An entrepreneur exposes himself to significant risks the moment he launches his business. A business is in danger even before the first person is employed, so it’s critical to have the appropriate insurance in place. A small firm could be destroyed before it ever has a chance to start with one lawsuit or tragic incident.
To mitigate these risks, fortunately, businesses have access to a wide range of insurance choices. For a business, the following insurance policies need to be set up as soon as possible.
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1) General Liability Insurance
Your general liability insurance shields you from lawsuits arising from business operations. This insurance covers the cost of your defence and any damages that are awarded if someone is hurt on the property of your company or if you damage someone else’s property. General liability insurance is required for every company that interacts with customers directly.
Consider the scenario where you run a retail business. A client breaks their arm after falling and slipping in your lobby. The court gives them INR 500,000 in damages after they sue them for bodily harm. If you have general liability insurance, your provider will reimburse the costs of the damages and your legal representation.
2) Property Insurance
Property insurance policies for businesses are typically offered by both public-sector and private-sector insurance companies. These policies provide coverage for various types of commercial properties, including buildings, machinery, equipment, stock, and other assets.
Some common types of property insurance policies for businesses in India include:
- Fire Insurance: This type of policy provides coverage for damage or loss due to fire, lightning, explosion, and other perils such as riots and malicious damage. Fire insurance policies may also cover damage to stock and machinery caused by fire.
- Burglary and Theft Insurance: This type of policy provides coverage for loss or damage to the insured property due to burglary, theft, or attempted theft. This coverage may include damage to the property itself as well as the loss of stock or equipment.
- Industrial All Risks Insurance: This type of policy provides coverage for a wide range of perils, including fire, theft, and natural disasters. It can also provide coverage for the breakdown of machinery and equipment.
- Machinery Breakdown Insurance: This type of policy provides coverage for sudden and unforeseen damage to machinery and equipment due to causes such as mechanical or electrical breakdown, human error, or operator negligence.
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3) Workers’ compensation insurance
Workers’ compensation insurance, or Workmen’s insurance policy, covers medical costs and missed income in the event that an employee is hurt at work. If the employee sues you, it may also cover the expense of your defence. Workers’ compensation may occasionally come with disability insurance.
Consider the scenario where you run a small clothing brand. Your workers’ compensation insurance will pay for any medical expenses and lost wages if one of your staff members has an injury while sewing. Any company that employs people must have workers’ compensation insurance.
4) Money Insurance Policy
Money insurance policies for businesses provide coverage for the loss of cash, currency notes, and cheques due to theft, burglary, or any other specified perils. This type of policy is important for businesses that handle significant amounts of cash or have high-value assets that can be easily stolen.
5) Vehicle Insurance
Vehicle insurance for businesses provides coverage for vehicles owned and used by the business for commercial purposes, including cars, trucks, vans, and other types of vehicles. This type of insurance is important because it helps protect businesses from financial losses that can occur due to accidents or damage to their vehicles.
In India, vehicle insurance for businesses is typically offered in two types of policies:
- Commercial Vehicle Insurance: This type of policy provides coverage for vehicles that are used for commercial purposes, including transportation of goods and passengers. It typically covers damage or loss due to accidents, fire, theft, and natural disasters, as well as liability for third-party bodily injury or property damage.
- Fleet Insurance: This type of policy provides coverage for a group of vehicles owned by a business. It typically offers similar coverage as commercial vehicle insurance but can provide cost savings and administrative benefits for businesses with a large number of vehicles.
6) Business interruption insurance
Business interruption insurance is a type of insurance that provides coverage for the loss of income and additional expenses incurred by a business as a result of the interruption of its operations due to unforeseen events such as fire, natural disasters, or other covered perils. This type of insurance helps businesses to recover from financial losses caused by such disruptions.
7) Product liability insurance
Product liability insurance is a type of insurance that provides coverage for businesses that manufacture, distribute, or sell products. This type of insurance helps protect businesses from financial losses that may occur due to legal claims filed against them for damage or injury caused by their products. Company managers who want liability protection from lawsuits that can result from decisions and acts they took while performing their duties should consider Directors & Officers Insurance products.
Product liability insurance typically covers the following:
- Legal Expenses: This coverage provides compensation for the legal expenses incurred by the business in defending itself against a claim filed against it. This can include attorney fees, court costs, and other related expenses.
- Settlements or Judgments: This coverage provides compensation for settlements or judgments awarded to the claimant in a product liability case. This can include compensation for medical expenses, lost wages, and other related damages.
- Recall Costs: This coverage provides compensation for the expenses incurred by the business in recalling a defective or dangerous product from the market. This can include costs related to product testing, transportation, and disposal.
When selecting a property insurance policy for your business in India, it is important to carefully review the coverage provided, the exclusions and limitations of the policy, and the terms and conditions of the policy. It is also important to ensure that the sum insured is adequate to cover the full value of your property and assets. Working with a knowledgeable insurance consultant can help ensure that you have the coverage you need to protect your business.