Top 5 business insurance products that startups should know
Starting a business in Hong Kong is a huge task. Not only do you have to come up with an idea, a service or a product that’ll be profitable, you also have to navigate the world and responsibilities of being the owner of a company. Startups and Small to Medium Enterprises (SMEs) are still held to the same compliance, corporate governance, and liability standards as larger companies. This includes the requirement to manage the risks associated with operating a business – many of these solutions involving business insurance.
This week, Pacific Prime Hong Kong offers a brief introduction to the world of corporate and business insurance products that you’ll need to have considered if you want to ensure compliance with local laws, and protection from unexpected disruptions. For even more information regarding how Pacific Prime can help you with your company’s insurance, visit our Corporate website.
Business insurance: what’s legally required, and what’s important to have?
In Hong Kong, there’s only one mandatory insurance requirement for businesses – Employee’s Compensation (EC) insurance. Other products, such as Professional Indemnity or building insurance, are not legally required but they’re seen as an absolute necessity for ensuring your business is protected when the unexpected happens. Essentially, your business or startup is an asset, and one that needs protecting. Here’s our top 5 list of business insurance products that can be vital to running and maintaining a successful company:
Employee’s Compensation insurance
As the sole insurance product for businesses that’s required by law, this will often be one of the first things you’ll want to secure. Employee’s Compensation (EC) is made compulsory to protect workers in the workplace. This insurance protects not only your staff, but also your business in the event that a staff member is hurt or injured carrying out their duties for the company. With its status as a legally mandated business insurance product, the market includes a range of basic to more comprehensive coverage plans – though pricing is generally determined by the number of employees you have and their salaries.
Not having an EC Certificate of Insurance can see you fined up to HKD 100,000, with possible imprisonment for two years. For startups and SMEs that begin operating out of a personal home, getting coverage can be a bit trickier as such plans can have issues drawing the line between what’s business, and what’s personal in home-run companies. The Hong Kong Government, however, can offer EC coverage under its Employees’ Compensation Insurance Residual Scheme Bureau.
Professional Indemnity insurance
Professional Indemnity (PI) is a business insurance product that protects you from the costs of legal action brought against your company, and its staff. This can be from claims of inadequate advice, services or designs that have caused losses to clients or third parties, as well as harm or damage caused to third-parties by staff of your business carrying out their duties. PI insurance can help you meet the costs and expenses of mounting a legal defence, in addition to any damages or costs that are awarded to claimants.
While not mandatory under Hong Kong law, particular industry bodies may require that your business purchase PI insurance for registration or qualification reasons. This includes management and business consultancies, fitness professionals, technical engineers and contractors, and some IT professionals, medical staff, and private education workers.
SMEs or startups operating from a business premise should also secure property, or office and contents insurance. It’s not that different from personal home and contents insurance, and is designed to protect the building you and your staff work in, as well as the assets inside that keep your business running. Any damage the building and contents sustain due to natural weather and disasters, fire or other events can be covered by property insurance plans.
Business interruption insurance
As the name suggests, business interruption insurance plans offer coverage for the financial costs associated with disruptions to your normal order of business. Think about how extreme weather events, such as Hong Kong’s turbulent typhoons, can shut down transport, and leave product deliveries delayed. Or even where a supplier suffers a disruption that holds your own business operations up. Business insurance plans that cover interruptions can offer financial support to keep you going until the disruption passes.
In an increasingly online world, the risks associated with doing business connected to the internet is getting greater. Previously the concern for acts of cyber crime was theft of personal and sensitive information. As businesses become more sophisticated in how they utilize the internet, so are the ways cyber criminals are looking to benefit illegally off of the information stored in the cloud. Cyber insurance can protect against costs associated with lost, locked or stolen data that is either held for ransom, or becomes the centre of a lawsuit against your business by clients or customers that are affected.
Getting the right business insurance solutions for your company
If you’ve not run a business before, wrapping your head around the insurance needs for your company can be a headache. Getting help with your insurance requirements can often make the startup process much, much easier. While there are a range of different insurers and intermediaries that will offer you business insurance products, what will make the difference is engaging the services of an expert insurance broker that offers support and solutions.
Pacific Prime Hong Kong not only has the expertise in helping businesses get adequate coverage, but offers ongoing support for the life of your plan, in case you need to use it. We’ve got some of the most experienced advisers and account managers that are dedicated to ensuring your insurance experience is the best in the city. We’ll talk through your business needs and goals to ensure that your insurance is not only right for what you need now – but sustainable through the future.