What is Business Insurance?
For most businesses, unexpected events with large or sudden losses can have a catastrophic impact on them; sometimes even resulting in financial insolvency. This is why it is important to have Business Insurance to cover the risks that your business is exposed to, no matter how small.
Business Insurance can be for all companies, regardless of the size. You can be a large corporation or a two-person outlet- there will always be suitable coverage for you. The various types of coverage can help to cover the cost of reinstatement of damaged property, loss of income, compensation to a third party for claims made against your business, as well as all legal costs associated.
Is Business Insurance a legal requirement?
This varies depending on the type of industry your business is in. While there is no universal list of must-have Business Insurance, here is a list of the most common types of coverage:
- The Ministry of Manpower has mandated that all manual employees, regardless of salary level and non-manual employees earning below $2,600 will have to have Work Injury Compensation Insurance.
- If you have an office or store in a commercial building, the landlord will usually require you to get Public Liability Insurance.
- Professionals such as accountants, lawyers, architects, doctors require Professional Indemnity Insurance as part of their trade in order to renew their license to practise.
- Entering into contracts with other parties sometimes requires you to get Product Liability, Professional Indemnity, Public Liability Insurance.
The above list is not exhaustive, and each business needs to know the regulatory environment that they operate in, and consult with a broker to better understand their risk exposure.
How much does Business Insurance cost?
The cost of the Business Insurance is usually dependent on a few common factors:
Nature of Business:
Is the nature of your business high or low risk? Your property and liability risk could be higher and thus require a higher level of coverage.
Revenue Turnover:
Higher revenue equals more products sold and more customers, and thus more exposure to risk.
Number of Employees:
The more employees you have, the more workplace risk.
Risk Location:
Is the property in an industrial or commercial area, where injuries are more likely?
History of Claims:
The number of past claims your business has made will invariably lead to higher premiums.
SME Insurance packages
An SME is defined as a company “with an annual turnover of less than S$100 million or less than 200 employees. Thus, SMEs make up 99% of all companies in Singapore, and hire 71% of the population! Unfortunately, they are also the most neglected segment in terms of insurance protection. This is primarily due to lack of awareness, inaccessible legal advice, and general neglect due to portfolio size.
However, there are now new products that cater to the insurance needs of SMEs. Many insurers now offer SME insurance packages that are crafted to cover the risk of different kinds of SME business, such as:
Office
F&B
Retail
Education
Health and Beauty
Renovation Contractor
These usually cover a minimum of Property All Risk, Public Liability, and Work Injury Compensation.
What other insurance does a business need?
Some of the most common insurance coverages that a business requires are:
Public Liability
Public Liability Insurance protects your business when faced with claims of property damage and injury caused to a third party in connection with your business activity.
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Work Injury Compensation
Work Injury Compensation Insurance covers compensation claims from an employee’s work-related injury or illness.
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Property
Property Insurance is designed to cover the physical properties your business owns as well as costs related to the business property.
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Professional Indemnity
Professional Indemnity Insurance provides coverage for work liabilities such as legal fees and compensation wrongful acts made against you.
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Directors and Officers
Directors and Officers Insurance covers claims resulting from decisions and actions taken by company managers as part of their job duties.
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Frequently Asked Questions
About Business Insurance Singapore
- Property insurance, also known as commercial property insurance, covers losses or damages to critical assets like owned or rented equipment, office, machinery, buildings and personal property at your company. A comprehensive policy should also provide coverage for business interruption.
- Deductible/excess is the amount of the claim that you have to bear for every admissible claim you lodge with the insurer. This amount is specified in your policy document.
- Fire insurance premium rate depends on the nature of occupancy i.e. for what purpose the building has been used. An office, restaurant, or retail shop has lower risk exposures hence, the insurer will charge them a low premium.
- The cost of business insurance in Singapore depends on several factors, including the size and type of business, the level of coverage required, and the insurer. Generally, SME business insurance packages in Singapore can range from a few hundred to several thousand dollars per year.
There are several factors to consider when choosing an SME business insurance provider in Singapore:
- Reputation: Choose an insurer with a good reputation in the industry and a track record of providing quality insurance products and services.
- Customer Service: Look for an insurer that provides excellent customer service and support. This will help ensure that you receive the assistance you need when you have questions or need to file a claim.
- Coverage Options: Choose an insurer that offers a variety of coverage options that meet your specific business needs.
- Claims Handling: Look for an insurer that has a streamlined and efficient claims handling process. This will help ensure that your claims are handled promptly and fairly.
- Pricing: While pricing shouldn't be the only factor you consider, it is important to choose an insurer that provides competitive pricing for their products and services.
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