The 5 types of insurance that business owners in China need
China and its glistening cities and futuristic tech ecosystem allures entrepreneurs and innovators from all over the world. While doing business in China is rewarding, it is also risky. A lawsuit can wipe a business out, or a natural disaster can destroy the foundations of a company before it gets off the ground. Unfortunately, it is impossible for an entrepreneur to eliminate all risks. Fortunately, there are a variety of risk-management options and insurance for business owners in China.
A successful business or company needs a combination of insurance. We at Asian-Risks introduce the five types of insurance that business owners in China need.
Property all risks
When you need property all risks insurance in China: Natural disasters like typhoons, floods, or earthquakes are relatively common in China, and can destroy your property beyond recovery. Property all risks insurance is a must for corporations relying on property to run business. Companies and manufacturers should take precautions to minimize the damage from potential natural disasters.
For example, southeast China is prone to typhoons and heavy rain. However, normal property insurance doesn’t cover such a devasting event. That is why China-based insurance brokers like us check with insurers before signing a property all risks contracts, to make sure they cover the natural disasters that are likely in your neighborhood.
Source: Sohu, Guangzhou Metro Line 13 temporarily closed due to heavy rain
How it can shift your risk: Property all risks insurance reimburses the losses related to property damage. Purchasing additional property interruption coverage helps you get through hard times and covers the cost to rebuild after an unpredictable event.
Business interruption insurance
When you need business interruption insurance in China: Risks not only involve physical damage, but also the interruption of usual business operations. For example, a strong typhoon that occurs in your area may flood your factory, requiring the cleaning and repairing of equipment impacted. This may require few weeks or a month; it can force you to stop your operation.
Source: Chinadaily, Tiantu, Shanwei was severely affected with seawater flooding and electricity cut off
How it can shift your risk: Business interruption insurance helps to soften the financial burden when you suffer an income loss. However, it is different from property insurance, which only covers the costs to repair the damaged property. Business interruption insurance fills in the gaps of income lost due to pausing operations. This policy provision is designed to put a business in the same financial position as usual. Accordingly, this type of insurance is especially applicable to companies that are easily affected by disasters.
When you need public liability insurance in China: A company could receive a lawsuit if a third party suffered a bodily injury in connection with your business. For example, a passerby can get hurt by a falling object at a construction site. Without public liability insurance, all indemnity for the injured would come from the business’s pocket.
How it can shift your risk: Public liability insurance helps your business relieve financial burden in case of accidents. Public liability insurance is not a one-size-fits-all policy. It provides tailored provisions and makes adjustments for a particular event, such as exhibitions, performances and shows.
When you need employer liability insurance in China: Employer liability insurance should be added to your insurance list when your first employee is hired. Starting from the first working day, an employer is responsible for all work-related injury or illness costs. Even if the work involved is low risk, accidents such as slip and fall could result in a pricey indemnity. However, general workers’ compensation is far from enough in these cases. Employees can sue for punitive damage such as psychological suffering and pain if the worker’s compensation does not adequately cover their loss.
How it can shift your risk: Employers liability insurance is designed to protect employers from financial loss when an employee has a job-related illness or an injury that is not covered in normal workers’ compensation. This insurance bears employers’ financial burden and ensures a worker receives the desired compensation.
When you need product liability insurance: If a customer gets food poisoning after eating products your company manufactures or sells, they can claim for indemnity. A product safety problem can bring a manufacturers or a wholesaler many issues, like a bad brand reputation or a pricy claim, and even close the business down. For example, an IKEA dresser crushed a 2-year-old toddler to death, which required IKEA to pay $46 Million.
Source: Tim Rayne, Dresser tip-over incident
How it can shift your risk: Product liability insurance is designed to protect clients’ legal liability against bodily or property harm to a third party who purchases or uses their products. Even a business that takes strict measures to ensure every good’s safety can find itself named in a lawsuit because of the harmful ingredient detected inside its products. Accordingly, this insurance is a must for manufacturers, retailers, wholesalers and merchants.
These are the five insurances that businesses owners in China need, but each company has unique risks which require a catered insurance plan. Contact us to get a tailor-made insurance solution for your business in China.
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