Explained: Here is how the standard fire insurance policies will work

Among small enterprises, penetration is just around 10 percent for fire policies. It is also expected that the standard products would be 15-20 percent cheaper than the regular policies in the same category.

Moneycontrol gives you the lowdown on how these standard policies will work:

Bharat Griha Raksha

This policy offers cover against a wide range of perils, including fire, natural catastrophes, forest and bush fires, riots, strikes and terrorism among others.

Further, the regulator said that this policy will also cover against bursting and overflowing of water tanks, apparatus and pipes, leakage from automatic sprinkler installations and theft.

This policy automatically also covers home contents — this will be up to 20 percent of the sum insured, with a maximum limit of Rs 10 lakh.

Home insurance policies for a house worth Rs 50 lakh could cost between Rs 7,000-9,000 premium per annum. The standard home policy could be at least 10-15 percent cheaper.

Bharat Sookshma Udyam Suraksha

This policy provides cover for buildings/structures, plant and machinery, stock and other assets of enterprises where the total value at risk across all insurable asset classes at one location is up to Rs 5 crore.

The policy has several in-built covers in addition to the basic coverage. These include cover for alterations, additions or extensions, cover for stocks on a floater basis, temporary removal of stocks, start-up expenses (following a loss).

Further, it also provides insurance cover for payment of professional fees to architects, surveyors and consulting engineers.

This cover can be taken by micro-level enterprises such as offices, hotels, industries and storage firms.

Bharat Laghu Udyam Suraksha

This policy provides cover for buildings/structures, plant and machinery, stock and other assets of enterprises where the total value at risk in one location is above Rs 5 crore but below Rs 50 crore.

The policy can be taken for all types of risks by offices, hotels, industries and storage firms.

IRDAI has said that Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha policies will be useful for financial protection of small, medium and micro enterprises.