Fire Insurance to Protect Your Business

Best fire insurance policy to protect your businesses against unforeseen losses, destruction or damages.

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What is fire insurance?

Fire insurance, generally known as the Special Fire and Special Perils is a type of property insurance that provides coverage for material damage. The main objective of fire insurance is to provide cover for your property against any physical losses, damage or destruction. The policy pays you the restoration costs, repair costs or replacement costs of the property or any part of the property.

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Why buy fire insurance for your businesses?

Buying a fire insurance policy is very important for the following reasons.

why buy fire insurance

Protect your dream

Any business small or big is a dream come true for many founders and business owners. Buying fire insurance protects these businesses from any potential damage from any of the perils mentioned in your policy wording.

Repair, restore or replace

Once your business is insured with fire insurance, any damages caused to your property can be covered under the policy. The policy covers repair, restoration or replacement costs for your damaged property.

Wide range of coverage

The fire insurance policy coverage is not limited to one type of asset alone. Rather covers a variety of assets like building, plant and machinery, furniture, stock, fixtures and other movable and immovable assets.

A variety of perils covered

A fire insurance policy not only covers any accidental damage caused by fire alone. Even though it is named fire insurance it offers cover for damages caused by fire, lightning, aircraft damage, impact damage, etc.

Types of fire insurance

Fire insurance in India is broadly categorised into three based on the sum insured.

Bharat Sookshma Udyam Suraksha

Bharat Sookshma Udyam Suraksha

This fire insurance policy covers the loss, damages or destruction to the business property like stocks, buildings, plant and machinery, fittings and fixtures and other assets of the business for a sum insured up to ₹ 5 crores.

Bharat Laghu Udyam Suraksha

Bharat Laghu Udyam Suraksha

This fire insurance policy covers the loss, damages or destruction to the business property like stocks, buildings, plant and machinery, fittings and fixtures and other assets of the business for a sum insured up to ₹ 5 to 50 crores.

Special Fire and Special Perils

Special Fire and Special Perils Policy

In this type of fire insurance policy, the business property like buildings, plants and fixtures, and other assets are insured against any loss or damage by the perils mentioned in the policy copy. Here the sum insured exceeds ₹ 50 crores.

The Special Fire and Special Perils are broadly categorised into

Valued policy

In this type of fire insurance policy, firstly the value of the business property is decided. This value is not the current market value but the value the insured and the insurer agreed upon. This applies to those properties where the market value cannot be determined, for instance, old manuscripts, artefacts etc. Hence, this value will decide the sum insured.

Floating policy

In a floating fire insurance policy, the coverage is offered to business that deals with stocks/goods present at various locations for one sum insured and one premium. This mostly applies to businesses dealing with the import and export of goods.

Comprehensive policy

A comprehensive policy ensures that coverage is offered to fire-related perils and also offers cover against other perils such as burglary, robbery, etc.

Specific policy

In a specific fire insurance policy, a sum insured is already decided for your business property. In case of any loss or damage to your property, the cover amount provided will be within the determined sum insured limit.

Replacement policy

Replacement or reinstatement policy applies to buildings, furniture, machinery and fixtures. The market value of the property is determined and the insured is compensated based on the actual amount required to replace or restore the damaged property.

Consequential loss policy

This type of policy provides compensation for the consequential loss of profits or loss. For instance, a fire outbreak at a manufacturing plant can stop operations and bring down production hence, causing a loss in profits. However, the fixed expenses continue. So, this policy compensates those consequential losses by looking at a loss.

What are the perils covered by your fire insurance?



Any damage/loss caused to the business property by the fire is covered. Exclusion includes the burning of property by public authority.



If the business property or building is damaged due to lightning, this damage/loss is covered by your fire insurance policy.


Explosion / Implosion

If any explosion/implosion happens to the property excluding the boilers or apparatus which can explode or implode due to their operation is covered.

Aircraft damage

Aircraft damage

Destruction, damage or loss caused by aircraft, aerial or space devices to the business property is covered excluding damages caused by pressure waves.

Bush Fire

Bush Fire

Overly grown bushes or trees may require removal. Setting fire to them may cause damage to the property, hence this is covered in your policy.

Impact damage

Impact damage

Loss, damage or destruction to the business property due to striking of rail, road vehicle or animal by direct contact will be covered.

Storm, Cyclone, Tempest, Hurricane, Flood and Inundation

Storm, Cyclone, Tempest, Hurricane, Flood and Inundation

Natural calamities like storms, cyclones, typhoons, tornados and hurricanes can cause loss/damage to property and are covered by fire insurance.

Subsidence and Landslide including Rock slide

Subsidence and Landslide including Rock slide

Destruction, loss or damage caused by the subsidence, landslide or rockslide on part of the site on which the property stands is covered.

Bursting or overflowing of Water tanks, and Pipes

Bursting or overflowing of Water tanks, and Pipes

Accidents like overflowing and bursting of pipes and water tanks can cause loss or damage to the property, so the policy covers these damages.

Missile testing operations

Missile testing operations

Any kind of missile testing operation can cause damage, destruction or loss to the business property, so fire insurance covers these damages.

Leakage from Automatic Sprinkler Installations

Leakage from Automatic Sprinkler Installations

Leakage of automatic sprinkler installations can wreck property like buildings, machinery, etc. Hence, this is covered in the fire insurance policy.

Riot, Strike and Malicious damage

Riot, Strike and Malicious damage

Any visible physical damage/loss caused by riots or strike or any external violent means is covered in the fire insurance policy.

Now, these are the mandatory perils covered in your fire insurance. However, one can opt for add-on cover with the existing fire insurance policy by paying an extra premium. Some are

Impact Damage by insured’s own vehicles etc

Forest Fire

Spontaneous combustion

Earthquake (Fire & Shock)

Spoilage Material Damage Cover

Leakage & Contamination Cover

Start-Up Expenses

Terrorism Cover

Features of fire insurance

Fire insurance is a mutual agreement between the insured and the insurer. Here are the features of fire insurance

Insurable interest in business property

Insurable interest in the business property means that the policyholder is benefitted from the insured business/property and suffers a loss in the destruction of these. This insurable interest should exist during the purchase of the policy and as well as while filing the claim.

Disclosure of information

A fire insurance policy is a mutual contract agreed upon by the insured and the insurance company. Hence, it is vital for the policyholder to share all the necessary information regarding the business property for the insurer to calculate all the risks involved.

Personal right

The policyholder receives the compensation amount in case of any loss/damage to the business property insured.

Cover for direct loss

When the primary cause of loss/damage to the property or contents in the building is fire, the fire insurance policy covers them. The damages caused while extinguishing the fire by firefighters like spraying water are also covered under direct losses.

General exclusions in fire insurance

A fire insurance covers damages or loss to the business property by fire or other perils. However, it does not cover certain conditions of these perils.

Some of the general exclusions in fire insurance are

Burning of property issued by any public authority is not covered in the policy.

Repairs, demolitions, construction or alterations to the building or premises are excluded from the coverage.

Fire caused due to natural heating, spontaneous combustion or its own fermentation by boilers or other apparatus is not covered.

Any defects in the construction unknown to the insured are excluded.

Normal cracking, settlement or bedding down of newly constructed property is not covered under the policy.

Loss, damage or destruction caused by a forest fire is generally excluded. However, an add-on cover can provide coverage.

Why buy fire insurance from Pazcare?

Here is why buying fire insurance from Pazcare can be of great advantage to the policyholder.

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Get multiple quotes

Get multiple quotes

Pazcare offers multiple quotes from multiple insurers. So, as a customer, you can choose the best quote with better prices and coverage.

Single point of contact

Single point of contact

Once you buy fire insurance from Pazcare, a dedicated account manager is assigned to you. So, you need not wait to get your questions answered.

Timely reminders

Timely reminders

Your fire insurance policy is valid for one year. At Pazcare, we provide you with timely reminders regarding the payment of premiums.

24X7 claim assistance

24X7 claim assistance

Pazcare offers 24X7 claim assistance to raise or process your fire insurance claim.

Documents required to claim fire insurance

Here are some of the documents required to claim your fire insurance policy from your insurance company.

Originals of insurance policy copy

Duly filled fire insurance claim form

Previous claim history report (if any)

FIR report on the incident

Forensic reports

Photographs and newspaper clips of the incident

Initial committee report that has details on the cause of fire

Report from fire brigade (if required)

Frequently asked questions about fire insurance

What is the meaning of fire insurance?

Fire insurance is a type of business property insurance policy that provides insurance coverage against loss, damage or destruction to the insured property. This damage can be caused by fire or any other peril mentioned in the policy copy. The compensation will cover your repair, restoration or replacement costs.

What are the 3 elements of fire insurance?

The 3 elements of fire insurance are the 3 features of any fire insurance policy. They are

1. Insurable interest. This means the policyholder must be benefitted from the business property and must suffer a loss in case of its damage/destruction.

2. Utmost faith. The policyholder must maintain good faith and should never keep secrets while disclosing information about the property. This includes mentioning all the risks associated with the business property. 

3. Contract of Indemnity. This means that the policyholder can claim the fire insurance up to the sum insured and if there is no loss/damage suffered then he/she cannot claim the policy.

What are the 12 perils of fire insurance?

The 12 perils of fire insurance also known as the events that cause the damages are

1. Fire
2. Lightning 
3. Explosion/Implosion
4. Aircraft damage
5. Riot, Strike and Malicious damage
6. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation
7. Impact damage
8. Subsidence and Landslide including Rock slide
9. Bursting and/or overflowing of Water tanks, apparatuses and Pipes
10. Missile testing operations
11. Leakage from Automatic Sprinkler Installations
12. Bush Fire