Running a business may sound big and attractive, but it involves a lot of challenges and often summons the owners to contest. For any such case, any businessman would need a saviour or Plan B that compensates the losses. A fairy Godparent is rare and hard to find. So, one alternative that seems obvious is buying insurance.
Insurance is about transferring risk to the insurance company. An insurance company cannot avert an event but can help mitigate the impact on the business or on you. When running a business, loss of life can impose setbacks to the profit earning. The eventuality would be of the same scale as much as damage to the property. Considering this, a businessman should buy both life and non-life insurance. The scope of protection under each will differ depending on the cover.
Here are 10 types of insurance every Indian businessman should buy.
- Life Insurance: Businesses are uncertain and so is life, as casualties can happen anytime. A Life Insurance Policy will save the surviving family members if the person covered expires suddenly. It will offer them the lump sum money up to the limit of the policy. Life Insurance pays the businessman after a set period if he survives. Some of the life insurance policies that a businessman could buy include Term Plan, Unit Linked Insurance Plan, Endowment Plan, Money Back, Child’s Plan, and a Retirement Plan.
- Property Insurance: Business runs in a premise which may be a manufacturing industrial unit or an office or a retail shop. Property Insurance will protect your business from financial losses which may arise from theft, fire, and weather-related afflictions. For example, a shopkeeper should buy Shop Insurance. Any damage to the shop may lead to loss of income. Some of the common types of property insurance policies in India are Standard Fire and Special Perils Policy, Burglary Policy, Marine and Cargo Insurance, and All Risk Policy. However, all the property insurance policies offer coverage with some exclusions like WAR or nuclear strikes.
- Health Insurance: Business may give stress to the owner. It may lead to a direct effect on the health of the businessman. It is wise to buy a health insurance policy. The Health Insurance will pay for the cost of hospitalization, emergency services, pre and post hospitalization, prescription drugs and maternity care. Most of the health insurance policies cover you for day care procedures, domiciliary expenses, and ambulance charges. Bad health can affect the business in addition to the expense incurred in treatment.
- Motor Insurance: A businessman may own many vehicles in his name. These may be either for personal or business use, but each of it should be insured. It will prevent financial liability incurred due to Third-Party bodily injury or property damage. The Comprehensive Car Insurance Policy will payback for the cost of repairs of the vehicle. Nowadays, Motor Insurance also offers mandatory personal accident cover to the owner or driver. This seems to be of great help at the time of a mishap.
- Business Interruption Insurance: Sometimes natural calamities can lead to suspension or closing of the business facility for some time. A Business Interruption Policy will turn out to be a saviour for business owners as it will cover the loss of income after a disaster. Take the scenario where a shop owner suffered losses as his shop and the contents got damaged after a severe earthquake. The shop needed repairs which further affected the income. Such financial losses are covered under the Business Interruption Policy.
- Workmen Compensation Policy: Workers are an important asset to a business. Buying a workmen compensation policy will help workers if they get injured while working. It will help businessmen to take care of the workers. The insurance company will pay the worker wage replacement and medical benefits to the worker injured. But the injury must be sustained while working. A Workmen Compensation Policy also covers the legal fees if the worker sues the businessman.
- Professional Liability: A Professional Liability Insurance or an Error and Omission Policy is to save a businessman for claims that may arise out of professional practice. The policy will save business against negligence claims due to harm that results from poor decision making by a businessman while holding a chair.
- Product Liability: A businessman can suffer a lawsuit due to the damage caused by the product manufactured. For a businessman, it is an important job to take care of the customers. Product Liability is not a mandatory cover but it will save the business from the fallout when the product causes injury to a third party.
- Mobile Insurance: A businessman may own an expensive mobile that may contain all valuable and personal information. Damaging the mobile may become a pain in the neck. Buying mobile insurance will protect expenses to repair the damaged mobile. The damage may be accidental and not at all intentional. The policy may not cover theft, accessory damage, mechanical or electrical breakdown, or any other pre-existing damage.
- Home Protection Plan: A businessman should buy a Holiday Home Protection Plan. It helps to protect the home, jewellery, and other valuable items when the whole family is away for a vacation.
Every Indian businessman can avoid a major financial crunch by choosing adequate and apt insurance policies.