cover: Leakage and Contamination Cover is important for factories storing oils or chemicals. Leakage and Contamination Extension pays for the Loss of Oil or Chemical due to Accidental Leakage or Contamination. The Insured has an option to choose to cover accidental leakage OR to cover accidental leakage and contamination both together
7. Terrorism Cover: Terrorism Cover provides protection against losses due to terrorist activities, which are typically excluded from standard policies.
8. Fire Loss of Profit (Business Interruption): The A Factory Insurance Policy in India can be extended to cover Business Interruption , also known as Fire Loss of Profit Insurance. The Policy pays for the Loss of Gross Profit faced by the Business following a Fire Accident. Selecting relevant add-ons based on your factory’s operations and risk profile is crucial for comprehensive protection.

Which Insurance Companies offer a Factory Insurance Policy?

The list of Insurance companies providing a Factory Insurance Policy in India are as follows:

1. New India Assurance Company
2. Oriental Insurance Company
3. National Insurance Company
4. HDFC Ergo General Insurance Company
5. ICICI Lombard General Insurance Company
6. Bajaj Allianz General Insurance Company
7. SBI General Insurance Company
8. Tata AIG General Insurance Company

What are the different types of Factory & Warehouse Insurance Policies?

1. Comprehensive cover: A comprehensive Factory & Warehouse Insurance Policy provides coverage for Damage due to Fire Accident, Business Interruption as well as Third Party Liability.
2. Floater Policy: This option is useful to clients who frequently have their assets at different locations. This is particularly useful for a distributor, C&F agent using multiple Godowns or Warehouses and has stock at different locations as the Complete Stock is insured under a Single Policy.
3. Reinstatement Value (RIV) Policy: A Factory and Warehouse Insurance Policy with a Reinstatement Value Clause pays the Replacement Cost of the damaged asset and not the depreciated value. For example, a machine was bought for Rs 1 lakh, say 10 years ago. The depreciated value of this machine on balance sheet is now Rs 10,000. In the event of a Claim, the same machine can now be bought for Rs 200,000 as per current prices. The Insurance Policy will consider this replacement cost of Rs 2 lakhs and not the depreciated value of Rs 10,000.

What are the exclusions under a Factory and Warehouse Policy?

The exclusions under a Factory and Warehouse Insurance Policy are as follows:

1. Natural wear and tear: The use of machinery over a period of times leads to deprecation and natural wear and tear. This is not covered under the Factory and Warehouse Insurance Policy
2. Wars and Pandemic: Any damages due to an ongoing war or pandemic are strictly excluded.
3. Losses Caused due to seepage and pollution are excluded
4. Losses caused due to Radiation and Ionization may damage the stock or equipment and such losses are excluded.
5. Intentional Harm to any property is not covered under the Policy

What is the Cost of a Factory and Warehouse Insurance Policy?

The Cost of a Factory and Warehouse Insurance Policy will depend on the following factors:

1. Sum Insured: The Sum Insured also impacts the Premium for a Factory Insurance Policy. Policies with a higher Sum Insured will have higher Premiums.
2. Location of Factory/Warehouse: Factories in Earthquake Prone Zones will have higher premiums
3. Claims History: Past Claims Experience also impacts the Premiums for a Factory Insurance Policy. Factories with prior claims will have higher premiums for their Policies.
4. Nature of business: The Risk Profile of the Business Operations also impacts Factory Insurance Premiums. Factories manufacturing hazardous chemicals will have higher premiums than those working on non-hazardous chemicals.

What factors can help reduce premium under Factory and Warehouse Insurance?

Following Factors help in reducing the Premium of a Factory Insurance Policy:

1. Installing Fire Extinguishers, Hydrants, Sprinklers at the site to minimize fire damage
2. Maintaining AMCs for all equipment and machines used
3. Having CCTV cameras and 24*7 security guards
4. Having limited or no exposure in basement
5. Nil claims history

What is the Claims Process under a Factory and Warehouse Insurance Policy?

1. Claim Intimation: When an incident happens, intimate the Claim to the Insurance Company as soon as possible.
2. Surveyor Appointment: The Insurance Company appoints a surveyor who visits the affected site for investigation.
3. Document Submission: Submit the documents required for a Factory Insurance Claim such as ID Proofs, GST Certificate, Claim Form, FIR Reports, Report of Damaged Assets etc.
4. Claim Assessment and Settlement: The Insurance Company assesses the Claim based on Documents submitted and Surveyor Reports. If the Claim is admissible, the Insurance Company settles the Claim as per the Policy Terms and Conditions.

What are the documents required to file a Claim under a Factory and Warehouse Insurance Policy?

The Insured needs to submit the following documents to file a Claim under a Factory and Warehouse Insurance Policy

1. Claim form describing the incident
2. First Information report
3. Final Investigation report
4. Invoice copies of all damaged assets
5. Fixed Asset Register maintained for balance sheet
6. Stock Register
7. Forensic report may be required
8. Fire brigade report (mandatory in case of fire)
9. Estimated cost of repair or replacement The above list is not exhaustive and the Insurance Company at its discretion may ask for more documents as required.

Get Best Quotes for Factory and Warehouse Insurance Policy with Qian!

A Factory Insurance Policy offers protection against fire damages and provides financial compensation in case of damage. This compensation protects you Investment worth Crores of Rupees and helps business recover for damage and resume operations more quickly. Thus, a Factory and Warehouse Insurance Policy is a must have for a Company to secure its assets. Qian is an experienced Insurance Broker for Factory and Warehouse Insurance Policy having served clients across diverse industries. If you wish to purchase a Factory and Warehouse Insurance Policy can get in touch with the experts at Qian.

Our team would recommend the appropriate coverages and the Best Quotes for your Factory Insurance Policy. Contact us now at insurance@qian.co.in or 📞 022-35134695 for your Factory and Warehouse Insurance Policy. We would be glad to assist you.

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