3 Types of Insurance Every Singapore Business Needs
Often mistaken simply as a regulatory requirement, business insurance is not only about protecting you or your business. It is also a way of protecting your employees, your suppliers and even your customers from some of these threats.
Think about the consequences should an unfortunate fire destroy your retail establishment and you are not insured. What about a delivery employee who meets an accident on one of his/her delivery assignments?
These are very real situations that have caused extreme hardship to both employees and employers when there was no proper insurance in place. Properly insuring your business gives you the peace of mind to focus on major issues like improving profitability and productivity.
This guide aims to provide an understanding and overview of the business insurance relevant to owners who are either looking to or have recently started a business.
What are the Major Types of Business Insurance?
For most businesses, the types of insurance available can be classified under 3 general categories:
The first category, Property pertains to any buildings, plant, machinery, equipment, stocks, furniture, fixtures and fittings, etc. Property insurance covers loss or damage to your business properties.
Purchasable insurance can provide coverage for the following:
- Fire insurance, which also extends to other perils like lightning or floods
- Theft insurance in the event of burglary or robbery
- Terrorism insurance in the event of unlawful use or violence against people or property
- Business interruption insurance to help to cover lost revenue, wages or ongoing expenses incurred in the event of suspended operations due to material damage from a fire or flood
- Select insurance plans which are catered to the risks in your business industry. For example, logistics companies providing shipping courier services can purchase marine/cargo insurance plans to cover cargo in transit
It would be prudent to first make a list of the most direct threats to your business premises and properties before consulting with a licensed insurance provider who may be able to structure a package suitable to your business needs.
Depending on the employment status of your workers, it might be a statutory obligation to insure them. Of the insurance applicable to employees, the 2 most important are work injury compensation insurance and basic health insurance.
(a) Work injury compensation insurance
Work injury compensation insurance provides cover for your company in the event that your employees file claims for injuries or diseases suffered while working.
Under the Work Injury Compensation Act (WICA), all employers are required to purchase work injury compensation insurance for local or foreign employees who are doing:
- Manual work, regardless of salary level; and
- Non-manual work, and are earning less than $1,600 monthly. (This threshold will be increased to S$2,100 on 1 Apr 2020, and then to S$2,600 on 1 Apr 2021.)
Please note that the above does not apply to freelancers or independent contractors that you engage. Employers who fail to provide work injury compensation insurance when required to do so face a fine of up to S$10,000 or jail of up to 12 months, or both.
Workman injury compensation insurance is important especially for companies involved in construction or heavy industry, where there are higher risks of worker injury.
Work injury compensation insurance can provide monetary protection in the form of payment of medical leave wages or expenses to your workers should they suffer any injury during the course of their work.
For more details on the entitlement and liability for compensation, please refer to our article on claiming work injury compensation.
(b) Basic health insurance (MediShield Life)
The Employment Act requires all employers to make CPF contributions for all Singaporean employees, a portion of which will be allocated to MediShield Life. MediShield Life is a basic health insurance only for Singaporeans to help them or their dependants in the event of old age or serious illness in the future.
You have the option to buy additional coverage that is not provided for by MediShield Life for your employees’ benefit.
S Pass & Work Permit holders
Although S Pass and Work Permit holders are not eligible for MediShield, you are still required to purchase medical insurance plans for them.
These medical insurance plans must be maintained for your S Pass holders and Work permit holders as long as they are under your employment.
Employment Pass holders
Employment Pass (EP) holders are not entitled to Medishield contributions. However you as the employer can voluntarily choose to purchase private medical insurance for them as part of their employment benefits.
Private medical insurance for EP holders can be structured as a Group package/benefit that can include dental, personal accident, hospitalisation and even maternity cover.
Alternatively, your employees may already have their own Integrated shield plans from their insurance provider, and you can choose to subsidise the costs while they are under your employment.
As work injury compensation insurance and Medishield contributions are mandatory, it is critical that your business has made the adequate provisions for these insurance schemes before you decide to purchase additional insurance benefits for your employees.
3. Legal Liability
There is always the unfortunate risk that your business can be held liable for compensation due to acts of negligence by your employees in the course of their work.
- Public liability insurance can provide coverage where the following might occur:
- Bodily injury or damage to property and premises resulting from your business operations
- Bodily injury or damage to property and premises resulting from the manufacturing, distribution or sales of your product
- Director and officer insurance is an important way of providing indemnity to the key decision makers in your company, especially since it can detrimentally affect your business should they be held liable for breach of duty or negligence.
- Professional indemnity insurance is specific to your professional occupation and provides coverage against legal liability arising from acts of negligence. This includes auditors, lawyers, accountants and should be purchased depending on your profession.
Despite the many different insurance providers and insurance solutions available in the marketplace for businesses, they can be generally classified under the 3 broad categories of Property, Employees and Legal Liability.
As always, it is important to first understand the nature of your business and perform a threat assessment to best determine the scope of your liability in the event of any unfortunate situations.
It is equally important that you consult with a licensed insurance provider or broker who is familiar with your business industry and can advise you accordingly on the more appropriate business insurance.
By doing so, you and your business will be better prepared to weather any challenges or disruptions while still maintaining functional business operations.
- What are Annual General Meetings (AGMs) in Singapore?
- Anti-Money Laundering Regulations and Your Business: What You Need to Know
- Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
- Dividend Payments Guide for Singapore Business Owners
- Company Audits in Singapore: Requirements and Exemptions
- Guide to Transferring Shares in a Singapore Private Company
- How to Hold Extraordinary General Meetings (EGMs) in Singapore
- How to Issue Shares in a Singapore Private Company
- How to Reduce the Share Capital of Your Singapore Company
- Legally Conducting Lucky Draws for Singapore Businesses
- Dormant Companies and Their Filing Obligations in Singapore
- How to Hold a Board Meeting in Singapore
- Paid-Up Capital in Singapore: A Complete Guide (Is $1 Enough?)
- Restaurant Inspection and Food Safety Rules in Singapore
- Essential Regulatory Compliance Guide for Singapore Companies
- Finding a Suitable Corporate Secretarial Firm in Singapore
- Oppression of Minority Shareholders
- Process Agents in Singapore
- Shadow Directors: Who are They and What Duties Do They Owe to the Company?
- Guide to Directors' Remuneration in Singapore
- 3 Types of Insurance Every Singapore Business Needs
- How to Change the Name of Your Singapore Company
- How to Remove a Director from a Company in Singapore
- Appointing Company Directors in Singapore: Eligibility, Process etc.
- Company Loans to Directors/Shareholders (& Vice Versa) in Singapore
- Share Transmission: What Happens If a Shareholder Dies in Singapore?
- Business Will: How to Pass on Your Business to Your Successors in Singapore
- Shareholder Rights in Singapore Private Companies
- Removal and Resignation of Company Auditor in Singapore
- Shareholder Roles and Obligations in Singapore Companies
- Creating and Registering Charges in Singapore: Guide for Companies
- How to Commence a Derivative Action on Behalf of a Company in Singapore
- Managing Director vs CEO in Singapore: Roles and Obligations
- Appointing an Authorised Representative for a Singapore Business
- Business Partnership Disputes in Singapore: How to Resolve
- Appointing a Company Secretary: Roles and Responsibilities
- Directors' Duties in Singapore
- Company Constitutions in Singapore and How to Draft One
- Company Memorandum and Articles of Association
- Minutes of Company Meeting in Singapore: How to Record
- Guide to Filing Financial Statements for Singapore Business Owners
- Filing Annual Returns For Your Business
- Memorandum of Understanding (MOU): Does Your Business Need One?
- Company Resolutions: What are They?
- Board Resolutions in Singapore
- How to Set Up a Register of Controllers
- How to Set Up a Register of Nominee Directors
- Your Guide to Resolutions Passed at a First Directors’ Meeting
- Your Guide to Resolutions to Appoint a Company Secretary
- Your Guide to Resolutions for Authority to Act on a Share Purchase and Subscription Agreement
- Your Guide to Shareholders’ Resolutions for Share Allotments
- Your Guide to Resolution for Authorisation of Investment in the Shares of Another Company
- Your Guide to Share Certificates in Singapore: Usage and How to Prepare
- Your Guide to Resolution for Transfer of Shares
- Your Guide to Resolution for Change of Registered Address
- Your Guide to Board Resolution for Approval/Allotment of Shares
- Your Guide to Resolutions to Increase a Company's Share Capital
- What is Withholding Tax and When to Pay It in Singapore
- Singapore Influencers: Here's How to Calculate Your Income Tax
- Corporate Tax in Singapore: How to Pay, Tax Rate, Exemptions
- When to Register for GST, How and Responsibilities after Registration
- Start-Up Tax Exemption Guide for New Singapore Companies
- Tax Investigation of Tax-Evading Business Owners in Singapore
- Small Business Accounting Services in Singapore
- Essential PDPA Compliance Guide for Singapore Businesses
- Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
- How Can Companies Dispose of Documents Containing Personal Data?
- Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
- Appointing a Data Protection Officer For Your Business: All You Need to Know
- Summary: Your Organisation's 9 Main PDPA Obligations
- Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
- GDPR Compliance in Singapore: Is it Required and How to Comply
- Is It Legal for Businesses to Ask for Your NRIC in Singapore?
- PDPA Consent Requirements: How Can Your Business Comply?
- Legal Options If Employees Breach Confidentiality in Singapore
- Insolvency: Claw-back of Assets from Unfair Preference and Undervalue Transactions
- Striking Off a Company
- What Should a Creditor Do When a Company Becomes Insolvent?
- Dissolution of partnerships in Singapore
- Validation of Payments Made by Companies Being Wound Up
- Can a Company that Struck Itself Off the Register Later Apply to Restore Itself?
- Closing Your Singapore Business: What You Need to Settle
- How to File a Proof of Debt against a Company in Liquidation
- Winding Up a Company