Standard Fire & Special Perils Policy
Fire Cover For Large Industrial Risks
The Standard Fire and Special Perils (SFSP) policy is the traditional Indian fire policy and is now used mainly where the value at a single location exceeds ₹50 crore. It covers buildings, plant, machinery and stock against fire and a named list of special perils, with earthquake and terrorism bought as add-ons. For large plants the details matter: basis of valuation, declaration and floater options, deductibles and the condition of average all shape what a claim finally pays.
What The SFSP Policy Covers
Fire And Explosion
Fire, lightning, explosion and implosion damage to insured buildings, machinery, equipment and stocks at declared locations.
Storm And Flood
Storm, cyclone, tempest, flood and inundation cover, along with subsidence, landslide and rockslide at the insured site.
Riot And Malicious Damage
Physical loss caused by riot, strike, malicious acts and impact damage by third-party vehicles or aircraft.
Earthquake Add-On
Earthquake fire and shock can be added, which is essential for plants in higher seismic zones of the country.
Declaration And Floater
Fluctuating stocks can be insured on a declaration basis, and floater cover can spread one sum across several locations.
Reinstatement Value Basis
Buildings and machinery can be insured at new replacement cost, avoiding deductions for depreciation at claim time.
What is the Standard Fire and Special Perils policy?
The Standard Fire and Special Perils (SFSP) policy is an Indian property policy that covers physical loss or damage to buildings, machinery, equipment and stocks caused by fire and a named list of special perils. Since the Bharat standard products took over smaller risks in April 2021, SFSP is used chiefly where the value at risk at a single location is above ₹50 crore.
Unlike the Bharat policies, SFSP does not include earthquake as standard, and it applies the condition of average strictly. That makes the way values are declared and the add-ons chosen far more important. It is one of several products on our fire insurance page.
What the policy covers
- Fire, lightning, explosion and implosion
- Aircraft damage and impact damage by vehicles or animals not belonging to the insured
- Riot, strike and malicious damage
- Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation
- Subsidence, landslide and rockslide
- Bursting or overflowing of water tanks, apparatus and pipes
- Missile testing operations
- Leakage from automatic sprinkler installations
- Bush fire
The standard wording also pays architects', surveyors' and consulting engineers' fees and debris removal costs up to a small percentage of the claim. If you expect higher costs, those limits can be raised by endorsement.
Add-ons for large risks
| Add-on | Why it matters |
|---|---|
| Earthquake (fire and shock) | Not in the base cover; vital across much of north India and the Himalayan belt |
| Terrorism | Priced separately and backed by the Indian market terrorism pool |
| Spontaneous combustion | Relevant for coal, agro products and some chemicals |
| Forest fire | For plantations and sites next to forest land |
| Impact damage by own vehicles | Covers forklifts and trucks hitting your own structures |
| Omission to insure additions | Protects new assets bought mid-year before they are declared |
What is not covered
- Loss of profit and business interruption, which need a consequential loss policy
- Machinery breakdown and electrical faults that do not result in fire
- Theft, unless it immediately follows an insured peril
- Pollution, war, nuclear risks and deliberate acts of the insured
- Loss to stocks from their own fermentation or natural heating, unless spontaneous combustion is added
- The excess stated in the schedule for each claim
How the sum insured is decided
Market value or reinstatement value
On a market value basis, the insurer deducts depreciation at claim time. On a reinstatement value basis, it pays the cost of replacing with new property of the same kind, provided you actually rebuild or replace. Most businesses prefer reinstatement value for buildings and plant.
Condition of average
If the sum insured is lower than the true value at the time of loss, the claim is reduced in the same proportion. A plant worth ₹200 crore insured for ₹150 crore would recover only three quarters of any loss. Regular valuation is the only real protection.
Stocks that move
Declaration policies let you insure a maximum figure and declare actual stock periodically, with premium adjusted at the end of the year. Floater policies apply one sum insured across several named locations. Both need disciplined reporting to work in a claim.
How MILES helps
- We check whether SFSP or an Industrial All Risk policy gives you better value for your size and spread of assets.
- We help you commission or review valuations so average is not applied against you.
- We prepare your risk information for underwriters and present it to 16+ insurers for competitive terms.
- We align the fire policy with your fire loss of profit cover so the two respond together.
- We coordinate with surveyors and loss assessors and follow the claim to settlement.
What we need for a quote
- Expiring policy and schedule of locations, occupancies and values
- Latest risk inspection or fire survey report
- Details of fire protection: hydrant, sprinklers, detection and water storage
- Stock pattern through the year, if you want a declaration basis
- Five years of claims history
Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.