A startup is like your own kid – you would like to keep it safe at all costs. But given the volatility of the business landscape, new businesses are often more likely to run into serious financial issues than settled corporations.
For example, when you are a startup or an SME, a single lawsuit can reap your business apart. Unfortunately, it means it can cause destruction and can prove fatal for your business continuity.
Thankfully, they have a lot of options to cover such uncertainties in the form of business insurance policies. This article discusses the types of business insurance for startups and SMEs and their importance.
What is Business Insurance?
Also known as commercial insurance, business insurance is a policy that indemnifies a business from financial losses because of unwanted events during its ordinary course. If the company suffers from any financial loss because of an event covered in the policy, it is liable to receive compensation from the insurer.
Importance of Business Insurance
Here is why business insurance is vital for SMEs and startups –
- Helps in the smooth flow of your business operations.
- Acts as a hedge against uncertain future events that can hamper your business
- Gives you peace of mind.
- Cost-effective compared to bearing the complete cost of any unwanted incident hindering your business.
- Provides coverage against natural calamities.
Types of Business Insurance for Startups and SMEs in India
Here are the types of business insurance for startups and SMEs you are likely to come across –
1. Property Insurance
Property cover insurance offers protection against any risks to your business property, such as your premises (office, shop, and factory), and tangible assets (equipment and appliances). For example, financial loss due to fire on official premises is covered under property insurance.
2. General Insurance
Depending on the kind of business you do, your company can run into a defined set of liabilities. Getting general insurance enables your SME or startup to indemnify itself from losses that can cause severe damage. It covers items such as clinical trials, infrastructure damage, worker compensation, and product recall.
3. Commercial auto insurance
If you operate a fleet of vehicles or utilize them to fulfil your orders, it is imperative to have your automobiles in good health. Getting auto insurance would ensure that you can claim damages in events that result in a loss of revenue because of the insured vehicles.
4. Data breach insurance
We understand that most startups and SMEs run at a higher risk of their vulnerable data running into unauthorized personnel. Most cybercriminals target newly formed or small brands’ databases for ransom or other purposes. Having a data breach insurance would help cover the loss of the business occurring because of data being leaked.
5. Worker’s compensation insurance
It is one of the most common business insurance that most organizations must have. Such a policy aims to compensate your employees if they suffer from an injury while working during office hours adequately.
6. Professional liability insurance
Also known as Errors and Omissions insurance, professional liability insurance seeks to protect businesses against damages caused during the performance of a service. It only covers any act of negligence (for example – not conducting due diligence when investing in a company) while rendering any particular service/s by the startup or SME.
7. Cover for loss of income
Cover for loss of income policy comes into the picture when the organization cannot meet its fixed cost due to an unforeseen event, such as natural disasters.
8. Vehicle insurance
Vehicle insurance is for those vehicles that are not being used for any commercial purposes. Such insurance covers damages caused to a vehicle (company-owned or employee-owned). Every vehicle plying on Indian roads must have compulsory vehicle insurance.
9. Directors and Officers Insurance
Directors and Officers insurance for startups and SMEs cover losses incurred by the businesses because of decisions made by their directors and officers that negatively impacted their revenues and ultimately profits.
Get an in-depth understanding of your Business Cash Flows to optimize your insurance outflows with Slate
While there is a plethora of business insurance for startups and SMEs available, it is imperative to understand that the costs attached to it will take a hit on your revenues. It means there is a need to optimize your outflows attached to it.
With Slate, you can generate actionable insights pertaining to your cash flow. It allows you an understanding of how your business flows and things most critical to its profits. It would then allow you to cover them to ensure you do not run into any unforeseen event without a financial cover.
Click here to try Slate for your business.