Starting a new business can be exciting, but comes with its own sets of risks as well. It can be especially hard to mitigate these risks, given that they are unique to each type of business. Besides foreseeable risks, accidents such as fires can put your business back if there are no insurance policies to support your company.
Fortunately, we have business insurance to protect us from such risks. For budding entrepreneurs looking to set up their company in Singapore, here’s a guide to business insurance in Singapore to ensure that your company will always be protected.
What is business insurance?
Business insurance policies help to protect your business against the many risks that come with running a company. These policies will prove to help mitigate any financial risk that you may face.
When you sign a business contract with your insurance provider, you pay a fixed premium each month in exchange for protection against financial loss in the event of any accidents. These accidents will be listed in the contract and vary depending on the type of insurance that you get. There are several common types of insurance for businesses:
- Property Insurance
- Liability Insurance
- Business Income Insurance
- Business Owner’s Policy
- Worker’s Compensation Insurance
Given the differences in the various policies, it is important that you read through your insurance contracts carefully to make sure that you are not over or underinsured.
When do you need business insurance?
We all know what happens when accidents occur – property gets damaged and people may get injured. Without an insurance policy, you’ll likely have to fork out payments for repairs and medical fees from your pocket as a business owner. Worse come to worse, you may even have to shut down your business.
To prevent such situations from happening, incorporated companies in Singapore must have Work Injury Compensation cover and Commercial Motor insurance.
Insurance for property
Property can come in the form of buildings, machinery, equipment, raw materials, computers, and other furniture. If you have property insurance, the policy will cover all sorts of financial loss or damage to your property.
Though most property insurance policies will protect against accidents such as fire, theft, terrorism, and natural disasters, there are also industry-specific insurance plans. For instance, you can invest in a cargo insurance plan if you run a shipping business. This plan protects your goods in transit.
Insurance for employees
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There are two important covers for employees – work injury compensation and basic health insurance. Depending on the employment status of your workers, these covers may be mandatory.
Work injury compensation
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This insurance protects a company if employees get injured or contract diseases. This is especially important for businesses where workers face a high risk of injury, such as construction. If workers suffer an injury during their work, this insurance also provides monetary protection to workers.
All employers must purchase this insurance for local and foreign employees under the Work Injury Compensation Act (WICA), for both manual and non-manual work. Non-manual workers earning less than $1600 a month are mandatorily issued this cover.
Basic health insurance
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All employers will have to make CPF contributions to their employees, a part of which will go to their MediShield Life. You can also choose to buy additional coverage for your employees on top of MediShield Life.
However, do take note that S Pass, Work Permit and Employment Pass holders are not eligible for MediShield. Employers are still required to get medical insurance to cover S Pass and Work Permit holders, but not for Employment Pass holders.
Given that insurance covers are compulsory in Singapore, be sure to set aside some funds to ensure that your employees are adequately covered.
Sometimes, companies may be held legally liable for compensation due to an act of negligence by an employee. In this situation, several types of insurance can cover you.
Public liability insurance provides coverage when there has been damage made to property and business or bodily injury from business operations.
DIrector and officer insurance covers the company’s decision-makers in situations where they are held liable for breach of duty or negligence.
Professional indemnity insurance provides cover to specific occupations such as lawyers and auditors against legal liability arising from negligence.
Insurance while working from home
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Even if you are a freelancer or employer conducting your job operations from home, insurance will still come in helpful in terms of covering your equipment. You’ll never know – it’s possible to suffer legal damages resulting from your products or service.
It’s still best to get business insurance though you are working from home. It should cover property that is key to your business, such as computers, printers, and furniture. If you are using a vehicle, getting a business motor policy would be ideal as well.
Cost of business insurance
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The cost of your business insurance is dependent on several factors such as the nature and size of your business. For example, companies that work with heavy equipment are more likely to face greater risk than others. Companies with more employees will also naturally require more funds for employers’ liability cover.
It also depends on your cover requirements and claims history. A higher level of cover naturally comes with a higher premium, and a history of making claims will also increase your premium price.
The best way to save costs and arrive at the right policy is to compare different policies. Insurance providers have different criteria to determine premiums so be sure to get one that covers everything that you need.
Purchasing insurance for business
Getting started with the basics of business insurance and investing in the right coverage is important no matter if you’re the owner of a startup entrepreneur or an e-commerce retailer. This will help you enjoy peace of mind and focus on the more important aspects of running your business.
Now that your insurance is settled, you might want to delve more into things like administrative or secretarial services. Be sure to contact us where we’ll be able to provide solutions to all these tasks and more.