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Factory and Warehouse Insurance Policy

Factories and warehouses form the backbone of all the manufacturing and storage related activities that happen in India. A factory setup will involve the building, creation of plant, installation of machinery and equipment, storage of stock/inventory (raw material as well as finished goods). Warehouses are the key for various business that involve storage. Additionally, there will also be electrical and electronic equipment, furniture, fixtures, money stored in safe, etc. These are all expensive assets and form an important part of the business setup. Any disturbance to this setup can be detrimental to the business and ruin years of hard work. An accident or unfortunate event can happen anytime, hence risk management is critical to the overall success of businesses.

Risk management – Warehouse and Factory owners need to identify the various risks they face and suitably mitigate or eliminate risk. A Factory Insurance Policy in India is an important tool to secure your factory assets.

Factory and Warehouse Insurance Policy

What is the need for a Factory Insurance in India?

A Factory Insurance Policy reimburses the Insured for any Material Damage to the assets due to variety of perils such as fire, natural calamities like earthquake, storms, cyclones, etc. Incidents involving burglary and theft can also be covered under this Policy.

A Factory Insurance Policy in India can alsobe extended to cover Business Interruption Insurance also known as Fire Loss of Profit Insurance. This can be crucial as expenses like salary, rent, etc never stop.

People are the most important asset of any business and their salaries can be paid using the Loss of Profit Cover. It usually takes time to get your claims and reinstate a whole factory and get back to routine production. Several months that are lost in this process can make a severe dent in the reserves of your balance sheet. Always consider taking a Loss of Profit Cover additionally.

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

A Factory Insurance Policy reimburses the Insured for any Material Damage to the assets due to variety of perils such as fire, natural calamities like earthquake, storms, cyclones, etc. Incidents involving burglary and theft can also be covered under this Policy.

A Factory Insurance Policy in India can alsobe extended to cover Business Interruption Insurance also known as Fire Loss of Profit Insurance. This can be crucial as expenses like salary, rent, etc never stop.

People are the most important asset of any business and their salaries can be paid using the Loss of Profit Cover. It usually takes time to get your claims and reinstate a whole factory and get back to routine production. Several months that are lost in this process can make a severe dent in the reserves of your balance sheet. Always consider taking a Loss of Profit Cover additionally.

What can be covered under a Factory and Warehouse Insurance Policy in India?

A Factory and Warehouse Insurance provides a comprehensive cover for all the assets of your corporation:

  • Building including walls, compound, plinth and foundation
  • Plant and Machinery, all equipment
  • Stock raw materials, in-process stock, finished goods
  • Furniture, fixture, electronics such as AC, laptop, computers, printers, etc.
  • Expensive art or antiques

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

  • Comprehensive cover:
    As the word suggests, a comprehensive Factory & Warehouse Insurance Policy can be issued with the choice of additional coverages.

  • Agreed Value policy:
    Some items such as expensive art are difficult to ascertain market value to. Hence, before the policy coverage starts the client and Insurance Company agree on a value of the asset being insured.

  • 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.

  • Reinstatement Value (RIV) policy:
    This type of Factory and Warehouse Insurance Policy pays the replacement cost of your 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 factors can help reduce premium under Factory and Warehouse Insurance?

Following good industry practices can result in getting an overall better rating from the insurance company. This helps in reducing the Factory and Warehouse Insurance Cost and it also increases chance of proposal acceptance from the insurance company as well as faster claims settlement.

Factors such as:

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

can be really helpful during the underwriting of factory and warehouse insurance policy and in reducing the factory insurance cost as well.

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

The premium of your Factory or Warehouse Insurance will depend on the following factors:

  • Location of Factory or Warehouse
  • Claims history (whether any claims taken in the past and how much)
  • Nature of business or activity
  • Sum Insured and Add-On Covers opted
What is the cost of a Factory and Warehouse Insurance Policy?

What are the exclusions under a Factory and Warehouse Policy?

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

Exclusions under a Factory and Warehouse Insurance Policy

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

Losses Caused due to seepage and pollution are excluded

Wars and Pandemic: Any damages due to an ongoing war or pandemic are strictly excluded.

Losses caused due to Radiation and Ionization may damage the stock or equipment and such losses are excluded.

Intentional Harm to any property is not covered under the Policy

 

How to claim under a Factory and Warehouse Insurance Policy?

  1. When an incident happens, intimate the claim as soon as possible to the Insurance Company.
  2. The Insurance Company would appoint a surveyor who will visit the affected site.
  3. Claim form needs to be submitted describing the incident and following documents are typically asked for by the company:
    • First Information report
    • Final Investigation report
    • Invoice copies of all damaged assets or an asset register maintained for balance sheet
    • Forensic report may be required
    • Fire brigade report (mandatory in case of fire)
    • 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.

How to claim under a Factory and Warehouse Insurance Policy?
Cover for Fire
Cover for Fire
Cover for Storm, Flooding
Cover for Storm, Flooding
Cover for Earthquake
Cover for Earthquake
24/7 Claims Assistance
24/7 Claims Assistance
Cover for Loss of Profit
Cover for Loss of Profit

Get Best Factory and Warehouse Insurance Policy Quotes with Qian

Factory and Warehouse Insurance is a must have for a Company to secure its assets. Qian is an experienced Insurance Broker for Factory and Warehouse Insurance Policies having served clients across diverse industries.

Businesses looking to purchase a Factory and Warehouse Insurance Policy can get in touch for a Free Consultation. Please feel free to reach out to us at support@qian.co.in or 022-22044989 or fill this Contact Form. We will get back to you within 24 hours, guaranteed.

Get Best Factory and Warehouse Insurance Policy Quotes with Qian

FAQS

Buying an insurance is not necessarily the easiest tasks for a business. It entails understanding all the coverages that a policy can offer, choosing the right additional coverages, being aware of the exclusions. It is common for businesses to miss out on some important add-ons like a earthquake cover or floods cover for instance.

Therefore, the Insurance Regulatory and Development Authority of India (IRDAI) announced for standardization of products based on sum insured. The large corporates have the bandwidth and the resources to understand the complexity of products as well as fight out legal battles should the need arise. It is usually the smaller business or start-ups that face the difficulty.

  1. Bharat Sookshma Udyam This policy can be opted for by the small business wanting to insure assets from 0 to 5 Crores. (Sum Insured <=5)
  2. Bharat Laghu Udyam This policy would interest the SME sector of India that would typically have assets greater than 5 Crores but upto 50 Crores to insure. (5<=Sum Insured<=50)

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