Business insurance is frequently neglected by small business owners or owners of Small Medium Enterprises because their focus on growing the business probably distracts them from seeing the risk faced by the business. With so many things to handle and with their priority on launching new and better products and services to grow and expand the business, business insurance to mitigate potential business risk is the last thing that comes to their mind!
In current business environment where unprotected business risks can destroy an established company, acquiring the right type of insurance to protect the company, business, team, employees and customers may be one of the most important decision for business owners and/or directors.
Types of Business Insurance to Manage and Reduce Business Risk
General Liability Insurance or Public Liability Insurance
General Liability Insurance (commonly known as Public Liability Insurance) is an essentially business insurance necessary for every business. It protects the business, employees and representatives of the business who alleged to have caused physical injury or damage of property to a third party. Whether the damage is the results of products you sold or services you provide, this insurance for business is here to cover your risk.
General Liability Insurance
Business Property Insurance is an insurance to compensate for loss of movable business property like inventory, office plant and equipment, laptops and computers, tools, etc. of the business. It protects the loss of property when there is a fire, flood, theft, etc. It is a basic insurance for businesses and companies to protect their tangible assets. Some property insurance also compensates for loss of income for a period of time when the business is unable to operate.
Work Injury Compensation or Workmen Compensation
Under Ministry of Manpower’s requirement, an employer needs to obtain Work Injury Insurance for manual worker and employees who are earning not more than SGD1,600. This type of business insurance covers employees and ensures that they are compensated for their medical expenses, injury, death and permanent disability.
Professional Liability Insurance
Businesses which provides professional and consultancy services should seriously consider getting this insurance. This business insurance covers the loss when customers take legal action against your business or company for negligence or dissatisfaction. It should cover business loss as a result of compensating customers due to error, negligence, misrepresentation, breach of confidentiality, etc. This insurance is commonly taken up by accountants or accounting business and lawyers.
Directors’ Liability Insurance
Directors’ Liability Insurance is a critical insurance for decision maker of a Company. This insurance covers the directors from liability arising from lawsuit as a result of negligence or wrongful acts when managing the Company.
Key Man Insurance
Keyman insurance is a life insurance policy on the key personnel of the business. The unexpected death or incapacity of this key person can adversely affect the business sales and operation, and therefore the payout from this business insurance will provide temporary relief to the business. Keyman insurance can also be structured in such a way to buy out the shares of the deceased or disabled partner so that the active partners continue to run the business without the interference of the deceased or disabled partner's beneficiaries. In this case, you may need some form of valuation services just like how a company would value itself for sale of business and then ascertain the amount to be insured to cover the value of the business held by the each partner.
Cyber Liability and Data Protection Insurance
With the wide spread use of internet, popularity of e-commerce and digitalization of information and documents, this insurance has grown in importance over time. A well-designed Cyber Liability and Data Protection Insurance should cover your business for legal cost incurred on cyber and data issues in this increasing complex digital world. It should also compensate the business for restoring and recovering from cyber-attacks.
As a business owner or an entrepreneur, we focus so much to growing the business and generating great revenue to the extent of neglecting the need to protect what has been created and risk losing the business.
It is time to balance revenue generation and risk mitigation so as to achieve the best business outcome in the long run. In order to do so, give us a call to obtain an expert advice on business insurance.