Business Insurance

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What is Business Insurance?

This is a type of insurance that covers financial assets, physical assets, business premises, risks related to employees of a business (enterprises), and legal costs (called Liability Insurance) from the day-to-day working of the organization. It is also called commercial insurance because it protects your business from unwanted mishaps.

If you own a small business or a large business or you are self-employed, then this insurance will help you to protect your asset and all the assets of your business. Hence, this insurance is crucial for all of them.

Why should you buy business insurance?

When you own a business, you have to consider all the possible risks related to the loss of assets and the safety of your employees. When you have business insurance, it will cover all those losses, employees’ safety, and also legal costs. But, if you do not have this policy, you have to pay for all those losses on your own, and these expenses are so high that you may lose your business or face an additional financial crisis because of those expenses. So, to avoid such problems, all business owners must buy business insurance.

Look at some other reasons to have better clarity.

  1. Coverage against natural mishaps: – This policy covers all the financial loss, physical injuries, or diseases of employees and damage or destruction of company assets when the company faces any natural calamity like flood, storm, earthquake, or fire. 
  1. Future is unpredictable: – You can not predict, what will happen in the future. So, you should be prepared for all possible mishaps from the start by taking business insurance. It is better safe than sorry. 
  1. Expensive Lawsuits: – Nowadays, legal procedures are very expensive. So, when you do not have business insurance, the legal cost in case of any mishaps can hamper your business very badly. So, taking business insurance is a must for your peace of mind.
  1. Helps to run the business smoothly: – Business insurance settles the losses from unavoidable situations like business interruptions, natural reasons, or legal actions. Hence, by taking this policy, you can run your business smoothly during such unfavorable situations. 
  1. Important for your peace of mind: – As this policy covers the expenses of losses of business due to specified reasons, you can run your business peacefully.

Types of Business Insurance

Since business is a vast area to cover and the requirements of different companies are different, different types of business insurance cover different requirements.

Look into some common types of business insurance below.

  1. Liability Insurance: – This policy covers the expenses to settle the third party (shareholders, Investor, customers, clients, etc.) claim arising due to any physical injury to people or any damage to the property of the business. If you are facing any legal case to settle such issues, then all those costs will be covered by this policy. This can be again categorized into general liability insurance, professional liability insurance, product liability insurance, and commercial umbrella insurance.
  1. General Liability Insurance: – This policy covers the expenses arising because of any physical injury, property loss, or damage to the third party from your operation in the factory, product or service. The legal costs arising due to this will also be covered by this policy.
  1. Professional Liability Insurance: – This policy covers the loss faced by the company because of any negligence in services like delay in placing the order, payment delay, or missed deadline provided by the company. The legal costs to settle these issues will be covered by this policy. This policy is also known as errors and omissions (E&O) insurance.
  1. Product Liability Insurance: – This insurance provides coverage for the losses that the company has to face due to defective product supply, which can cause harm to buyers. It covers all the legal costs to settle the issue. 
  1. Commercial Property Insurance: – This insurance covers the loss or damage to your business due to reasons like fire, storm, strike, riots, or deliberate action by any third party.
  1. Employee Insurance Policy: – It is also called worker’s compensation plan. This policy covers the expenses borne by the company in case of any injury or disease to the employees of the company. If any family of an affected employee files a case against the company for the injury or disease, then this policy will bear the legal cost. 
  1. Cover for Loss of Income: – This policy pays you a fixed amount when you can not restart your business after a disaster.
  1. Vehicle Insurance: – Any vehicle, commercial or private that is used for business purposes is covered under this policy.
  1. Cyber Insurance: – This policy covers the expenses to protect your information online from cyber-attacks and while recovering your data in case of a data breach. 
  1. Business Interruption Insurance: – This policy is applicable for the business where employees’ physical presence is necessary like banks, hotels, and retail shops. This policy covers the losses due to hamper in regular course of business because of any emergency situations like strike or land slide. For example, if employees can not come to the office due to strike, then the loss of that day will be covered by this policy.

Features of Business Insurance 

  • This policy covers the loss or damage to your business due to any natural calamity or any human activities (theft, deliberate destruction).
  • It covers the expenses arising from employees’ injuries, diseases, or death due to an accident in the company.
  • It covers the legal costs.  
  • The losses faced by the company arising from third-party claims due to negligence in providing the services are compensated by this policy.

Benefits of Business Insurance

Following are the benefits provided by business insurance.

  1. Lawsuits: – When you have to face any legal case because of any reason like injuries or death of employ because of any accident in the working process, third party claim due to negligence in providing service, etc.; the cost of all those legal processes will be covered by this policy. 
  1. Employees’ safety: – This policy ensures the safety of the employees by covering the expenses of their medical treatment in case of any injury or disease while working in the organization.
  1. Property damage covers: – This policy covers the damage or loss of all the assets (financial, physical, and the premises) of your business due to both natural calamity and third-party human activity (Knowingly or unknowingly).
  1. Covers the loss due to negligence in providing the service: – When your business faces losses because of claims arising from a third party due to negligence in your service like payment delay and missed deadline, business insurance will bear that.
  1. Attract more clients: – When you buy commercial insurance, it develops faith in people. So this will attract more clients to your business.
  1. Compensates loss of income: – If a business faces any loss due to any disruption in daily activities because of any natural or human-related cause, then that loss will be covered by business insurance.

For example, let’s there is a riot in your city. So, employees can not come to the office. In this situation, the loss that your business has to bear will be covered by this policy.

  1. Third-party liability: – In every business, there may be a little, but there is a chance of a third party getting injured inside your business premises. In that case, business insurance will help you pay the expenses.

What does Business Insurance cover?

  1. Business premises: – Business covers the loss or damage of the business premises because of natural or human-induced reasons.
  1. Physical and financial assets: – It also covers the losses of both physical and financial assets of your business.

Here physical assets mean all the machinery, furniture, automobiles, manufactured goods, and other valuable things if any.

Financial assets include cash, stocks, bonds, etc.

  1. Lawsuits: – This policy covers all the legal costs while defending the business against any case filed by any third party.
  1. Injuries and diseases of Employees: – This policy also covers the injuries and diseases of the employees while working in the company or plants. If death occurs due to that disease or injury, then this will also be covered under this policy.

What Business Insurance does not cover?

  1. Loss due to wear and tear: The performance degradation of the equipment because of wear and tear arising because of longer use duration is not covered by this policy.
  1. Maintenance issues: – Damage to the equipment due to negligence in maintenance is not covered under this policy. Intentional damage is also not covered. 
  1. Illegal or international activities: – This policy does not cover loss or damage due to illegal activities like fraud, intentional firing, or destruction. International activities are also excluded from its coverage.

Who should buy Business Insurance?

If you are running any kind of business, small or large, business insurance is a necessity for you. Look into the categories below to get a better idea.

  1. Retail stores: – Stores like grocery shops, beauty parlors, and bookstores should buy business insurance.
  1. Retailers: – Any kind of wholesalers like for furniture, electronic equipment, or automobile parts can buy this policy.
  1. Start-ups: – The newly established companies must have business insurance for the safety of their businesses. 
  1. Service-providing businesses: – The businesses providing services like hospitals, clinics, educational institutes, and banks should also buy business insurance.
  1. Catering business: – Businesses like hotels, restaurants, and clubs should buy this policy.
  1. Event planning business: – Businesses who plan events like weddings, birthday parties, other functions, formal meetings, or award functions should buy business insurance.
  1. Business that represents clients: – Businesses representing their clients like lawyers, PR agencies, and advertising agencies should also buy this policy.
  1. Manufacturing companies: – Companies that manufacture automobile parts, food items, water taps, etc. should buy this policy.

Things you should consider before purchasing a Business Insurance

All businesses, small or large, are always at risk. A single accidental mishap can cause a huge loss to your business. Most small businesses even can not stand again after facing such loss. Business insurance can only help those businesses to survive such situations. 

But, as a huge amount of money and the safety of your business is involved here, you must look into all the requirements, terms & conditions of the policy very carefully before buying a policy. 

Look into the things you should consider before buying business insurance.

  1. Size of your business: – The risk factor depends upon the size of the business. Large business means greater risk involved. So, before buying business insurance, you must look into the size of your business. Calculate exact values of all the assets and your business premises.
  1. Risk involved: – Estimate all the possible risks involved in your business, like the risk of theft, fire, earthquake, etc. All risks are not involved in all types of businesses and all locations. For example, on stable land, there will be low risk of earthquake. Earthquake insurance coverage is mandatory for business situated in earthquake-prone regions or businesses involving mine work. So, consider the risk only when it is associated with your business. Estimate the values of all the assets properly to avoid future problems.
  1. Type of business: – For different companies, the risks involved may differ. For example, the risk involved for a bank is different from the risk involved in an automobile manufacturing company. So, estimate the risks according to the type of your business. 
  1. What is covered under the plan: – Look carefully into the covered commodities in the policy and make sure that all the valuables like machines, furniture, and electrical & electronic equipment are covered under your policy. You may have to buy separate insurance for money and glasses, because generally these are not covered under the regular business insurance. 
  1. You must fulfill all legal obligations: – In all countries, there are certain compulsory conditions to be fulfilled while buying business insurance. You must take all those necessary steps to avoid any legal actions against you in future. Different companies require different business insurance coverage depending upon their location, size, industry type, and employment capacity. Some countries have made it compulsory for all businesses to buy workers’ compensation insurance for their employees. 
  1. Cover you and your business: – Do not forget to cover yourself along with your business. Because you are a very important asset to your company. Without taking this, you may face a huge financial problem, especially for small businesses, where you are the sole owner of the business.
  1. Buy a policy from an authorized and reputed company: – There are high chances of fraud in the case of business. So, you must check the authenticity of the company before buying the policy. Do detailed research before buying and buy the policy from a reputed company.

How to buy Business Insurance online?

When you plan to buy any insurance, you always have 2 ways. One is offline and another is online. While buying online has several advantages over buying offline like, it is more convenient, time-saving, and more transparent. So, it is preferable to buy business insurance online.

Here are the steps that you have to follow while purchasing business insurance.

Step 1: – Find all the companies, which are providing business insurance. 

Step 2: – Check whether they are registered on the IRDAI website or not.

Step 3: – Visit their sites and view the insurance plans in detail.

Step 4: – Choose the policy that fulfills your need the best.

Step 5: – Pay its premium.

How to file a Business Insurance claim?

When you face any of the mishaps that are included in your business insurance policy, you have to follow the given steps to claim your policy.

  1. Inform your insurer immediately after the incident. Also, inform the policy in case of any criminal offense. 
  2. Fill in the claim form provided by the insurer in detail and sign it.
  3. Then the company will send a surveyor within 24 hours. Assist the surveyor with all the requirements. 
  4. Prepare all the documents related to the assets lost or damaged in case of property loss.
  5. Estimate the total amount of loss.
  6. Keep some proofs of loss or damage like photographs, and newspaper cuttings if any.
  7. Submit all the required documents and proofs to the surveyor or directly to the company as per the criteria of the company.
  8. Then the company will verify your policy and all the documents.
  9. After verification, the insurer will approve your claim.

Documents required to claim Business Insurance

You will need the following documents while filing your business insurance claim.

  • Duly filled claim form
  • Insurance policy copy
  • FIR copy if applicable
  • Proofs like photographs, newspaper cuttings when applicable

You may require some other documents depending upon the type of business insurance claim.

   FAQ:

Q: What is Business Insurance?

A: This is a type of insurance that covers financial assets, physical assets, business premises, risks related to employees of a business (enterprises), and legal costs (called Liability Insurance) from the day-to-day working of the organization. It is also called commercial insurance because it protects your business from unwanted mishaps.

Q: Is business insurance mandatory in India?

A: In India, business insurance is not mandatory, but it is necessary. it’s covers financial assets, physical assets, business premises, risks related to employees of a business, and legal costs.

Q: What are the types of Business Insurance?

A: Business is a vast area, so different insurance companies cover different requirements. Here are some common types of business insurance.

  • Liability Insurance
  • General Liability Insurance
  • Professional Liability Insurance
  • Product Liability Insurance
  • Commercial Property Insurance
  • Employee Insurance Policy
  • Cover for Loss of Income
  • Vehicle Insurance
  • Cyber Insurance
  • Business Interruption Insurance

Q:  How can I cancel the commercial insurance policy?

A: Policyholders can cancel their business insurance policy within 15/30 days(15 days for offline buyers and 30 days for online buyers) from the date of receipt of the policy document until and unless no claim has been made during the policy period.

Q: Can Business Insurance be purchased online?

A: Yes, customers are required to visit the official website of the insurance company, brokers, or web aggregator and purchase the insurance products through an online payment.

Q: How to buy Business Insurance online?

A: Here are the steps that you have to follow while purchasing business insurance.

Step 1: – Find all the companies, which are providing business insurance. 

Step 2: – Check whether they are registered on the IRDAI website or not.

Step 3: – Visit their sites and view the insurance plans in detail.

Step 4: – Choose the policy that fulfills your need the best.

Step 5: – Pay the first premium.

Step 6: – The insurer provide you the policy documents.

Q: What is included in Business Insurance?

A: Business insurance covers the cost of property damage, lawsuits, lost business income, and other covered losses.

Q: What does Business Insurance cover?

A: Here are some points that the insurance company covers, but it varies from insurer to insurer. Business insurance can cover:

  • Theft
  • Property damage
  • Liability protection 
  • Lawsuits 
  • Vehicle insurance
  • Loss of income
  • Employee injuries/illnesses
  • Workers’ comp
  • Customer injury

Q: What doesn’t cover in Business Insurance?

A: There are some few perils that the insurer does not cover under this plan. Those include:

  • Nuclear hazards
  • Wear and tear, power failure
  • Military action
  • Different types of pollution
  • Illegal activities performed by the insured
  • Governmental actions
  • Explosion of machinery
  • Action due to law enforcement

Q: Why should you buy business insurance?

A: When you have business insurance, it will cover all those losses, employees’ safety, and also legal costs. But, if you do not have this policy, you have to pay for all those losses on your own, and these expenses are so high that you may lose your business or face an additional financial crisis because of those expenses. So, to avoid such problems, all business owners must buy business insurance.

Look at some other reasons to have better clarity:

  • Coverage against natural mishaps
  • Future is unpredictable
  • Expensive Lawsuits
  • Helps to run the business smoothly
  • Important for your peace of mind

Q: When do businesses need insurance?

A: Here are a few specific situations for which you want to make sure you’re covered: 

  • You have employees.
  • Your business has grown.
  • You acquired a business vehicle.
  • You need industry-specific insurance.
  • You recently signed a lease.
  • It’s required by law in your jurisdiction.

Q: What is the renewal process for commercial insurance?

A: Customers can renew their policy by visiting the insurance provider’s official website and entering the user name and password for login. After this, make payment for the premium amount. You will receive the notification regarding the successful renewal of the policy on your registered mobile number and E-mail ID.

Q: Documents required to claim Business Insurance

A: You will need the following documents while filing your business insurance claim.

  • Duly filled claim form
  • Insurance policy copy
  • FIR copy if applicable
  • Proofs like photographs, newspaper cuttings when applicable

You may require some other documents depending upon the type of business insurance claim.

Q: Who should buy Business Insurance?

If you are running any kind of business, small or large, business insurance is a necessity for you. Look into the categories below to get a better idea.

  • Retail stores
  • Retailers
  • Start-ups
  • Service-providing businesses
  • Catering business
  • Event planning business
  • Business that represents clients
  • Manufacturing companies

Q: What are the Factors consider before purchasing Business Insurance?

A: Look into the things you should consider before buying business insurance.

  • Size of your business
  • Risk involved
  • Type of business
  • What is covered under the plan
  • You must fulfill all legal obligations
  • Cover you and your business
  • Buy a policy from an authorized and reputed company

Q: Is business insurance tax deductible?

A: Business insurance is considered one of the costs of doing business. That means you can deduct insurance premiums that serve a business purpose, such as your premium for general liability insurance or professional liability insurance.

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