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Can firecracker shops get insured against fires in their store?

Can firecracker shops get insured against fires in their store?

Where there is fire, there is an increased risk of fire-related accidents. And this risk is very pronounced during Diwali in India.

On 26 October 2021, a firecracker shop in Sivakasi, Virudhunagar District in Tamil Nadu (known as the hub of firecracker manufacturers in India) was set ablaze due to a suspected electric short circuit.

The fire spread quickly on account of the firecrackers being stacked on top of each other and engulfed the neighboring regions. Officials estimated a death toll of 7 with at least 10 people who were injured during the accident, two of whom ended up in intensive care.

In addition to the grievous loss of life, the store owner also suffered a loss of income due to substantial property damage.

Following this incident, the Chief Minister offered a compensation of ₹5 Lakhs for the deceased families and ₹1 Lakh for the gravely injured.

But is there any way the shop could have financially protected itself from such an incident?

Commercial fires can result in massive property damage. To combat this risk, most shops and establishments can purchase Fire and Allied Perils Insurance.

Fire Insurance indemnifies businesses against property damage caused by covered events like fire, lightning, floods, riots, among many others. It is one of the most essential insurance policies that every business should have.

If the store owner in this case had a Fire Insurance policy in place, he would be compensated for the damage caused to his store by the spread of fire. Moreover, the adjacent shops which were damaged could also cover their losses through Fire Insurance.

The problem is, insurers do not always agree to issue a Fire Insurance policy for a firecracker shop or manufacturing unit owing to its high risk factor. And most policies that are available for this industry come at huge premiums.

So to answer our initial question- no, there’s not much that firecracker shops can do to secure themselves against fire. But for most other kinds of establishments, Fire Insurance is the way to go!

Fire accidents due to firecrackers are rather common occurrences. Check out our piece on a 1992 Bus Fire that was caused by unlicensed explosives!

Further Reading

Most businesses opt for Fire and Allied Perils Insurance to cover the risk of fires. Learn more: What does Fire Insurance cover?