Whether you are a lifestyle, small business, scalable, buyable, large company or social startup, adequate insurance is indispensable to protect your business from unexpected losses.

India has the third-largest startup ecosystem in the world, with over 70,000 + startups. More entrepreneurs prove people are more willing to take risks. Fire insurance can play a crucial role in reducing risk for start-ups.

What are the benefits of fire insurance for startups?

Before plunging into the vast realm of startups, it is important to thoroughly examine and evaluate potential risks. In the event of an unfortunate occurrence, small businesses or startups require a fallback plan for protection. Despite taking essential precautions and implementing diverse fire safety measures in your workspace or storage facility, unforeseeable accidents can still transpire with detrimental consequences that may irreparably harm your business operations. Consequently, purchasing fire insurance becomes an essential investment for startup ventures.

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There are several types of fire insurance policies

Because businesses need fire insurance, it's now time to find out what type of fire insurance suits your needs the best. An insurance company can design customized products for micro and small businesses by following guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) in January 2021, namely the 'Bharat Sookshma Udyam Suraksha' and the 'Bharat Laghu Udyam Suraksha'.

A maximum sum insured of Rs 5 crores is available

The Bharat Sookshma Udyam Suraksha provides coverage of up to Rs. 5 crore for plant & machinery, buildings, stocks, and other assets. Your standard business insurance policy includes cover for physical loss, damage, or destruction to your building, your plant and machinery, and your stock. Aside from Earthquakes and Terrorisms, the product also covers adding, altering, or expanding, temporarily removing stocks, covering specific contents, start-up expenses, professional fees, debris removal, costs required by local regulations, Floater Cover for Stocks, Spontaneous Combustion, Forest Fire, Theft / Burglary following an insured peril only reported within 7 days of the occurrence. This policy covers the following: Additions, alterations, or extensions Stocks on floater basis, Temporary removal of stocks, and Professional Fees.

A Sum Insured between Rs 5 Crores and Rs 50 Crores

Bharat Laghu Udyam Suraksha: This policy covers assets over Rs. 5 crores, but not over Rs. 50 crores. You are covered by this policy if unexpected events result in the loss of physical assets associated with your business, including buildings, plant and machinery, stock, and inventory.

A variety of inbuilt covers can be found within it, including Additions, alterations, or extensions Temporary removal of stocks Start-up expenses Cost of debris removal Stocks on a floating basis Coverage for specified contents Professional fees Costs imposed by municipal regulations

If the sum insured exceeds Rs 50 crores

A Special Fire and Special Perils (SPSF) policy covers property over Rs. 50 crores, including plant & machinery, buildings, stocks, and other assets. It is a traditional policy that covers fires and allied hazards. Buildings (including plinths and foundations), machinery, stocks, furniture, fixtures and fittings, and other contents can all be covered under the policy.

In the standard policy, the following named perils are covered: Fire Lightning Explosion / Implosion Aircraft Damage Riot, Strike, Malicious Damages (RSMD) Storm, Tempest, Cyclone, Typhoon, Hurricane, Tornodo, flood, inundation (STFI) Impact damage caused by any rail, road, vehicle, or animal (other than oneself) Subsidence, Landslides and Rock Slide Missile Testing operations Bush Fire Overflowing and/or Bursting of Water Tanks, Apparatus and Pipes Leaks from Automatic Sprinkler Installations.


If your startup does not have an adequate fire insurance policy, the repercussions could make a big hole in your pocket. If you do not have a fire insurance policy, you have damage control at your fingertips. BimaKavach can assist you with comparing and purchasing the best fire insurance policy for your startup, knowing the importance of fire insurance.


1.  What do we mean by average fire insurance policy?

The average policy in fire insurance states that the insurance company will only reimburse the proportion of loss that is rateable. In other words, if the insurance company only pays the amount of the assets insured and the loss is less than the actual amount, then they will only pay the sum of the assets insured.

2. Name down the 12 perils of standard fire insurance policy

Storm, Tempest, Flood, Inundation, Hurricane, Cyclone, Typhoon and Tornado (RSMD Perils) Explosions and Implosions. Aircraft damage. Riot, Strike.

3. What factors are considered when calculating fire insurance premiums?

Having a clear understanding of the factors that determine your fire insurance premium allows you to make informed decisions. These factors include property value, location, construction, security measures, and your own claim history.