Small and medium-sized enterprises (SMEs) form the backbone of India's economy, contributing significantly to employment generation, innovation, and overall economic growth. These enterprises face numerous challenges, including financial risks, operational vulnerabilities, and the constant threat of commercial crimes. In response to these challenges, the Government of India has launched the Bharat Sookshma Udyam Suraksha initiative, aimed at providing comprehensive protection and support to small businesses across the country.

In this article, we would delve into the key features and benefits of the Bharat Sookshma Udyam Suraksha initiative, shedding light on the specific insurance solutions and risk mitigation strategies offered to small businesses. We explore how this program serves as a catalyst for enhancing the financial security of SMEs, fostering trust among stakeholders, and bolstering the overall economic ecosystem. By highlighting the importance of proactive risk management and insurance solutions tailored to SMEs, this article aims to empower small entrepreneurs with knowledge and resources to protect their enterprises and thrive in an ever-evolving business landscape.

Let’s start with the basics!

What is the Bharat Sookshma Udyam Suraksha program?

The Bharat Sookshma Udyam Suraksha Policy provides insurance coverage for the commercial property of a small business. Under this policy, the insurer agrees to reimburse the business for the loss it has incurred when unforeseen occurrences cause physical loss, damage, or destruction of the business's building and structures, equipment and machinery, stock, and other assets.

This program encompasses a range of measures designed to safeguard SMEs from various risks, including commercial crime, fidelity breaches, and other fraudulent activities. By addressing the unique needs and vulnerabilities of small enterprises, this initiative seeks to promote their sustained growth and resilience in an increasingly competitive business environment.

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).
  • Stocks as floaters: Stock losses at more than one designated location.
  • Temporary transfer 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 5 Lakh and cover for personal effects of visitors, employees, Directors and up to Rs 15,000 per person for a maximum of 20 persons
  • Professional fees: Up to 5% of the claim amount for surveyors, architects, and consulting engineers.
  • Start-up Expenses: The costs incurred by your startup as a result of a loss or damage caused by insured events up to 1 lakh during the policy period.
  • Compliance Costs: Additional cost incurred for the reconstruction of property solely to comply with municipal regulations.
  • Debris Removal Costs: Reasonable expenses for debris removal are covered, up to 2% of the claim amount
  • Fluctuation in Stock values- This is an add-on cover and can be availed on payment of an additional Premium. It provides protection for frequent fluctuations in stock/stock values on a declaration basis.

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

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

  • Willful or intentional act by the policyholder
  • Loss or damage to cold storage goods as a result of temperature changes
  • War, invasion, and war-like activities
  • Ionizing radiation
  • Contamination or pollution,
  • Property has gone missing or has been misplaced
  • Consequential or indirect loss/damage,
  • Costs or fees for preparing any claim
  • Insured premise /building remaining unoccupied for over 30 days
  • Precious stones or works of art unless specifically declared
  • 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.
Who is Eligible to Purchase the Bharat Sookshma Udyam Suraksha Policy?
Who is Eligible to Purchase the Bharat Sookshma Udyam Suraksha Policy?

Who is eligible to purchase the Bharat Sookshma 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 not over ₹ 5 Crore at the policy start date.
  • If the value of all Insurable assets is over ₹ 5 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 exceeds ₹ 5 Crore during the policy period, the Bharat Sookshma Udyam Suraksha policy will be replaced with an applicable policy on the expiry of this policy

The footnote:

From the discussion above, we have seen that the Bharat Sookshma Udyam Suraksha initiative stands as a crucial step toward safeguarding small enterprises in India. Through the implementation of this initiative, small businesses gain access to comprehensive coverage against several forms of financial loss. This not only protects their financial assets but also instills confidence among stakeholders, fostering a conducive environment for growth and investment.

As the program continues to evolve and adapt to emerging risks, it is essential for small business owners to stay informed and leverage the resources and support offered by Bharat Sookshma Udyam Suraksha. By proactively mitigating risks and prioritizing financial security, SMEs can enhance their competitiveness, attract investments, and contribute even more substantially to India's economic prosperity. By embracing the opportunities and resources provided through this initiative, small businesses can strengthen their foundations and embark on a path of sustained success and prosperity.

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Frequently Asked Questions ( FAQs)

  1. Can I buy additional covers in a Bharat Sookshma Udyam Suraksha policy?

Yes. You can. Coverage under add-ons can vary from one insurer to another. Insurers may sell add-ons after filing with the Authority. For details on the add-on covers, you may visit the insurer’s website.

2. How much do I pay for this cover?

You need to pay a premium to the insurer for availing of the coverage. The premium would depend on certain factors. Some of them are-

  • The nature of the insured property (stock, building, plant)
  • The Sum Insured amount
  • The nature of the business.
  • Other factors that define the risk profile of the business

3. How can I make a claim when I suffer a loss?

You must file a claim if you suffer a loss that is covered by this policy. The insurer will investigate the claim and approve it if it meets the terms and conditions of the policy.

When you endure loss to any Insured Property as a result of an Insured event, you must:

1. Immediately notify the insurer

2. Report to the police, fire authorities, and other necessary statutory authorities

3. Take all reasonable precautions to prevent future damage to the Insured Property.

4. Collect and preserve evidence, take and preserve photographs

5. Assist the insurer and its authorized representatives in collecting evidence and details. Provide all information, books of accounts, and other documents

6. Submit the claim form as soon as possible but within 30 days of the date you first notice the loss or damage