Electrical short circuits have become a major cause of fires in commercial areas in Indonesia, particularly in shophouses, restaurants, and small and medium-sized businesses. In fact, over 60% of fires in urban areas occur in business areas. Ironically, most of these businesses lack adequate fire, property, or inventory insurance to cover losses.
In many cases, just one small spark from a faulty cable or a dusty outlet can destroy years of investment. Shophouses filled with electronic equipment and restaurants with active kitchens create the perfect combination for a difficult-to-control fire risk. Therefore, it’s crucial for business owners to not only understand the causes of electrical short circuits but also to prepare for financial protection through fire and commercial property insurance.Therefore, before the risk hits your business, Contact L&G Insurance Broker now in 08118507773 For a free consultation before any risk occurs, our team of experts is ready to help you find the best protection solution for your needs and risk profile.
Why Are Shophouses and Restaurants Most Vulnerable to Fire?
Not all business locations have the same level of risk. However, shophouses and restaurants have unique characteristics that make them much more vulnerable to fire.
a. Electrical Overload
Modern restaurants use a variety of high-power appliances, including electric stoves, industrial refrigerators, ovens, and coffee machines, all running simultaneously. Shophouses and retail stores often run air conditioning and lighting for more than 12 hours a day. All of this puts a significant strain on the electrical system.
b. Old and Non-Standard Installations
Many older commercial buildings still use electrical installations with outdated wiring, inadequate grounding, and no automatic protection like appropriately rated MCBs. When the current increases or a short circuit occurs, the cables heat up and can ignite, igniting a fire.
c. Environmental Factors (Oil and Vulnerable Stocks)
Restaurants, especially in kitchens, often contain large amounts of oil and flammable materials (oil vapors, gas cylinders). Shophouses, on the other hand, often stock items made from paper, plastic, and cardboard, all of which are flammable if exposed to even the slightest spark.
d. Lack of Access to Eraser
Because they are located in densely populated and often multi-story areas, firefighters’ access to shophouses and restaurants is often hampered, exacerbating losses at critical moments.
This is why shophouse and restaurant owners must consider fire insurance and commercial property insurance as the main layer of financial protection.
Common Causes of Short Circuits in Businesses
Electrical short circuits rarely occur spontaneously. They are the result of a series of technical errors and negligence that accumulate. Here are some of the most common causes in the field:
a. Non-standard electrical installation
Many business buildings in Indonesia were constructed without proper electrical load calculations. Wiring was performed by uncertified technicians, and connections were made haphazardly. As a result, cables quickly overheat and cause sparks.
b. Electrical Overload
Restaurants and shophouses often have many electrical appliances running simultaneously. When a single circuit is overloaded, the current surges, causing short circuits or melting cables.
c. Lack of Maintenance
Cables and sockets have a lifespan. Without regular inspection, insulation can crack, connectors can become loose, or dust can build up, impeding heat circulation.
d. Humid and Oily Environment
Especially in restaurants, oil vapors can cling to kitchen wiring or electrical outlets. Oil can cause sparks if exposed to heat or short circuits.
e. Modification Without Technical Permission
Adding new outlets or connections without calculating their capacity can be extremely dangerous. Many major fires have started from these kinds of “additional connections.”
Considering all these factors, the first step is implementing sound electrical risk management. However, the second, equally important step is having fire and commercial property insurance to protect assets in the event of an incident.
Financial Impact: From Burnt Kitchen to Bankrupt Business
A fire at a business premises isn’t just about losing the building. The impact is far greater than it seems, threatening the very survival of the business.Direct losses include:
- Building and Renovation: Cost of rebuilding a shophouse or restaurant.
- Equipment and Machinery: Loss of refrigerator, dining table, oven, cooling system, and cash register.
- Stock of Goods: Loss of all stock of food or merchandise.
- But what is more serious are the indirect losses:
- Business Interruption: Lost income during the renovation period (can be 6 months to a year). Standard property insurance does not cover this.
- Reputation Damage: Loss of regular customers and potential new clients due to temporary business downtime.
- Penalties and Compensation: Legal liability if the fire spreads to neighboring properties or causes damage to third parties (Public Liability).
Without fire insurance, all these losses would have to be covered out-of-pocket, which in many cases would lead to business bankruptcy. However, with the right policy, business owners can receive reimbursement for buildings, contents, inventory, and even lost income through commercial property insurance.
Therefore, don’t let your capital disappear in an instant. Contact L&G Insurance Broker now in 08118507773 for free consultation before any risk occurs.
Case Study of a Restaurant Without Insurance
Some time ago, a restaurant in South Jakarta caught fire due to an electrical short circuit in the kitchen. A small spark from a refrigerator cord sparked the blaze, which spread rapidly due to the room’s high oil vapors and flammable interior. Within 20 minutes, the entire restaurant was engulfed in flames.burnt kitchen.
Losses were estimated at Rp 1.2 billion, including damage to the building, kitchen equipment, and food supplies. The restaurant had to close completely for six months. Worse still, the owner didn’t have property insurance, believing the premiums were too high. As a result, he had to cover all repair costs himself, and the restaurant never reopened.
This story serves as a valuable lesson for many businesses in the hospitality sector. Without adequate insurance coverage, a single incident can end a business that has been built over years. However, with the right fire and inventory insurance, most losses can be reimbursed by the insurance company.
Furthermore, if the fire spreads to a neighboring shop and causes damage to a third party, the owner could face legal action. This is where public liability insurance comes in handy, protecting business owners from unexpected legal liability.
The Important Role of Insurance Brokers in Business Protection
Many business owners purchase policies directly from insurance companies without understanding the details of the coverage. As a result, many claims are rejected due to inconsistencies in the terms and conditions.
Insurance brokers like L&G Insurance Broker act as risk consultants who side with you, not the insurance company.The main benefits of using an L&G broker include:
- In-depth Risk Analysis and Customization: Brokers help assess your business’s specific needs and risks, ensuring your fire or property insurance policy covers typical risks (kitchen, stock, overloading).
- Negotiate the Best Premium and Coverage: L&G uses its extensive network of insurance companies to compare quotes and negotiate the best price with maximum coverage.
- Total Claims Assistance: Brokers assist with the claims process from start to finish, preparing documents, and fighting for your compensation rights, ensuring you receive your full rights.
- Comprehensive Protection Adjustment: L&G ensures that protection for fire insurance, property insurance, stock insurance, and public liability is truly effective and integrated.
L&G is known as a trusted commercial property insurance broker in South Tangerang, with extensive experience in handling risks in the hospitality and retail sectors.
Risk Management: Prevent Short Circuits Before They Happen
Insurance is important, but prevention is always the best option. Here are some simple yet vital steps every business owner should take to minimize the risk of short circuits:
- Routine electrical inspections at least twice a year by certified technicians (SNI Compliance).
- Use SNI certified cables and equipment with the required current capacity (Avoid cheap, untested products).
- Separate the electrical lines between heavy equipment (AC, freezer) and light equipment.
- Install tested and maintained smoke detectors and automatic sprinklers.
- Conduct fire evacuation simulations for all employees at least once a year (HR readiness).
- Provide APAR (Light Fire Extinguisher) in every important area (kitchen, warehouse, electrical panel) and train employees to use it.
- Store flammable materials (tissue, plastic, oil) away from heat sources or electrical sockets.
With a combination of prevention and property insurance, your business can survive major financial risks.
Risk Coverage Recommendations for Business Premises
Based on the high risk level of shophouses, restaurants and business premises, L&G Insurance Broker recommends the following combination of protection:
- Commercial Fire Insurance: Must cover extended electrical risks (short circuits, overheating) and explosions.
- Commercial Property Insurance (Property All Risks/PAR): The broadest coverage, guaranteeing losses due to fire, water, riots, and natural disasters (with extensions).
- Stock Loss Cover: Protects raw materials, food ingredients, or merchandise from damage or loss due to fire (stock value must be updated regularly).
- Business Interruption (BI) Insurance: Covers loss of income and fixed costs during the post-fire renovation period.
- Public Liability Insurance: Protects business owners from legal liability for losses to third parties (neighbors or customers).
With guidance from L&G Insurance Broker, you not only purchase a policy, but also obtain a comprehensive protection strategy that suits your business conditions.
Conclusion
Shophouses and restaurants are the heart of the local economy, but the fact that over 60% of fires in commercial areas are caused by electrical short circuits is a warning sign that must be taken seriously. This high fire risk is not caused by a rare accident, but rather by systematic neglect in maintaining aging electrical installations and overloading, exacerbated by flammable materials in kitchens and stockrooms. Financial losses from a single incident can reach billions of rupiah, directly destroying working capital and halting operations, often leading to bankruptcy.
Business continuity amidst fire risks can only be guaranteed with tailored financial protection. L&G Insurance Broker, an experienced commercial property insurance broker in South Tangerang and throughout Indonesia, offers end-to-end solutions to manage electrical short circuit risks. L&G ensures your fire and Property All Risks insurance policies cover both direct losses (buildings, equipment, inventory) and indirect losses (business interruption). L&G fully supports its clients throughout the claims process, avoiding rejections due to policy wording errors or underinsurance, so your company can recover and resume operations quickly.
Don’t let a business you’ve built over the years go up in smoke in a matter of minutes just because you saved on a relatively small insurance premium. L&G Insurance Broker encourages you to be proactive and make fire insurance a mandatory investment. A resilient business is a protected one. Safeguard your assets, stock, and reputation from this real threat of electrical short circuits.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773(CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
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