Normally we have taken Fire insurance for our assets (buildings/plant and machinery/stocks/contents). Current situation under lockdown where those assets are lying unattended for more than 30 days, these will be deem as Silent Risk under Fire insurance . As proactive measure, Aera suggests please reach out to their Insurer /broker/agent about that same. Please read the note for details. Please let us know if you need any more details

1. Note : Potential Impact of Covid 19 lockdown
Silent Risk Clause : “Fire Insurance”
Apr 2020

2. Asset Insurance Policy
Background:
COVID-19 presents significant challenges to people and Business around the world
and the disruption continues to evolve. It’s important that businesses prepare for
and respond to this "new normal" in order to ideally emerge stronger. COVID-19
outbreak is impacting everyone in various ways. Businesses are being closed,
Business activities are stand-still , Business Asset are unoccupied or not in use, and
combined with “social distancing” and other measures imposed by various levels of
government, businesses are experiencing and will continue to experience various
losses. The business has to create an assessment to help you understand the poten-
tial impact to their business and gauge their readiness to respond This note will
cover “Impact of lockdown on Asset Insurance especially Fire Insurance due to.
Silent Risk Clause as the Assets are lying unattended for more than 30 days.”
In Detail
As a basic tenet of insurance, the insured is expected to behave as though he is
uninsured and take all reasonable measures with due diligence and do everything
practicable to protect the insured property in accordance with statutory.
requirements.
A Factory/ Business Premises would be treated as ’Silent Risk’, if there is no
manufacturing/storage activity for at least 30 consecutive days . An estimate that
maximum of Property Insurance policies , silent Risk clause is triggered if there is
no activities for at least 30 consecutive days. Once silent risk clause is trigged then
Insurance policy become cease and any claim during the period of Silent Risk will
be denied by the Insurer.
SILENT RISK Warranted that no manufacturing and storage
activities are carried out
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Note on
Impact of Silent Risk Clause during
COVID 19 on the Asset Insurance policy
and action required to continue Insurance
p o l i c y.
Please note: This note is prepared
based on the General Silent Risk Clause
& overall Fire Tariff. It may undergo
minor or major changes based on any
further circular /notification/ clarification
provided by Insurance Regulatory
AuthorityIRDA, Specific Insurance
Company or Government
Relevant to :
Corporate having Asset
Insurance Policy to proactively
engage with their Insurer
In brief
As a proactive measure by Insured, it is
suggested to approach their Insurance
service provider (Insurance company,
Insurance Agent/Broker) for extension of
Silent Risk clause.

3. Check your policy coverage
From an insurance perspective, whether losses arising as a result of the COVID-19 pandemic are covered will vary
from one jurisdiction to another and will also depend on specific policy terms, which can vary greatly from policy to
policy. Aspects of the loss may be covered under various insurance policies such as business interruption,
commercial general liability, and property. There may also be specific coverage for losses sustained due to infectious
diseases and/or in relation to orders by civil authority to shut down operations. As such, policies should be carefully
reviewed to assess if coverage is available.
Apart from other Insurance policy, in case of Fire Insurance, there is embedded clause “ Silent Risk clause”
Silent Risk Clause under Fire Insurance
Condition to trigger of Silent Risk Clause
1) A Factory/ Business Premises would be treated as ’Silent Risk’, if there is no manufacturing/storage activity for at
least 30 consecutive days
Current situation due to COVID 19, there is lockdown suggested by Government. Current Situation under.
lockdown where Asset are lying unused as well as unattended for more 30 days , it will triggered Silent Risk clause
under Fire Insurance.
Impact of Silent Risk Clause
• Insurance Policy may cease
• Coverage under such policies may get lapse
• Insurance company may deny any insurance claim
Our opinion
We believes this issue may arise in claims and litigation. We are advising our customers and all Insurer to get a
handle on this topic immediately.
It is very clearly that the company should be proactive to protect their Interest and continuity of Insurance policy.
To avoid any ambiguity and dispute in future, it is better to have a proactive communication with their Insurance
provider.
Practical Next steps
As a proactive measure, we suggest that Company should intimate Insurer regarding non=occupancy of premises and
special approval may be requested to the Insurer for continuity of cover upto 3rd May 2020 or till such time the
lockdown period is extended by the Government. It is better to have Risk management system by Insured like fire
extinguishers, sprinklers, 24/7 security , CCTV camera etc) and intimate the availability of Risk Management Sys-
tem to their Insurer :
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4. Procedure
• Send Email/Letter to Intimate Insurer for extension of non-occupancy period to avoid Silent Risk clause
• Request for continuity of cover upto 3rd May 2020 or till such time the lockdown period is extended by the
Government.
• Confirm in the Intimation that Insured has the required risk management system in place for Insured property.
• Risk Management system like
• Fire extinguishers
• Sprinklers
• 24/7 security
• CCTV Camera
• Follow-up with Insurer for their approval
Our opinion (The Bottomline)
1) To encourage Insured that they should take proactive steps by intimating Insurer for the current assessment of
non-occupancy of property
2) Review Risk Management system in place to avoid any future dispute/ambiguity/litigation.
3) Be ready to respond effectively and efficiently to Insurer queries
4)Review Business continuity and contingency plan
5)Be proactive to check policy coverage and restriction with statutory requirements.
6)Actively engage with Insurer
7) The Corporate should design and plan to avoid any future litigation.
The Corporate should take their decision quickly and be a part of the complaint side of the Law
At Aera, we suggest to get in touch with your Insurer on priority basis.
Happy to be a part of your progress forever.
& & & & & &
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5. & & & & & & & & Disclaimer
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