The Bharat Udyam Suraksha Policy (BLUS), is a Fire and Allied Perils Insurance product that provides coverage to commercial properties. Through this policy, the insurance company agrees to pay the insured for the loss, damage or destruction to any of the insured assets due to any insured peril or event.
Most features of a BLUS policy are similar to those of a BSUS (Bharat Sookshma Udyam Suraksha) policy, the only difference is the eligibility criteria.
You can purchase a Bharat Laghu Udyam Suraksha policy for a building or structure, if you have an insurable interest in the property as the owner, lessee, purchaser, tenant, licensee, employee or a legal occupier.
Additionally, you can insure stocks, plant and machinery under this policy if you are the owner or lessee of the asset, or if you hold it in trust or on commission, or if you have accepted such property for job work. In simple words, anyone who has an ‘insurable interest’ in the property and is legally responsible for it can insure it under a BLUS scheme.
There are some additional criteria you have to meet in order to be eligible to purchase a BLUS policy :
- You must be engaged in a business of manufacturing or production of goods, or of providing or rendering services. and you must be legally responsible for your business
- The value of all Insurable Assets at one location must be more than ₹5 crore but not more than ₹50 Crore at the date of commencement of the policy. Insurable Assets here include buildings and structure, plant and machinery, stocks and other assets that the insured is legally responsible for
There are 4 main types of assets you can insure under a BLUS policy.
1. Building and Structures : Buildings and structures can include any shed, flat, house, unit of a building, or basement (if there is any) that is located inside the insured premises where business is carried out.
Furthermore, insurance coverage is also provided to the following “additional structures” :
- All fixtures and fittings (for example, electrical wiring, antennas, etc.) that are permanently attached to the floor, walls or roof of a building in the premises
- Garage, out-houses, security sheds, towers, porch, tanks, compound walls, fences, gates, and internal roads
- Lifts and hoists
- Solar panels , wind turbines, air conditioning and central heating systems, security systems, fire alarm and sprinkler systems, electrical and power installations, etc.
- Water, gas and sewage pipeline located within the premises
The policyholder can get any structure insured under this Fire Insurance policy by including it in the policy schedule, as long as it is located within the premises and used for business.
2. Plant and Machinery : Plant and machinery implies all equipment, machinery, pipes and cables, computers and servers, etc. that are located within the insured premises . These can also include the following :
- Machines that are under repair, or taken on lease or hire
- Foundation, bedding and accessories of the machines
3. Stock of goods or merchandise : The following assets are included in this category :
- Finished, semi-finished goods, stock in progress and stock invoiced and ready for dispatch
- Stock held in trust or accepted for job work
- Stock located in an open area of the insured premises
4. Other assets : Basically, all tangible property that is located inside the premises and used for commercial purposes can be insured under a BLUS scheme. Some examples are as follows :
- Office equipment, telephone equipment, electronic equipment, computers etc.
- Canteen and kitchen equipment, gym and permanent sports equipment etc.
A BLUS policy provides cover for physical loss, damage or destruction caused to the insured property by the following unexpected events :
In addition to the above events, this Fire Insurance policy will also cover theft within 7 days from the occurrence of any of the above insured events, provided this theft was caused by the occurrence of such an insured event.
In-built covers : There are certain covers that come in-built in a BLUS policy. This means that if the insurance company has agreed to pay claim for loss or damage to insured property, it will also pay for the following losses and expenses that are in-built :
Additions, alterations or extensions - Property that the policyholder erects, acquires or adds during the period of the policy will be covered up to 15% of the sum insured for that item. Note - this excludes stocks
Start-up expenses - startup costs incurred by the insured subsequent to a loss or damage caused by an insured event will be covered up to ₹5 Lakh during the policy period. Note - this amount may differ depending on the insurance company
Temporary removal of stocks - Loss to stocks that have been temporarily removed to another location for the purpose of fabrication, procession or finishing will be covered up to 10% of their value. Some insurers also provide cover for stocks on floater basis, which covers loss to stocks located at more than one named location
Cover for specific contents - This policy will provide covers for specific contents during the policy period :
- Cover for money up to ₹50,000
- Cover for documents such as deeds, manuscripts, business books, plans, drawings, securities, etc. up to ₹50,000
- Cover for computer programmes, information and data up to ₹5 Lakh
- Cover for personal property to employees, directors and visitors up to ₹15,000 per person for a maximum of 20 persons
Professional fees - This includes reasonable fees of architects, surveyors and consulting engineers will be covered up to 5% of the claim amount
Costs of removal of debris - Reasonable expenses associated with removal of debris will be covered up to 2% of the claim amount
Costs required by municipal regulations - Additional costs of reconstruction or alteration of property incurred solely for the purpose of complying with municipal regulations. This is also known as the Local Authority Clause
In some cases, the events mentioned above will not be covered. These are specific conditions that make the insured peril uninsurable. The insurance company can impose their own conditions by specifying them in the policy schedule. However, certain general exclusions that apply to all BLUS policies are listed below :
Other exclusions :
The BLUS policy will NOT cover any loss, damage or destruction to the following assets under the said conditions :
- Any electrical or electronic machine, fixture or fitting where the damage is due to over-running, excessive pressure, short circuiting, self heating or leakage of electricity from any cause (even lightning)
- Stocks in cold storage premises where damage is caused due to change of temperature
- Bullion, unset precious stones, any curios or works of art, unless they are declared separately in the policy schedule
- Any insured property removed from the premises, except the removal of machinery and equipment for the purpose or repairs, renovation or cleaning. Additionally, stocks covered under the in-built cover ‘temporary removal of stocks’ do not form part of this exclusion
In addition to the above exclusions :
- Theft within 7 days of occurrence of the responsible insured event will not be covered if it is of any article or thing that is located outside the premises, attached from the outside of the outer walls or roof of the premises and not securely mounted
- Excess of ₹5,000 will not be covered. This means that the insurer will deduct ₹5,000 from every loss suffered by the insured before settling the claim. Moreover, for the insured risk of terrorism, this excess amount will be determined by the attached terrorism clause
- Loss or damage cause due to the insured’s deliberate, willful or intentional act/omission, or of anyone acting on the insured’s behalf with their knowledge, shall not be covered
- Any claim covered by a marine policy in force at the time of loss or damage will not be covered under a BLUS policy, except in excess of the limits of the policy, i.e. the excess loss not covered by said marine policy will come under the purview of a BLUS policy
If the value of your commercial assets does not fall between ₹5 Crore and ₹50 Crore, check out Bharat Sookshma Udyam Suraksha (BSUS) and Standard Fire and Special Perils (SFSP) Fire Insurance policies