Every Business in Singapore Needs these 3 Forms of Insurance

Many business owners misunderstand the purpose of business insurance. Business insurance, contrary to popular belief, is not merely a legal requirement - it is also a means to shield your employees, suppliers and customers from danger.

Without insurance, just imagine what will happen if a fire were to break out at your retail establishment. Or, what if a delivery worker gets into an accident at work?

All these scenarios have happened before, and they have thrown both employers and employees with no insurance coverage into deep trouble. Insurance can free you from your worries and allow you to focus on enhancing productivity and profitability.

This article serves as a guide for you to understand the key business insurance types that are highly relevant to those that have just established their business, or are looking to start one.

The Big 3 Business Insurance Types

For the majority of businesses out there, insurance can be categorized into 3 main groups:

Employees
Property
Legal liability

1. Employees

It may be legally compulsory to insure some workers, depending on their employment status. There are 2 key insurance types to take note of: basic health insurance and work injury compensation insurance.

(a) Basic health insurance (MediShield Life)

Singaporean employees

Under the Employment Act, every employer must CPF contributions for all of their Singaporean employees, and a part of this will be distributed to MediShield Life. Medishield Life is a foundational health insurance solely for Singaporeans. This insurance policy aims to aid Singaporeans after they grow old or develop serious illnesses in the future.

As an employer, you can choose to purchase additional coverage not provided by MediShield Life for your employees.

S Pass & Work Permit holders

S Pass and Work Permit holders are not entitled to MediShield. However, you are still legally required to buy medical insurance plans for them.

These medical insurance policies must be maintained for as long as they are under your employment.

You can refer to the MOM website for more information regarding health insurance requirements.

Employment Pass holders

Employment Pass (EP) holders also cannot apply for MediShield. Nevertheless, as an employer, you can still choose to purchase private medical insurance for them, as a form of employment benefit.

These private medical insurance policies can come in the form of a Group package/benefit that provides personal accident, maternity, hospitalization or dental coverage.

Another option for you could be to subsidize the costs of your employees' own pre-existing integrated shield plans while they are under your employment.

(b) Work injury compensation insurance

Work injury compensation insurance provides coverage for your company in case your employees file claims for illnesses or injuries gained at work.

Under the Work Injury Compensation Act (WICA), every employer must buy work injury compensation insurance for both foreign and local employees who are involved in:

Non-manual work, and have a monthly salary of $2,600; and
Manual work, no matter the salary

Employers who fail to provide work injury compensation insurance despite being obligated to do so will receive a fine of up to $10,000, jail of up to 12 months, or both for a first-time offence. Note that this requirement is not applicable to independent contractors or freelancers.

2. Property

Property refers to furniture, equipment, buildings, fixtures and fittings, stocks, plant, etc. Property insurance covers damages and losses to your business property.

Here are a few examples of insurance that can be purchased for property:

Business interruption insurance: assists you in covering lost wages, revenue or ongoing expenses incurred whilst operations were suspended
Theft insurance: if a robbery or burglary occurs
Fire insurance: not only covers for the event of a fire, but also floods or lightning
Terrorism insurance: for unlawful use of violence against property or people
Select insurance plans: Plans that are tailored to suit the needs of the industry that your business is in. For instance, a logistics company can purchase cargo/marine insurance plans to cover cargo in transit

We recommend you to list down the most pertinent dangers to your business properties and premises, and consult us with this list in mind. This way, we can help you to craft a package that will best suit your business's needs.

3. Legal liability

Unfortunately, all businesses are vulnerable to the risk of being held liable for compensation from acts of negligence by employees. These are the insurance types you can consider to protect yourself from this risk.

Director and officer insurance: provides indemnity to the main decision-makers in the company
Public liability insurance: provides coverage for (a) bodily injury or damage to premises and property due to sales, manufacturing or distribution of your product OR (b) bodily injury or damage to premises and property stemming from your business operations
Professional indemnity insurance: protects you against legal liability resulting from acts of negligence. This insurance type is specific to your professional occupation and should be purchased depending on your occupation.

It is crucial for us to comprehend the type of business that you are running, and identify potential threats and thereafter decide the scope of liability should any unforeseen circumstances arise.

It is also important that you consult a trustable insurance provider who is familiar with your business industry - someone who can advise you on the most suitable business insurance policies for you.