If there's one thing all business owners share in common it's a fear of having their carefully laid plans go to waste. For an upcoming business where things aren't completely certain, this fear is even more palpable.
Business insurance can protect companies against risks caused by any number of reasons. These risks include property damage and legal liability along with employee-related risks. There's no one type of insurance that covers all aspects so it's necessary to purchase several. Let's look at what they are.
Assets insurance
Also called business property insurance in other countries, assets insurance takes into account buildings and their content, company vehicles, breakdown of machinery and damage to computer systems. Under these, there are several areas which are covered including property damage due to natural calamities, theft and malicious damage, damage to company vehicles owing to accidents, vandalism and car theft, and machinery breakdown due to electrical outage, vandalism, natural calamities and the loss and cost of data recovery.
Assets insurance policies will naturally have different premiums with the cost dependent on the level of risk.
Liability insurance
This is a given but we're mentioning it to drive home its importance. Liability insurance protects a business, its employees and its products and services in the event of a lawsuit alleging that a third party was inflicted with bodily harm or had property damaged (in essence, negligence). It's a very real occurrence and disgruntled people have been known to file lawsuits with no basis in truth. Even if a company adheres to very strict policies of quality and ethics it can be accused of negligence by someone with bad intentions so it's wise to have protection.
Liability insurance spans a couple of subtypes, workers' compensation and public liability. The first covers employees against accidents and illness while the second extends to errors and damages to the public and public property arising out of the usage of the company's products. It also consists of professional indemnity where employees and the business are protected against legal action arising out of professional negligence.
Income protection insurance
Under income protection insurance, the policyholder can recover income lost due to being incapacitated either because of injury or illness. The benefits are paid regularly and are tax-free.
Income insurance must cover several areas, not just the policyholder and the business. Let's say that a fire has occurred and the office must remain shut for a time. Employees must still receive wages, records and databases must be protected and any debts, loan repayments etc., must continue to be paid.
Life insurance policies too must be purchased to cover key employees and business partners in case they pass away. This ensures the business continues to run without the valuable services of the deceased.
Because of the number of business insurance types that exist, it's not a breeze finding out whether a company needs additional protection. The best way to find out is to speak with the authorities of an insurance company or with a lawyer well-versed in insurance law.
No matter how small a business is, getting insurance coverage at least for certain areas is necessary not only for the business but for the policymakers as well. So if you've recently set up a business and it looks to be taking off, start considering purchasing insurance to protect your investment.