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Business Insurance

Your business must be prepared for various uncertainties. Safeguard your business with business insurance.

What is Business Insurance?

Business insurance is a kind of insurance that helps an enterprise to protect its financial assets, intellectual property and physical location from an unforeseen incident causing huge financial losses. It supports the insured business against any damage or loss arising out of incidents like natural disasters, thefts, vandalism, lawsuits, loss of income and employee illness, injury or death. Such incidents can cause a major setback to your business. In several cases, it leads to partial or complete closure of the business leading to loss of income. Thus, it is important for you, as a businessman, to buy a good business insurance policy in India. All you have to do is to buy an appropriate insurance policy that provides suitable coverage and pay timely premiums.

Besides providing you with financial support at the time of need, business insurance helps your business build credibility. Prospective clients and investors view an insured business as a responsible one and believe that their money is safe. Even the employees and workers feel safer while working in an insured business. This helps to retain employees in the organization for long which in turn helps in the growth of the company.

You need to pay a premium and buy insurance for your business for an amount of money called Sum Insured.

Companies assess their need for insurance depending on the potential risks that can differ based on the type of environment in the business operates.

Why Should You Cover Your Business with Insurance?

It is vital for the owners of small enterprises to carefully take into consideration and assess the needs of their business as they have extensive financial exposure in case of any loss. If the owner of the business does not feel that they have the ability to assess business risk effectively and the need for insurance coverage, they must work with an experienced, licensed, and reputable insurance agent. Business insurance protects the SMEs from fire, theft, professional liability, general third party liability, compensation towards workers, medical expenses etc.

Types of Business Insurance:

There are several options available for coverage for businesses. The coverage your business requires depends on the things such as the industry, its location, number of employees, and size. It is probable that your insurance needs may change as the business grows.

Different types of business insurance policies are as follows:

Liability Policies:

This policy helps your business bear the cost of liability claims arising from a third party bodily injury or property damage. In case any lawsuit is arsing against your enterprise you may be liable to pay huge legal fees. Without this cover, the entire expense will be on you. The most common liability covers include- general liability, public liability, professional liability and commercial umbrella insurance.

General Liability Insurance

General Liability Insurance is one of the basic business insurances that provides coverage against any liability cost arising out of loss or damage caused to a third party or property. It bears the cost of any legal liability arising out of a lawsuit which otherwise has to be paid by the owner of the business. Whether you operate from a professional space or from your house, you should definitely have general liability insurance.

Professional Liability Insurance

Professional Liability Insurance is the type of business insurance that provides protection against damages caused in the performance of a service. Also known as Errors and Omissions Insurance, it takes care of any losses that you may have faced because of negligence in rendering any services. Some insurance companies provide professional liability insurance that is specific to a certain profession. You can check with your insurance company to find the specific insurance that suits your profession.

Employee Insurance Policies

Also known as Workers' Compensation Plan, this policy under company insurance helps the business owner cover the expenses arising out of injuries or illness to employees. It also covers the legal cost faced by the business if a deceased family decides to sue the business. Even, in most countries, especially abroad, it is a mandatory buy.

Property Policies

If a business is not sufficiently insured against the property damage, the recovery cost will entirely on the owner. Commercial insurance helps the business owner pay the repair or replacement cost of any damaged property. The risk is higher in case of small business, where 40% of business never gets the chance to reopen after a disaster strikes. That’s why you need this policy to protect your business property. It usually includes the physical location of the business, damaged tools, documents, assets or damaged caused by vandals.

Cover for Loss of Income

This policy helps the insured pay off the fixed costs if the business is unable to operate after a disaster.

Product Liability Insurance

If your business is into manufacturing, product liability insurance is necessary. It is useful in covering the expenses of a lawsuit arising due to damages caused by your products.

Vehicle Insurance

Any vehicle used for business should be insured. In India, it is mandatory to have third party insurance, be it a private or commercial vehicle. However, comprehensive insurance will provide end-to-end protection covering own damage as well. Nevertheless, if employees are using their private vehicles, their personal insurance will cover them during an accident or other damages.

Commercial Vehicle Insurance

Any vehicle that provides commercial services in a business should have a Commercial Vehicle Insurance. It provides protection against any damage caused to the vehicle or the driver or to a third-party in case of an unforeseen incident like a traffic collision, accident, fire, theft, etc. In India, third party insurance is compulsory for all vehicles plying on Indian roads. But to ensure complete coverage, business owners should opt for comprehensive vehicle insurance.

Business Interruption Insurance

This type of policy is designed for a business that requires a physical location such as retail shops. Business interruption policy comes in handy in case a business faces loss due to the circumstances that cause a commotion to the normal course of business. For instance, if a natural calamity or a riot makes it difficult for employees to come to work, it will lead to the business incurring losses. This type of business insurance helps to compensate for such losses.

There are also a few other types of business insurance that are specific to certain kinds of businesses and are tailor-made for their needs. For instance, petrol pump owners can opt for Petrol Pump Insurance, restaurant owners can choose Restaurant Insurance and warehouse owners can choose Warehouse Insurance.

Features of Business Insurance

Though having your business insured is not mandatory in India but it is necessary. Business insurance India comes with certain features that make the policy worth your money:

  • Damage to the property due to fire or natural disasters such as flood, earthquake, storm etc.
  • Loss due to theft
  • Business insurance covers third party liability on the business
  • Injury or death of an employee during the course of his/her work is covered
  • It covers the loss of profits after an outbreak of a calamity
  • Liability arising out of negligence and errors

Benefits of Business Insurance

The benefits of Company Insurance plans are as follows:

  • Company insurance plan protects the business against losses due to an interruption of the normal course of the business by covering the disasters like fire or a natural calamity
  • It offers credibility to the company by getting its business insured
  • Group policies offered to assure the safety of the employees and help the employers retain the talents within the company. Eventually, it aids in more growth of the company.
  • These days clients also consider those companies that are well-insured with business insurance.
  • The physical assets of a business such as computers, furniture etc. are well-protected from theft if it is covered by a business insurance policy.

How to Buy Business Insurance India

Buying insurance can be interesting only if you follow the right process. If you are looking for business insurance, you can buy either online or offline. To go online, you must know who all are selling business insurance. Go to the official websites and go through the plans in detail. If you find anything that suits your requirements, next go to the compare option. Here you’ll get a fair idea of how a particular plan works for your needs. you can get to know the different premiums and coverage offered by the insurers. The last step is to finalise one and pay the premiums online.

On the other hand, you can buy offline as well, by approaching the preferred insurance provider. This is the traditional way of buying insurance, which requires you to visit the branch, know about the plans and buy. You can buy even approaching an agent as well, provided he/she is well-versed with the product information and you are not being misled.

Things to Consider before buying Business Insurance

While buying business insurance, you should consider factoring certain things:

Assess Your Risks

An insurance cover is offered after assessing the risk appetite of the applicant, otherwise, how will the insurer determine whether they are going to cover your business? Firstly, they estimate the level of risk your business is exposed to. This is called Underwriting where the underwriter reviews whether it will offer all or the portion of the coverage applied for. Every policy comes with a premium and deductible. Premium is the amount you pay for availing the policy benefits while deductible is a pre-decided amount that you agree to pay at the time of claim. Simply put, lower the deductible you pay, higher your insurance premium will be or vice versa.

So, only after assessing your risk, you can decide whether you can afford a higher deductible to save on your annual premiums.

Shop Around

Don’t just buy whatever plan you get randomly. Shop around, do your research and buy. You can take help from online insurance aggregators in the process of suggesting plans.

Insurance Coverage

No doubt the extent of coverage varies insurer to insurer. While buying business insurance, you can take the help of experts who actually know the issues that may face by your business and buy accordingly. At times, insurance brokers can give you a fair idea. Whatever the situation, make sure the coverage offered is apt for the insurance needs of your business.

Approach a Reputable Agent ONLY

The principle of selecting a broker to buy company insurance is he should be authorised or reputable!

Make sure the person pitch you the right only, with sufficient knowledge about the product. He should be a person with whom you can clear your doubts. If not you can ask your family or friends using this policy. Go for online reviews of the users and buy.

Review Your Insurance Needs

With your business, the liabilities also go up. And you can’t afford being uncovered during a disaster that may hugely affect your finances. Moreover, the cover you opted for at the initial stage of your business, may not suffice the current insurance needs. That’s why it is necessary to assess the needs and let the insurer know in case you want additional coverage.

Other Types of Important Insurance

Petrol Pump Insurance

This insurance designed for petrol pumps, CNG stations to offer optimum protection to the assets inside the petrol stations against the risks associated. This policy protects the properties, cash, assets etc. against fire, theft, natural disasters, burglary, legal liability, dishonesty of workers or other perils. The premium for Petrol Pump Insurance is calculated basis on the covers opted for and the values of the property or machinery.

Restaurant Insurance

However, not offered by many insurers in India, this policy is tailor-made in covering your business against the threats like, fire, act of God, malicious damage, riot, burglary, damage to property, loss of money, loss of money while in transit, physical loss of electronic equipments in the premise, machinery breakdown, personal accident, public liability and so on.

Professional Liability Insurance

Professional Liability Insurance also referred to as  Professional Indemnity Insurance is designed to mitigate the legal expenses arising out of a professional lawsuit by a third-party. If a third party sustains any injury, damage or death due to the services offered by the professionals, the possibility of a lawsuit is higher. To bear those legal expenses, Professional Liability comes in handy. This policy can be availed by professionals including doctors, lawyers, Chartered Accountants, architects, organisational bodies such as law firms, hospitals, BPOs etc. Some of the insurers offering Professional Liability Insurance include ICICI Lombard, Bajaj Allianz, United India Insurance, National Insurance etc.

Q:

What does Business Insurance cover?

Ans:

Business insurance covers SMEs for third party legal liability, loss due to the negligence of the business entity, damage due to natural or man-made disasters, liability arising due to a faulty product, covers the commercial vehicles etc.

Q:

How does Business Insurance work?

Ans:

Business insurance is simply a contract between the insured and the insurer, where the insurer agrees to share the risk in exchange for an annual premium. In case of an emergency, upon a claim registration and verification of the case followed by proper documentation, the insurance company pays for the loss.

Q:

Can I save taxes by paying for Business Insurance premium?

Ans:

You can save on tax as the coverage is paid for operating a business, profession or trade.

Q:

Is Company Insurance mandatory in India?

Ans:

Company insurance is not mandatory in India, but it is a necessity for your business. However, some of the business insurance policies are mandatory in foreign countries.

Q:

Does my business insurance cover damages of flood?

Ans:

Yes, your business is well-protected against the damages caused by natural calamities such as flood. However, consider reading and understanding the policy wordings regarding any clause or clear your doubts with the insurer.

Q:

What is property insurance?

Ans:

Property insurance protects your business building, equipment, infrastructure against the perils. This type of insurance usually covers the insured business for losses in the event of a fire or lightning strike and will be the cost of removing property to protect it from further loss.

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