Important Terms You Should Know When Buying Bharat Sookshma Udyam Suraksha Commercial Insurance Policy

If you are looking to insure a business organisation in the MSME sector, the Bharat Sookshma Udyam Suraksha Commercial Insurance Policy may be an ideal choice. For the unaware, MSME refers to Micro, Small and Medium Enterprises. To know if this policy is ideal for your MSME organisation, it is crucial to have a clear understanding of its essential terms. Read on for a list of such important terms and their meaning, explained for your benefit:

Sum insured* 

The amount shown as the sum insured in the policy schedule represents the insurance company’s maximum liability for each cover or part of the cover and each loss, as applicable.

Insured property*

By the term ‘insured property’, the policy refers to the building, plant and machinery, furniture, fixtures and fittings, stocks and any other contents declared and insured by the policyholder under the policy. They must be located on the policyholder’s premises unless specifically stated in the policy.

Total loss*

This term refers to a situation where the insured property or item is completely destroyed, lost, or damaged beyond retrieval or repair. It can also refer to a situation where the cost of repairing it is more than the sum insured of that item or in total. Any loss other than total loss is referred to as partial loss.

Your premises*

By this, the policy refers to the premises in which you (that is, the policyholder or the person opting for the insurance plan) carry on a business, and which is occupied by you for the purposes of business declared to the insurance company and is reflected in the policy schedule.

Building*

The term ‘building’ when mentioned in the policy also has a specific meaning. It refers to a building or structure in the policyholder’s premises, where business is carried out. It includes the basement (if any), all fixtures and fittings permanently attached to the floor, walls or roof like electrical wiring, antennas, and other such components. It also includes the following ‘additional structures’ located on the premises and used for business, as shown in the policy schedule: a. garage, out-houses, security sheds, towers, verandah or porch, tanks, compound walls, retaining walls, fences, gates and internal roads; b. lifts and hoists’ c. solar panels, wind turbines and air conditioning systems, central heating systems, security systems and cameras, electrical installations, a fire alarm, fire sprinkler systems, power lines, and power installations; d. pipelines for water, gas and sewage within the premises; e. any other structure as shown in the policy schedule.

Business*

This refers to the policyholder’s commercial enterprise, trade or profession as shown in the policy schedule.

Contents*

In the context of this MSME insurance policy, the term ‘Contents’ refers to those articles or things in the policyholder’s premises that are not permanently attached or fixed to the structure of the premises.

Insurable Assets*

All buildings, plant and machinery, furniture, fixtures and fittings, stocks and other contents, which, for the purposes of the business on any one location, you own, or hold as tenant or occupant, are referred to as ‘insurable assets’. The term also extends to the specified assets you hold in trust or on commission or are legally responsible for as part of your trade, even if you have not taken insurance cover for any of them.

Plant and machinery*

All equipment, machinery, pipes and cables, spares, computers, servers and preloaded licensed system software located within any structure or in the open area of the premises come under the term ‘plant and machinery’ in this General insurance  policy. The term also includes: a. machines under repair; b. machines taken on hire or lease, or through any system of purchase of goods; c. foundation, bedding or setting of the machines; d. accessories of machines.

Kutcha and Pucca construction*

In the Bharat Sookshma Udyam Suraksha Commercial Insurance Policy, ‘kutcha construction’ refers to building(s) having walls and/or roofs of wooden planks/thatched leaves and/or grass/hay of any kind/bamboo/plastic cloth/asphalt/canvas/tarpaulin and the like. Any construction other than the above is considered as ‘pucca construction’.

Stocks*

This refers to any stock of goods or merchandise. It may be: a. finished goods, semi-finished goods, stock in process, stock invoiced and ready for dispatch; b. raw materials, packing materials; c. stock held in trust for which you are responsible; d. stock in open in the insured premises.

Agreed value* 

An amount agreed between you and the insurance company at the policy commencement date for items whose value cannot be ascertained.

Market value*

This term means new replacement/ reinstatement value minus depreciation, reckoned as on the date of loss. Claims are subject to terms and conditions set forth under commercial insurance policy.For definitions of more essential terms, refer to the policy wordings of the Bharat Sookshma Udyam Suraksha Commercial Insurance Policy.   *Standard T&C apply. Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.