Category: Financial Planning

How do I insure my start-up?

A very famous quote on insurance –

Because in the blink of an eye, everything can change. —Ashley Neves

Entrepreneurship is like test driving a new vehicle with the full family on a newly constructed road! Would you care to insure your start-up now?

The Type of Insurance You Need for Your New Business

Listing down the types of insurance you may need for your new business –

Cover from Fire, Natural Calamities – Looking for cover against loss because of accidental fire? Engrained with cover for damages caused by natural calamities such as earthquakes, floods, and storms, some also extend to cover strikes, terrorism, and riots.

Business disruption and significant losses – About to conclude an important meeting, just when afire breaks up that could affect profits. General insurers provide an extended fire insurance that covers these disruption and profit loss. These policies typically cover theloss of gross profit due to areduction in turnover or output, theadditional cost to avoid areduction in turnover and the auditor’s fee.

Theft Cover- You could also cover your assets against robbery with exclusions of loss of jewelry, plate glass, and theft by family or employees and shoplifting.

Cash insurance: Theft Cover would not cover the cash robbery, for that you would need another insurance – Cash Insurance. That also protects thecurrency, pay orders, bank drafts kept in safe or during transit. The cover comes with the exception of omitting loss due to fraud by an employee; money sent via post and in personal custody by an employee for over 48 hours.

Data Insurance: Data is the key and could be worth of money. Hence data protection is crucial. An electronic equipment policy covers the data loss and pays the cost of reinstatement.

General third-party liability: It is a general plan that covers the obligations met by a business. That includes cover against

  • physical/mental
  • damage to property
  • advertising injury
  • legal liability.

Professional insurance: If you are providing professional services make sure to pick this one first. Also, known as errors and omissions (E&O) policy it protects against third-party legal liability that rises due to errors and omissions or negligence while executing a service.

Fraud control: A fidelity guarantee policy insures against any direct monetary loss to the insured business due to an act of ‘duplicity’ (meaning deception) or ‘fraud’ by an employee of the organization while at work.

Workmen compensation policy:  As per Workmen’s Compensation Act, 1923, and Fatal Accidents Act, 1855, the employer is legally bound to pay compensation to employees for bodily injury, disability or death caused due to accidents that happen during their employment and provide compensation for occupational hazards of a job. You could avail the Workmen Compensation Policy to cover these liabilities.

Key-man insurance: You might have some unique individual who is anasset to your firm and losing them may hamper your growth because of the skillset or knowledge. You could cover him against the key-man insurance that is like a term insurance.

Directors and Officers Insurance: In case the Director or officers find themselves in legal action and that affects theprofitability of the business; this policy could cover the costs/damages.

Life Insurance: What to Consider As a Business Owner

Your personal life insurance could help your family when you are not there, but how about your business? As an owner, you could also help your business by covering it with life insurance. Here are two basic kinds of insurance that could help you –

Term Life Insurance – Term insurance, a type of life insurance, provides coverage for a specified period or years. If the insured dies over the policy tenure, a death benefit (or sum assured) is paid out. No payout is made if the insured survives the tenure.

Permanent Life Insurance – Permanent insurance provides lifelong protection, and the ability to accumulate cash value on a tax-deferred basis. Unlike term insurance, a permanent insurance policy will remain in force for if you continue to pay your premiums.

We hope we have answered your queries on how you can insure your start-up.If you still have any unanswered questions or need help, feel free to contact us here.

We would be glad to help you with your planning and investment related decisions.

Samiksha Seth

Content Strategist Dilzer Consultants Pvt Ltd