Menu

"Your business needs to be prepared for the unexpected. Take a business insurance plan."

Business Insurance

What is business insurance?

"Risk " is part and parcel of a business and is unavoidable. However certain risks which a business faces can be avoided by insuring your business called business insurance.

You pay a premium and insure your business for a sum of money called sum assured. Business insurance covers fire and allied perils, loss of Company equipment due to theft, third party liability if your business causes damage to public property and a professional indemnity cover.

Why Business Insurance?

You invest a lot of money in a business. You want to concentrate only on making a profit. You have uncertainty in the business environment (inflation and political changes) which can affect your business. There is nothing you can do about these changes in the business environment.

A business also faces risk to its location due to a fire, flood or a natural calamity. This is true mainly for a manufacturing unit (Factory which manufactures products).Your business might face risk from theft of data by your employees. This is true especially in the service industry (Financial services and IT). On the job injuries are common to a business (especially for a manufacturing unit).You would have to pay a lot of money in compensation to your employees injured on duty. The risk due to this uncertainty can be avoided by availing business insurance.

Why buy Business Insurance?
Protection from Fire

Protection from Fire

Compensation available to the location of the business, furniture and also costly office equipment if destroyed in a fire.

Compensation to Workers

Compensation to Workers

Your workers are compensated, if they suffer on the job injuries. Workers compensation is compulsory in India.

Protection from Theft

Protection from Theft

Your business is compensated from any theft, burglary or robbery on the business premises.

Professional Indemnity

Professional Indemnity

Compensation to clients and legal fees taken care of, if errors, omissions or negligence by the business, results in a loss to the client.

Eligibility for Business Insurance

Any kind of business willing to insure against possible risks.

Key factors to consider for Business Insurance

Your business must avail worker's compensation

It is compulsory for businesses in India which employ workmen to avail worker's compensation. If your employee is injured, killed during the course of his work (on the job duty) then this is an on the job injury.

The workers compensation policy pays the worker compensation/money for injuries suffered at work.

Protection against fire and allied perils

If your business is a manufacturing unit then protection/cover against fire and allied perils (earthquake, landslides, floods, storms) is a must.

You must insure your entire property against these risks. Insure the boundary walls of your business/manufacturing unit, elevator/lift, office equipment, costly electronic equipment and furniture.
Document (Show proof of ownership) of all this equipment so that the insurer can easily settle your claim.

Take insurance against theft

Your business can suffer a severe loss due to a theft/burglary. You can avail insurance/cover against the loss you suffer in a theft or the damage to your business property in a burglary/attempted burglary. You are not covered for theft of jewelry, property and business documents.

You must avail a sufficient sum assured (Coverage amount) for your business so that the loss of equipment in a theft is not too costly for you.

General third party liability

Your business must avail a general third party liability to protect the business from claims of injury and death of a third party during the course of the business.

This also covers:

Damage and destruction to the property of a third party.
The advertisements of your business may invade the privacy of a person (this affects his/her personal life), infringement of the copyrights/patents/trademarks of another business or defame a person (libel).
Claims of harassment and discrimination.
All these claims for damages are settled by a general third party liability.

Professional indemnity insurance:

While running a business if damage/injury is caused to your clients (people you serve) then you are liable to pay for damages.This is mainly availed if you are a highly qualified professional such as a lawyer, doctor, chartered accountant, engineer or a consultant.

The claims settled in professional indemnity insurance are:

Negligence: Your negligence or the negligence of the business causes death or injury to your clients. If you are a doctor then you must have professional indemnity insurance.

Copyrights: If you unintentionally infringe on the copyrights and the patents of another business.

Loss of data: If you lose data or important documents of your clients then you will have to pay huge amounts of money in damages. Injury caused by machines: The machines you use in the business can cause injury to a client (Think machines doctors use). You must avail errors and omissions cover if your business uses information and network technology.

A professional indemnity insurance covers (pays up claims for such damages).

Product liability insurance

This insurance is very necessary if you have a manufacturing unit. The products your business manufactures could be defective and cause injury to a client (customer) who purchases your product.

These products are generally used, touched or consumed. If you have a business which manufactures food products, toys and so on make sure to avail product liability insurance.There are different types of business insurance policies. You need to make sure that your business has all the protection it needs.

Criteria

There must be an actual loss of business income.
The business must experience a necessary suspension of operations during restoration.

Types

Property Insurance: Protects against damage to business location (can include specific insurance such as fire...)

Causality insurance: Broad category of property insurance, protects against damage and liability, vehicle insurance, elevator insurance.

Public liability insurance: Protects against liability claimed by third party due to business or its employees' negligence.

Worker compensation: Pay workers in case of injury or illness.
Health insurance for its employees.

Scripted Insurance: If your business is unique and needs a specific kind of insurance.

Business interruption insurance: Protect against loss or damage to cash flow or profit caused by business not able to operate due to some reasons.

Related Articles

07 January 2014, Thursday

Need for Business Insurance in India

“Uncertainty” is a problem faced by businesses in India and the World. No business can guarantee itself a profit. The Auto industry might suffer a loss due to the rise in prices of raw materials and labor costs and sometimes even labor unrest. (Strikes and lockouts). Chocolat. . .

21 January 2012, Thursday

How to Make Claim on a Property Insurance Policy

Property insurance covers damage to the location of the business and also furniture and fittings, machinery and goods stored in the factory premises due to Fire Lightning Earthquakes Landslides Explosions and Implosions Riots Tsunami’s and floods Floods . . .

20 January 2010, Thursday

What is reinsurance and what are the types of reinsurance?

Reinsurance contracts are those contracts in which one insurance company transfers its risk to another insurance company. Insurance companies which transfer the risk are known as ceding companies also, direct writers. Accepting company .i.e. the company which accepts the risk is also known as re. . .

Most Read Articles

20 January 2008, Thursday

Milestones of the sensex

The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base value of 100 started on April 1979. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies . . .

07 January 2014, Thursday

Why is it very Essential to have Defensive Stocks in ones Portfolio?

There is a famous saying “Better be safe than sorry”. One cannot make too many mistakes and live to tell the tale when he is investing in the stock market. Building a safety net under one’s portfolio is very essential and its true value is realized only in a recession. Fortunately. . .

18 January 2012, Thursday

How to Make Claim on a Health Insurance Policy

Formalities for a health insurance claim You can make a claim under a Health insurance policy in two ways : On a Cashless basis and A Reimbursement Claim On a Cashless basis : For a claim on cashless basis, your treatment must be only at a network hospital of the Third Party Admini. . .

In The Media