SFSP Policy · STFI Perils · Earthquake Add-On · Loss of Profit · Mandatory for Loans

Fire Insurance in Hyderabad —
The Foundation of Every Business Risk Programme

Q: What is the Standard Fire and Special Perils (SFSP) policy in India?

The Standard Fire and Special Perils (SFSP) policy is the primary fire insurance product in India, replacing the older fire policy with a standardised set of 11 covered perils. It covers property — buildings, plant, machinery, stock, and contents — against fire, lightning, explosion, aircraft damage, riot, storm, flood, landslide, impact, missile testing, and bush fire. The policy wording is standardised by the General Insurance Council of India.

Q: What are the 11 perils covered under a standard fire insurance policy?

The 11 standard perils under the SFSP policy are: (1) Fire, (2) Lightning, (3) Explosion/Implosion, (4) Aircraft Damage, (5) Riot, Strike, Malicious Damage (RSMD), (6) Storm, Cyclone, Typhoon, Tempest, (7) Flood and Inundation, (8) Earthquake (only if add-on is purchased), (9) Landslide and Rockslide, (10) Subsidence, and (11) Bush Fire. RSMD, STFI, and earthquake are typically add-on covers in most placements.

Q: Is earthquake cover included in standard fire insurance?

No — earthquake is not covered by default under the standard SFSP policy. It is available as a paid add-on (Earthquake I covers damage to property from earthquake, fire, and shock; Earthquake II also covers damage from eruption, landslide/rockslide). Given that Telangana and Andhra Pradesh fall in seismic zones, earthquake cover is strongly recommended.

Q: What is a loss of profit add-on to fire insurance?

Loss of Profit (LOP) insurance — also called Business Interruption insurance — covers the financial loss suffered when a business cannot operate normally due to physical damage covered under the fire policy. It pays for lost gross profit, standing charges (rent, salaries, loan EMIs), and increased cost of working during the period of restoration. LOP is triggered only when the underlying fire policy responds to a claim.

Q: How is the sum insured calculated for fire insurance?

The sum insured should be based on the reinstatement value (RV) for buildings — the cost to rebuild to original specification at current construction prices. For stock and contents, it should be the replacement cost at current market prices. Under-insuring triggers the Average clause, which reduces claim settlements proportionally. For example, insuring at 70% of RV means only 70% of any claim is paid.

Q: What is the difference between fire insurance and property insurance?

Fire insurance (SFSP policy) is the foundational cover protecting property against fire and 10 other named perils. Property insurance is a broader term that may include all-risk cover, machinery breakdown, and business interruption under a single combined policy. Most large commercial and industrial clients purchase a comprehensive property programme that includes SFSP as the base layer.

Q: What documents are required to file a fire insurance claim?

Required documents typically include: FIR or fire brigade report confirming the incident, photographs of damage, asset register and purchase invoices, stock register (for stock claims), audited accounts (for BI claims), proof of insurance, and the insurer-appointed surveyor's report. A timely notification to the insurer and prompt survey appointment are critical for smooth claim settlement.

Q: How does Finvastra arrange fire insurance in Hyderabad?

Finvastra assesses the property type, construction details, occupancy, fire protection systems, and required add-ons to design the right SFSP policy. We conduct a proper sum insured assessment to prevent under-insurance, compare rates from IRDAI-approved insurers, and arrange comprehensive fire programmes — including STFI, earthquake, RSMD, and loss of profit cover — at competitive premiums.

Fire insurance under the Standard Fire and Special Perils (SFSP) policy covers buildings, stock, plant, and machinery against 11 standard perils including fire, lightning, explosion, storm, flood, and riot. Mandatory for all bank-mortgaged properties — Finvastra arranges the right coverage at competitive premiums.

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11 Perils

Standard SFSP covered risks

STFI Cover

Storm, Tempest, Flood, Inundation

Earthquake

Add-on for seismic zone protection

Loss of Profit

Business continuity during restoration

The Base Layer

What Is Fire Insurance — The SFSP Policy

Fire insurance in India is now standardised as the Standard Fire and Special Perils (SFSP) policy, issued by all IRDAI-approved general insurers with uniform policy wording defined by the General Insurance Council. It covers 11 named perils for property — buildings, plant and machinery, stock, and furniture & fittings — against fire and the perils listed in the policy.

The SFSP policy is the essential and often the minimum required insurance for any business with physical assets. Every bank and NBFC in India requires borrowers to maintain fire insurance on mortgaged property as a condition of the loan sanction — with the lender noted as the mortgagee on the policy. A lapse in fire insurance constitutes a breach of loan covenants.

Covered Perils

The 11 Perils Covered Under the SFSP Policy

Fire & Lightning

Damage from fire caused by accident or external source, and lightning strikes — including resultant fire or sudden electrical surge damage.

Explosion & Implosion

Physical damage from explosion of gas or pressure vessels, or implosion of vacuum vessels — covering boilers, pressure tanks, and storage vessels.

Storm, Flood & STFI

Storm, cyclone, typhoon, tempest, flood, and inundation — increasingly critical given India’s exposure to monsoon flooding and cyclonic events.

Riot, Strike & Malicious Damage

Loss or damage arising from riot, strike, malicious damage by third parties, and civil commotion — separate RSMD add-on available with extended cover.

Add-On Covers

Key Add-Ons to the Base SFSP Policy

Add-On Cover	What It Covers	Recommended For
Earthquake I & II	Property damage from earthquake, volcanic eruption, and tsunami	All properties in Seismic Zones III, IV, V
STFI Extended	Storm, tempest, flood, inundation — full weather peril cover	Properties near water bodies, flood-prone areas
RSMD	Riot, strike, malicious damage, civil commotion	Industrial and commercial properties in urban areas
Loss of Profit (BI)	Lost revenue and fixed overheads during restoration period	All businesses — especially high-turnover operations
Machinery Breakdown	Accidental electrical/mechanical failure of machinery	Manufacturing plants, IT server rooms, factories
Architects’ Fees	Professional fees for rebuilding plans after a claim	Commercial and industrial properties

Who Needs It

Fire Insurance Is Essential For Every Business

All Businesses with Assets

Any business with a physical location — office, factory, warehouse, or retail outlet — needs fire insurance as the baseline asset protection policy. There is no category of business that is exempt from fire risk.

Mortgaged Properties

All banks and NBFCs mandate fire insurance on mortgaged property. The lender is noted as mortgagee on the policy and has first claim on any insurance proceeds. This is a non-negotiable condition of every property-backed loan.

Manufacturing & Industrial

Factories, processing units, and industrial plants face elevated fire risk from production processes, chemicals, and electrical systems. Fire insurance with BI cover is critical to protect both assets and revenue continuity.

Retailers & Traders

High-value inventory in retail and trading businesses is extremely vulnerable to fire losses. A combined SFSP policy covering building, contents, stock, and BI ensures comprehensive protection under a single placement.

Our Process

How Finvastra Arranges Fire Insurance

Risk Assessment

We assess the property type, construction, occupancy, fire protection systems (sprinklers, hydrants, extinguishers), and any hazardous materials — each factor determines the underwriting rate and insurer capacity.

Sum Insured Calculation

We help determine the correct reinstatement value for buildings and replacement cost for contents, stock, and plant — preventing under-insurance and the Average clause penalty that reduces all claims proportionally.

Market Placement

We compare SFSP rates and add-on pricing from New India Assurance, ICICI Lombard, Bajaj Allianz, HDFC Ergo, and other IRDAI-approved insurers — finding the best combination of cover and premium.

Policy & Claims Servicing

We issue the policy with the lender noted as mortgagee where required, manage annual renewals and sum insured updates, and provide full claims support from FIR filing through to final settlement.

FAQ

Fire Insurance — Frequently Asked Questions

What is the Standard Fire and Special Perils (SFSP) policy in India?

The SFSP policy is the primary fire insurance product in India with standardised wording covering 11 perils for property — buildings, plant, machinery, stock, and contents. It replaces the older fire policy and is issued by all IRDAI-approved general insurers.

What are the 11 perils covered under a standard fire insurance policy?

The 11 standard perils are: (1) Fire, (2) Lightning, (3) Explosion/Implosion, (4) Aircraft Damage, (5) Riot, Strike & Malicious Damage, (6) Storm, Cyclone, Typhoon, Tempest, (7) Flood and Inundation, (8) Earthquake (add-on), (9) Landslide and Rockslide, (10) Subsidence, and (11) Bush Fire.

What does STFI mean in fire insurance?

STFI stands for Storm, Tempest, Flood, and Inundation. It is an important add-on covering weather damage to property. Given Hyderabad experienced significant flooding in 2020, STFI cover is strongly recommended for all commercial properties in Telangana.

Is fire insurance mandatory for business loans and mortgages in India?

Yes. All banks and NBFCs require fire insurance for properties mortgaged as collateral for business loans, LAP, and home loans. The lender is noted as mortgagee or loss payee on the policy. Failure to maintain fire insurance constitutes a breach of loan covenants and may trigger acceleration of the outstanding loan.

Is earthquake cover included in standard fire insurance?

No — earthquake is an add-on to the SFSP policy (Earthquake I & II add-on). Telangana and Andhra Pradesh fall in seismic zones — earthquake cover is strongly recommended for all properties in the region. It is available at a modest additional premium.

What is a loss of profit add-on to fire insurance?

Loss of Profit (Business Interruption) cover compensates for lost gross profit and fixed overhead costs — rent, salaries, EMIs — during the period the business cannot operate due to physical damage covered under the fire policy. The indemnity period (typically 12–24 months) covers restoration time.

How is the sum insured calculated for fire insurance?

Buildings are insured at reinstatement value — built-up area × current construction cost per sqft. Stock and contents at replacement cost. Under-insuring triggers the Average clause, which reduces claim payouts proportionally. Finvastra conducts proper sum insured assessments to prevent this.

What is the difference between fire insurance and property insurance?

Fire insurance (SFSP) is the base policy covering named fire and allied perils. Property insurance is a broader term that may include all-risk cover, machinery breakdown, and BI under a combined policy. Most commercial clients layer multiple covers on top of the SFSP base.

What documents are required to file a fire insurance claim?

Required: FIR and fire brigade report confirming the incident, photographs of damage, asset register and purchase invoices, stock register (for stock claims), audited accounts (for BI claims), proof of insurance, and the surveyor report. Timely notification to the insurer within 24–48 hours of the event is critical.

How does Finvastra arrange fire insurance in Hyderabad?

Finvastra assesses property type, construction, occupancy, and required add-ons to design the right SFSP policy. We conduct a proper sum insured assessment to prevent under-insurance, compare rates from IRDAI-approved insurers, and arrange comprehensive fire programmes — including STFI, earthquake, RSMD, and loss of profit cover — at competitive premiums.

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