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Risk Management: Insurance Coverage for Business Premises – What You Need to Know
But hold your horses, there. If your business involves physical premises such as a shop, an office, or a warehouse, you may first wish to consider insuring it against certain forms of risk.
Commercial property insurance generally provides the option to cover the following risks:
Fire and Other Perils
Industrial fires happen more often than most people think. In 2019, the Singapore Civil Defence Force (SCDF) responded to nearly 500 fire incidents in non-residential premises. This included 47 cases occurring in supermarkets and shopping complexes as well as 48 cases in factories. Most of us would definitely have heard of some of the most serious cases, such as when two warehouses caught fire in Tuas last year and needed nearly 18 hours for firefighters from the SCDF to put out.
The damages and liabilities resulting from a fire could be absolutely debilitating.
Similarly, with Singapore recently recording our highest rainfall in 39 years, one cannot help but be reminded of the risk of flooding. Indeed, in the past few years, there have been instances of shopping malls like JEM and People’s Park Complex being flooded and causing disruption to businesses within them.
Insurance would cover your business property against loss or damage due to these issues. Other perils that could be covered include lightning storms, riot and strike, malicious damage, explosion, bursting and overflowing of water pipes, earthquakes, hurricanes, cyclones, typhoons, and windstorms.
Given that most of these events are what is generally known as acts of God for which nobody can be held responsible, getting insurance coverage for damages or loss incurred would most likely be the only way to get any form of compensation.
Compensation can be disbursed for any damage to stock-in-trade, office equipment, furniture, fittings, fixtures, renovations, and other contents.
Business Interruption and Consequential Loss
In addition to direct property damage and loss, a business owner can also suffer losses when the property is damaged due to being unable to continue normal business operations.
This covers any loss of profit or revenue, or any increase in the cost of working, due to damages to the property caused by an insured event (as covered above).
Theft and Burglary
Singapore enjoys a reputation of being an incredibly safe country, such that many small businesses apparently do not even bother to take enough precautions to safeguard against shoplifting. However, as our police force is wont to remind us, low crime doesn’t mean no crime.
A business owner can secure his business against any financial loss or damage caused by burglary or attempted burglary through property insurance.
This is particularly important for enterprises which hold large quantities of physical stock in-house or deal in valuable goods.
This might sound quite niche, until you realise that most business premises will invariably include some forms of glass panels, fixtures, and structures. This is especially true for retail stores, where shopfronts could be made of glass, as well as showcases and shop displays.
The inherently fragile nature of glass means that damage to it is more prevalent. As such, this specific form of insurance coverage will take care of any accidental breakage.
Perils on the Building itself
In the event that your business premises is not merely a unit within a building but actually encompasses the whole building (for example, if your business owns an entire warehouse), there is the option to extend coverage to any of the above perils mentioned above to the building itself. The insurance will then take into account any damage or loss incurred upon the physical structure itself.
Getting insurance coverage for all such risks may sound financially daunting, but the costs are actually not as prohibitive as you might think. Basic fire insurance is likely to cost only around S$200 per annum. Naturally, the premiums would increase as commensurate with a higher amount of coverage. But considering the risks and potential harm that would come to one’s business should there be no compensation forthcoming in the event that a disaster happens, most would consider the expenditure not just a worthwhile investment but an absolutely crucial cost of doing business.
An effective way to minimise this cost would be to examine the circumstances of your business carefully and assess what is needed.
Business Insurance Packages
Some insurance providers offer comprehensive business insurance packages. These packages would include coverage for all risks as well as some other potential essentials such as product liability and public liability. There can even be coverage for work injury compensation, which is mandatory for all employers in Singapore. These are generally more value-for-money than purchasing a standalone commercial property insurance. They are also customisable to suit your needs, and can include other coverage such as goods in transit and even personal accidents. These packages usually pertain to retail shops, F&B establishments, wholesalers as well as manufacturing and warehousing companies.
As such, those looking to set up, or have just set up, a new business in any of these areas would do well to consider business insurance package options.
How to make a commercial property claim
Different insurance providers will have different processes. But generally speaking, in the event that an incident which may give rise to a commercial property claim has occurred, one should refrain from disposing any damaged items or property until the claim has been settled. If a crime has been committed as part of this incident (such as a burglary), a police report should be made.
When submitting a claim form, the following documents will most likely be needed:
Police Report (if applicable)
Clear photographic evidence of damaged property
CCTV footage of the incident if available
Repair/Replacement Quotations (preferably from more than one source)
Purchase invoice/receipt of damaged property
Want to get a quote for your company’s fire insurance policy? You can fill in the Interest Form here!
Read also: What is Public Liability Insurance And Should Your Business Get It?
Read also: COVID-19: How to Reduce Your Company Insurance Costs During This Pandemic
Read also: New MOM Requirements for Employees on Work Permit, Training Work Permit and S Pass Holders Entering Into Singapore From 1st Jan 2021
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