IRDAI-mandated commercial fire insurance for India's SMEs. Total assets ₹5–₹50 crore at one location. New for Old — no depreciation. 5% excess (min ₹10,000). Start-up expenses ₹5 lakh. Computer data cover ₹5 lakh. Employee personal effects. Pucca construction only. The trilogy's final tier.
Commercial Insurance· IRDAI Mandated· The Trilogy Completer
"Laghu Udyam" means "Small Enterprise" in Hindi. The Bharat Laghu Udyam Suraksha Policy (BLUS) is the IRDAI-mandated standardised commercial fire insurance for Small and Medium Enterprises whose total insurable assets at any one location exceed ₹5 crore but do not exceed ₹50 crore. Pharma plants, hotels, hospitals, IT companies, department stores, warehouses — all at SME scale — are the natural home of BLUS.
Total insurable assets at ONE location — the definitive SME bracket in the IRDAI commercial fire framework
Per LocationBuilding, P&M, and contents settled at replacement cost of new equivalent property — no depreciation
No DepreciationIf SI ≥ 85% of actual value, average clause does not apply — same threshold as BSUS
85% ThresholdPercentage-based — scales with claim size; unlike BSUS's flat ₹5,000; the most significant operational difference
Higher than BSUSStart-Up ₹5L, Computer Data ₹5L, Employee Effects ₹15K/person — covers not in BSUS
BLUS EnhancedExplicitly excludes Kutcha construction — brick, RCC, steel, pre-engineered buildings only at this scale
BLUS RequirementVia GIC Re Terrorism Pool — mandatory in-built peril; cannot be excluded; same as BSUS and BGR
GIC Terrorism PoolUnlike BSUS (which does not explicitly state this restriction), BLUS policy wordings explicitly define and exclude Kutcha construction:
Kutcha (NOT eligible): Walls and/or roofs of wooden planks, thatched leaves, grass/hay, bamboo, plastic cloth, asphalt, canvas, tarpaulin, or similar temporary materials.
Pucca (Eligible): Brick/stone masonry, Reinforced Cement Concrete (RCC), steel structures, pre-engineered steel buildings, concrete construction.
At the ₹5–₹50 crore asset level, businesses must be operating from permanent, structurally sound Pucca premises to be eligible for BLUS.
API plants, factories, food processing, textile mills
Mid-scale hotels, resorts, large restaurants
Mid-size hospitals, diagnostic centres, labs
IT companies, server farms, data centres (small/mid)
Large retail, malls, supermarkets, multi-floor stores
Warehouses, cold chains, logistics hubs
Colleges, university buildings, lab equipment
Power substations, utility facilities outside industrial compounds
The Most Important BLUS Operational Difference
Every BLUS claim is subject to a compulsory excess of 5% of the claim amount, subject to a minimum of ₹10,000. This is a percentage-based excess — unlike BSUS's flat ₹5,000. For large SME-scale claims, this can be significant. Use the calculator below to see what it means for your claim size.
| Claim Amount | BSUS Excess (Flat ₹5,000) | BSUS — You Receive | BLUS Excess (5% or Min ₹10K) | BLUS — You Receive |
|---|---|---|---|---|
| ₹50,000 | ₹5,000 | ₹45,000 | ₹10,000 (min) | ₹40,000 |
| ₹1,00,000 | ₹5,000 | ₹95,000 | ₹10,000 (min) | ₹90,000 |
| ₹5,00,000 | ₹5,000 | ₹4,95,000 | ₹25,000 (5%) | ₹4,75,000 |
| ₹25,00,000 | ₹5,000 | ₹24,95,000 | ₹1,25,000 (5%) | ₹23,75,000 |
| ₹1,00,00,000 | ₹5,000 | ₹99,95,000 | ₹5,00,000 (5%) | ₹95,00,000 |
| ₹5,00,00,000 | ₹5,000 | ₹4,99,95,000 | ₹25,00,000 (5%) | ₹4,75,00,000 |
The 5% excess reflects that BLUS targets larger businesses that can reasonably absorb a proportionate first loss. Flat excesses (like BSUS's ₹5,000) work well for small claims; percentage excesses scale appropriately with SME-level losses.
For a ₹5 crore factory fire claim → BLUS excess = ₹25 lakh. This is the insured's proportionate share of a large loss. At BLUS scale, businesses should maintain adequate cash reserves or credit facilities to absorb this first-loss excess while the claim is being settled. This is why interim payments from the insurer are important for large BLUS claims.
Even when 5% of the claim amount would be less than ₹10,000 (i.e. claim below ₹2,00,000), the minimum excess is ₹10,000. This is double BSUS's ₹5,000 flat excess. For very small claims (pipe burst causing ₹50,000 damage), the effective excess under BLUS is 20% (₹10,000 of ₹50,000). BLUS is designed for SME-scale losses — small individual claims within a large policy should be viewed in the context of the overall risk protection provided.
8 Automatic Benefits — Enhanced at SME Scale
BLUS has the same 8 in-built cover categories as BSUS — but with significantly enhanced limits for the SME business scale. Four of the eight are enhanced or entirely new compared to BSUS.
New buildings, plant, machinery, or contents acquired after policy inception are automatically covered — insured must notify within 7 days. Subject to additional premium at renewal.
Up to 15% of relevant SI (excl. stocks)Stock at multiple named locations covered under one floater Sum Insured — particularly relevant for manufacturing businesses with factory, warehouse, and distribution stock.
Floating across named locationsStocks temporarily sent to another premises for fabrication, processing, or finishing are covered. Relevant for businesses using sub-contractors or job-work arrangements.
Up to 10% of Stock SIFour separate items covered under Specific Contents:
Costs of restarting the business after a covered loss — reconnecting utilities, re-testing/certifying machinery, re-licensing, regulatory re-approvals, hotel soft-launch, pharma cleanroom re-certification, staff re-onboarding.
Up to ₹5,00,000/year — 5× BSUS (₹1L)Architect's, surveyor's, and consulting engineer's fees for damage assessment and reinstatement supervision — calculated as a percentage of claim, not just within SI. For large claims, this is a significant, separately-quantified benefit.
5% of Claim Amount — new basis vs BSUSCosts of removing debris, dismantling, shoring up, or propping up damaged buildings or machinery. At BLUS scale (₹5–₹50Cr assets), 2% of a large claim can be a very significant absolute amount.
2% of Claim AmountAdditional reconstruction costs solely to comply with updated municipal / local authority regulations at time of reinstatement — updated building codes, fire safety regulations, structural requirements.
Included within SIBLUS includes a unique in-built cover for Computer Programmes, Information, and Data — up to ₹5,00,000 per year. It covers the cost of reproducing/restoring lost computer programmes, data, and information following an insured event (fire, flood, etc.).
Particularly critical for:
This ₹5 lakh cover addresses the very real cost of data recovery and system restoration — absent from BSUS because micro-enterprises are less IT-dependent than SMEs.
BLUS includes a unique human-facing in-built cover: personal belongings of employees, directors, and visitors on business premises are covered up to ₹15,000 per person for a maximum of 20 persons per policy period.
Covers: personal laptops, bags, clothing, mobile phones, wallets, and other personal effects brought to the business premises and damaged or lost in an insured event (fire, flood, earthquake, riot).
Total maximum: 20 × ₹15,000 = ₹3,00,000. This is the most people-centric in-built cover in any product in this series — uniquely recognising that when a factory burns or a hotel floods, it's not just the business assets that are lost.
Restarting an SME after a covered loss involves expenses far beyond a small bakery or shop:
→ Pharmaceutical plant: EPA re-testing, cleanroom re-certification, Good Manufacturing Practice (GMP) compliance reinspection, batch testing before production restart
→ Hotel: Soft-launch marketing, staff re-training, kitchen re-commissioning, health & safety certification, online reputation recovery
→ Hospital: Medical equipment re-calibration/certification, patient management system restoration, accreditation reinspection
→ IT company: Data system restoration, security certification, client communication and re-onboarding
₹5,00,000 for these start-up costs reflects the real complexity of restarting a larger business. BSUS's ₹1L was designed for a bakery. BLUS's ₹5L is designed for a pharma plant.
After BLUS pays any claim, the Sum Insured is automatically restored to the full original amount. The insured must pay proportionate premium for the unexpired policy period from the date of the loss.
Example: ₹20 crore SI policy; ₹5 crore fire claim paid. SI is restored to ₹20 crore — you pay pro-rata premium for the remaining months.
You may choose NOT to restore the SI — in which case the policy SI is permanently reduced to ₹15 crore for the rest of the term with no extra premium. This option is exercised immediately on occurrence of the loss — discuss with Probitas on 022 4302 0000.
All 19 Mandatory In-Built Perils
BLUS uses the same 19-peril coverage suite as BSUS and BGR — but now protecting ₹5–₹50 crore of commercial assets. All perils are mandatory and cannot be excluded.
BLUS, BSUS, and BGR all cover the identical 19-peril suite. The difference is the insured property: BGR protects your home; BSUS protects micro-enterprise assets (≤₹5Cr); BLUS protects your SME assets (₹5–₹50Cr). A ₹25Cr pharma plant is protected by the same fire, flood, earthquake, and terrorism coverage as a ₹5L apartment.
Same conditional theft rule as BSUS and BGR. BLUS does not cover standalone burglary. For standalone theft/burglary cover of commercial premises, a separate Burglary Insurance Policy is required.
Even if a covered peril causes damage, BLUS only covers Pucca construction buildings. Kutcha construction is excluded from BLUS regardless of the cause of damage. Ensure your building qualifies as Pucca (brick, RCC, steel) before purchasing BLUS.
Terrorism is a mandatory in-built peril under BLUS — via the GIC Re Terrorism Pool. This is particularly relevant for hotels, hospitals, and prominent commercial establishments that may be higher-profile targets. Unlike older SFSP policies, BLUS cannot exclude terrorism coverage.
The Complete SME Fire Insurance Picture
BLUS and BSUS share the same product DNA — same 19 perils, same New for Old basis, same 85% underinsurance waiver. The differences are in scale, the key excess structure, and four enhanced/new in-built covers unique to BLUS.
| Feature | 🏪 BSUS (Bharat Sookshma) | 🏭 BLUS (Bharat Laghu) — This Product |
|---|---|---|
| Value at risk (one location) | ≤ ₹5 Crore | ₹5 Crore – ₹50 Crore |
| Target business scale | Micro & small (shop, bakery, small factory) | Small & medium (pharma plant, hotel, hospital) |
| Compulsory Excess | ₹5,000 flat per claim | 5% of claim / min ₹10,000 — scales with claim |
| Kutcha construction | Not explicitly excluded | EXPLICITLY EXCLUDED — Pucca only |
| Start-Up Expenses | ₹1,00,000 per year | ₹5,00,000 per year (5×) |
| Professional Fees | Included within building SI | 5% of claim amount (separately quantified) |
| Computer Programmes / Data | Not separately stated | ₹5,00,000 per year (NEW) |
| Employee / Director / Visitor effects | Not stated | ₹15,000/person × max 20 (NEW) |
| Debris Removal | 2% of claim amount | 2% of claim amount (same) |
| Underinsurance Waiver | 85% threshold | 85% threshold (same) |
| SI Restoration after claim | Not separately specified | Auto-restored; proportionate premium payable |
| Stock valuation basis | Landed cost / Input cost / Mfg cost | Same (Landed cost / Input cost / Mfg cost) |
| Terrorism in-built | ✔ GIC Terrorism Pool | ✔ GIC Terrorism Pool |
| Temp. stock removal | 10% of stock SI (in-built) | 10% of stock SI (in-built) |
| BI / Loss of Profit | Optional add-on (3–12 mo indemnity) | Optional add-on (12–36 mo indemnity) |
| Reinstatement basis | New for Old — no depreciation | New for Old — no depreciation |
If you are near the ₹5Cr or ₹50Cr threshold, call Probitas on 022 4302 0000 to determine the right product. BLUS continues until expiry if assets cross either boundary mid-year — the switch happens at renewal.
Who Can Buy BLUS
Factory, pharma plant, food processor with significant P&M and stock values
Building + P&M + StocksMid-scale hotel, resort, large restaurant group
Building + FF&E + StocksDon't own the building? Insure your fit-outs, equipment, and stock
Fit-outs + P&M + StocksLarge warehouse, cold chain, logistics hub with significant stock values
Building + Stocks on Floater• Residential properties → use BGR
• Assets ≤ ₹5Cr at any location → use BSUS
• Assets > ₹50Cr → Bharat Vyavsayik Suraksha Policy
• Kutcha construction buildings → not eligible
• Under-construction properties
• Motor vehicles, aircraft, watercraft
How to File a Claim
Plan for the 5% excess when a claim occurs. For a ₹5Cr factory fire claim — the excess is ₹25 lakh. Ensure your business has adequate cash reserves or credit facilities to cover this first loss while the claim is being assessed and settled. Discuss interim payment arrangements with Probitas on 022 4302 0000 for large claims.
At BLUS scale (₹5–₹50Cr assets), a fire or flood can generate claims of ₹1–₹20+ crore. For claims of this magnitude, consider appointing an independent Loss Assessor / Public Adjuster to represent your interests alongside the insurer's appointed surveyor.
A loss assessor can help:
→ Prepare and present a comprehensive claim
→ Correctly value complex P&M replacement costs (New for Old)
→ Accurately calculate stock losses against all four valuation bases
→ Ensure start-up expenses and professional fees are fully claimed
→ Advise on SI restoration decision
BLUS's in-built Professional Fees cover (5% of claim) helps offset the loss assessor's cost. Call Probitas on 022 4302 0000 for guidance.
After BLUS pays your claim, the SI auto-restores to its original level. You must pay proportionate premium for the remaining policy period. You may choose NOT to restore (reducing SI permanently) — but this decision must be made immediately on occurrence of the loss. Probitas 022 4302 0000 will guide you through this critical post-claim decision.
For large BLUS claims (factory fire, major flood damage), the full assessment and settlement process can take weeks to months. During this period, request interim (advance) payments from the insurer on account of the admitted liability — to maintain cash flow for temporary repairs, interim stock purchases, and business continuity. Probitas will coordinate with the insurer to arrange interim payments for large claims.
Call 022 4302 0000 immediately — don't delay. Lodge Police FIR for fire, RSMD, terrorism, theft. Revenue Dept. certificate for flood/earthquake. Large loss: notify within 24 hours.
Photograph all damage to building, P&M, stocks comprehensively. Implement temporary protection measures. Segregate damaged from undamaged stock. DO NOT carry out permanent repairs before surveyor inspection.
For stock claims: last stock register vs damage count. Compile purchase invoices (raw material), production records (WIP and FG), sales invoices (contract price goods). Digital records are critical.
Licensed IRDAI surveyor appointed for all BLUS claims. New for Old basis assessment — replacement cost of new equivalent P&M. Consider appointing a Loss Assessor to represent your interests. Cooperate fully.
Claim Form, Policy, Photographs, Surveyor report, Repair/replacement quotes, Stock register & invoices, Police FIR, Calamity certificate, Financial statements (BI claims), Bank details (NEFT). Computer data: IT vendor restoration quote.
BLUS settles at reinstatement value (New for Old). 5% excess (min ₹10K) deducted per claim. IRDAI TAT: 30 days from complete documents. Large claims: staged payments possible. Decide on SI restoration.
Illustrative Claim Scenarios
| Parameter | Pharma Factory Fire — Pune | Hotel Flood — Kerala | IT Office Fire + Data Loss — Bengaluru |
|---|---|---|---|
| Business | MediCure Pharma Pvt. Ltd., API Plant, Chakan, Pune | Malabar Grand Hotel (70-room mid-scale), Kozhikode, Kerala | TechServ Solutions Pvt. Ltd., IT Company, Electronic City, Bengaluru |
| Total SI | ₹42,00,00,000 (> ₹5Cr ≤ ₹50Cr ✔) | ₹26,50,00,000 (UW waiver applies — 98.1% of actual ≥ 85%) | ₹11,50,00,000 (> ₹5Cr ✔) |
| Event | Electrical fire in Production Hall B — 3 API machines destroyed, raw material and finished goods in hall lost, building partially damaged | Extreme monsoon flood — ground floor inundated; kitchen, restaurant, lobby, 20 rooms severely damaged; FF&E destroyed | Server room fire + sprinkler activation — 15 servers destroyed, software/data lost, office fit-outs damaged, employee belongings lost |
| P&M / Building Claim | P&M: ₹8,00,00,000 (new API machines — New for Old) Building: ₹1,80,00,000 | Building: ₹3,50,00,000 FF&E: ₹2,80,00,000 (new hotel furniture/kitchen) | Servers: ₹8,00,00,000 (15 new servers — New for Old) Fit-outs: ₹80,00,000 |
| Stock Claim | ₹3,50,00,000 (raw + FG at landed/mfg cost) | ₹45,00,000 (food stocks, linen) | NIL (no stock) |
| Enhanced In-Builts | Start-up expenses: ₹5,00,000 Debris: ₹26,60,000 (2% of claim) | Start-up expenses: ₹5,00,000 (hotel relaunch) Employee effects: ₹1,20,000 (8 staff × ₹15,000) | Computer data: ₹5,00,000 Employee effects: ₹1,50,000 (10 staff × ₹15,000) |
| Gross Claim | ₹13,30,00,000 | ₹6,81,20,000 | ₹8,86,50,000 |
| BLUS Excess (5%) | ₹66,50,000 | ₹34,06,000 | ₹44,32,500 |
| Prof. Fees (5% of claim) | +₹66,50,000 | +₹34,06,000 | +₹44,32,500 |
| Net Settlement | ₹13,61,60,000 | ₹7,27,50,000 | ₹9,04,23,000 |
* Illustrative only. Gross claim = physical damage + in-built covers. Net settlement = gross − excess + professional fees (as in-built benefit). Stock claims require invoice/register reconciliation. All settlements subject to policy terms, surveyor assessment, and documentation. ₹5,000 minimum excess applies if 5% < ₹10,000 — all scenarios above are large enough for 5% to apply directly.
Common Questions
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