Whenever you start a business, you need to make sure you have proper insurances in place to cover the risks.
Whether your office is based in China, Hong Kong or Singapore, you will face similar risks and you will need to consider the following insurances:
1. Property all risks insurance (or contents insurance)
As a tenant, you should consider covering your assets in case of accidents and natural disasters, especially if you have expensive assets on site. As the name mentions, it will cover all accidental loss or damage, even without knowledge of the real cause, unless a risk is specifically excluded in the policy wording. Theft, unless committed by a company staff (which is then covered by fidelity insurance) is usually included so there is no need to put in place a standalone policy.
This is the most basic insurance and each insurance package offered by insurers will include coverage for this with a minimum premium. It is recommended to insure at purchase or replacement value, as most assets in an office will usually depreciate quickly. Even if damages are caused by a third party (for instance, water leakage damaging your IT system etc.), you will be able to make a claim under your own policy; your insurer will sue the responsible body.
2. Employers’ liability insurance
Whether it is called employers’ liability in China, employee compensation in Hong Kong or worker’s injury compensation in Singapore, employers’ liability insurance covers the same thing: the indemnity payable to an employee in case of a work-related injury. The insurance may be compulsory or not – it is compulsory in Hong Kong, but not in China and only in certain cases in Singapore). The indemnity to be paid will depend on the workplace legislation in each country: coverage issued locally by the insurer will take into account the requirements of each country, as coverage and claim conditions will vary between Hong Kong, Singapore and Shanghai. However, an employer has the duty to provide a safe working environment and failure to do so will expose the company to financial indemnities.
Read more about employers’ liability insurance.
3. Public liability insurance
When running a business, there is always the risk of property or bodily damage to a third party as a result of your business. Public liability insurance covers you in the event of such a third party liability. Your landlord will probably require you to insure the liability in case you damage the landlord’s property or a third party property. You may be required to add them as co-insured under this policy. The coverage is usually extended to your staff while working out of the premises.
If your company manufactures or distributes a product, you will also need to extend the coverage to your product (product liability insurance).
4. Business interruption (or loss of profit insurance)
If your premises is damaged due to a natural disaster, your business will be interrupted in the time until the premises are restored. During that time, proper coverage is critical to make sure that your business will be able to sustain the financial losses you will face in such a situation. Business interruption insurance will cover the loss of profit as well as direct losses incurred during that specific time. This insurance is critical for any shop, restaurant or industrial site.
Read more about business interruption insurance.
5. Professional liability insurance (or professional indemnity)
This type of insurance was initially intended to cover professionals such as lawyers, doctors, accountants, architects, fund managers, etc. Now, however, it has extended to include all kind of consulting work. The cover protects against mistakes in professional acts and omissions, including the giving of incompetent advice. If you are not in a regulated profession where this insurance is mandatory, it will most likely be required by your customers that want to secure your ability to indemnify them if they suffer financial loss from your work. Professional liability insurance policy may include cyber-liability risks to cover direct financial loss following a cyber attack. If not, you should consider including cyber insurance as a standalone policy.
These aforementioned insurance policies are very important to consider when starting a business. There are other risks you will need to insure depending on the type of your business, like money insurance, fidelity insurance and director’s and officer’s (D&O) insurance. And of course, you will also need to look at staff insurance, medical, life, disability as well as travel insurance but this will depend on your human resources strategy.
At Clema Risk Solutions, we help you find the best insurance solutions for your business. Contact us at firstname.lastname@example.org if you have any questions regarding insurances for starting a business, or any other insurance-related queries.
To find out more about our various insurance solutions for SMEs, please visit our website.