General Liability Insurance for Small Businesses

Overview:

We live in an age where business prospects have multiplied, leading us to explore newer avenues and better opportunities. Owing to a sound economic growth fuelled by increase in foreign investments, the Indian business story has never been so thrilling. before. A key testimonial to the fact is the growing number of entrepreneurs in the country. The buzzword, ‘Startups’ has taken the center stage, creating newer prospects for business owners as well as consumers. This new wave is creating a revolution of sorts, not only in urban areas, but also in the rural space.

At the same time, the risks of operating the business is also on the rise. It not only has the potential to cause loss to the assets, but also hamper the brand and disrupt day-to-day operations. Threats such as natural calamities and burglary can play spoil sport and lead to monetary losses. To minimize losses and prevent disruption to business operations, it's paramount to have an insurance in place. In India, a host of general insurance products are available for business owners operating in the SME (Small and Medium Enterprises) space. This insurance protects the business owner against the most commonly occurring risks and offers financial assistance in case of a mishap/loss.

Benefits of General Liability Insurance for SMEs:

  • The insurance package comes in all shapes and sizes. One can go ahead and choose to cover a wide range of risks depending on the availability. It offers a certain amount of flexibility to assign specific cover options under a single umbrella.
  • The “Sum Assured” is in accordance with the type of business, its size and the risks involved.
  • The primary benefits include cover for material damage due to theft, breakdown, monetary losses due to malfunction of machinery and so on.
  • The insurance will also cover situations which have the potential to interrupt the business such as strikes and natural calamities.
  • The “Public Liability” clause is also included to cover losses arising out of damage to public property/life to be compensated accordingly.
  • Personal accident is also a part of the standard cover offered by most of the insurance companies.

General Liability Insurance Covers:

  • Loss or damage to the property arising out of fire, explosion/implosion, lightening, riots, and malicious damage are covered.
  • Loss or damage due to natural calamities such as flood, typhoon, storm, cyclone, hurricane, tornado, flood and others.
  • Damage caused to the material/property due to transport by rail, road or air.
  • Extended cover for losses arising out of earthquake and terrorism can also be opted for.

General Liability Insurance Exclusions:

  • The main exclusion relates to loss/damage arising out of war or war like operations, radioactive contamination, ionizing radiation and other nuclear fuels.
  • Burglary carried out by the inmates of the building, employees or members of the insured’s household.
  • Existing defects in the electronic equipment at the time of commencement of the insurance policy.
  • Breakdown of the machinery due to wilful act or due to negligence of the staff. Normal wear and tear is also an exclusion.
  • Portable equipment where the loss is caused due to normal operations, wear and tear, detention by customs and others.
  • Personal accident, self-injury, suicide and others are not included.

Optional Covers:

A host of optional covers are available to cover the general and specific exclusions as detailed above. Some of the most prominent optional covers are as below.

Personal Accident

Under this Add On option, employees are covered against accidents anywhere in the world, 24/7. Companies where the travel frequency of employees is high or exposure to hazards or risks is bigger can consider availing this cover.

Baggage Loss

Offers cover for loss/damage to the personal baggage of the employee of the business during travel related to trade.

Breakdown of Machinery

Unforeseen damage to the machinery due to electric and mechanical breakdown that does not find cover in the standard insurance is covered under this option.

There are a host of other optional covers which come at a nominal cost. The availability of these additional covers depends on the insurer in question. 

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