Types of Business Insurance

When starting a business in Singapore, it is important to take note of the top insurance that your business needs. By having such protection in place, it will allow you peace of mind to run your business seamlessly.

Below are the different types of insurance to consider:

1. Professional Indemnity insurance

Professional Indemnity provides coverage against legal liability arising from acts of negligence based on profession. This insurance is important for people who:

  1. Have contracts with large clients who can afford to take legal action against you.
  2. Has overseas contracts either in the US or EU or Australia.
  3. Outsourced work to subcontractors which you are liable for.

You are most likely required to get this insurance if you are dealing with large client as it covers the PR cost, legal defense costs and damages.

 Different insurers cover a breach of contract and errors by subcontractors differently.

Be advised to add more clauses and is important to let your broker know about it and could be one of the following:

  • Additional Liability: Adding another party into the policy.
  • Waiver of Subrogation: Waives the right of the insurer to seek compensation from a negligent third party.
  • Umbrella Liability: Covers for claims in excess of your current liability coverage
  • Cyber Insurance: Covers for breach of Personal Data Protection Act (PDPA), General Data Protection Regulation (GDPR) or any related cyber breach and error

2. Directors and Officers Insurance or Management Lability insurance

This insurance automatically covers all directors, officers and anyone who makes an authorised management decision for any error in their management & fiduciary duty. This insurance is important for people who have external investors, taking over a distressed company, under government regulation (MAS)  or planning to raise funds through equity or a loan. This insurance is likely required if you are raising funds from an institutional investor.

 It covers the following:

  • PR cost
  • Legal defense cost and damages for the insured person
  • Covers the entity for an employment dispute or if the entity is paying for insured person’s legal cost and damages
It may not cover the following any claims related to the nature of your business (Professional Indemnity) or insured versus insured lawsuits

Most claims made are from investors, senior and key employees, during insolvency or due to breach of government regulation.

3. Public liability Insurance / Commercial General Liability

Public liability insurance (also known as commercial general liability) covers any accidental bodily injury or damage to a property that has been made during your business operations as well as legal defence costs and damages.

This is important if you are handling client's properties (e.g. repairs and installations), servicing business or dealing with clients in the food, education or childcare industry

If you are planning on renting an office space or working with large MNCs, your landlord/client will likely require you to get this insurance. You may also be advised to add on more clauses and it is important to let your broker know about it which includes:

  • Additional Liability: Adding another party into the policy
  • Cross Liability: One insured party can sue another insured party when both parties are under the same policy
  • Completed Operations: Coverage for claims resulting from an incident after business operations are completed
  • Waiver of Subrogation: Waives the right of the insurer to seek redress for losses from the negligent third party named
  • Umbrella Liability: Coverage for claims in excess your current liability coverage

4. Work Insurance Compensation

This insurance covers the liability of an emplyer to pay compensation to their employees who may have suffered work-related injuries, occupational illness or diseases in accordance to Work Injury Compensation Act (WICA). It is complusory for all employees doing manual work as well as employees earning less than $2,600 per month.

The following are claimable under WICA

  • Medical expenses
  • Lump sum compensation for death of permanent incapacity
  • Medical leave wages

5. Commercial Business Package Insurance

Business package insurance is a comprehensive multi-line insurance solution that can be tailored to meet the needs of your business. It often provides a more affordable and critical defence against elements that can disrupt or damage your business. Common coverage within Commercial Business Package insurances include:

  • Property All Risks for fire and other named perils
  • Business Interruption to help cover losses in case of suspended operations
  • Public Liability/General Liability to protect against third party bodily injury or property damage
  • Theft for losses arising from burglaries and robberies
  • Electronic Equipment For damage to laptops, mobile phones and other specified items

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