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building on fire, illustrating the need for fire insurance for SMES
/ Property Insurance, Commercial Fire Insurance / By

Fire Insurance for SMEs: Secure Your Business in Malaysia

In 2023, the Malaysian Fire and Rescue Department (JBPM) received 34,389 distress calls related to fire incidents, resulting in an estimated RM2.6 billion in losses nationwide (source: Bernama). While emotional and operational setbacks from disasters can be devastating, a well-structured insurance plan is essential to reduce financial risk. This is especially true for small and medium-sized enterprises (SMEs), where a single disaster can lead to financial ruin.

The right insurance plan can help SMEs recover faster and stay resilient during unexpected crises. Of all the policies available, fire insurance is arguably the most fundamental for any business in Malaysia.

🏢 What is Fire Insurance for SMEs?

Commercial business insurance is a form of property coverage that protects your company against losses caused by fire, lightning, gas explosions, and other specified risks. While a general policy provides a broad safety net, fire insurance for SMEs is a specialized plan that focuses specifically on the risks of fire and related perils.

A standard fire insurance policy typically includes:

  • Damage to the Building: This covers the physical structure of your business premises, including walls, ceilings, and floors.
  • Equipment, Fixtures, and Fittings: Protects all the essential items that enable your business to operate, from computers and machinery to display counters and office furniture.
  • Inventory and Stock: Safeguards the goods and products you hold for sale or production, which can be a business’s most valuable asset.

🔄 Essential Add-Ons to Strengthen Your Protection

A standard fire insurance policy is a great starting point, but it often isn’t enough. SMEs can enhance their protection by paying additional premiums to cover other risks. These optional extensions transform your basic fire insurance into a truly comprehensive plan.

  • Aircraft damage
  • Earthquake and volcanic eruption
  • Storm and tempest
  • Flood
  • Explosion (non fire related)
  • Impact damage (e.g., vehicles)
  • Bursting or overflowing of water tanks, pipes, or apparatus
  • Bush/lalang fires
  • Subsidence and landslip
  • Spontaneous combustion
  • Riot, strike, and malicious damage
  • Falling trees, branches, or other objects

📌 Note: These policies are based on a named peril structure. Only the specific events listed are covered.

📉 Business Interruption: Don’t Overlook Lost Income

Fire or other property damage can cause more than just structural loss. It can halt your operations entirely, leading to a significant loss of income. That’s where Business Interruption Insurance (also called a Fire Consequential Loss Policy) becomes vital.

It covers:

  • Loss of gross profit or revenue
  • Rental income loss
  • Ongoing expenses like rent and staff salaries during the downtime

⚠️ Important: If the main policy does not cover a specific peril (such as flood), the business interruption policy will not cover losses related to that event either.

🔐 Is Burglary Covered?

Many SME owners assume that burglary is part of fire insurance, but it is not automatically included. You must:

  • Add a burglary extension to your fire insurance, or
  • Purchase a separate burglary policy

This is crucial for retail shops, warehouses, and businesses with valuable stock or equipment.

📊 Real World Case: Nirwana Maju’s Flood Recovery

In January 2021, Nirwana Maju, a hypermarket in Kemaman, Terengganu, suffered major losses due to severe flooding. Water levels reached two feet, damaging:

  • Around 40% of their stock
  • Equipment and machinery
  • Fixtures and fittings

The estimated loss was over RM1.7 million.

Fortunately, Nirwana Maju had a comprehensive commercial insurance policy, including flood coverage, with Liberty Insurance Berhad. The insurer expedited the claims process and provided timely support, enabling the hypermarket to quickly resume operations.

This case shows the importance of including specific risk coverage, such as flood, in your SME’s insurance plan. This is especially critical in high risk areas.

💡 Summary: Don’t Leave Your Business Exposed

Every SME in Malaysia should consider a tailored commercial insurance plan that includes:

  • Fire insurance
  • Burglary and theft coverage
  • Business interruption insurance
  • Optional peril specific add on such as flood, riot, or impact damage

🕒 Protect your business today. Prepare before disaster strikes. A well structured insurance plan gives you peace of mind, financial stability, and a faster path to recovery.

👥 Talk to Us

Looking for tailored insurance solutions for your SME or commercial property?

Y.F. Tham is a licensed financial advisor in Malaysia, dedicated to helping business owners protect what matters most with the right coverage for fire, theft, flood, and more.

📧 Email: [email protected]
💬 WhatsApp: Chat Now
👤 About Us: Learn more

Secure your business today. Don’t wait until it’s too late. 🛡️