The Micro, Small, And Medium Enterprises (MSME) sector is a key contributor to employment generation, income creation, and overall economic development in India. However, MSMEs often struggle with various obstacles, such as limited access to finance, inadequate technological infrastructure, and vulnerability to market fluctuations. In light of these challenges, the Bharat Laghu Udyam Suraksha Policy aims to create a conducive environment for the sustainable growth of MSMEs by offering a range of financial and non-financial support measures. The Government of India has launched this initiative to address the challenges faced by MSMEs while fostering their resilience, growth, and long-term sustainability.

In this post, we will look at the key characteristics and benefits of the Bharat Laghu Udyam Suraksha initiative, as well as the specific insurance options and risk mitigation measures offered by it. This article aims to educate small entrepreneurs with knowledge and tools to safeguard their businesses and prosper in an ever-changing business landscape .

Let’s start with the basics!

What is the Bharat Laghu Udyam Suraksha Program?

The Bharat Laghu Udyam Suraksha policy provides insurance coverage for your commercial property. Under this policy, the insurer agrees to reimburse you for the loss you suffer when unforeseen occurrences cause physical loss, damage, or destruction of your business's building and structures, equipment and machinery, stock and other assets.

With the vision of building a supportive and enabling environment, the Bharat Laghu Udyam Suraksha policy seeks to propel MSMEs towards success. Central to the policy is the facilitation of easy and affordable credit access for small enterprises. By streamlining loan processes, introducing favorable lending practices, and establishing credit guarantee mechanisms, the policy aims to empower entrepreneurs with the necessary financial resources to fuel their business growth.

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This policy gives the following types of covers

1. Standard Coverage - for Your business's building and structures, stock and other assets and plant and machinery.

2. Inbuilt Coverage- If the insurer agrees to cover your claim for loss or damage to Insured Property under the Standard Coverage, they will also cover the following loss or damage and expenses.

  • Additions, changes or extensions: During the Policy Period, property that you erect, acquire, or add is covered up to 15% of the sum insured for that item (with the exception of stocks).
  • Temporary removal of stocks: Up to 10% of the value of stocks temporarily transferred to other premises for processing, fabrication or finishing.
  • Cover for Specific Contents: During the policy period, cover for cash up to Rs 50,000, cover for documents such as manuscripts, deeds, business books, drawings, plans, securities and so on up to Rs 50,000, cover for computer programmes, information, and data up to Rs 5 Lakh and cover for personal effects of visitors, employees, Directors up to Rs 15,000 per person, for a maximum of 20 persons
  • Start-up Expenses: The costs incurred by your startup as a result of a loss or damage caused by insured events up to Rs 5 lakh during the policy period.
  • Professional fees: Up to 5% of the claim amount for surveyors, architects, and consulting engineers.
  • Debris Removal Costs: Reasonable expenses for debris removal are covered, up to 2% of the claim amount
  • Compliance Costs: Additional cost incurred for the reconstruction of property solely to comply with municipal regulations.

Standard add-on covers

On payment of an extra Premium, you can acquire the following standard Add-on coverages.

i) Floater Coverage: Coverage for stocks located in multiple locations under a single Sum Insured.

ii) Stock Declaration Coverage Policy: Coverage for frequent variations in stock/stock values on a declaration basis.

What is not covered in a Bharat Laghu Udyam Suraksha policy?

Certain events are not covered in a typical Bharat Laghu Udyam Suraksha policy. Some of them are as follows-

  • Willful or intentional act by the policyholder
  • War, invasion, and war-like activities
  • Loss or damage to cold storage goods as a result of temperature changes
  • Contamination or pollution
  • Ionising radiation
  • Property has gone missing or has been misplaced
  • Costs or fees for preparing any claim
  • Consequential or indirect loss/damage,
  • Insured premise /building remaining unoccupied for over 30 days
  • Loss or damage to any electrical/electronic machine, fixture, or equipment by excessive pressure, over-running, short-circuiting, self-heating or leakage of electricity from any cause
  • Precious stones or works of art unless specifically declared
Who is Eligible to Purchase the Bharat Laghu Udyam Suraksha Policy?
Who is Eligible to Purchase the Bharat Laghu Udyam Suraksha Policy?

Who is eligible to purchase the Bharat Laghu Udyam Suraksha policy?

You can obtain this insurance for any property related to your business if you are the owner, lessee, purchaser, renter or trustee on commission, or if you are accountable for it and responsible for taking insurance. You can avail this cover for any commercial enterprise up to the value of all Insurable assets, as shown below-

  • If the value of all Insurable assets at any one location is over ₹ 5 Crore but not more than ₹ 50 Crore at the policy start date.
  • If the value of all Insurable assets is over ₹ 50 Crore at the policy start date, you will need to buy the applicable policy meant to cover your risk.
  • If the value of all Insurable assets either exceeds ₹ 50 Crore or reduces below ₹ 5 Crore during the policy period, the Bharat Laghu Udyam Suraksha policy will be replaced with an applicable policy on the expiry of this policy

The footnote:

The Bharat Laghu Udyam Suraksha policy marks a significant milestone in India's journey towards empowering and protecting its small enterprises. By recognizing the immense value of micro, small, and medium enterprises (MSMEs), the policy paves the way for a more resilient and inclusive economy. Through its multifaceted approach, encompassing easy credit access, technological adoption, and entrepreneurship development, the initiative strives to create an enabling environment where small businesses can flourish.

Bharat Laghu Udyam Suraksha policy is a testament to the government's commitment to fostering the growth and protection of small enterprises in India. By addressing the specific challenges faced by MSMEs and offering comprehensive support measures, the policy aims to unlock their potential and unleash a wave of entrepreneurial spirit. As small businesses flourish and thrive, they become key drivers of economic progress, generating employment, contributing to GDP growth, and fostering a sustainable and inclusive India for all.