The Answer in 60 Seconds

An SCDF licence to store, import, transport, dispense or pipe petroleum and flammable materials is a fire-safety authorisation under Part 6 of the Fire Safety Act 1993. It is not an insurance mandate. The Act lets the licensing officer grant the licence, attach conditions, and cancel it, but it does not make a commercial insurance policy a statutory condition of holding the licence. The duty the licence imposes is a safety duty: store and handle the material the way the Act and its regulations require.

That said, the exposures behind the licence are some of the most severe an SME can run. Fire, explosion, third-party injury and environmental contamination are exactly why the material is licensed in the first place. So the question is not "does the licence require insurance" but "what cover matches the hazard the licence exists to control".

The one insurance the law does compel sits outside the Fire Safety Act entirely. Under section 24 of the Work Injury Compensation Act 2019, every employer must take out and maintain approved work-injury cover for its employees, and a business handling flammable stock almost always employs people standing next to the hazard. Property and fire, public liability, business interruption and environmental cover are not licence conditions, but they track the licensed risk closely, and a landlord or a client contract may require them. The licence asks for safe handling. Your balance sheet asks for cover. Keep the two separate in your head.

The Sourced Detail

The phrase "petroleum and flammable materials licence" bundles two ideas that should stay apart. One is a fire-safety duty owed to SCDF and the public. The other is an insurance decision owed to your own business, your staff and your counterparties. The licence is about the first. It says nothing useful about the second, and that silence is where owners get caught. Below, the statutory frame first, then the exposures, then the cover that answers them.

What the licence actually is

The control of petroleum and flammable materials sits in Part 6 of the Fire Safety Act 1993, the statute SCDF administers. The Part separates the regulated activities: section 78 governs storage, section 79 import, section 80 transport, section 81 dispensing, and section 82 pipelines. Each activity needs the relevant licence or permit before it may lawfully be carried on, and section 88 governs the grant and renewal of those licences and permits while section 89 governs cancellation.

What "petroleum" and "flammable material" cover is not left to common sense. The Act defines petroleum to include crude petroleum, liquefied petroleum gas and products distilled from crude petroleum, coal, shale, peat or other bituminous substances, and a flammable material is any substance prescribed as such for the purposes of the Act. The prescribed classes and the quantity thresholds that trigger a licence live in the subsidiary legislation made under the Act, so whether your stock crosses the line is a question for the regulations, not a guess.

The point to hold onto is that this is a permission to handle a dangerous thing safely. Like the SCDF Fire Safety Certificate regime for designated buildings, it is a safety instrument. It is not, and was never designed to be, a financial backstop.

Does the Act impose an insurance condition?

This is the question the title forces, so answer it squarely. The Fire Safety Act 1993 does not write insurance into the petroleum and flammable materials Part as a standing statutory requirement. The licensing officer's power is a power over conditions and compliance, not a mandate that you carry a named policy. The Act lets the officer attach licence conditions and cancel the licence for breach, but the conditions the statute frames are operational and safety conditions, not a generic obligation to insure.

There is a practical caveat that matters. Because the licensing officer may impose conditions, and because the detailed requirements live in subsidiary legislation and in SCDF's own published conditions of licence, an insurance condition could in principle appear in a specific licence or a specific regulation for a specific activity. So the disciplined position is this: the primary Act does not impose a general insurance mandate, and you should read the actual conditions printed on your own licence and the current regulations before assuming nothing is required of you. Treat the licence document as the source of truth on what SCDF demands, and treat this article as the map of what the law generally does and does not require.

The exposures the licence is built to control

Here is where the real work is. The reason petroleum and flammable materials are licensed at all is that the downside is catastrophic, and catastrophic loss is what insurance exists to absorb. Four exposures map onto the licensed activity.

The first is property and fire. A flammable-stock business carries an elevated fire and explosion risk by definition, which is the whole premise of the licence. That elevated risk also changes the underwriting: an insurer pricing fire cover for a unit storing flammable materials is pricing a different animal from a dry warehouse, and will want to see the SCDF licence, the storage arrangements and the safety compliance before quoting. The licence does not buy the cover, but holding it cleanly is often what makes the cover available and sensibly priced.

The second is public liability. If a fire, leak or explosion injures a neighbour, a visitor or a passer-by, or damages an adjoining property, the claim lands on the business. The Fire Safety Act controls the hazard; it does not pay the third party who is harmed when the hazard escapes. Public liability cover is the line built for that.

The third is business interruption. A serious fire does not only destroy stock and premises. It stops the business, sometimes for months while the site is made safe, investigated and rebuilt. Property cover may rebuild the building; business interruption cover is what addresses the income lost while it cannot operate.

The fourth is environmental and clean-up. Petroleum and flammable materials can contaminate soil, water and drains, and the cost of remediation can dwarf the physical damage. Standard property and liability policies often treat pollution narrowly, so this exposure frequently needs deliberate attention rather than an assumption that it is already covered.

The insurance the law does compel: WICA

Cutting across all of this is the one genuinely mandatory cover, and it has nothing to do with the SCDF licence. A business that stores or handles flammable materials employs people, and those people stand closest to the hazard. As an employer, the business falls under section 24 of the Work Injury Compensation Act 2019, which requires every employer to insure and maintain insurance under one or more approved policies against the liabilities it may incur under the Act, in respect of its employees, subject to the classes the regulations exclude.

The trigger is employment, not the petroleum licence. But the two overlap in the worst way: a fire or explosion is precisely the kind of event that injures workers, and WICA cover is the statutory floor for compensating them. The mechanics of who must be covered are set out in our note on WICA section 24, the mandatory insurance provision.

Common Mistakes

  1. Reading the licence as proof of insurance. The SCDF licence proves you may handle the material safely. It says nothing about whether a single dollar of loss is insured.

  2. Assuming the Act mandates a policy, and so doing nothing. The primary Act does not impose a general insurance condition, but that is a reason to choose cover deliberately, not a reason to carry none against a catastrophic exposure.

  3. Not reading the conditions on the actual licence. Because the licensing officer can attach conditions and the detail lives in subsidiary legislation, a specific insurance requirement can appear on a specific licence. Read your own document.

  4. Buying standard fire cover without declaring the flammable stock. Non-disclosure of a materially elevated hazard is how a property claim gets denied at the worst possible moment.

  5. Forgetting business interruption and environmental clean-up. Rebuilding the premises is not the same as replacing lost income or funding contamination remediation. These are separate questions that standard packages may not answer.

  6. Treating WICA as optional because the focus is fire. The workers handling the flammable stock are exactly who WICA section 24 exists to protect, and the duty is mandatory regardless of the SCDF licence.

What This Means for Your Business

If you are applying for or renewing a petroleum or flammable materials licence, separate the safety duty from the insurance decision and handle each on its own terms.

Treat the licence as a fire-safety obligation. Meet the storage, handling and operational conditions the Fire Safety Act 1993 and its regulations set, and read the conditions printed on your own licence so you know exactly what SCDF requires of you, including any insurance condition specific to your activity.

Treat WICA as the one cover the law compels, and carry it because you employ people next to a hazard. Check your headcount and roles against the section 24 duty and keep it current.

Treat property and fire, public liability, business interruption and environmental cover as risk decisions matched to the exposures the licence exists to control. Declare the flammable stock to your insurer in full. Read your landlord's lease and your client contracts, because a landlord storing tenants near a flammable-materials operation, or a corporate client, will often require public liability at a stated limit, and that requirement comes from the contract, not the licence.

Covarage helps with the part that quietly goes wrong under load: keeping the SCDF licence, the WICA policy, the property and liability cover and the lease requirements organised in one place, with renewal reminders before anything lapses, and a route to a licensed adviser when you need to arrange or compare cover for an elevated-hazard operation.

Questions to Ask Your Adviser

  1. Does our specific SCDF licence, or the regulation governing our activity, attach any insurance condition we must meet to hold or renew it?
  2. Has our insurer been told, in full, that we store or handle licensed flammable materials, and is the fire and property cover priced on that basis?
  3. Does our headcount and the nature of our work bring us within the WICA section 24 duty, and is every covered employee actually insured?
  4. Do we hold public liability at a limit that matches the third-party harm a fire or explosion could cause, and does our lease or any client contract set a required limit?
  5. Are business interruption and environmental clean-up addressed deliberately, or have we assumed they sit inside the standard property package?

Related Information

Published 31 May 2026. Source verified 31 May 2026. COVA is an introducer under MAS Notice FAA-N02. We do not recommend insurance products. We provide factual information sourced from primary regulators and route you to a licensed IFA who can match a policy to your specific situation.