Business Insurance in Singapore - What You Need to Know

Every business is vulnerable to dangers - from lawsuits, to fires, to theft... Every single one of these dangers threaten businesses to fall into financial disaster. You can never be certain that these bad things will never happen to you, but what you can be certain about is this - with the right insurance policy, you can minimize these potential damages.

This article will act as a guide for you to understand what business insurance is, and allow you to invest in the right coverage.

What is Business Insurance?

Business insurance allows companies to be compensated if a bad thing happens to them. In order to get this compensation, companies have to pay smaller amounts of money to their insurance provider. Importantly, different policies have different terms, which means that companies will have to read the contract terms carefully to know what their policy is really covering or.

After a business signs a contract with an insurance provider, the business becomes the policyholder. Thereafter, the money that the business pays according to this contract is called premium.

The most popular insurance types for businesses

• Business Package Insurance

• Liability insurance

• Workers' Compensation Insurance

• Business Interruption

• Property Insurance

Every insurance policy is very specific about the types of events they cover. With so many different types of coverage, it is highly likely that businesses will need to consult an insurance agent, to ensure that the risks are relevantly covered

Why would a firm need business insurance

If a firm suffers from an unfortunate fire, the firm would need to pay a potentially hefty sum to repair and replace broken equipment. If the fees are too high, the firm might even need to consider closing operations for good.

In order to avoid these situations from happening, Singapore makes it a legal requirement to invest in a few insurance types, such as Commercial Motor Insurance and Work Injury Compensation

Property protection

For businesses, property can include machinery, raw materials, furniture, buildings, computers, etc. Property insurance can compensate for damages to these property.

The more common variations of property insurance covers for terrorism, fire, natural disasters, theft, etc. There even insurance plans that cover risks specific to an industry. For example, a cargo insurance plan can protect shipping businesses against anything bad that could happen to their goods in transit.

Besides physical assets, property insurance can also compensate for expenses incurred from a catastrophic loss, when a business is tries to get back on its feet straight after the incident.

Employee protection

Depending on the employees' employment status, insurance for employees can be compulsory. The two main insurance types are basic health insurance and work injury compensation.

Basic health insurance

The Employment Act forces employers to make CPF contributions for their Singaporean employees. A part of these CPF contributions will be allocated to MediShield Life, a basic health insurance for Singaporeans. Additionally, companies can also consider purchasing additional coverage not provided for by MediShield life.

Although S Pass and Work Permit holders are not eligible for MediShield, employers are still obligated to medically insure them for as long as these employees are employed under them.

Similarly, Employment Pass holders are also not eligible for MediShield life, and employers can invest in private medical insurance as part of employment benefits for these employees.

Notably, work injury compensation and MediShield are both compulsory purchases, employers should ensure that they have enough provisions for these two first before investing in additional forms of coverage for employees.

Work Injury compensation

Work injury compensation covers a company if employees file claims for diseases or injuries. Work injury compensation is important, especially for businesses that require their employees to face higher risks of injury (e.g. construction). Work injury compensation compensates for losses incurred due to injuries that happened over the course of their work.

All employers in Singapore are required under the Labor Injury Compensation Act (WICA) to obtain this insurance for local and foreign employees (but not independent contractors and freelancers) performing both manual and non-manual work. Workers doing non-manual jobs and making less than $1,600 per month must be required to be insured.

Employers who don't offer workers' compensation insurance risk a fine of up to S$10,000 or a jail sentence of up to 12 months.

Protection against legal liability

It is possible for businesses to incur legal losses because of an employee's act of negligence. The following insurance types can be helpful in cases like these.

Public Liability insurance covers for damages to property and premises resulting from business manufacturing, sales, business operations or distribution. Moreover, Public Liability insurance also covers for bodily injury.

Directors and Officers insurance protects a company's key decision-makers should they be held liable for negligence or breach of duty.

Professional Indemnity insurance covers specific occupations (i.e. accountants, auditors, lawyers) against legal liability resulting from negligence.

If I work at home, do I still need business insurance?

Professionals and independent contractors who work from home have just as much incentive to purchase insurance for their tools. A business contents insurance policy is the best option for furniture, computers, printers, and other things, as opposed to a typical home contents insurance policy, which is unlikely to be suited for business use. Purchasing a company motor policy will also make sense if you drive a car. In addition, you must have employer liability insurance if you employ others.

Cost of business insurance

A number of variables, including some of the following, will ultimately affect the rate you pay for business insurance.

the kind and scale of the business

Businesses that use expensive and heavy machinery, for example, will be more risky than those that don't. Similar to this, companies with additional employees will require higher employers' liability insurance. The nature and size of a firm have a significant impact on the cost of business insurance.

The necessary cover

A higher premium is associated with a higher level of coverage. Your history of claims. If you've previously been paid by insurance, the providers will anticipate that you'll file claims in the future, which means they'll have to incur more losses rather than earn from you. As a result, they will raise the premium. Comparing various insurance policies is the greatest approach to find the best one. Shop around and weigh your options because different insurance carriers will use different factors to calculate the premium.

Hope this article was useful in helping you to get a better idea on which types of insurance would be best for you and your business. If you have any queries or doubyts, feel free to contact me at 96891153.