What Are The Duties And Obligations Of A MSME Insurance Policyholder After The Occurrence Of An Insured Event?

In the realm of Micro, Small, and Medium Enterprises (MSMEs), insurance plays a pivotal role in mitigating risks and safeguarding against unforeseen events. Running any business requires one to prepare for contingencies in more ways than one. While it is not pleasant to think about having to face unfavourable situations that might bring losses, it is necessary so you may stay prepared. Getting your business insured is one of the simplest steps that one could take towards protecting their finances against unfortunate mishaps your business may face. It can also prepare you to deal with the obligations that may follow. While getting your business insured can prove to be a privilege you may be able to exercise at the right time, a policyholder also has to bear some responsibilities or obligations when it comes to maintaining the policy and being able to claim it when needed. A significant aspect of MSME insurance is understanding the duties and obligations incumbent upon policyholders following the occurrence of an insured event. Let's delve into the essential aspects and responsibilities associated with MSME insurance policies, particularly in the context of Bharat Sookshma Udyam Suraksha.

MSME Insurance Policies

MSME policies, commonly categorised as General insurance, are designed to provide financial protection to businesses in the MSME sector against various risks such as fire, burglary, natural calamities, and third-party liabilities. The scope of coverage may vary based on the type of policy chosen and what coverage it offers. These policies offer coverage tailored to the specific needs and vulnerabilities of small and medium enterprises, helping them recover and sustain operations in the face of adversity.

Duties and Obligations Post Occurrence of an Insured Event

After the occurrence of an insured event, MSME insurance policyholders are required to fulfill certain duties and obligations to facilitate a smooth claims process and ensure fair indemnification. It can allow the policy provider as well as the policyholder to navigate the situation better. Let's explore these obligations in detail:

Immediate Notification to the Insurer

Policyholders must notify the insurer promptly, ideally within 14 days, regarding any event that could give rise to a claim under the policy. The notification should be in writing and submitted to the address specified in the policy documentation.

Lodging Complaint with Authorities

If advised by the insurer, policyholders should file a complaint with the appropriate authorities, such as the police, detailing the loss or damage incurred. Providing a copy of the written complaint, First Information Report (FIR), or Final Report to the insurer is essential for claim processing.

Submission of Claim Form and Documentation

Within 28 days of the insured event, policyholders must submit a completed claim form to the insurer. The claim form should include detailed information about the loss or damage suffered, along with an estimate of the claim amount. All supporting documentation required to substantiate the claim must be provided promptly.

Cooperation with the Insurer

Policyholders are obligated to cooperate fully with the insurer and its representatives throughout the claims settlement process. This includes providing necessary information, assistance, records, and documentation as requested by the insurer.

Restrictions on Settlement and Admission of Liability

Policyholders should refrain from admitting liability or settling any claims without the written consent of the insurer. The insurer reserves the right to take over and manage the defense and settlement of any claims under the policy.

Key Provisions and Considerations

In addition to the core duties and obligations, MSME insurance policies may contain specific provisions and considerations that policyholders need to be aware of:

Basis of Claim Payment

The method of claim payment varies based on the nature and extent of the loss or damage incurred. Policyholders may be entitled to reimbursement for repair costs or replacement expenses, subject to policy terms and conditions.

Contribution and Subrogation

If other insurance policies cover the same claim, the insurer's liability may be limited to a proportionate share of the loss. Policyholders must assist the insurer in pursuing subrogation rights against third parties responsible for the loss or damage. The duties and obligations of MSME insurance policyholders after the occurrence of an insured event are crucial for ensuring transparency, fairness, and expediency in the claims settlement process. By adhering to these obligations and cooperating with the insurer, MSMEs can navigate challenging situations effectively and secure the necessary support to resume normal business operations. Bharat Sookshma Udyam Suraksha aims to empower MSMEs with comprehensive insurance coverage and a robust framework for risk management, fostering resilience and sustainability in the sector.*   *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.