From market fluctuations to cyber threats, setting up a business involves risk. Amidst this ever-changing landscape, one steadfast ally stands ready to protect and empower SMEs: business insurance, also known as commercial insurance.
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.
Before we dive into what kind of plans are recommended, we should first understand how business insurance coverage helps your business
Benefits of Business Insurance
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 hence be more inclined 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
SMEs can hence overcome business hurdles with ease. Without business insurance, business owners will have to pay for many things like 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 put at risk.
3. Protection Against Unpredicted Events
Businesses continue to remain vulnerable to unforeseen events. For instance, fires and extreme weather. They might 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.
By safeguarding your business against potential threats through buying insurance, business owners can better focus on expanding their business and achieving profit maximisation.
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.
Types of Business Insurance Plans
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.
2. Professional Indemnity Insurance
Professional Indemnity Insurance assists in shielding 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.
Not having Professional Indemnity Insurance often represents a very serious business risk as a party that experiences losses due to relying on your professional advice may have grounds to file a lawsuit. Professionals need insurance coverage to shield themselves from the potential financial strain of such legal actions and to safeguard their practice’s reputation, personal integrity, and assets.
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 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.
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.
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.
Choosing the Most Suited Business Insurance Plan
Every business has different kinds of risk to mitigate. Hence SME owners should conduct thorough analysis to decide what policy is best for your business before committing. Owners might want to factor in the characteristics of their industry and the nature of their business operations. For example, e-commerce businesses are heavily dependent on their online platforms hence cyber insurance is especially important for them.
SMEs might have concerns regarding the costs of insuring the business. Thus, it is important to gather quotas from different insurance companies to ensure competitive pricing that fits within your budget.
After Business Insurance, What Now
Businesses should also recognise that having access to adequate funds in times of need is equally crucial for business continuity. In order to make timely payments to the insurance company, SMEs need to ensure that they have a healthy cash flow position. In the event of a cash flow crunch, fret not as Poss is here to help your business access funds when you most need it. Contact us here today to learn more about our business financing solutions or hop over to our website to read more about them.
