insurance-policy

Which Insurance Policy Is Right For Your Business?

Regardless of how successful your business may be, unforeseen circumstances do occur. The key to safeguarding your assets, revenue, reputation, and liabilities comprise in having the right insurance policy for your business. 

There are 3 main criteria to consider when you are investigating which insurance coverage is the right one for your business. Ask yourself which policy will ultimately provide your business with the best protection against the possible:

  1. Loss and/or damage to the business property or trade
  2. Legal liability that may arise from third party claims
  3. Injuries or death

Loss and/or damage to the business property or trade

Fixed assets make up the bulk of invested capital in your business. It is therefore important to have a commercial policy that will include cover for you: 

  • Buildings
  • Furniture and fittings
  • Machinery and electronic equipment 
  • Stock

Typically, a ‘Business Insurance’ policy includes a broad range of coverage options to choose from. 

While some insurers may have them listed under different names, generally these policies are:

  • ‘Fire, Special Perils, and Theft’

This policy will cover your business for material damage losses incurred from extraordinary events related to weather phenomena, theft, fire and accidental damage.

  • ‘Goods in Transit’

This policy will cover your business for the physical damage or loss of your goods sustained whilst in transit.

  • ‘Business Interruption’ 

This policy will cover your business for potential loss of revenue caused either by material damage, business interruption, and extraordinary events.

  • ‘Money’

This policy typically covers the money that the insured may keep on their premises during and/or after business hours, while in transit, their private residence, or in bank night safes.

  • ‘Electronic Equipment’

This policy will protect the insured from accidental damage, breakdowns, loss of data, and other additional expenses your business may incur on any one of your electronic equipment such as: laptops, servers, computers, printers, point of sales, following damage to your property.

  • ‘Management Liability’

This policy protects the company, its directors, and managerial personnel against mismanagement. It will also cover your business from acts of misconduct, defamation, unfair dismissal, and potential losses accrued from theft or fraudulent transactions by your employees.

  • ‘Travel Insurance’ 

This policy will cover you and/or authorized personnel for medical costs, personal accident, legal expenses, and loss of baggage that you may incur on business trips.

  • ‘Deterioration of Stock’

This policy will cover against food spoilage — kept in freezers and/or refrigerators — resulting from an unforeseen change in temperature settings.

  • ‘Machinery Breakdown’ 

This policy will cover your business against the accidental breakdown of your machinery. Before the underwriting of this policy, the insured needs to agree to;

  • having their machinery serviced annually by a professional. The inspection certificate is required to be forwarded to the insurers at the time of renewal.
  • Having their premises surveyed by an appointed insurance surveyor.

Legal liabilities arising from third party claims

The risk of financial loss from third party claims can cause significant damage to your business. All businesses regardless of size and/or nature that interact with members of the public are advised to have a ‘Public Liability’ Insurance in place.

This policy is designed to protect you and your employees from claims resulting in personal injury and/or damage by third parties sustained from your products and/or services. This insurance policy will cover legal costs and pay out the necessary compensation your business may incur.

By law, under the ‘Occupational Health and Safety Authority Act’, employers are responsible to provide a safe working environment for all their employees. Unfortunately, sometimes work-related accidents do occur. Should your business be found responsible, claims that may arise will be paid for accordingly.

Injuries or death

A ‘Personal Accident’ (Group and Individual) policy will cover your business from ‘statutory liabilities’ that will pay injury leave benefits as dictated by EIRA — Employment and Industrial Relations Act — should you or one of your employees be injured at your place of work.

Other Specific Types of Insurance Policies To Consider

  • A) Professionals who provide a service and give advice, are required to hold a ‘Professional Indemnity’ Insurance cover to be able to practice their stated profession. Unlike a Public Liability Insurance cover, where the claimant can sue for personal injury and/or damage sustained, a Professional Indemnity insurance will cover claims made by your clients for any professional mistakes or negligence on your part.
  • B) To protect your online presence from malicious attacks it is recommended you purchase a ‘Cyber Liability’ Insurance. The fall out from the legal costs associated with a data breach can severely impact your business – not to mention damage to your reputation.
  • C) If you are planning on carrying out construction projects such as;
    • Alteration works
    • Demolition 
    • Road works
    • Tunneling works 

You may benefit by purchasing a ‘Construction and Engineering’ Insurance policy. 

Do I need to have all the insurance policies mentioned above?

No, insurance companies most often have their signature policy packages that are particular to specific businesses. 

To find out what your risk assessment may be, you can simply fill an online form. This may include providing the insurance companies with the following information:-

  • Name
  • Address
  • Business model
  • Details of the risk you want to be insured.

Before purchasing any insurance coverage, be informed of what risks your new policy will help cover.

How do I calculate the sum insured?

When calculating the sum insured, you need to take note of the following guidelines as issued by The Malta Financial Services Authority, (MFSA);

  • Any premiums you pay on your policy depends on the sum insured.
  • If VAT is claimed back, then the sum insured should always exclude the VAT.
  • If VAT cannot be re-claimed then your sum insured should include the VAT element.

In regard to buildings, the sum insured must include any services and permanent fixtures. The amount must also reflect the re-building cost, including permanent fixtures and fittings and money required to rebuild.

In the case of trade equipment, machinery and other contents;

  • If your policy is on an indemnity basis you need to calculate the sum insured of the item considering wear and tear.
  • If your policy is on a reinstatement basis, then the sum insured needs to be calculated on the replacement cost at the time of loss.

The stock sum insured needs to be the replacement at cost price and should amount to the maximum value at any one time.

Which insurance company is right for my business?

In the last decade, Malta’s continuous investment and specialization in Captive Insurance, Insurtech, and Protected & Incorporated Cell Companies, has propelled this nation at the forefront of the insurance industry within the EU.

Offering:

  • A pool of highly skilled (English speaking) professionals within this sector;
  • Favourable tax rates;
  • EU Membership; — (Insurance companies licenced in Malta can operate in any other member state)
  • Stability; 
  • Diversity;
  • Vibrant Island Lifestyle;

Were contributing factors in attracting some major international players within this industry to set up companies in Malta.

According to statistics published in the Insurance and Reinsurance Sector Guide 2018-2019 by Finance Malta, there are a total of 63 insurance companies operating in Malta. 

Whilst the majority of these sell insurance to clients outside of Malta, the following list of established and locally owned insurance companies service clients in and outside of Malta too:

These companies are licensed under the Insurance Business Act ( Cap 403- Laws of Malta) and the Insurance Intermediaries Act ( Cap 487 – Laws of Malta). 

Taking into consideration the size of Malta’s economy, today, out of all the other European Union member states;

  • Malta boasts to have the third-largest insurance sector after Luxembourg and Liechtenstein. 
  • Premiums for all lines combined totalled €4.7 billion in 2018. 

For more information on SOHO’s Office Space solutions and our platform of services in Malta, connect with us either through our:

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  1. Email us at info@sohomalta.com
  2. Simply drop into one of our 3 office locations in Sliema, Gzira and St. Julian’s
  3. Or speak directly with one of our staff by calling  +356 9933 4333

Our team will gladly assist you in any inquiries you may have.

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