Types of insurance every company in Singapore needs

3 minute read

Share on facebook
Share on google
Share on twitter
Share on linkedin

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. 

At Sleek, we have partnered up like minded insurance partners to help all off our clients get the most suitable and affordable insurance for their businesses.

 

Below we list different types of insurance all Singapore companies should 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 have contracts with large clients who can afford to take legal action against you, has overseas contracts in the US, EU or Australia or outsourced work to subcontractors which you are liable for. If you are doing work for a large client, you are most likely required to get this insurance. It covers the PR cost, legal defense costs and damages. 

 

Do take note that different insurers cover a breach of contract and errors by subcontractors differently.

 

You may also be advised  to add on more clauses and it is important to let your broker know about it. Some additional clauses could be: 

  • Additional Liability: Adding another party into the policy
  • 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
  • Cyber Insurance: Covers for breach of PDPA, GDPR or any related cyber breach and error

Examples

 

Digital Marketing Agency

You make recommendations to your client based on market research. The figures in the research report turned out to be erroneously computed, resulting in a failed marketing campaign. Your client sues you for damages to recover costs and lost income.

 

Cyber-Security Agency

You offer your client a proposal on safeguarding their networks, which they adopt. However, you were not thorough enough and omitted an essential part of the process. Subsequently your clients’ databases are hacked and he sues you for damages.

 

Management Consulting Firm

Your employee accidentally loses a company laptop that contains your client’s confidential information, potentially harming your client’s strategic position. Your client sues you for damages.

 

Website Design Firm

As part of your work, you need to design a new corporate logo for your client. Subsequently, it was brought to your client’s attention that the logo was very similar to a competitor, who brought a claim for trademark infringement. Your client in turn sues you for damages.

 

IT Firm

While performing a system upgrade for your client, you disable certain security features and inadvertently left it vulnerable to malware, which resulted in your client suffering a loss of data and disruption to business operations. Your client sues you for damages.

2) Directors and Officers Insurance or Management Liability 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.

 

What cost does it cover?

  • 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 claim 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.

Examples

 

Hyflux 

https://www.straitstimes.com/business/companies-markets/hyflux-directors-under-probe-over-corporate-governance-breaches

MAS & SGX probing directors due to insolvency of Hyflux

Insurance covers legal advice cost & PR cost. 

 

Samwoh 

https://www.straitstimes.com/business/koh-family-loses-samwoh-group-suit

2 Founders sue each other for control of the company 

Cover the director’s defense cost and PR cost of the company 

3 Years plus to settle 

 

Hin Leong 

https://www.asiaone.com/money/hin-leong-tradings-114b-cover-scandal-what-singaporeans-need-know

Founder lied about financials 

Banks suing the founder for personal liability 

CFO & accounts implicated. 

Legal defense cost. Possible damages for CFO & accountants if error not fraud

3) Public liability Insurance or 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. This insurance covers legal defense costs and damages. 

 

Who is this insurance important for? If you handle your customer’s properties like – repair, installation or servicing business or if you are dealing with people 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. Some additional clauses could be: 

  • 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

Examples

 

Retail Store Owner

A member of the public enters your store and slips on a wet floor as your employee forgot to put up a cautionary sign. Hip is fractured and you are sued for medical expenses.

 

IT Contractor

While installing a new server for your client, your employee accidentally damages existing surrounding equipment.

 

Wholesale Trader

A poorly installed shelf at your warehouse collapses on one of your supplier’s delivery men and he is taken to hospital. Sues you for medical bills and loss of income.

 

F&B Caterer

You are catering food for an event and one of the participants suffers accidental scalding from hot food items spilled on him.

4) Work Insurance Compensation

This insurance covers the liability of an employer to pay compensation to their employees who may have suffered work-related injuries, occupational illnesses or diseases in accordance to the Work Injury Compensation Act (WICA). Work Injury Compensation insurance is compulsory for all employees doing manual work, as well as all employees earning $1,600 or less a month.

What can be claimed under WICA?

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

Example 1: Software Development Firm

Your employee meets with a traffic accident on his way to a client’s office and gets permanently disabled.

 

Example 2: Financial Services firm

An employee with a heart condition suffers a heart attack while pulling an all-nighter at the company’s office. Her husband makes a claim for compensation.

 

Example 3: Wholesale Trader

An employee drops a box onto his foot and fractures it. He claims medical expenses.

 

Example 4: Management Consultancy Firm

During an overseas assignment, one of your employees contracts Covid-19. He makes a claim for medical expenses.

 

Example 5: Work-From Home Technology Firm

An employee spills hot coffee on himself while working from home and sustains second-degree burns. He makes a claim for medical expenses.

 

Example 6: Home Based Language Learning Center For Children

During a lesson, a young pupil accidentally punctures the eye of one of your teachers with a coloured pencil. Teacher claims medical expenses.

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 defense 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

Next steps

Sleek is not a registered insurance agent and is prohibited from giving specific advice, provide proposals, handle claims etc. All insurance matters are handled by Sleek’s partners. Click here to get started!

Did you like this?  Share it with your networks.
Share on facebook
Share on google
Share on twitter
Share on linkedin

We help entrepreneurs streamline their company incorporation, governance, and accounting using clever technology.

© 2020 Sleek Tech Pte Ltd | 28C Stanley St, Singapore 068737 | +65 6909 2214 | Privacy Policy | ACRA Professional No. 201708433H | MOM EA Licence #17S8937
Close Menu