A Small and Medium Enterprise (SME) usually faces various problems and risks due to its size. Usually, the unpredictable market is one of the factors that can cause harm to this kind of business. However, there are also ways to prevent and protect SMEs from failing.
One of these ways is to get SME business insurance. Nowadays, even the smallest business should be insured to prevent bankruptcy. But before you get one, you should first know its importance, the process, and the claiming procedure.
In this article, we’ll discuss the different types of SME business insurance to help you identify which should you get.
What is SME Business Insurance?
SME business insurance, or small business insurance, is a comprehensive insurance coverage for Small and Medium Enterprises (SMEs). It protects the business by providing financial assistance from risks and accidents that could happen in the business.
Most Common Types of SME Business Insurance
a. General liability insurance
General liability insurance, or public liability insurance, is considered the most important insurance coverage for SMEs. It’s a type of insurance coverage that protects the company from third-party claims. For instance, if a customer has been injured inside your business premises, this type of SME insurance can pay for the damages.
If that happens, your business can be free from paying the third party directly or being sued for reputational damage. In addition, the arrangement can be as formal as possible, given that you can guarantee liability from the third party involved.
So if you don’t want your business to get bankrupt due to unnecessary circumstances, secure general liability insurance as soon as possible.
b. Commercial property insurance
Are you afraid that a small damage in your physical store might affect your entire business? Commercial property insurance can protect your business if the following has been compromised:
- Store or building
- Product or material inventory
- Tools and equipment
- Office furniture
Based on that, commercial property insurance covers the business property and all its contents from possible damages. When that happens, you won’t need to pay for the full renovation or replacement of the damages to keep your business going.
However, you should also keep in mind that the insurance can’t cover everything. It may depend on your policy limit and the terms of your chosen insurance company.
c. Business Interruption Insurance
If your business can’t continue to operate in its physical location, the business interruption insurance can cover the loss of income and other expenses. Usually, a business can’t operate due to natural calamities, fire, and other accidents.
For instance, if you’re renting the space and you’re unable to open your business for a month due to fire damages, this type of insurance can pay for your rent. Aside from that, it also covers the potential revenue, salaries of employees, loans, and taxes.
However, similar to other insurance policies, there are limitations. For instance, the coverage can only last up to six months, or not every financial aspect is covered depending on the policy you avail.
d. Cyber Liability Insurance
Nowadays, it’s hard to trust everything online, even if you avail of various computer antiviruses. As an SME owner, it’s your responsibility to protect your business from data breaches and cyber threats.
Cyber liability insurance protects the first party and the third party. The first party includes financial assistance from the losses of the SME business during the cyber incident. On the other hand, third-party coverage assists third parties, including customers, other business partners, and employees, from all the damages they’ve incurred during the cyber attack.
If you have a website, get information and orders online, and communicate with other businesses through emails and other social media platforms, you need to secure cyber liability insurance more than you think you need it.
e. Workers’ compensation insurance
Do you have at least one employee? That’s the minimum requirement, as an employer, to avail of workers’ compensation insurance. Besides, it’ll not just going to help your employee, but also your company.
For instance, if your employee obtains an injury or gets sick while performing their job, the insurance can take care of the medical bills and other financial liabilities. Fortunately, if there’s insurance you won’t have to pay for the full price of the damages. And sometimes, everything is included in the policy.
So before you think twice about getting an insurance policy for your employee/s, make sure you have enough money to cover damages that may occur in the future.
Final thoughts
SME business insurance is a vital tool to protect your business. Whether you’re a start-up or have been in the industry for quite some time, it can help you fight the risks and potential of the daily business operation.
Aside from the protection from uncertainties, availing of SME business insurance allows you to focus on other aspects of your business, and gives you peace of mind.
We hope this article helps you get to know more about SME business insurance and its most common types. If you want to share your stories, don’t hesitate to leave a comment below!