How can insurance ensure your firm is productive and stays safe during the hot summers?

While summers bring warmth and sunshine, they do present a trying time for your field and warehouse employees. Here are a few steps to take to ensure safety and optimal productivity for your employees during the summer.

Key Takeaways

• Climate-Specific Risk: India’s extreme summers act as a “stress test” for machinery; ensuring your Air Conditioning units are covered for both repair and replacement is vital for maintaining productivity.

• The Fire Season: High ambient temperatures increase the volatility of stored goods. Fire insurance is a non-negotiable safeguard for both warehouses and transit merchandise during the dry summer months.

• Power Outage Protection: Prolonged outages can silence industrial townships. Businesses should verify if their policies include Business Continuity Loss coverage to mitigate the financial impact of forced downtime.

• Human Capital Care: Contract laborers are the most vulnerable to heat-related illnesses like dehydration and heat stroke. Providing sufficient medical insurance ensures faster recovery and maintains your labor supply.

• Distribution Reliability: Supply chains are easily disrupted by heat-related transit delays or vehicle fires. Hedging these risks protects your distribution network from costly bottlenecks.

• Mitigating Margin Stress: By transferring these seasonal risks to an insurer, firms can avoid ad-hoc, out-of-pocket expenses that would otherwise erode profit margins.

Insure your air conditioning machinery

Most of India experiences extremely high temperatures in summer. It becomes almost impossible to work during the peak heat. Your workplace ventilation or fans may not be sufficiently effective during the hottest days. Today many firms have installed air-conditioning in their offices. However, on the hottest days, even the air conditioners tend to get overloaded and can suffer damage. It is important to take adequate insurance covering both the repairs and possible replacement of air conditioning machinery during breakdowns. This will ensure that there are no ad-hoc, out-of-pocket expenses that will stress your firm’s margins.

Additional Read: Factory and warehouse insurance: The savior during turbulent times

Insure goods in the warehouses and in transit – they face a high risk of catching fire during the summer!

There have been many instances where extreme heat has led to fire accidents. An example is Delhi’s Bhalswa landfill which caught fire these last summer due to scorching heat. It took more than four days to douse the fire. Ongoing cooling operations were thereafter undertaken to ensure the safety of surrounding habitation.

Another instance of a summer fire in North Delhi was the Karol Bagh footwear market fire. Many dealers lost their merchandise and their shops during the fire. An investigation was done following speculation that the cause was a short circuit due to electrical overloading. However, the cause has not been confirmed. This emphasizes the need to protect your merchandise and building, workplace, and stores against fire, especially in summer.

Watch out for business losses due to summers power outages

Power outages happen routinely during our summers. Businesses struggle to maintain productivity during such outages. It is not always possible to obtain power by running diesel generators.

The Industrial Model Township (IMT) at Manesar near Gurgaon fell completely silent the last summer due to prolonged power cuts. In fact, several firms there ended up terminating many employees. There was no compensation available for such employees.

This instance showcases the importance of taking protection against such situations. They are often beyond the control of business owners. Check if your insurer provides business continuity loss coverage, or contact a good broker such as Securenow who will help you with product availability and coverage terms.

Additional Read: What are the 12 perils of a standard fire insurance policy?

Cover your distributors and staff and contract labor

Consumer products and other businesses are dependent on their supply chains and distribution networks running smoothly. Any disruption could cost the business severely. You need to hedge the risks of disruption of your distributors or supply chains.

Contracted laborers can get affected during summer due to extreme conditions. Construction and manufacturing businesses depend on contract labor. During extreme weather conditions, laborers may unable to continue with their work due to heat. They may face health hazards such as dehydration, heat stroke, fever, etc.

Sufficient medical insurance is essential in such conditions. It helps the laborer recover quickly from an illness.

Additional Read: Does workers’ compensation cover prescriptions?

Summary Table: Summer Operational Risks & Insurance Solutions

In a nutshell…

Some of the situations that you should cover yourself for your safety and business continuity during the hottest summer periods have been highlighted. Else, you may face losses at such times. Before you avail yourself of insurance, you must compare insurance products and evaluate the ones that meet your requirements. You can conduct a comprehensive comparison across products at  SecureNow before you choose the right insurance products.

Frequently Asked Questions (FAQs)

1. Does standard fire insurance cover a “short circuit” if no fire breaks out?

A) A standard fire policy generally triggers only when there is an actual fire. However, the damage to the electrical machinery itself caused by an overload or short circuit is typically covered under a Machinery Breakdown (MBD) policy or a specific electrical damage rider.

2. Can I claim for “Lost Profits” if my factory closes due to a week-long power cut?

A) Standard property insurance does not cover power cuts. You specifically need Business Interruption Insurance (often an add-on to a fire policy) that includes a “Utility Interruption” clause. This covers lost revenue if a power outage (caused by a covered peril elsewhere) stops your operations.

3. Is “Heat Stroke” covered under Workers’ Compensation?

A) Yes, in many cases. If a laborer suffers a heat stroke while performing their duties on-site, it is considered a work-related illness/injury. A Workers’ Compensation or Group Personal Accident policy can help cover the resulting medical expenses and disability benefits.

4. Are goods in transit more expensive to insure during the summer?

A) Premiums generally stay consistent year-round, but the risk assessment might change. It is crucial to ensure your Marine Insurance covers “fire and allied perils” to protect merchandise from the higher risk of spontaneous combustion or vehicle fires in the heat.

5. How do I determine the “Sum Insured” for my office AC units?

A) You should base the value on the Replacement Cost. This ensures that if an overloaded unit is completely burnt out, the insurance payout is enough to buy a brand-new, modern equivalent at current market prices, rather than just its depreciated value.

About The Author

Shivani

MBA Insurance and Risk

She has a passion for property insurance and a wealth of experience in the field, Shivani has been a valuable contributor to SecureNow for the past six years. As a seasoned writer, they specialize in crafting insightful articles and engaging blogs that educate and inform readers about the intricacies of property insurance. She brings a unique blend of expertise and practical knowledge to their writing, drawing from her extensive background in the insurance industry. Having worked in various capacities within the sector, she deeply understands the challenges and opportunities facing property owners and insurers alike.