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“Uncertainty” is a problem faced by businesses in India and the World. No business can guarantee itself a profit.
These are some of the changes in the business environment which causes a loss to a Company/Industry.
This uncertainty causes risk in a business.
" 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. When you ride a two wheeler why do you wear a helmet? You might be the best rider around but you might meet with an accident even though it is not your fault .You wear a helmet to prevent head injuries which might be fatal. In the same way your business needs protection against certain risks it might face. Business insurance provides your business the protection it needs against certain unknowns/threats.You definately need business insurance.
This insurance protects your business from the damage caused by a fire either accidental or set deliberately to the location of your business. This cover/protection needs to be taken for the office equipment, furniture, Computers, fittings and furnishings, costly equipment as well as elevators. This insurance might also cover losses due to a natural calamity such as an earthquake or a flood. Riot and terrorism might also be covered under some of the policies. Remember : If the loss to your business by fire was caused due to your negligence then the insurance policy will not reimburse (pay up) your losses. You need to document (make a list of) all costly equipment with proof so that your claim is hassle free.
Loss due to an interruption in business
A business might suffer a loss due to an interruption in business/production due to
The loss in profits due to the interruption in the business is paid up by the insurer if you have a business interruption policy.
If you have to relocate to an alternate site (rented site) then these expenses are covered by the business interruption policy.
A business may suffer a loss due to a theft of jewellery (in case of a jewellery store), the title deeds or the books of the business. Shop lifting causes huge losses to business in India. Your theft insurance policy covers the losses suffered up to the sum insured (The amount you insure your business). You need to make sure that your business is sufficiently insured to cover all losses suffered due to a theft/burglary.
Public liability insurance protects your business (pays for damages) against the loss/damage your business causes to an unrelated third party. This could be the death or an economic loss (damage to property) suffered by a third party due to acts of negligence on the part of your business. Your own employees are not covered under a public liability insurance policy. This policy needs to be compulsorily taken by transporters of hazardous substances as these substances in case of collisions/leakage can cause severe damage to the public.
If your client is unhappy with your products/services he might claim damages (ask you to pay up for his loss) or may damage the reputation of your business.
Your client might claim damages for :
Negligence : On the part of your business or your employees.
Intellectual property : Your business infringes on other businesses trademarks and copyrights.
Loss of data : Your business loses data of your clients. This mainly applies to lawyers, doctors architects or consultants.
The professional indemnity insurance pays up (for claims and damages) suffered by your client due to the negligence on the part of your business.
You (the employer) will have to pay a compensation (to your employees) for accidents suffered on duty (Occupational hazards) .This could be a bodily injury or a disability suffered by an employee during the course of his work.A workers compensation policy covers (claims for bodily injury and disability) suffered by your employees/workers when on duty.
If your business manufacturers a product (toys, food products or clothes) and it causes damage /harm or an economic loss to a third party/customer then you have to pay damages (compensation) for this loss. A product liability insurance policy pays up for the losses suffered by your customers or a third party due to damages caused by the products you sell.
A key-man is a person important for the functioning of the business. His/her loss (due to death) might severely impact the functioning of the business. A key man could be the director/founder of the business, a project manager or a sales manager of the business. The key-man insurance policy functions in a similar manner to a term insurance plan. In this case on the death of the key-man (Could be a founder or a Director) of the Company the policy pays the amounts to the Business.
A group accident and a med claim /health policy provides protection/cover (pays a sum of money) when the employees of your firm/business suffer an accident or a health issue. This cover can be further extended to the employee’s parents and family (spouse and children). Always try to get good business insurance quotes so that the premiums you pay for business insurance are low.