That's it, you chose Singapore to kick-start your business? Everything is moving really fast and protecting your business is not really your priority?

Watch out, doing your business without protecting it would be a huge professional mistake that could destroy your hard work!

First of all, protect your business against financial losses due to 3rd party claims you are accountable for. Being more than a simple regulation, business insurance is about protecting your business, your employees and yourself from a potential mishap. When your business is protected, think about covering your main assets: your employees and yourself. On top of those, depending on your activity, you might want to consider insuring yourself against cyber-attacks, ensure your offices, tools...

To help you get a better idea, here are a few insurances that you have to consider:

1. Professional Indemnity Insurance

Also called Professional Liability Insurance or Error and Omission Insurance (E&O Insurance), this type of business insurance aims to protect businesses in the advice giving industry in the event of negligence, or a claim linked to the services or advice provided. A Professional Indemnity Insurance will cover you if a claim or an allegation is made against you.

The coverage can include a lot of cases such as negligent acts, misleading statements, defamation, intellectual property rights infringement, loss of data... Some professions such as accountants, lawyers, architects or even insurance brokers are legally required to get professional indemnity insurance in order to open a business.

This insurance helps you keep your finances, your livelihood and your reputation in one piece. Even if you could cope with the financial burden, the time spent to settle the issue might be a business killer!

Furthermore, some partners, vendors or clients might request proof of coverage before doing business with you.

2. Public Liability

Public liability insurance is for businesses that interact with third parties. It covers you if a third party claims for property damage or body injuries. This insurance helps you pay the bill and the legal expenses incurred to settle it.

It covers you for most accidents that could occur at any business. For example, if a visitor slips on a loose step, this type of insurance will cover you. Note that the public liability insurance covers you only for third party claims. It will not cover any expenses related to a claim from one of your employees.

Public liability insurance is a must-have as soon as you open your business!

Keep in mind that people ask for compensation when accidents occur. You probably don't have the time and money for them, therefore a public liability is the right call to make. Furthermore, many clients can ask you to have a suitable coverage in order to do business with you.

3. Director & Officers Insurance (D&O Insurance)

D&O insurance covers the management teams any claims made by a third party. The allegations are caused by their decisions and actions taken within their scope of duties and responsibilities. For example, one of your managers or even yourself can be sued by a stakeholder who suffers from a financial loss.

There are 3 "sides" to D&O insurance :

1. Side A:
It protects your management team from claims alleging professional errors. This means that their decisions or/and actions have had a negative impact on the company's value and on your client's business.

2. Side B:
It protects your company in case it needs to indemnify and/or pay for the defense of one of its directors or officers.

3. Side C:
It protects the company in the case of a shareholder lawsuit. It protects against the legal costs occurring while defending the company's business actions.

This insurance is important but might not be a priority. However, you should consider it when your company grows and you have external investors or a board of directors. In addition, check what your policy covers as the level and lines of coverage can vary quite a lot.

Some policies have an exclusion on claims that are made by major shareholders, make sure you pay attention to the policy wordings.

4. Product Liability

Product liability protects a business against claims due to damages caused by one of its products. The coverages are tailored according to the business and the products it sells.

There are many examples of product malfunctions where product liability insurance was useful. Here is a famous case:

In 1994, Stella Liebeck purchased a hot coffee at McDonald's. Accidentally, she poured it over her lower body and suffered third degree burns. Her lawyers argued that McDonald's served the coffee too hot. Their coffee was usually served around 180degF (82degC) while most of the competitors serve it at only 140degF (60degC). She won the case and received 2.7 million US$ in punitive damages and 160,000 US$ for medical expenses.

As you've seen with this example above, a product malfunction can have immense consequences on your business. This insurance is not for every business but if you manufacture products for the general market, you should really consider it.

Here are a few important insurance policies that you can consider as a CEO. However, keep in mind that there are other insurances types that you could look at. Furthermore, depending on your business type and your activity, you may need to subscribe to specific insurances. Another point that may be beneficial for you is to cover, not only your business but also your employees. In that case, you may want to find out why it is important to cover your employees.

 

To find out more about healthcare topics in Singapore you can check our articles. To understand how your health insurance plans cover the healthcare costs, you can approach UEX’s happiness team by email for more information and guidance – and the good news is that they are super nice!

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