Tips on insurance: How to protect your business in Singapore
4 minute read
When starting a business in Singapore or any other country, a business owner is always exposed to certain risks. To make your business journey go as seamless as possible, it is important to get insurance to protect both your business and employees in the long run.
In Singapore, business owners have a wide range of insurance available to them. Below we have listed 4 insurances that you can consider.
1: Professional Liability and Omission Insurance
The aim of professional liability or error and omission insurance focuses on protecting businesses in the advice industry in the event of – negligence or a claim linked to the services or advice that had been provided.
With Professional liability insurance, it can cover you if a claim or allegation has been made against you. This coverage can also cover other cases like:
This insurance is not mandatory but it is compulsory for some professions such as – solicitors, financial advisers, accountants and architects.
The benefits of this insurance is that it helps keep your finances, livelihood and reputation intact. At times, certain partners/vendors/clients may request proof of coverage before they begin doing business with you.
2: Public Liability
Public liability insurance covers you if a third party claims for property damage or injuries to the body. With the help of this insurance, it helps you pay the hefty bills, including the legal expenses that were incurred during the settlement.
This insurance covers you for most of the accidents that could happen at any business, eg: If a visitor slips on a loose step, this insurance will be beneficial for you. It is important to remember that this insurance only covers you for third party claims. If a claim is coming from your employee, it will not be covered. Most employees choose to get this insurance when opening their business so they would not need to spend time or money on such unforeseen incidents.
3: Director & Officers Insurance
A director and officers insurance (also known as D&O), provides coverage to the management teams, regarding any claims made by a third party. The cause of these allegations was caused by actions/decisions taken within the scope of duties and responsibilities.
There are 3 sides to a D&O insurance:
Side A protects officers and directors from claims that allege to “wrongful acts”. This means that their decisions caused a negative impact on the value of the company as the decisions may have been taken within their scope of duties and responsibilities.
Side B protects the company by indemnifying the director or officer and has to pay for the defense or indemnity costs.
Side C protects the company in case of a shareholder lawsuit. This covers the legal costs occurring while defending the company’s business actions. As this insurance is not a top priority, it is important to consider it when your company is growing and your external investors may be involved.
Types of common D&O scenarios:
4: Product Liability
Product liability insurance covers a business against claims due to damages which were caused by one of its products. Do note that this insurance is tailored according to the business and the products that are being sold. This insurance is especially good for product malfunctions.
A famous example:
In 1994, a woman named Stella Liebeck bought a hot coffee at McDonalds. She accidentally poured It over her lower body which led to her suffering from third degree burns.
Her lawyer then argued that the coffee that McDonalds served was too hot. Their coffee is usually served around 82 celcius while most of the competitors serve it only at 60 celcius.
Stella won the case and received US$ 2.7 million in punitive damages and US$ 160,000 for medical expenses.
If you are interested in finding out more, leave your details below and a representative from UEX will get in touch with you.