SFSP, BLUS, and BSUS: Insurance Differences at a Glance
Most of the insurers until recently offered only Standard Fire and Special Perils (SFSP) fire policy to their customers. The Insurance Regulatory and Development Authority of India (IRDAI) issued guidelines in January 2021, wherein it allowed insurance companies to design customized products. These products must be specifically be focusing on micro and small enterprises. In the article below we shall highlight SFSP, BLUS, and BSUS insurance differences in detail.
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Types of Fire Insurance Policies
The types of fire insurance in India are based on the sum insured. Let us have a look at these types and their major differences.
Bharat Sookshma Udyam Suraksha (BSUS): This policy offers protection to companies for a maximum sum insured of Rs. 5 crores. It typically covers plant and machinery, stock, building, and other assets, the total value for which is not beyond Rs. 5 crores.
Bharat Laghu Udyam Suraksha (BLUS): This policy provides coverage for the sum insured between Rs. 5 crore and Rs. 50 crores. Similar to the BSUS, this policy too covers plant and machinery, stock, building, and other assets, the total value for which is between Rs. 5 crore and Rs. 50 crores.
Standard Fire and Special Perils (SFSP) policy: This policy covers plant and machinery, buildings, and other assets of a property where the total value of the assets at risk is above Rs. 50 crores.
SFSP, BLUS, and BSUS Insurance Differences
To learn about major points of differences between the different fire insurance policies, let us look at the table below:
| Basis | BSUS | BLUS | SFSP |
| Total insured asset value of the subject matter | Below Rs. 5 crores. | More than Rs. 5 crores but less than Rs. 50 crores. | Exceeding Rs. 50 crores |
| Excess amount to be borne by insured | 5,000 of each claim | 5,000 of each claim, subject to a minimum of Rs. 10,000 | As specified in the policy |
| Coverage for Terrorism, Volcanic Eruption, Earthquakes, and Forest Fires | Inbuilt | Inbuilt | Offered as add-ons at an extra premium cost |
| Flexibility in choosing between
STFI (Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation) and RSMD (Riots, Strikes, and Malicious Damage) |
Being a standard coverage in the policy, these covers cannot be customised. | Being a standard coverage in the policy, these covers cannot be customised. | Customization of this policy is possible. One can add a cover at an additional premium cost or delete it for a lower premium. |
| Costs for Removal of debris | Upto 2% of the claim amount | Upto 2% of the claim amount | In excess of 1% of the claim amount |
| Method of valuation | Based on Reinstatement Value/Replacement Value only | Based on Reinstatement Value/Replacement Value only | Based on Reinstatement Value/Replacement Value or Market Value |
Case Study:
Vikas started his business (computer training institute) and bought a Bharat Sookshma Udyam Suraksha (BSUS) policy. When due to an electrical fault, a fire erupted and damaged his institute, he raised a claim against his policy. The insurer sent the surveyor to assess the actual loss. After the survey, the assessed damage was mentioned as Rs. 1 crore. Since the fire had occurred as a result of the peril insured under the policy, all the losses were covered. Thus, Bharat Sookshma Udyam Suraksha (BSUS) policy helped Vikas curtail financial losses.
Conclusion:
Fire insurance for businesses is very essential as the losses due to fire and other allied peril can have a huge financial impact. Choosing the correct fire insurances policy for your business is also very vital. The article above helps you understand SFSP, BLUS, and BSUS insurance differences and make an informed decision.
