People get business insurance primarily to ensure financial protection in unforeseen circumstances that may severely affect their logistics. Good insurance helps keep a business stable during the crisis and also aids in recovery.
However, when choosing a business loan, it’s essential to understand the options available and select one that aligns with your company’s financial needs and long-term goals. This blog will help you choose the right coverage for your specific needs.
What do Business Insurance Policies Cover?
Business insurance policies provide financial protection for your business in various situations where there is a risk of financial loss, such as:
- Property Damage: Businesses involving commercial spaces taken on rent or lease can be damaged due to natural calamities or man-made negligence. Few business policies help pay for these so your business does not suffer a financial setback.
- Liability Claims: If you are running a business or launching a product that has caused physical harm or property damage to your client, you can be charged on legal grounds. Few business policies help you pay the legal fees due to these lawsuits.
- Workmen Compensation: A lot of businesses involve the workforce in working on physical equipment, and accidents may happen while working with them. Workmen compensation helps your employees get medical aid from hospitalisation, medicine charges, bed charges, ambulance fees, etc.
- Cyber Attacks: Businesses that are primarily available on digital platforms are more likely to fall prey to cyber-attacks, which can compromise personal information. Some business policies can help you pay for this crisis when retrieving your information.
- Theft and Vandalism: Some business insurance policies help pay for physical assets, such as commercial vehicles, tools, equipment, etc. if they are stolen or damaged. This kind of policy can save a lot of money for businesses with physical assets.
- Equipment Breakdown: If your business works with heavy machinery which can stand a chance of breakdown, you can get financially drained trying to repair it. A few business policies can insure your equipment so that the insurance can pay for the repair or a new set during these times.
- Natural Disasters: No one can point out natural disasters, but they can have devastating consequences for your business, especially if you run one that includes physical assets, commercial spaces, etc. Some business policies can help you pay for the repair or rent of these commercial properties or rented equipment in such cases.
Different Types of Business Insurance Policies in India
As there are different types of business insurance, you might need clarification as to which one you should choose. Here is a quick rundown on the various business insurance policies you can explore for your business:
Table of Contents
1. General Liability Insurance Policy
Though the General Liability Policy is not a legal requirement for a business, it covers the business financially against any claims of property damage, bodily injuries, etc.
The General Insurance Liability Policy also covers copyright infringement, any incident that may harm reputation, and invasion of privacy. This policy covers legal and settlement costs, and in some cases, it also covers medical expenses.
2. Commercial Property Insurance Policy
Commercial property insurance helps reduce the financial impact of damage caused by natural circumstances or intentional man-handling. You can protect your business’s on-site physical assets if anyone harms them or if there is a natural calamity.
This insurance policy is usually combined with the General Liability Policy in a Business Owner’s Policy. It primarily covers the equipment needed for the business, the inventory of products, the property where the company is held, etc.
3. Workmen Compensation Insurance Policy
Workmen or Worker’s Compensation Insurance offers financial assistance to employees who experience injuries or illnesses related to their work. Many businesses must ensure this coverage, as workplace injuries are common.
An advantage of this insurance policy is that employees can receive financial support without fearing losing their jobs. Reputable insurance companies like Digit provide comprehensive coverage and reliable support.
4. Health Insurance
If you run a business with a staff of over 50, you must have health insurance. This policy helps with the cost of medical treatment by covering a large portion of hospital fees and other professional consultation fees.
Health insurance like Digit includes pre and post-hospitalisation expenses, annual health checkups, psychiatric support, maternity expenses, and more.
5. Cyber Insurance
Cyber Insurance, as the name suggests, covers financial losses due to cyber incidents. For businesses that do a large portion of their work on digital platforms, this insurance acts like a risk management tool and protects the business against any kind of cyber threat.
There are two kinds of Cyber Insurance Policy coverage, which include:
- First-Party Coverage: This coverage takes care of the cost due to a data breach, helps restore and recover the damaged data, and also helps with a risk assessment of any possible future cyber attacks.
- Third-Party Coverage: This mostly helps with lawsuits filed by third parties for damage caused by any cyber attack. Vendors, clients, etc., can do this. Since it covers lawsuits, it is also called cyber liability coverage.
6. Tools and Equipment Insurance
If you run a business that relies heavily on physical tools and equipment, having this policy can be very beneficial. If any tool or equipment is stolen or damaged, businesses can claim that cost through this business policy.
The Tools and Equipment Policy may or may not be listed in your policy, so check before you agree. Sometimes, you can claim the cost for equipment you have rented or have taken on a lease.
7. Commercial Vehicle Insurance
This is one of the insurance policies businesses legally must take if they have any operating commercial vehicles. Commercial Vehicle Insurance covers company cars, commercial trucks, etc., by paying for the damage to the vehicle in case of a collision. It also limits BI and PD claims and pays for legal costs in case of a lawsuit against the vehicle, etc.
The Commercial Vehicle Insurance Policy also pays for theft, vandalism, and other issues. For some businesses, the Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage is taken separately, but it is covered under this policy in most cases.
8. Product Liability Insurance
Product Liability Insurance is a worthwhile policy for your business if you design, manufacture, and sell products. This insurance helps your business against any lawsuits filed by clients claiming loss or injury because of your product.
This kind of insurance policy also helps cover the legal costs and compensations in case your product is found to be at fault.
9. Business Interruption Insurance
Suppose your business faces a loss due to an operation disruption caused by an insured event. In that case, Business Interruption Insurance (BI coverage) protects the losses financially. It pays for all the operating costs while the operations are temporarily shut.
A part of the BI coverage includes potential revenue, salaries, loan repayments, taxes, mortgages, etc. Some BI policies also pay for temporary staff and the cost of any temporary location you currently use to set up your business.
10. Professional Liability Insurance
Let’s say you are a company or a business offering expert or advisory services, and your client files a lawsuit against claims of financial losses due to negligence during the professional service. Professional Liability Insurance pays for your legal and settlement costs in those cases.
These legal costs can result from inaccurate advice, breach of contract, budget overruns, oversight, etc. Medical practitioners, lawyers, and real estate agents are some of the professions advised to take out a Professional Liability Insurance Policy.
Conclusion
Your business faces various situations on a day-to-day basis, whether operational or involving a lawsuit. These situations can affect profit and logistics. The above insurance policies need to be explored and utilised to ensure the business runs smoothly in the wake of crisis and calamity.
A large benefit of business insurance is that it improves the company’s credibility, attracting many stakeholders and clients who prefer working with financially protected businesses.