Business insurance: what it is, how it works and what coverage your company needs to have
In Brazil, it is common for small and medium-sized companies, as well as early-stage startups, to always work with a tight budget. As a result, giving up certain types of insurance is inevitable.
In fact, this is a reality of global entrepreneurship. According to a study conducted by Next Insurance, with 30,000 entrepreneurs, 44% of companies have never had any insurance.
Unfortunately, this reality may end up costing your business and a country's economy much more dearly.
According to data from the Ministry of Economy, Brazilians have invested more in opening their own CNPJ. In 2020 alone, 328,000 companies were opened in the country. Has this growth caused the search for business insurance to increase by the same proportion?
It should be noted that this type of insurance is important to help companies manage losses resulting from unplanned or unpredictable events. Without business insurance, business owners may have to pay out of pocket for costly damages and legal claims against their business. Depending on the incident, this could be a financially devastating scenario for business owners.
You may have noticed the large increase in companies closing their doors at the national level - according to a survey According to the National Household Sample Survey (PNAD) about 600,000 companies went bankrupt in recent years.
Thus, in this article, you will understand about the different types of insurance that exist, the types of coverage and how to make strategic decisions to protect your company.
What coverage does your company need?
Open and manage a company, or even one Insurtech, it is certainly not an easy task and in recent years it has been a task that requires careful planning. There are several challenges along the way and it is always necessary to seek ways to minimize them.
It is important to remember that insurance is mainly about a financial protection, In other words, to achieve good results, longevity and more within a business, it is of paramount importance that you protect your assets.
“If you don't have business insurance, as a homeowner, you could run the very real risk of having to pay out of pocket for expensive damages and legal claims against your business.”
Rorie Devine, CTO at Gro.Team
Before choosing and taking out insurance, it is important to understand What is the insurance market like in Brazil, and how your coverage works to be able to define the most suitable contract for your needs. At the national level, the main business insurance coverages are:
Business insurance for the physical structure
- Fires:
This type of insurance is characterized as basic coverage for any company and is considered one of the main multi-risk business insurance. After all, a fire can cause great losses for the entrepreneur and for the business itself.
Depending on the type of contract, the coverage may compensate in the event of fires started in the business itself and also in neighboring places. In addition, there is also the possibility of covering lightning strikes and explosions of any nature.
- Natural disasters:
If your business is at risk of earthquakes, floods, or other types of natural disasters, it is recommended that you opt for this type of insurance.
Policies of this type of insurance cover disasters related to the location where your business is prone. Although it is expensive insurance, it is extremely necessary to protect your business from unexpected disasters.
- Electrical problems:
This type of insurance is considered essential for all organizations, especially technology companies, as it covers damage caused to equipment, machinery, or electrical installations resulting from abnormal voltage variations, short circuits, and even heat.
- Machine breakage:
This type of insurance covers the sudden or accidental breakdown of a company's production machinery and equipment. In this way, ensuring the protection and minimization of financial and time damages for your business.
This insurance policy guarantees coverage for material damage resulting from accidents caused by external causes, whether due to manufacturing defects or even assembly errors.
In addition, backup for explosions is included in the coverage and, in some cases, it is possible to contract a specific cover for electronics.
- Theft of assets:
This type of insurance guarantees coverage against theft or qualified theft of goods, raw materials, merchandise, machinery, equipment, etc.
This coverage serves to financially reward companies that experience these situations. In other words, if your company has a criminal action, this insurance will compensate your business.
Business Civil Liability Insurance
- General Civil Liability:
This type of insurance preserves your company's financial resources, should it be held legally responsible. Thus, guaranteeing the reimbursement of amounts related to the compensation of involuntary personal injury and material damage for which your company is responsible.
In addition to providing security for your company, this insurance protects your customers and third parties that may be affected.
- Professional Civil Liability:
This insurance is also known as error and omission (E&O) insurance, it protects companies that offer professional services.
An example of this is B2C companies, these companies often use this type of insurance to protect themselves against claims stating that their services caused financial problems or bodily harm to customers. This insurance can be taken out collectively or individually.
- Civil Liability - Works:
This type of insurance guarantees compensation for damages to third parties due to accidents caused by failures in the safety of projects and works.
Insurance for interns
This insurance is mandatory for all companies that have interns on their staff. The Internship Act (No. 11,788/08) came into force in 2008 and requires organizations to take out personal accident insurance for each intern.
Business health and business life insurance
This type of insurance is aimed at protecting the employees who work in the company, as it provides them with financial support if something happens to them.
The coverage of this insurance covers partial or total disability caused by accidents, provides hospital reimbursement, makes daily payment for temporary disability, and even provides support in case of need for economic assistance.
Insurance for transporting cargo
A public safety in Brazil it is a concern and, in this context, cargo theft is one of the crimes that have increased the most in recent years. And so that you don't have a headache, this insurance is for you who work with many fleets.
This insurance is made against loss or physical damage to transported goods and fully covers the means of transport.
Rent payment insurance
If your company suffers a financial loss, you can activate this insurance to cover rental expenses. This policy is normally included in the contract additionally.
In short, there are a large number and types of business insurance available to organizations in the market. Therefore, it is important to know them and to know the importance and benefits that each one has so that you, an entrepreneur, can protect your assets.
You need to take into account that companies seek insurance to cover possible property damage, to protect themselves from lawsuits or contractual disputes. Thus, the ideal is to take out business insurance immediately after opening your physical business, as this guarantees the company's security from the start.
As you could see in this article, the insurance market is expanding and, at the same time, the need to adapt to the digital revolution in the sector is growing. An example of this is the search for the signing of documents online, which meets this demand and contributes to the optimization of the market.
Clicksign is the ideal solution to accelerate the growth of your business! If you want to know more about how Online Document Signing can revolutionize your processes, click here and talk to an expert.
