Voluntary insurance for entrepreneurs
If you wish, you can supplement your business’s mandatory insurance arrangements with voluntary insurance policies. These will provide you with the extra cover you might want for your business. Voluntary insurance includes entrepreneur’s accident insurance, property insurance, business interruption insurance, general liability insurance and legal expenses insurance. Acquire this insurance from an insurance company of your choice.
The Employment Accident and Occupational Disease Act does not make it obligatory to acquire insurance against accident and occupational disease for yourself as entrepreneur, but it does oblige you to take out this type of insurance for your employees. Often, however, it is worthwhile taking out this type of insurance for yourself voluntarily.
An entrepreneur’s voluntary insurance arrangement under the Act may apply to just your working hours or time spent away from work, as you choose. The difference between an entrepreneur’s working hours and time spent away from work is often blurred, so the broader cover option could be the wiser choice.
An entrepreneur’s voluntary insurance policy covering working hours provides compensation in the event, for example, of medical and rehabilitation expenses resulting from an accident or occupational disease. It will also cover loss of earnings resulting from the incapacity for work, in the form of e.g. a daily allowance, rehabilitation allowance or a worker’s compensation pension.
You may also be eligible for compensation if an accident or occupational disease causes you permanent disability. The policy will also pay out a survivor’s pension if the entrepreneur dies as a result of injury or an accident as referred to in the Act.
If you have an insurance policy also covers time spent away from work, it will pay out the same compensation for accidents as voluntary working hours insurance.
The cost of accident insurance is based on YEL income and how dangerous your work is. Compensation for loss of earnings and the survivor’s pension under the policy are also based on your YEL income.
Property insurance covers loss and damage to your company’s property. In practice, property insurance generally includes a number of insurance policies that are smaller in scope, such as insurance against fire and break-ins and cover for the transport of goods.
Property insurance enables you to provide cover, in principle, for all your company’s property in the event of loss or damage caused by humans or natural phenomena. With this insurance you can also protect, for example, your company’s real estate, machinery, software and stock.
You can be covered under a property insurance policy if your company’s property is affected, for example, by a fire, storm, water damage, burglary, vandalism or robbery. Cover may also extend to machinery and stock breakages.
Business interruption insurance covers your business operation for losses resulting from sudden interruptions.
Interruption can be due, for example, to machinery breaking down or a fire on the premises. If a supplier of goods that is vital for your business suddenly ceases to operate, this can also interrupt your own business operation. If you are a sole trader, any sudden incapacity for work on your part can interrupt your business operation temporarily.
Business interruption insurance can provide cover, for example, your company’s losses of income and additional expenses incurred in exceptional circumstances. It can also cover salaries and running costs during any interruption of the business.
There are many types of business interruption insurance arrangements, depending on the insurance company. You can often choose what might be most suitable depending on the most likely reasons why your company’s operations might be interrupted.
Business interruption insurance can generally help your company to continue to operate as normally as possible following an interruption.
General liability insurance provides cover in the event of loss or damage that you, your employee or one of your products causes to external parties. There are many types.
General business liability insurance can cover loss or damage, for example, in situations where your company’s employee has done his or her work negligently and the customer’s property is damaged or malfunctions as a result.
Product liability insurance can cover loss or damage, for example, in situations where your company’s product causes loss or damage to another party.
Professional indemnity insurance can help if your company’s negligently prepared contract, accounts or sale document causes your customer to incur additional costs.
Consultant liability insurance may be necessary if you give advice or are working as a consultant on your client’s project. If your advice causes your client loss or damage, you may use your policy to provide compensation.
Liability insurance in respect of a CEO or Board of Directors can provide compensation for loss or damage resulting from their neglect and mistakes.
Legal expenses insurance might seem something that is unlikely to be relevant to an honest entrepreneur, but one day your company might have to go to court through no fault of its own.
Legal expenses insurance can cover your company for lawyers’ fees and legal expenses in disputes and criminal cases it may be involved in. The costs for reimbursement must be necessary and reasonable. Legal expenses insurance can also provide cover for the costs your company incurs as a result of arbitration and other preventive legal action.
Legal expenses, however, do not usually cover court costs if the proceedings are the consequence of a police investigation where your company is suspected of being involved in criminal activity. Nor will it cover cases heard by a special court, such as the Market Court. Nor will you receive compensation for any loss of earnings for the time you have spent in connection with judicial proceedings or arbitration. If a court sentences the losing party to reimburse the costs of their counterparty, the legal expenses insurance will also not reimburse these costs.
Insurance companies also offer businesses dozens of other types of insurance for different industries and purposes.
The policies may provide cover in such areas as your company’s vehicles, patents and other intellectual property, IT equipment, information systems and your business trips.
Think carefully about the sort of risks that are associated with your business, and choose the most suitable policies for your company accordingly. What the insurance companies have to offer and their charges vary, so you need to compare the options carefully.