July 21, 2022

Types of Businesses that need Insurance

Types of Businesses that need Insurance

For the most part, small businesses have to function in dynamically changing and inherently risky environments. Challenges like fluctuating market sentiments, difficulties in material procurement, depleting cash flows, etc. can cause immense stress for a business owner.

But that’s not all. Small businesses are constantly exposed to a large number of risks, ranging from the risk of property damage and theft, to workplace accidents and unexpected lawsuits. To efficiently deal with such risks, commercial enterprises take different types of Business Insurance policies. These policies act as risk management tools, greatly securing a company’s finances and boosting their long-term growth.

Although Business Insurance is a highly essential asset for any business irrespective of its size or industry, there are certain types of businesses that are in more pressing need of insurance protection. Let’s take a look at these below-

Companies that heavily rely on manufacturing their products and have one or more functional manufacturing units, plants, factories, workshops, or other similar establishments, have to regularly deal with risks of machinery breakdown, theft of raw materials or stock, equipment damage, and flood damage to the facility, among several others.

These mishaps can cause great financial losses in terms of replacement/repair costs, business interruption, cost of rebuilding the premises, etc. In order to safely deal with such accidents without breaking the bank or going out of business, companies need Business Property Insurance. Policies like Fire Insurance, Burglary Insurance, Machinery Breakdown Insurance, etc. can be great additions to a manufacturing business’s risk management program.

In addition to the above Property Insurance policies, manufacturing concerns can also benefit from Liability Insurance policies, particularly, Workmen’s Compensation Insurance, Public Liability Insurance, and Product Liability Insurance. These policies ensure that your business does not suffer heavy losses as a result of one of your employees getting in a workplace accident, a customer, supplier or visitor suffering unexpected injuries on your premises, or your end products causing any harm to the public.

Retail enterprises like garment stores, department stores, general stores, kirana shops, etc., keep large amounts of stock in their inventory and routinely interact with suppliers and customers for their day-to-day business operations. These businesses face high risks of theft, fire, floods, customer injuries, or damage during transit.

Insurance policies like Fire Insurance, Burglary Insurance, Public Liability Insurance, and Marine Cargo Insurance can be instrumental in safeguarding these businesses’ finances in case of unexpected disasters. Additionally, policies like Neon Signboard Insurance, Plate Glass Insurance, and Money Insurance can exclusively cater to those shops that want to protect their signboards, glass structures, or cash in hand.

To avoid the hassle of purchasing several different policies at one go, which often ends up amounting to very high collecting premiums, retail stores can instead opt for a package policy known as Shopkeeper’s Insurance. This policy is a combination of several individual policies like Fire Insurance, Burglary Insurance, Neon Signboard Insurance, Workmen’s Compensation Insurance, and many more. Shopkeeper’s Insurance essentially offers blanket coverage at a much cheaper rate protecting the business against a large number of risks at one go.

Businesses that heavily rely on warehousing and storing of raw materials, finished goods, equipment, etc. are exposed to numerous risks. The dangers of fire burning down the warehouse and everything in it, floods or other natural calamities damaging raw materials, or a gang of thieves stealing high valued inventory are always present. And the financial repercussions of such events can be too enormous to bear.

As a result, it is pivotal for these warehouses to be insured under policies like Fire Insurance, which compensates for any physical damage to stored assets, Burglary and Theft Insurance, which covers the theft of stock or equipment, Commercial Vehicle Insurance, which covers damage to transportation vehicles due to accidents, and also Marine Cargo Insurance, which protects stock or inventory being transported from one location to another.

If the warehouse or godown deals with heavy machinery and equipment, a Machinery Breakdown Insurance can also help deal with any mechanical or electrical malfunctioning of such machinery. Some insurance companies offer a bundle of policies together that are specifically designed to cover a business’s factory and warehouse from prevalent risks.

Undoubtedly, the full list of types of businesses that need insurance is much longer since virtually every enterprise needs some sort of Business Insurance to function unimpeded. From D&O Insurance or Fidelity Guarantee Insurance, to Erection All Risk Insurance or Extended Warranty Insurance - there's an insurance policy covering every foreseeable risk that a business organization could be exposed to.

Further Reading

Types of Business Insurance policies

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.