Business insurance protects you from serious financial losses, in case a major calamity strikes your business.
For instance, businesses are liable to pay for their employees’ work-related injuries/sickness, including Covid-19 infections. Would you wish to pay $45,000 out of your own pocket? What happens if you accidentally damage someone else’s property, and they sue you? Or what happens if you make a mistake in your work, and your clients send a legal letter demanding compensation? Such lawsuits could easily cost hundreds of thousands of dollars. Business insurance serves as an important risk mitigation tool. It protects your business, and your bank account. It can prevent you from suffering serious consequences like bankruptcy – say, in the event of an expensive lawsuit.
It depends on the type of business you run. It also depends on the specific types of business insurance involved.
Some industries legislate business insurance as a legal requirement. For instance, doctors must carry Medical Malpractice Insurance. Lawyers, and Real Estate Agencies, must carry Professional Indemnity Insurance. If you operate in such sectors, you must carry these mandated types of covers.
Other specific types of insurance are made mandatory by law.
For instance, the Work Injury Compensation Act (WICA) mandates that all employees who are manual workers, or who earn $2,600 or less each month, must have Work Injury Compensation Insurance.
Performance Bonds are also commonly used as a condition in project tenders or contract awards. For government construction projects, it is a legal requirement to carry a Performance Bond to cover 10% of the project’s contract value.
However, it’s best to go beyond simply looking at the legal minimums. For instance, the law doesn’t require businesses to carry Commercial Property Insurance. However, if you run a restaurant, it’s probably a good idea to carry Commercial Property Insurance, since the risk of a kitchen fire is sufficiently high and it could destroy your entire business. Think about business insurance from a comprehensive risk management perspective, rather than from a “I’ll only get what’s legally required” perspective.
When choosing what type of coverage is required, we look broadly at the kind of goods or service(s) that is being offered by the company. A manufacturer with factory operations may typically require a property insurance for their factory in case of fire or damage to their premises. A Product liability insurance is useful to indemnify against 3rd party loss/ damages, and factory workers will need Work Injury Compensation Insurance in case of workplace injury accidents.
For service related industries, professional indemnity insurance is required for work related errors & mistakes when dispensing professional advice, for occupations such as architects, lawyers, doctors, brokers, agents, surveyors, etc.
Companies that run retail shops will probably need Public liability insurance, in case shoppers are involved in a slip & fall situation inside their shop. Owners can also purchase fidelity & money insurance to protect against theft from employees or their customers.
Speak with us for a more detailed assessment of coverage requirements.
The premium for an SME business insurance package deal starts from $19/month onwards.
There are many different business packages in the market, and companies are spoilt with a variety of choices to suit their insurance needs. A typical business package policy aims to address key coverage based on the nature of the client’s business actitivies and is catagoried into industry segments (eg office/ retail/ light industries/ F&B, etc). Within these packages will incorporate key insurance coverage suitable for that industry, which includes basic coverage such as Work Injury Compensation, Property all Risk, business interruption, money, fidelity guarantee.
Companies have also the option of adding coverage outside of the basic features which could add on the cost of the business insurance policy.
Business insurance packages typically have a set of key coverage items at an affordable premium.
Some of the key covers are:
Work Injury Compensation – Covers the expenses that comes with an employee’s work related illness or Injury
Public Liability – Covers the cost of legal action and compensation claims made against your business if a 3rd party is injured or their property suffers damages whilst at your business premises or when you are working in their home, office or business property
Commercial Property – Covers physical damage to your business property, e.g. from a fire.
Business Interruption – Covers lost gross profit if your business is shut down due to covered reasons, such as a fire.
The amount of coverage requirement could be easily determined by calculating what is the maximum possible claims scenario that your business could incur, and then buying the appropriate type of insurance cover to protect against possible loss due to that incident. This method of estimating the amount of insurance coverage needed ensures that in any unforeseen circumstances, your risk is fully protected and your business can continue to operate with minimum financial loss & business interruption.
Many small businesses don’t sufficiently protect their assets (e.g. employees, property) and suffers the consequence of loss when one or more of their assets is damaged, injured, or even suffers total loss in an event of an accident.
No. For business insurance, insurers will require your UEN number and nature of business before they can issue the policy. If you haven’t registered your business, no worries – an ACRA registration is quick and affordable.
If you file a claim, the insurer’s claims team will verify that your corporate entity is registered with ACRA before making any claims payments.
You can get a business insurance at the onset but claims will not be payable if regulatory business requirements are not met. Insurance claims payout are usually conditional to adherence of local/ mandatory regulations before the policy can respond to a claims payment. A business that has not been approved by law is deemed to be illegal in its trade, and policy clauses will typically stipulate that the insured activities be legal such that the insured can exercise it’s rights to chase for its receivables, pursue claim or even be a plaintiff when fighting for disputed debts in the course of its business.