A Guide to Understanding Business Insurance

What is Business Insurance?

A business insurance policy protects an organisation against the many risks inherent in running a company. No matter the type and scale of business, an insurance coverage proves to be immensely useful for reducing financial risk in a variety of unforeseen circumstances.

As part of the policy, a business (policyholder) signs a contract with an insurance provider, promising to pay a fixed premium. In exchange for the premium, the insurer protects the company against financial loss in the event of certain accidents and disasters (fires, vehicle crash, lawsuits, bankruptcy, etc.) listed in the contract.

Some common types of insurance for businesses:

• Property Insurance
• Liability Insurance
• Business Income Insurance
• Business Owner’s Policy
• Worker’s Compensation Insurance

Because insurance policies are deeply specific about the kinds of events they cover, it is important one reads the contract carefully and engages an insurance professional to make sure the relevant risks are appropriately covered.

When and why you need Business Insurance?

Say, a natural disaster were to affect a company’s property and employees. Without insurance, it would need a hefty sum for repairs and replacing equipment. Naturally, this would cause distressing cash flow problems, even if a business had sufficient profits. In the event of a huge loss, a company could potentially go out of business. For Singapore businesses, a Work Injury Compensation cover and Commercial Motor insurance (for their commercial vehicles) are mandatory.

Protecting your property

Property, in the context of a business, can refer to buildings, machinery, equipment, raw materials, computers, furniture, fittings, etc. A property insurance policy will cover financial losses or damage to such properties. Some common types of property insurance covers offer protection against fire, theft, terrorism, natural disasters, etc. Select insurance plans that cover risks specific to an industry are also available; for instance, a shipping business could invest in a cargo insurance plan to protect goods in transit. Apart from protecting physical assets, this insurance cover can also provide funds right after a catastrophic loss, when a business is trying to get back on track.

Work injury compensation

A work injury compensation cover protects a company in the event of employees filing claims for injuries or diseases. In fact, under the Work Injury Compensation Act (WICA), all employers in Singapore are required to purchase this insurance for local and foreign employees (not freelancers and contractors) engaged in both manual and non-manual work. For non-manual work, workers earning less than $1,600 per month are to be mandatorily insured. Employers who fail to provide work injury compensation cover can face a fine of up to S$10,000 or jail of up to 12 months. This insurance is especially important for businesses where workers face a high risk of injury, such as construction. It provides monetary protection to workers if they suffer an injury during the course of their work.

Basic health insurance

For Singaporean employees, the Employment Act mandates all employers to make CPF contributions, a portion of which is allocated to MediShield Life, a basic health insurance for Singaporeans. Companies can also buy additional coverage not provided for by MediShield Life.

S Pass and Work Permit holders are not eligible for MediShield. However, employers are still required to provide medical insurance cover to them, as long as they are employed.

Employment Pass holders are not eligible for MediShield. However, employers can voluntarily purchase private medical insurance as part of employment benefits.

Since both work injury compensation and Medishield covers are mandatory, it’s important a business makes adequate provisions for these before purchasing additional coverage for its employees.

Legal liability

There may be instances where a business is held legally liable for compensation due to an act of negligence by an employees. The following types of covers prove useful in this case:

• Public liability insurance provides coverage when there is bodily injury or damage to property and premises resulting from business operations, manufacturing, distribution, or sales
  
• Director and officer insurance provides indemnity to a company’s key decision makers should they be held liable for breach of duty or negligence
  
• Professional indemnity insurance provides coverage to a specific occupation (auditors, lawyers, accountants) against legal liability arising from negligence

Do I need Business Insurance if I work from home?

Professionals and freelancers who conduct their business from home have as much reason to cover their equipment. It is possible to suffer legal damages resulting from your products and services.

While a standard home contents insurance policy is unlikely to be ideal for business use, a business contents policy for furniture, computers, printers, and other belongings is ideal. If you use a vehicle, buying a business motor policy will also make sense. Other than this, if you employ other people, an employers liability cover becomes legally mandatory.

How much does Business Insurance cost?

The premium you pay for a business insurance will ultimately be decided by a number of factors, some of which are:

• The nature and size of business: Some businesses will inherently face greater risk than the others, for eg., those that work with heavy equipment. Similarly, businesses with a greater number of employees will need more employers’ liability cover. The cost of business insurance has a lot to do with the nature and size of a company  
  
• Cover required: Needless to say, a higher level of cover comes with a higher premium
  
• Claims history: A history of making claims will naturally come with a higher premium since it will imply a likelihood of claiming in the future
  
• The best way to arrive at the right policy is to compare different insurance policies. Insurance providers have different criteria for determining the premium, so shopping around is the right way to compare your options.

Where can I compare Business Insurance quotes?

Compare business insurance quotes from different insurers at Symbo and find the best deal for your company. All you need to do is give us some information your business and needs, and we will show quotes along with the coverage offered.

Always remember that with insurance products, the cheapest may not be the best. Look for a balance between the premium and cover to zero in on the right policy for your business.