Mis-selling Menace

Wouldn’t you like your home, its belongings, workspace, factories, manufacturing units, retail outlets, marriage halls, convention halls, restaurants and pubs etc. to be covered for any unforeseen calamities like fire, natural disaster or even an act of terrorism?

Yes, surely! That would be your answer.

For this, Government has mandated Insurance companies to cover your dwellings and establishments under Bharat Grih Raksha Policy, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha. These are all-encompassing policies that can provide coverage for your precious belongings which you have created with your lifetime savings. You should consider it to be mandatory, not optional.

The Bharat Griha Raksha policy covers your Home Building, its belongings, i.e., articles etc. in your home. Under this policy, the Insurer agrees to pay for the loss you suffer when unexpected events cause physical loss, damage or destruction of the building of your home, and articles in it. When your home building is covered, the contents get automatically covered for 20% of the sum insured of the Home Building subject to a maximum of ₹ 10 Lakhs.

Likewise for your micro business, manufacturing, retail or services facility, there is Bharat Sookshma Udyam Suraksha Policy. It covers the property relating to your business against any unexpected causes like: physical loss, damage or destruction of building and structures, plant and machinery, stock and other assets related to your business. It has certain in-built features like additions, alterations or extensions, stocks on a floater basis, documents, professional fees and removal of debris and municipal regulations etc. The cover here is not > 5 Crores.

Bharat Laghu Udyam Suraksha is for you if you own a small enterprise, manufacturing unit or a service facility, as the coverage here is in the range of Rs.5 to 50 crores for the loss you suffer due to any unexpected event. Most of the features remain same like that of Bharat Sookshma Udyam Suraksha Policy.

These policies are for your benefit; hence you should not aspire for L1 (lowest premium) which encourages mis-selling and when the claim happens, you feel short-changed because of tampering with the underwriting. So why does mis-selling happen in the first place? In case you report tampered details about your properties or belongings for discounted premiums, mis-selling happens.

In case you have an events hall which in absolute terms is a Convention Hall, and you report it as a marriage hall to the insurer, your premium will be for the marriage hall, but your loss will be of the convention hall. Or if you have a Sawmill and you declare it to be a handicraft centre and calamity happens? Can you bear this compounded loss? You are availing discounting at what cost?

To avoid such a situation, you can engage with a surveyor appointed by IRDA who will assess your belongings on various parameters and give the right occupancy report, according to which your sum assured and the premium will be fixed. This will provide you with so much peace of mind as the insurer cannot decline your claim then. Based on your survey report, you can challenge it with IRDA and make sure that there is no claim denial.

Remember, there is no discounting for sum assured above Rs.50 crores.

Like so many others, these policies too are subject to mis-selling which is a well-documented fact owing to the lucrative commissions. There is a need to understand the policies well, if you feel that your agent is not doing that, contact a senior official of the insurance company, take his help.

Please avoid misreporting lured by discounting in premiums and encourage mis-selling.

Deepak Choudhhary, CEO, Insurance4life.in, writes regularly on personal finance related subjects.