What insurance should I pick for the small engine parts manufacturing unit I am starting?

I am starting my own small manufacturing plant for engine parts and spare manufacturing very soon. What kind of insurance would you recommend I must have?

Varun

Reply by: Gurdeep Singh Batra, Head – Property UW (E&S), Risk Engg, Global Accounts and Coinsurance, Bajaj Allianz General Insurance Company
 
Varun, I wish you the best in setting up your manufacturing plant. It is great to see entrepreneurs like you planning ahead and considering risk management as an integral part of your business strategy. Insurance plays a crucial role in ensuring your business remains secure and continues running smoothly despite unexpected challenges.
 
Since your business is a manufacturing plant, I recommend considering one of the two policies based on the scale of your investment. The first policy is the Bharat Sookshma Udyam Suraksha Policy, which is ideal if your business capital assets are up to Rs 5 crore. The second policy is the Bharat Laghu Udyam Suraksha Policy, suitable for capital assets ranging from Rs 5 crore to INR 50 crore.

Both policies offer extensive coverage for medium-sized enterprises, protecting your investment from various risks. They provide insurance against physical damage to your property similar to a fire insurance policy, covering perils such as fire, acts of God, riots, strikes, malicious damage, third-party impact damage, and other covered perils.
 
To enhance protection, you should consider taking the following additional policies:
 
Beyond the above-mentioned base policies, there are several other insurance solutions that can enhance the protection of your manufacturing plant. Since your manufacturing plant operations depend heavily on machinery, I would recommend the Machinery Breakdown Insurance policy. It covers repair and replacement costs for any accidental breakdowns, ensuring your machinery gets fixed promptly and minimizing production downtime. Additionally, with the Reinstatement Value Policy, depreciation is not considered during claim settlements. This means that if your plant machinery is damaged beyond repair, you'll get new machinery of the same kind and type up to max declared sum insured, ensuring proper compensation and quicker recovery.
 
Manufacturing units are also susceptible to losses due to unexpected disruptions. A Fire Loss of Profit Policy covers the loss of revenue if a fire disrupts your manufacturing operations. It compensates for the income you would have earned during the downtime, until your plant is back to normal working conditions. Furthermore, Electrical Equipment Insurance covers the cost of repairing or replacing electrical equipment such as computers, printers, televisions and data loss due to malfunctions. These damages may result from accidents, electrical faults, power surges, or related incidents.
 
In case an insured event necessitates temporary relocation, an Alternate Accommodation Add-on can help cover the cost of renting another space, allowing you to continue operations without major disruptions.
 
As a business owner, it is also essential to consider liabilities that may arise from third-party interactions. A Public Liability Insurance policy covers legal liabilities arising from bodily injury or property damage to third parties while they are on your premises. For example, if a supplier trips over a loose wire at your facility, their medical expenses or other compensation would be covered.
 
Similarly, since you will be employing workers, a Workmen’s Compensation Insurance policy is crucial. It ensures compliance with the Workmen’s Compensation Act of 1923 by covering medical expenses, lost wages, and rehabilitation costs for employees who sustain work-related injuries or illnesses.
 
Another key aspect to consider is the safety of your goods while in transit. A Marine Transit Policy protects goods during transit, covering potential losses or damages while the cargo is transported by air, water, rail, or road. It covers risks such as accidents, fires, or other unforeseen events.
 
You can also consider a Burglary Insurance policy that protects your valuable assets from theft or burglary, ensuring you can maintain operations without worrying about the financial impact of theft. Furthermore, to bolster your protection, you may consider adding Money Insurance to your policy. This additional coverage safeguards against the theft of money from your premises, up to the specified limit outlined in your insurance policy.
 
As manufacturing businesses become increasingly dependent on digital transactions online, a Cyber Insurance Policy is also recommended. This policy protects your plant from the financial and operational consequences of cyber-attacks, data breaches, and other cyber-related incidents.
 
Varun, I hope this information helps you in making an informed decision about securing your business with property insurance. Having the right policies in place ensures that unforeseen setbacks do not become roadblocks to your growth. You will receive all the mentioned coverages under a single Package policy, eliminating the need to purchase each policy separately. This bundling approach not only offers convenience but also provides a modest discount on the overall premium cost.  By ensuring comprehensive coverage for your assets, operations, and liabilities, you are laying a strong foundation for long-term success. It is always advisable to consult with your insurance partner to customize your policies and explore add-ons tailored to your specific business needs. A well-structured insurance plan ensures your business stays resilient and flourishes, paving the way for growth and stability.