Running a business involves risk, from market ups and downs to cyber threats. That is why having the right business insurance is crucial – it protects your business and gives you peace of mind.
Insurance for SMEs is crucial. SMEs often operate with limited resources and tighter financial budgets, making us more vulnerable to unforeseen circumstances. Having comprehensive insurance coverage protects businesses from a variety of risks, such as property damage, liability claims, and employee-related incidents.
Let’s break down how insurance can help and what types of coverage are available for your SME in Singapore.
Why Business Insurance is Essential for SMEs?
1. Increased Credibility
Showing your clients proof of insurance provides them with peace of mind and enhances your business’s credibility. It reassures customers that they are dealing with an insured business that has taken steps to safeguard its customers and operations. Clients might be more likely to choose your business over competitors.
2. Minimise Financial Loss
Commercial insurance for SME offers protection in multiple ways. It can help
- Cover the costs of repairing damages arising from accidental cause
- Replace damaged equipment
- In the case of a lawsuit, lessen the burden of legal expenses on the business etc
Without business insurance, business owners will have to pay for many things such as legal fees on top of repairs and replacement costs. All of these out-of-pocket expenses pose adverse impacts on the business’s cash flows. Without sufficient financial means to pay these sums, the stability of your business is at risk.
3. Protection Against Unpredicted Events
Businesses continue to remain vulnerable to unforeseen events. For instance, fires and extreme weather may cause severe disruptions to the daily operations of your business. Through buying business insurance, larger risks can be mitigated and solutions can be provided for such accidents, allowing you to run and grow your business without constant worry.
However with the influx of insurance plans in the market, how should you start navigating around to find the one to protect your business? Let’s explore some small business insurance plans that your SME should have.
4 Types of Insurance Every SME Should Consider
1. General Liability Insurance
General liability insurance shields your business from claims for injuries and damages brought by a third party, whether they occur at your workplace, a customer’s premises, or elsewhere. In the event of a significant claim or lawsuit, general liability insurance can prevent financial setbacks from threatening the continuity of your business. This insurance plan is essential for all businesses.
Find out more with the various providers such as:
- Great Eastern Life: They have different insurance policies for industries such as F&B (starts from $127 for a standard plan for a stallholder), education (starts from $232 for a standard plan) and retail (starts from $214 for a standard plan for retail product).
- Etiqa: Basic cover annual premium for education sector starts from $317.14, food and beverage annual premium starts from $299.11.
2. Professional Indemnity Insurance
Professional Indemnity Insurance protects professionals from legal liability arising from breaches of professional duty in the course of their business practice. This policy protects your business and your employees. Any professional or consultant providing advice or services where the advice is relied upon by other people or businesses is strongly advised to purchase this insurance. Examples of such businesses include consulting, accounting and law firms.
Some professional indemnity insurance providers include:
- Chubb Insurance: Market specialisation includes architects, public accountants, consultants and ancillary medical professionals.
- Tokio Marine
3. Cyber Insurance Policy
According to the National Business Survey 2023/2024 conducted by the National Business Federation, cybersecurity was one of the top business trends of concern amongst SMEs. If your company stores critical data on computer systems or servers, you become a key target for cybercriminals.
In the case of cyber attacks on businesses, cyber insurance can assist in mitigating the financial impact of such attacks. Some areas that cyber insurance policies can cover include damage or theft of the business’s digital assets, and the expenses incurred from a security or privacy breach. With more companies moving towards digitalisation, more emphasis should be placed on safeguarding their digital assets.
Some cyber insurance providers are:
- DBS (underwritten by Chubb): Covers business interruption and data recovery, as well as incident response and third party claims.
- MISG: Policy can be extended to cover countries your business operates in.
- Tokio Marine Cyber 365: Policy does not cover physical hardware and failure in power, telecommunications or other infrastructure.
4. Work Injury Compensation Insurance
This insurance covers the cost of medical care and physical rehabilitation for injured workers, and provides compensation for lost wages during their period of incapacity. According to the Ministry of Manpower, these two groups of employees must be insured:
- All employees doing manual work, regardless of salary level.
- All employees doing non-manual work, earning a salary of $2,600 or less a month, excluding any overtime payment, bonus payment, annual wage supplement, productivity incentive payment and any allowance.
For other employees who don’t belong to the above two categories, businesses have the discretion to choose whether they want to purchase this insurance for them. The Work Injury Compensation Insurance ensures your business is protected in the event of a workplace injury. This policy covers medical bills, lost wages, and rehabilitation costs for injured employees. In the case of any unfortunate event, it insures both the employee and employer.
Some work-injury compensation insurance providers are:
- HSBC Life Benefits+: It allows you to provide customisable employee benefits to meet individual needs and offer comprehensive benefits.
- NTUC: FlexCare provides comprehensive coverage with flexible options for SMEs.
Besides the mentioned policies, there is also the option of opening a business bank account where insurance can be conveniently purchased from the same platform. For example, the UOB BizCare insurance plan is an easy and comprehensive option for SMEs that already have an existing business account in Singapore with UOB.
How to Choose the Right Insurance for Your Business
Every business has unique risks, so it is important to find the right coverage. You can start by:
- Evaluating Your Business Needs: What are the key risks in your industry? For example, e-commerce businesses require robust cyber insurance, while food stallholders need fire and equipment insurance.
- Comparing Quotes: Collect multiple quotes to find the best policy that fits your budget without compromising coverage.
- Looking for Bundled Solutions: Some banks, such as UOB and DBS, offer insurance options bundled with business accounts, which can help simplify the process.
What Comes After Insurance? Keeping Your Business Cash Flow Healthy
While insurance protects your business, access to funds is equally important. Timely payments to insurers are essential to maintain coverage. If you face a cash flow crunch, Poss Capital offers financing solutions to help you stay on top of your business expenses.
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