Carmaker Maruti Suzuki may have to bear the revenue loss of more than Rs. 4 billion due to disruptions at its plant as its insurance claims is restricted to a just Rs. 50 million damage to plant, according to media reports.
Maruti has an insurance cover worth Rs. 162.13 billion from four insurers —Iffco Tokio General Insurance, Bajaj Allianz, National India and United India. The insurance plan does not cover the loss of production due to interruptions, but only damages to plant and machinery, insurers said. Iffco Tokio General is the major insurer with 60% exposure to the Maruti account, followed by Bajaj Allianz with 17.5%, National India 15% and United India 7.5%.
Iffco Tokio General, which has received intimation from Maruti about the recent incident, has sent its surveyors to the Maruti’s plant. The policy will cover loss to the property but will not cover loss due to business interruption, the reports added.
Maruti’s lack of adequate insurance cover indicated that corporates in India are so accustomed to risks that they consider risk as a part of life, and don’t feel the need for insurance or risk management. Most companies buy insurance to cover damage to the property but a few companies buy insurance to cover their revenue loss. The cost of buying revenue loss policy along with fire and other disaster policies costs is 40% more which many companies believe is not necessary.