Insurance Guides

4 Best Tips On Architects Professional Indemnity Insurance

You run an architectural practice. You design beautiful buildings that are just as much works of art as they are places for people to live, eat, play, or work. Although your responsibilities lie primarily in designing elegant buildings for clients, there are also serious legal responsibilities that come along with being an architect.

Architects must shoulder onerous legal duties for delivering designs that are free from defects or faults. If architects produce designs with defects, and these structures are then built, clients and other parties may suffer economic losses. Defective designs may even result in unsafe structures, causing either injury to people or damage to surrounding property.

This is where architects professional indemnity insurance comes into play. An architects liability insurance policy essentially protects architects against negligence, errors & omissions, and other mistakes that result in them being sued.

#1. What does architects professional indemnity insurance cover?

Architects professional indemnity insurance covers:

1. Negligence: You accidentally planned dimensions of certain parts of the building wrong, causing delays
2. Errors and omissions: You forgot to include certain design or structural requirements into your blueprints. These errors were only discovered after construction. Fixing the problem will involve tearing down certain structural features and rebuilding them at a cost of $50,000. You can be held liable for
3. Defamation: This is not specific to architects, but is a general feature of professional indemnity insurance. If you are sued for libel or slander, this policy will protect you.
4. Sub-contractor errors: If you contract any work out (e.g. designs, blueprints), any errors that are made by your sub-contractors are also covered. This is incredibly useful because you are covered for other people’s mistakes.

What does architects professional indemnity insurance pay for?

Architects professional indemnity insurance pays for:

1. Lawyer’s fees
2. Damages or settlements awarded by the courts

#2. Why is professional indemnity insurance so important for architects?

There are two simple reasons:

1. If there are defects in the building, it doesn’t matter who’s actually at fault. Most of the time, everyone involved in constructing the building gets sued together.
2. You won’t survive the cost of a lawsuit without architects insurance

Architects can get sued either directly by the client, or much more commonly as part of a broader lawsuit targeting all related parties in a construction project: the developer, the construction company, the engineers, the surveyors, and the architects. These “dragnet” lawsuits are very common when there are defects in the final works.

As for the cost of surviving the lawsuit, most architects have a high risk of going bankrupt in the event of a lawsuit.

There is no “typical” length or cost to a lawsuit – these two variables will move widely depending on factors like the severity of the architect’s negligence, the damages involved, etc.

What can be established, however, is a reasonable baseline estimate for what you might have to pay if you were sued as an architect. Even if the case is not complex, lawsuits can easily drag on for years as both sides battle back-and-forth. We can assume a conservative annual cost for lawyer’s fees to be $50,000. A lawsuit that takes 3 years to settle would cost you $300,000. And these are just lawyer’s fees alone – they haven’t even taken into account the damages you have to pay if you lose the suit.

This is why even a $1 million policy is not as generous as most people think. A million dollars may sound like a lot, but when you actually get thrown into a lawsuit, most insureds quickly find that cool million dollars isn’t really enough to cover their rapidly mounting costs.

The essential point is this: could you imagine bearing these costs out of your own pocket? How much savings do you have? Would you be willing to sell your car, mortgage your home, borrow from friends and family, to fund your own legal defense?

The most dangerous thing about architects’ liability is that you don’t even have to be guilty of whatever the person is suing you for. You could well be innocent, but you still have to hire a lawyer to prove that innocence. Freedom, unfortunately, is not going to come free. And while your lawyer is arguing your case in front of the court, you’ll still have to pay your legal team their fees so you don’t end up losing the case.

Most architects think that as long as the don’t make mistakes, they won’t get sued. What most architects forget is that if there are defects in the building, clients will often sue all the parties involved in the construction of the building: from the architects, to the surveyors, to the construction company. It is incredibly common for architects to get dragged into these lawsuits by nature of association. Your blueprints and designs may be perfect, but if there are even apparent faults in the building, your clients are not going to care if you’re not responsible. You are going to end up having to defend yourself in court, and this defence could very well bankrupt you if you don’t have liability insurance.

#3. What are some lawsuits that architects in Singapore have faced?

Source link here.

The above case which made headlines in The Straits Times is a great example of how architects will often get dragged into lawsuits. In 2016, residents of The Seaview condominium, located in the East region of Singapore, sued four parties for a host of supposedly defective works in their building.

Architects will face such lawsuits very commonly. So you see, it doesn’t actually matter whether you’ve done your job as an architect flawlessly. All it takes is for the developer or the construction company to make a few mistakes (and such mistakes are highly likely to occur), and all the parties who were involved in the construction of the building get slammed with a lawsuit together.

Even if you’re innocent, it’s going to cost a lot of money to prove that innocence in court!

#4. Use an online insurance broker to save money

Using an online insurance broker, like Provide, will help you to save up to 25% on architects liability insurance. Traditional agents/brokers have higher overheads, which are ultimately passed onto you in the form of higher premiums. Given the current economic climate, it’s highly recommended for businesses to try to cut down on expenses wherever possible.

Provide’s online insurance services are the perfect way for architects to reduce the amount they have to spend on professional indemnity insurance.

Where can I get architects professional indemnity insurance?

Provide is the best place to get architects professional indemnity insurance. With Provide, you’ll save up to 25% on architects liability cover. Because we’re a digital platform, we have lower overheads, so we pass every dollar saved back to you.

Provide’s expert team has over 20+ years of experience protecting companies of all sizes – from large multinational companies to small businesses.

You might have heard of both Errors & Omissions (E&O) insurance and Directors & Officers (D&O) insurance. This article explains the major differences between both types of coverage, and why it’s important for businesses and business owners to have both types of coverage if they want to protect themselves from legal liabilities. (Side note: In Singapore, E&O insurance is called Professional Indemnity insurance. E&O is the term more commonly used in the US.)

It’s usually easier to understand how each type of insurance works, and the major differences between them, with an example. Here’s an illustrated situation of how professional indemnity and D&O insurance would each act differently to protect you if you find yourself in trouble.

E&O vs D&O – Sample Case Study: You run a construction company. One of your clients complains about shoddy work that was performed for his construction project, claiming your work caused structural issues with the building. Your client sues you for negligence.

The BCA (Building and Construction Authority) steps in to investigate, and finds that there are indeed structural issues. The BCA also initiates legal action against both you and your company. The BCA is seeking civil penalties against your company.

Your shareholders sue you for mismanaging the company, and causing financial losses to shareholders. As a company director, your shareholders are holding you responsible for not ensuring proper building requirements, which led to equity holders suffering financial damages.

Here’s how your E&O and D&O insurance would be activated to protect you:

1. E&O insurance would pay for legal fees to defend your client’s negligence lawsuit, and the BCA lawsuit against your company
2. D&O insurance would pay for legal fees to defend your shareholder lawsuit targeting company directors

Now that we’ve covered a broad overview of E&O vs D&O policies and the way each works, let’s get into the details of each type of insurance to further explain their differences.

E&O a.k.a. Professional Indemnity Insurance: The essence of E&O/Professional Indemnity Insurance is to pay for legal costs when the company itself is sued. E&O insurance protects the company against claims of negligence, errors & omissions, malpractice, defamation, and improper advice/practices which end up harming clients. This policy extends coverage to mistakes made by all the company’s employees. Beyond salaried and hourly employees, even subcontractors working for your company are also covered. You can thus see that E&O insurance is tailored to protect the corporate entity from a wide variety of legal liabilities!

Some additional examples of where E&O insurance would protect you:

• Your business produces promotional materials for a client, and misspelled the client’s name on all the brochures/fliers/advertisements.
• You provide advice that was incorrect. Even a seemingly simple mistake could lead to a legal claim for negligent or wrongful advice.

This type of insurance is important for companies of all sizes, as long as they provide professional advice to clients. Even if you think the quality of your service is impeccable, and you have strong corporate governance to limit poor advice from being provided, not all of your customers will feel the same way as you. Clients can accuse businesses of providing them sub-standard work, or providing them advice that caused them financial harm. Such accusations could occur anytime, and could come from anyone.

The legal costs to settle these legal disputes are often tremendous, with costs easily totaling in the hundreds of thousands of dollars. This can severely disrupt business operations, particularly so for small businesses. If you run a sole proprietorship, the costs and disruptions are magnified even further. With E&O coverage, the company is safeguarded from such legal risks. You’ll see that this differs very much from D&O insurance, which as its name projects is designed solely to protect senior executives.

Directors and Officers (D&O) Insurance: Unlike E&O Insurance which covers the company, the essence of D&O Insurance is to protect the Directors & Officers of the company against legal liability.

This type of insurance pays for the defense costs for directors and senior executives who are sued personally because of a mistake they made while managing the company. Directors get sued for a wide variety of reasons: negligence, errors & omissions, defamation, mismanaging the company, misusing company funds, and much more.

These claims can be made by a very wide variety of sources: regulators, employees, competitors, shareholders, creditors, etc. D&O insurance is important for all companies, whether they’re small or big, because lawsuits filed against directors will go after the directors’ personal assets! So if you don’t have D&O insurance, your bank account, house, and other personal possessions are at risk. Because directors are exposed to lawsuits from so many directions,

Unlike E&O policies, D&O insurance will cover directors after they retire for several years (usually 5-7 years). This is called run-off coverage. Because your liability as a director doesn’t end after you resign (yes, you can get sued for what you did as a director even if you’re no longer one!), you’ll need D&O insurance to protect you. This is one of the most important parts of liability protection for directors, which is why D&O insurance is a necessary complement to E&O insurance.

D&O insurance will also cover criminal trials if the police charge you with crimes related to your management of your business. Usually, policies will compensate your defense costs only after the court finds you not guilty. This prevents insureds from committing crimes just because they have insurance. Such “alleged criminal acts” coverage is not available under E&O/professional indemnity insurance.

D&O insurance also protects directors from employee lawsuits, while professional indemnity insurance doesn’t. So if directors get sued by their employees for things like wrongful dismissal, harassment, or other reasons, they’ll be protected. The same goes for shareholders; if directors get sued by shareholders for mismanaging the company, causing them financial losses, etc. D&O insurance will be activated to pay for defense costs and damages. E&O/professional indemnity insurance won’t cover such events.

Does a business need both E&O and D&O Insurance? What happens if I only have one type of coverage?

You need both types of policies, because having only one type of coverage leaves you 50% exposed. You need both E&O and D&O insurance to provide you company-level protection and director-level protection. All businesses will need a D&O insurance policy to protect directors from lawsuits that target their personal assets. If you’re running a service business, then you’ll also need E&O coverage to protect you from lawsuits that are aimed at the company.

Many business owners with E&O insurance operate under the mistaken impression that a single policy is all they need. That’s dangerous. Many business-related lawsuits, whether one filed by unhappy customers or disgruntled business partners, will be aimed at both the corporate entity and the directors who oversee the company. If you only have either type of insurance, you’ll only be half-covered if you get sued!

Where can I get great E&O and D&O coverage?

You can get it right here at Provide. We offer broad-coverage, high-indemnity E&O/professional indemnity insurance and D&O insurance. Our prices are up to 25% lower, thanks to our digital platform that creates lower overheads.

Should I Switch Insurance Companies?

You’re thinking of switching insurance companies for your business. Maybe you’re shopping for a better price. Maybe your current coverage isn’t good enough. Or maybe your insurer botched a claim that you felt should have been paid.

Whatever the case, know that our online platform makes it easy for business owners to compare and switch insurance companies. If you’re wondering whether you should take the final plunge to change your insurer, we’ve come up with a simple 3-step checklist to help you decide. Read on to find out if another insurer deserves your business more:

Step 1: Review Your Current Policy and Insurer

Review your current policy to determine what coverage you have. Then create a list of all the protections you would like to have in your new policy. This makes it easy for you to compare your existing policy with the new one. If the new insurer offers you a better price but weaker coverage, you’ll be able to make a more informed decision about which policy you’d prefer.

During your review process, ask yourself these 3 quick questions:

Question 1: Is your current insurer meeting your protection needs?
Answer: If the policy you have with your current insurer isn’t providing you sufficient coverage, then you should consider upgrading your coverage to higher limits or more comprehensive terms. If your current insurer cannot provide this higher coverage, or cannot do so at a sufficiently affordable price, then it’s time to consider switching insurance companies.

Question 2: Are your current insurance premiums too high?
Answer: Do you feel you’re paying too much for your business insurance policies? If your current policies are priced too high, you should consider comparing policies from other insurers to see if you could save money. Provide’s online platform helps you save up to 25% on all types of business insurance policies.

Question 3: If you’ve filed claims before with your current insurer , how was your experience?
Answer: Was the claims investigation process smooth or troublesome? Did they pay out your claims on time or did they drag it out? How supportive was the customer service team in your time of need? If your answers to these questions are negative, then perhaps it’s time to give your business to someone else who might appreciate it more.

Step 2: Source Quotes

Once you know all the protections you want to have in your policy, start sourcing for quotes from different insurers.

The vast majority of insurers will not directly provide business owners with quotes due to the complexity of insurance products. You will need an insurance broker to help you with the sourcing process.

Provide is a digital broker that makes commercial insurance cheaper, faster, and exponentially more convenient for business owners. We provide instant quotes for a variety of products, and our prices are up to 25% lower than traditional offline brokers.

Click here to get a quote from our comprehensive product range, or click here to schedule a call with one our expert advisors.

Compare Quotes

Once you have a few quotes in hand, it’s time to see which suits you best.

If you feel you want better coverage, or your protection needs have changed, it’s helpful to rank which protections are most important to you.

Having an expert broker walk you through the pros and cons of each policy is immensely helpful.

Consider total costs: Consider the total costs of switching, beyond merely the quoted price. You should take into account the cost of longevity discounts and multi-policy discounts (if applicable) that you would lose if you switched insurers. If the new insurer offers a better rate even after these discounts, then go ahead and make the change.

Step 3: Cancel Your Old Policy

If you’ve decided to switch insurers, there are a few things you need to take note of.

Ensure coverage is in force: Before you cancel your old policy, check the date on which your new policy will activate. It’s a good idea to align the start date of your new policy with the cancellation date of your existing one.

This helps you avoid a situation where you have a gap in coverage. If a claim situation arises (e.g. an accident happens) and you did not have coverage during that period, you would not be able to file a claim with your insurer.

Give sufficient notice in writing: Insurers will have a clause outlining the number of days of written notice you must provide to cancel a policy. This often ranges from 7-14 days.

Cancelling a policy in writing also provides proof of your cancellation request, and when you made it. This removes all ambiguity from any dispute that may arise later (e.g. the processing department at the insurer forgot to cancel your policy and charges you for next year’s policy).

Check your policy terms: You will need to check whether your policy is pro-rated or short-rated.

A pro-rated policy means that if you cancel a 12-month policy after 9 months, you will be refunded for the remaining 3 months of coverage.

A short-rated policy means that if you cancel the policy before it expires, the insurer may deduct a cancellation fee from whatever refund you were entitled to. Sometimes, these fees can be large to disincentivise customers from switching their policies early. Check your policy wording document to make sure it’s worth switching.

A good broker should be able to answer all these above queries for you, and to handle all the administrative tasks of switching insurers.

Ready to Switch? Choose Provide.

Provide’s online platform makes it easy for business owners to compare the most popular types of business insurance. If you can’t find something you like, our expert advisors will be happy to tailor protection to your exact needs.

Click here to compare business package insurance, or click here to speak with our expert advisors who can handcraft a comparison of any policy type for you.

D&O Insurance Basics: The Ultimate Guide for Business Owners

What is D&O Insurance?

Directors & Officers (D&O) Insurance protects company directors & officers from lawsuits filed against them.

The moment you serve as a company director or officer (e.g. when you incorporate your own business), you are immediately exposed to a wide variety of legal liabilities: professional negligence, breach of fiduciary duty, misleading shareholders, wrongful employee dismissal – and a thousand more legal allegations that could cripple your finances.

These lawsuits could be filed against you by a dizzying multitude of parties – suppliers, customers, competitors, employees, creditors, regulators, or shareholders. Essentially, almost any party your business comes into contact with is a potential claimant.

When you are sued as a company director, your personal assets like savings in your bank, your house, and your car will be completely open to legal claims. If you don’t have D&O insurance, you will have to use your personal assets to pay for expensive legal fees and damages awarded, which often stretch into hundreds of thousands of dollars.

How does D&O Insurance work?

To understand how D&O insurance functions, we must first understand what a typical D&O policy looks like. D&O insurance is structured around 3 “sides”: A, B, and C. These “sides” are basically individual components of the D&O policy, with each section protecting you from different risks.

D&O Side A: Director Coverage

This side of D&O insurance protects directors when the company is unable to indemnify them against lawsuits. Side A is most commonly activated when companies go bankrupt, or when companies are prohibited by law from indemnifying directors against certain allegations.

Example claims: Your company goes bankrupt, and thus cannot pay for directors’ legal fees and damages. Side A of the policy will be activated to protect the directors.

A director is fined by government regulators for breaching certain legal statutes. Under Singapore law, companies cannot indemnify directors for regulatory penalties. Side A of the policy will pay for the director’s legal defense and damages.

D&O Side B: Company Reimbursement

This side of D&O insurance reimburses the company for legal fees and damages paid to defend directors. Side B is most commonly activated in D&O lawsuits, since companies will defend their directors, and then claim reimbursement from their insurer.

Example claims: You run a construction firm. Your customers sue you as a company director, alleging professional negligence that led to defective property construction. Your company spends $500,000 on lawyers and settlement fees. You can claim back these costs under Side B of your D&O policy.

D&O Side C: Entity Coverage

This side of D&O insurance protects the company whenever the firm and its directors are sued together. Private businesses enjoy broader Side C coverage than public companies – the latter are only entitled to activate Side C coverage for securities-related claims.

Example claims: Shareholders sue the directors of a public company for allegedly misleading numbers and facts published in the company’s financial statements.

What does D&O insurance cover?

Misrepresentation or misleading statements

Directors have a responsibility to be truthful when making agreements or providing information. If directors commit acts like presenting inaccurate financial statements, or publishing false advertisements, they can be held liable. Covers lawsuits alleging such misrepresentations.

Errors, Omissions, Professional Negligence

When performing a service, negligent acts can sometimes occur, resulting in financial loss or physical injury to third-parties. Covers lawsuits resulting from such negligence.

Breach of Warranty of Authority

Company officers may make decisions that exceed the scope of authority granted to them by the Board of Directors, resulting in financial loss or other damages. Covers liability from such acts.

Breach of Fiduciary Duty

If Directors and officers do not act in the best interests of the company, they can be held liable by shareholders. Covers liability from such acts.

Employer Liability

Directors can be held responsible for workplace practices like wrongful dismissal, employment discrimination, and sexual harassment. Covers employer liability from such allegations.

Defamation/Slander

Covers lawsuits alleging defamation (written) or slander (spoken).

What does D&O insurance not cover?

Dishonest, Criminal or Fraudulent Conduct

Directors have a legal responsibility to act in good faith and to comply with regulations at all times. D&O policies thus will not cover lawsuits stemming from such behavior.

Insured vs. Insured Lawsuits

D&O insurance will not cover you if you are sued by another insured individual covered under the same policy (e.g. two directors in the same firm suing each other).

Breach of Contract

D&O policies often will not cover breach of contract claims. This is because a contract is not a liability imposed by law, but an obligation that is voluntarily entered into. There would be conflicts of interest if contract breaches were insurable, since insured individuals could break contracts at will without bearing any financial repercussions.

Prior and Pending Claims

D&O policies will not cover claims that have arisen before, or are currently being litigated, at the time you purchase the policy.

Key clauses in D&O insurance

Of the many clauses found in D&O policies, there are 5 crucial clauses that will have a significant impact on the effectiveness and breadth of coverage.

Advanced Defense Costs

Does your D&O policy pay your lawyer fees in advance, instead of having you pay first then seek insurer reimbursement later? Wherever possible, you should choose a policy that will give you advanced defense payments. Provide’s D&O policies feature this clause (URL) – this lifts a significant financial burden off the shoulders of small business owners.

Run-Off Coverage/D&O Tail Insurance

Directors & Officers can be held liable for management decisions that they made while they held office, even after they’ve resigned! Post-resignation liability is one of the biggest and most worrying liabilities that directors face, because such liability will follow directors for many years even after they no longer hold office. You should therefore select a D&O policy that contains run-off protection – Provide’s D&O policies offer this protection. This means that even when Directors & Officers leave the company, the D&O policy will still protect them from claims. Run-off protection usually lasts for 5-7 years, depending on the policy. For even greater protection, a stand-alone Side A policy (also called D&O tail insurance) can be purchased. D&O tail policies will provide an extended duration of run-off protection (often 10+ years).

Duty to Indemnify vs. Duty to Defend

Duty to Indemnify: The insurer is obligated only to reimburse the company for any expenses incurred while defending a claimable D&O lawsuit.

Private company D&O insurance is often written on a Duty to Indemnify basis. This means the insurer will only pay for lawsuits that are claimable events under the policy. If you’re sued for a reason that is not covered under the policy, you won’t be covered.

A Duty to Indemnify policy gives you control over the defense process: you are allowed to select your own lawyers to defend lawsuits (subject to insurer approval), you are responsible for making payment for legal expenses, etc. This level of control may be useful if you are defending an especially complex lawsuit.

Duty to Defend: The insurer is obligated to defend the company for any D&O lawsuit, even if coverage is in doubt and may not ultimately apply.

Sometimes, D&O policies are written on a Duty to Defend basis. The implications are exactly as it sounds – the insurer must defend the policyholder against all D&O lawsuits.

With Duty to Defend policies, the insurer will select lawyers for you, and manage the whole defense process. Although this means you do not control the defense proceedings, it doesn’t lower the quality of your defense in any way. Insurers have access to top legal firms who will have handled similar lawsuits many times before. It’s also always in the insurer’s best interests to win the case for you quickly, since it reduces the amount they have to pay out under your D&O policy. Having the insurer manage the defense process is especially useful for more routine D&O lawsuits, since the insurer will handle payments, legal arrangements, and other administrative tasks so that you can focus on your business.

A particular advantage of Duty to Defend policies is that if any part of your claim is covered, the insurer must defend the entire claim, even those parts of the claim that are not ordinarily covered. This “umbrella defense” provision provides Directors much broader coverage. It also avoids a problem commonly seen with Duty to Indemnify policies, where insurance payouts must be negotiated and split between covered and uncovered portions of the claim. This negotiation process, as you might expect, is often rife with frustrating disputes between policyholders and insurers. Having a Duty to Defend policy allows insured individuals to avoid frustrating arguments with insurers on coverage, and to instead focus on resolving the lawsuit.

Shrinking Limits

D&O policies are written with a “shrinking limits” provision. This means that the amount of coverage available for damages is reduced by the amount paid out for legal expenses. Make sure you select a policy that will provide sufficient payouts for both!

Why is D&O insurance essential for small businesses?

1. Small businesses have limited resources to fight lawsuits: Unlike large corporations, SMEs typically do not have millions of dollars in cash reserves that they can draw on anytime to fund a lawsuit defense. Diverting significant amounts of liquid assets and cash flow away from operations, and towards legal fees, will often cause significant detrimental impacts on the small businesses.
2. The cost of a single D&O lawsuit could easily bankrupt an SME and its Directors: A D&O lawsuit could easily cost between half a million to several million dollars to resolve. A single D&O claim, if not insured for, could essentially bankrupt a small business and its Directors.
3. Small businesses often do not have in-house counsel: Unlike large corporations, very few SMEs have in-house lawyers that can review every decision your business makes with third-parties or with employees. This increases the likelihood of making management decisions that Directors may have to answer for in court. Having a D&O policy ensures that if management decisions ultimately result in a lawsuit, Directors are not left without recourse to protect themselves.

Will Limited Liability laws protect directors from personal lawsuits?

In Singapore, Limited Liability statutes only prevent directors from being held responsible for company liabilities. These laws do not apply to directors’ personal liabilities.

It is crucial to know that when plaintiffs sue, they will often file multiple lawsuits targeting both the company and the company’s directors. When you are sued personally as a director, Limited Liability laws will not help you. You will only be protected if you have a D&O policy in place.

What are common claims for D&O insurance?

It’s easier to understand how this type of insurance works with some D&O claims examples. Here are the top 6 most common claims made for D&O insurance:

1. Shareholder Claims

Shareholders have a financial stake in the business, so when they feel their interests are not being appropriately represented, they can take Directors to court. Common shareholder lawsuits involve:

• Errors or misleading statements in financial reporting
• Breach of fiduciary duty leading to financial losses or bankruptcy
• Mismanagement of company causing poor financial performance
• Mergers & acquisitions
• Decisions exceeding authority given to company officer

2. Employment Claims

In this litigious age, it is increasingly common for employees to file civil suits against company directors for perceived workplace wrongs. Directors can be sued for:

• Wrongful dismissal
• Breach of employment contract
• Employment discrimination (e.g. hiring, promotions)
• Sexual harassment

3. Customer Claims

Directors can face claims from customers if they fail to properly provide promised services or goods. Customers file suits against Directors for:

• Fraudulent behaviour
• Contract disputes
• Professional negligence
• Misleading promises/claims

4. Creditor Claims

When a company owes money to a third-party, directors of the indebted company are legally required to act in good faith to both shareholders and creditors. Directors can be sued by creditors for:

• Breach of fiduciary duty to creditors, leading to a loss on assets owed/impairment of ability to repay debt
• Irresponsible or fraudulent accumulation of debt
• Conducting business while insolvent

5. Competitor Claims

In Singapore’s competitive business environment, it’s not uncommon for small businesses to be litigated by rival firms. Directors can be sued for:

• Defamation/slander
• Infringement of Intellectual Property
• Theft of trade secrets
• Collusion & other anti-competitive behaviour

6. Regulator Claims

Comprehensive legal frameworks help ensure responsible business behaviour, but it also increases the chance of company directors inadvertently breaching regulations, and bearing painful penalties. This is especially true for businesses operating in tightly-monitored industries (e.g. financial services, law, and healthcare). Regulators can file lawsuits or fine Directors for:

• Breaching industry regulations
• Professional negligence that results in loss or injury to third-parties
• Engaging in deceptive marketing
• Causing pollution
• Any other unlawful conduct

Having D&O insurance will protect you from this wide variety of legal liabilities. If you’re a director, do you want your personal assets to be exposed to so many risks without some kind of protection?

How much D&O insurance do private companies need?

When planning the amount of D&O coverage to purchase, it’s helpful to map out the potential costs of defending a D&O lawsuit.

Lawyer’s fees: A safe estimate would range between $50,000 to $100,000 a year. A typical D&O lawsuit will easily last a minimum of 2-3 years.

Damages/Settlement: A safe estimate is to have at least $500,000 set aside, exclusively for damages.

Given the combined cost of lawyer’s fees and potential damages, most SMEs should be looking at D&O policies beginning from $1 million in coverage.

How much does D&O insurance cost?

A million dollars of D&O coverage starts at only $3.80/day. That’s less than the price of a daily cappuccino!

In a year, small businesses should expect to pay no more than $1,500 for between $1-2 million dollars in coverage. The large amount of coverage you get for such affordable premiums is a strong incentive for business owners to protect themselves with a D&O policy.

There are 2 principal ways company directors can prepare for litigation:

When you compare the costs side-by-side, it’s not difficult to see which is the better option for directors and business owners.

Where can I buy D&O insurance?

Provide is the easiest place to get online D&O insurance quotes. It takes only 60 seconds to get covered. You’ll save up to 25% on premiums compared to traditional brokers, with broad coverage and high indemnity guaranteed.

Are you a business owner wanting to protect yourself from damaging and expensive lawsuits? Unsure of how to get liability insurance for your business? Are you looking for a better, cheaper, easier way to protect your company from legal liability?

This easy-to-follow guide clearly explains:

1. The different ways you can get business liability insurance
2. Which way helps you save the most money, gives the best protection, and is the simplest to use

There are 3 main ways business owners can get liability insurance to protect themselves and their company.

#1. Use an insurance agent

Business owners can use a commercial insurance agent to purchase insurance. Most insurance agents in Singapore are focused on personal policies like car, maid, and life plans, so make sure to approach an agent with specific experience in handling commercial policies.

It’s important to note that insurance agents are only legally allowed to represent a maximum of 3 insurers. There are 82 insurers in Singapore: 60+ global insurers (e.g. the AIG’s, Chubb’s, QBE’s of the world), with another 20 regionally-focused insurers. What this means is that if you have an insurance agent source commercial insurance quotes for you, you’re probably not going to get the best prices, or the best coverage options. Agents unfortunately don’t possess the ability to conduct a broad search across the insurance market.

There are more insurance agents in Singapore than insurance brokers because qualifying to operate as a broker is much harder. Brokers have to meet much more stringent insurance experience criteria, undergo a stricter review process by MAS, and must have much more paid-up capital.

#2. Use an online insurance broker

You can use an online insurance broker to purchase business liability insurance. Provide is Singapore’s 1^st online business insurance platform, exclusively focused on protecting SMEs.

If you run a small business, you should consider using an online broker to protect your company. Provide helps SME owners get the best insurance protection rapidly, and to save lots of money in the process.

Our digital platform helps business owners:

1. Save up to 25% on all insurance premiums
2. Buy protection instantly
3. Get broad coverage, high indemnity policies guaranteed
4. Get access to industry experts who will provide tailored advice, and be strong claims advocates

If you’re looking for a better, faster, and easier way to get covered, choose Provide.

#3. Contact an insurance broker for an in-person consultation

Lastly, there’s always the traditional route of calling up a commercial broker, and having a sit-down to review your needs and get quotes. Traditional brokers will solely operate via this route.

Provide also offers in-person consults with our insurance experts. Provide’s highly experienced brokers have 20+ years of combined experience protecting all types of companies, from large corporations to small businesses. If you prefer to meet with someone over using our online platform, our industry experts will come down to meet you, analyse your business, and provide thorough coverage recommendations. Arrange an expert consult now.

What types of liability insurance should small businesses have?

There are 4 main types of liability insurance that business owners can use to protect themselves and their company:

1. Director & Officer (D&O) Liability Insurance
2. Work Compensation Injury (WICA) Insurance
3. Professional Indemnity Insurance
4. Public Liability Insurance

How does liability insurance protect business owners and their companies?

Lawsuits are one of the single most damaging risks any company – let alone a small business – can face. Defending legal claims can easily cost a small business owner half a million dollars or more. These costs could very easily bankrupt an entire business. Business liabilities can even lead to business owners themselves being declared bankrupt, or in some cases going to jail.

This table below shows how the 4 types of liability insurance, put together as a suite, will protect business owners and their companies from expensive and dangerous litigation.

How much should small businesses pay for liability insurance?

For small businesses with annual revenues of less than $5 million, use the following table as a liability insurance guide. These are easy-to-follow estimates for how much liability coverage you’ll need, and how much the premiums will be.

At Provide, we believe that businesses deserve the most comprehensive protection, delivered at the most affordable prices. That’s why all our policies cost up to 25% less, with broad coverage & high indemnity guaranteed. Our digital platform creates lower overheads, and we pass every dollar saved back to you.

Get your liability insurance quotes today for:

1. Public Liability Insurance Quote
2. Work Injury Compensation Insurance Quote
3. Directors & Officers (D&O) Liability Insurance Quote
4. Professional Indemnity Insurance Quote