Factories and warehouses are involved in manufacturing and storing huge quantity of goods on a yearly basis. The value of such goods runs into crores of rupees. Damage to the factory or goods is one of the biggest risks factory owners face as it would mean a huge financial loss along with interruption of business operations for a considerable amount of time.
What is Factory and Warehouse Insurance?
A Factory and Warehouse Insurance Policy provides cover to the Policyholder if the building structure, plant and machinery in the factory or the warehouse stock is damaged on account of certain specified perils.
What are the different perils covered under a Factory and Warehouse Insurance Policy?
A Factory Insurance Policy provides cover against various perils such as Fire, Lightning, Explosion/Implosion, Aircraft Damage, Riot, Strike Malicious Damage, Impact Damage, Landslide and Subsidence, Bursting and Overflowing Water Tanks, Missile Testing, Bushfire and Forest Fire.
The Policyholder can opt for different add-on covers like earthquake, terrorism, storm, flood, inundation, theft and burglary as well to extend the coverage to other perils by paying additional premium.
What are the benefits of a Factory Insurance Policy?
A Factory Insurance Policy offers various benefits to the Policyholder such as:
Risk Management: Crores of rupees are invested in a factory. Any damage to the plant and machinery means huge financial losses. A Factory and Warehouse Insurance Policy will ensure that such risks are mitigated and the factory owner can be rest assured that he will be able to recoup his losses with the insurance policy should an incident damage his factory or warehouse stock
Easier Availability of Bank Loans: Lenders providing loans for factories and warehouse stock will demand insurance since they want to secure themselves in case the plant and machinery or the stock is destroyed. A Factory and Warehouse Insurance Policy will provide comfort to the lenders and assist in easier availability of bank loans.
Reduction of Financial Losses: A Policyholder can also opt for a Business Interruption Insurance Policy or a Fire Loss of Profit Insurance Policy in addition to the Factory and Warehouse Insurance Policy. A Business Interruption Policy will pay the policyholder for the loss of Gross Profit faced during the business interruption period when the factory was damaged by the fire. This helps in meeting fixed costs like Loan and Interest Repayments and Employee Salaries.
What is the average cost of a Factory and Warehouse Insurance Policy?
The average cost of a Factory and Warehouse Insurance Policy mainly depends on the risk of the business being conducted within the factory. For eg. Chemical factories with higher risk will have higher cost compared to an engineering goods factory.
The Factory and Warehouse Insurance Cost also depends on the following factors:
- Sum Insured
- Location of the Factory
- Prior Claims Experience