Business insurance, also referred to as commercial insurance, is a combination of insurance plans catering to a multitude of business needs. Based on the type of activity in the firm, any or multiple of the following different business insurance policies can be bought:
- Office Premises / Shop Insurance
- Stocks / Goods (Raw, in process or finished) Insurance
- Liability Insurance
- Cyber Insurance
Most insurer’s in India offer package policies customizable as per different businesses and commercial entities. Depending on the insurer, different policies or a single comprehensive policy can be purchased.
Cyber insurance is a new addition to the portfolio of Indian Insurers, and thus so far only a handful of insurers offer this policy. However, it may not form a part of the packaged cover for small business.
Office and Shop Insurance
Policies for office or shop insure the premises of the company, the assets within and the goods in the process and storage. This is usually a fire and allied perils insurance which covers the loss due to fire and other natural events and other accidents.
Additional covers can be included with this standard policy as riders to provide for legal liabilities, workmen compensation, burglary, cash in the safe or cash drawer, etc.
Stock / Goods Insurance
A separate insurance policy can also be purchased to cover only goods in the store. These policies are designed to cover the loss of stock due to fire and allied perils. This is recommended for businesses based on storing goods.
Liability insurance covers any legal liability arising out of the accidents in the operations of the company or the products. The following types of liability policies are available to the businesses:
Cyber Insurance / Insurance for Information Loss
Cyber Insurance, however, is still new to the Indian market and is offered by very few insurers as of now. India being a software exporter and the second largest victim of cyber attacks, Indian firms do need to catch up with cyber insurance.
Cyber insurance protects the business from liabilities and losses arising out of cyber attacks on the company’s digital assets and information.
Case to Explain the Need of Business Insurance
Sahil Mittal, 32, had started in his family business with his father, Mr. Harish Mittal, five years ago. Now his father sits well in the sprawling office reading only the financial news and spending time occasionally meeting old business associates in his office. Meanwhile, Sahil has taken the business well up the turnover ladder and for the first time this year, this company is crossing the 50 crore mark set by Mr. Harish when Sahil first started (turnover was about 50 lakhs a year then).
Sahil attributes much of this fast growth to the multitude of insurance policies he invested on as the business activities grew, even when Mr. Harish was completely against his squandering precious cash resource on ‘useless’ (in the language of Mr. Harish) insurance policies.
Mr. Harish, though, realized the importance of business insurance one rainy season, when a sudden power surge was caused by water logging in one of the stabilizers and turned the storehouse into a bonfire. Due to heavy rains, the guards discovered the fire only when the flames showed up on the outside, and fire tenders still took some time to douse it down.
This ordeal could’ve pushed the business back a couple of years with Goods, finished and unfinished, worth Rs. 1.5 crore were either lost and or damaged. Plus, more than 30% of the storehouse (a valuable asset for the business) was rendered useless without repairs, not counting the repairs needed for electrical fittings.
Fortunately for Mr. Harish, his son’s ‘squandered’ money on All-Risk Business Insurance paid off by covering almost 85% of the store repair cost and 90% of the goods value. Ever since Sahil looks after much of the business and Mr. Harish sits in his sprawling office, content and retired.
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