Business Insurance

IRDAI has made this simpler. Since 2021 every general insurer must offer two standard fire products for business. The wording is identical across insurers. That kills the old trick in this market, which was a cheap policy with a narrower peril.

Which business insurance policies exist, and who needs which?

Read as of 6 September 2026. The two Bharat products and their value-at-risk bands are from IRDAI’s guidelines on standard products for fire and allied perils.

What am I legally required to buy?

Two things, for most firms. Motor third-party cover on every vehicle you own, under the Motor Vehicles Act, 1988. And cover for injury at work, under the Employees Compensation Act, 1923. ESI replaces the second for staff inside its wage limit.

A third applies to fewer firms. Handlers of hazardous substances must hold public liability cover under the 1991 Act. Store fuel, gas or industrial chemicals in bulk and you may be inside it. Check.

Fire cover is not required by law. It becomes required the day you take a secured loan. The lender will insist on it and will want to be named. That is a contract term, not a statute.

How is the premium actually set?

On the sum insured and the occupancy. Occupancy means what you do on the site. A cloth godown and a plastics unit are not the same risk. A fire policy prices them apart, even at the same address.

The sum insured is the part you control. It is also the part most firms get wrong. Building and plant go in at reinstatement value. That is what it costs to rebuild today. Stock goes in at cost, and stock moves through the year. Insure the average and you are short in your peak season.

We publish no premium figures here. Fire and liability rates are quoted per risk. A rate for one shop tells you nothing about another shop. Get two quotes on the same sum insured and the same use of premises. Compare only those.

What does the tax treatment look like?

Premiums are a business expense. You deduct them from business income in the year you pay. That covers fire, liability, marine and group health for staff.

Section 80D does not apply here. That one is for an individual’s own health cover. Say a firm pays group health for the owner’s family and books it as a business cost. An assessing officer will test that.

GST of 18% applies to a general insurance premium. A registered business can usually claim input credit where the cover relates to the business. That changes the real cost a lot. Brokers rarely mention it.

What gets left uninsured most often?

Business interruption. The fire policy rebuilds the shed. It does not pay salaries and rent for the six months you cannot trade. You buy that as an extension. It is the one that decides whether the firm survives the claim.

The second is cyber. Small firms hold customer data and take online payments. Almost none of them buy cyber insurance. The third is the owner whose absence would stop the business. That is a life cover question, not a general insurance one. Staff cover is a fourth, and personal accident insurance is cheap.

Our claims-side guide covers what happens after the loss. It explains how underinsurance cuts a settled claim. Get your Udyam registration done too, since some schemes ask for it.