September 1, 2022

Bharat Sookshma Udyam Suraksha (BSUS) Policy Exclusions - Explained

Bharat Sookshma Udyam Suraksha (BSUS) Policy Exclusions - Explained

A Bharat Sookshma Udyam Suraksha (BSUS) policy provides Fire Insurance coverage to small businesses against a large number of risks, ranging from fire and explosions, to riots and natural disasters.

If your business is insured under a BSUS policy, you can rest assured knowing that any damage to your machinery, building, or stock can be adequately covered. However, it must be noted that there are certain perils and events that fall outside the purview of this policy and are therefore not paid for by the insurance company. In order to fully understand how your Business Insurance policy works, you must take note of these exclusions. Let’s examine them in detail below-

Peril exclusions- the common risks/perils included in a BSUS policy (such as fire, explosion, impact damage, etc.) are only covered to a certain extent. The below list specifies circumstances where coverage for such risks will not be provided -

  • Fire caused by an asset undergoing any heating or drying process, such as brazing, bonding, or forging of materials in furnaces or ovens
  • Fire caused by the burning of the insured property by order of a public authority. This includes instances where a municipal authority, the police, or any other governmental institution has ordered for the destruction of your business’s property for any purpose
  • Damage to boilers, economisers or other machinery in which steam is generated, and their contents will not be covered when such damage is caused due to the machine’s own explosion or implosion or due to the effects of centrifugal forces
  • Any land subsidence or collapse caused by demolition, structural repairs, river erosion, defective design/workmanship, or normal cracking
  • Any physical damage to your business property caused by the impact of pressure waves emitted by supersonic aircrafts is not covered. Additionally, loss resulting from collision with an animal, vehicle, or aircraft that belongs to you or your employees will also not be covered
  • Any property damage arising from your business property being temporarily or permanently confiscated or forfeited by order of a public authority will not be covered. Similarly any damage arising out of total or partial cessation of work or business interruption will also not be covered
  • Losses caused by leakage of automatic sprinklers during any repairs, removal or extensions of such systems
  • Theft of any business property located outside the insured premises

A BSUS policy will not provide coverage for any loss or damage to the following assets:

  • Electrical or electronic equipment - loss or damage to electrical or electronic equipment due to events like over-running, arcing, excessive pressure, short-circuiting, self-heating, or leakage of electricity will not be covered. However, if such events were to result in a fire that causes damage to other nearby equipment or structures, then those damages will be covered under this policy
  • Stocks in cold storage- loss, destruction, or damage to stocks kept in cold storage premises is not covered if such damage is directly caused by a change in temperature of the storage facility
  • Loss of stock due to spoilage- deterioration of goods during the manufacturing process or due to faulty raw materials will not be covered under this policy
  • Loss of valuable assets like precious stones, bullion, works of art, curious, etc. is not covered, unless such assets are specifically mentioned in the policy and approved by the insurance company
  • Loss of any insured asset which has been mislaid or missing, and its disappearance cannot be linked to the occurrence of any identifiable insured event

  • Excess of 5% : A policy’s excess or deductible refers to a part of the loss that has to be borne by the insured and is deducted from the final claim amount paid by the insurance company. A BSUS policy comes with an excess of 5%, subject to a minimum of ₹10,000- this means that 5% of each insured loss suffered by your business or a sum of ₹10,000 (whichever is higher) will not be covered by the insurer
  • Deliberate or wilful negligence by the insured : Any losses occurring as a direct result of your own deliberate and wilfully negligent act/omission will not be covered under this policy. This also includes misconduct by any of your representatives, employees, or relatives
  • Cost of preparing claim : Reasonable and necessary expenses incurred for the purpose of assessing, preparing, or clarifying an insurance claim will not be covered. This includes fees paid to the consulting engineer or loss adjuster, cost of claim submission, expenses incurred in procuring required documents, etc.
  • Any loss or damage to insured business property that is already covered under a valid Marine Insurance policy will not be covered under a BLUS policy. However, any excess loss that goes beyond the limits of the Marine policy will be suitably covered under a BSUS policy
  • No property loss or damage will be covered if your business premises have been left continuously unoccupied for a period of more than 30 days, unless you obtain a written approval from the insurance company in the form of an endorsement
  • Any property damage caused by an act of war, invasion, civil war, mutiny, civil commotion, or other war-like events is strictly kept out of the scope of coverage under this policy
  • Similarly, loss or damage which is a direct result of ionising radiation, nuclear operations, and related perils is also not covered
  • Expenses or damages arising out of any pollution or contamination will also not be covered. However, if such pollution results in or is accompanied by the occurrence of an insured event then any subsequent physical damage can be covered
  • This policy does not provide reimbursement for any reduction in the market value of the insured property (building, machinery, equipment, furniture, etc.) after it has been repaired or reconstructed
  • This policy will not cover any consequential or indirect losses that follow the occurrence of an insured event. For instance, extra costs like loss of income, loss of wages or earnings, loss by delay, loss of market share or time, medical expenses, etc. are not reimbursed under this policy

Learn more:

What does a BSUS policy cover?
What are the differences between SFSP, BLUS, and BSUS policies?

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.