As India moves towards creating a more secure economy, various new schemes have been launched for the protection of business owners and their business-related properties. One such policy was launched by the Insurance Regulatory and Development Authority of India (IRDAI) is in 2021. It is known as Bharat Sookshma Udyam Suraksha Yojna. Under this policy, any business or enterprise can take up the proposed insurance policy and safeguard its property. This policy has various eligibility criteria. But the main thing we need to understand here is the factors that affect the premium of this policy. This article discusses how an insurer can decide the premium for high-risk businesses under the Bharat Sookshma Udyam Suraksha insurance.
Features of the Bharat Sookshma Udyam Suraksha Scheme
The Bharat Sookshma Udyam Suraksha coverage guarantees that you are protected against any physical loss, destruction, or annihilation of the buildings, equipment, stock, or other assets associated with your company. Here, we will understand the peculiar features of this policy and why must a person invest in this. Some of its key features are –
- Coverage and Amount – Under this policy, the total value of the insured risk covered is up to a whopping 5 CR Rupees. This means that losses incurred up to this amount can be claimed. Also, the policy offers 3 kinds of coverage – Standard Covers, In Build Covers, and Standard Add-On Covers.
- Protection from unexpected eventualities – The best part of this policy is that it covers the insurance holder’s claims that fall under the category of ‘unexpected events’. This means that losses incurred due to natural or man-made disasters can be claimed.
- Underinsurance – Up to 15% of the insured amount in underinsurance may be waived. If any insured property’s Replacement or Reinstatement value on the date of loss is higher than the Sum Insured. Then, underinsurance has occurred.
- Stock values – In case you have opted for floating-basis insurance, if a fluctuation in the stock prices or values is observed, the policy will cover the claim on the basis of the declaration.
- Self-disposal – The last and the best part of this policy is that it doesn’t keep you bound. You can cancel, renew, or withdraw the policy and the premium amount as and when you like. The processes involved are also quite simple and non-time consuming.
Factors affecting the premium for high-risk business
After knowing the peculiar features of the Bharat Sookshma Udyam Suraksha, again the question arises, how does an insurer decide premium for high-risk businesses on a floater-basis, under Bharat Sookshma Udyam Suraksha Yojna.
- Nature of the business – The payment you must pay for the coverage is based on the type of business you have. Depending on the nature of the firm, a large premium will be due for the coverage.
- Sum Insured – The premium you must pay to obtain Bharat Sookshma Udyam Suraksha insurance depends on the size of the money insured as well. The premium is greater for a large insured amount.
- Risk Profile – When determining the premium, the risk level of the business is also crucial. The payable cost will be large if the firm has a high-risk assessment and vice versa.
Apart from these 3 main factors, it depends on the insurance-seeker what kind of insurance policy he wants to avail. But the claim coverage might also change with the change in the government policy and inclusions and exclusions.
