Delhi riots underline why its important for businessmen to buy extra cover
A businessman, who owns a shop, factory, or godown can protect them by buying a standard fire and special perils policy. It provides cover against loss or damage due to riots, strikes
 "Delhi violence")
premium
A shopkeeper sorts through the charred remains of a vandalized and burned shop, following Tuesday's violence, at Khajuri Khas extension. PTI
The riots that took place in northeast Delhi recently caused loss of lives and also resulted in the destruction of shops, houses, vehicles and other forms of property. A riot in the nation’s capital may be a rare, low-probability event, but it does occur. The incident once again underlines how important it is for businessmen and entrepreneurs to purchase insurance to safeguard themselves against events that can destroy all the assets they have built up over a lifetime.
Business assets: Buy right sum insured
A businessman, who owns a shop, factory, or godown can protect them by buying a standard fire and special perils policy. It provides cover against loss or damage due to riots, strikes and malicious damage. It also covers these assets against other perils such as fire, lightning, explosion, implosion, impact damage, etc.
The cost of this policy, say experts, is not as high as many people assume it would be. “The premium rates, as a percentage of the insured value, start at 0.066 per cent for a shop, 0.098 per cent for a godown, and roughly 0.193 per cent for a factory. They vary, depending on the nature of goods and products stored or manufactured in the premises,” says C R Mohan, senior vice president and national head, property and risk engineering services, Bajaj Allianz General Insurance. The premium rate will be lower, for instance, in case of a godown storing metals, and higher in case of one that stores inflammable chemicals.
At the time of purchase, make sure you are not underinsuring. “The customer needs to decide the replacement value of the structure and buy that much sum insured. For stocks and other contents of the building, the pricing used is market value,” says Mohan. In other words, depreciation has to be taken into account when deciding on the sum insured for contents.
Insurance buyers need to keep an eye on increases in the value of the insured property, due to the purchase of new machinery, raw materials, etc. “Notify such developments to your insurer so that they can be covered by paying an additional premium,” says S. Vishwanathan, national underwriter, SBI General Insurance. He also advises against opting out of any cover just for the minor discount in premium it may fetch you.
If the proposal form has questions about loss or claims history, disclose the facts properly. If the property is situated in an area prone to flooding, that fact should not be hidden. One silly mistake buyers commit is to give the incorrect address of the premises. Many fill in their office address instead of giving the address of their godown or factory. Vishwanathan suggests keeping a copy of your insurance policy elsewhere (away from the site) so that it does not get destroyed in an incident.
Business assets: Buy right sum insured
A businessman, who owns a shop, factory, or godown can protect them by buying a standard fire and special perils policy. It provides cover against loss or damage due to riots, strikes and malicious damage. It also covers these assets against other perils such as fire, lightning, explosion, implosion, impact damage, etc.
The cost of this policy, say experts, is not as high as many people assume it would be. “The premium rates, as a percentage of the insured value, start at 0.066 per cent for a shop, 0.098 per cent for a godown, and roughly 0.193 per cent for a factory. They vary, depending on the nature of goods and products stored or manufactured in the premises,” says C R Mohan, senior vice president and national head, property and risk engineering services, Bajaj Allianz General Insurance. The premium rate will be lower, for instance, in case of a godown storing metals, and higher in case of one that stores inflammable chemicals.
At the time of purchase, make sure you are not underinsuring. “The customer needs to decide the replacement value of the structure and buy that much sum insured. For stocks and other contents of the building, the pricing used is market value,” says Mohan. In other words, depreciation has to be taken into account when deciding on the sum insured for contents.
Insurance buyers need to keep an eye on increases in the value of the insured property, due to the purchase of new machinery, raw materials, etc. “Notify such developments to your insurer so that they can be covered by paying an additional premium,” says S. Vishwanathan, national underwriter, SBI General Insurance. He also advises against opting out of any cover just for the minor discount in premium it may fetch you.
If the proposal form has questions about loss or claims history, disclose the facts properly. If the property is situated in an area prone to flooding, that fact should not be hidden. One silly mistake buyers commit is to give the incorrect address of the premises. Many fill in their office address instead of giving the address of their godown or factory. Vishwanathan suggests keeping a copy of your insurance policy elsewhere (away from the site) so that it does not get destroyed in an incident.