Practical No:5
Aim: Compile Information about various insurances schemes covering different risk factors
1. Professional liability insurance.
Professional liability insurance, also known as errors and omissions (E&O) insurance, covers
a business against negligence claims due to harm that results from mistakes or failure to
perform. There is no one-size-fits-all policy for professional liability insurance. Each
industry has its own set of concerns that will be addressed in a customized policy written for
a business.
2. Property insurance.
Whether a business owns or leases its space, property insurance is a must. This insurance
covers equipment, signage, inventory and furniture in the event of a fire, storm or theft.
However, mass-destruction events like floods and earthquakes are generally not covered
under standard property insurance policies. If your area is prone to these issues, check
with your insurer to price a separate policy.
3. Workers’ compensation insurance.
Once the first employee has been hired, workers’ compensation insurance should be added to
a business’s insurance policy. This will cover medical treatment, disability and death
benefits in the event an employee is injured or dies as a result of his work with that
business. Even if employees are performing seemingly low-risk work, slip-and-fall injuries
or medical conditions such as carpal tunnel syndrome could result in a pricey claim.
4. Home-based businesses.
Many professionals begin their small businesses in their own homes. Unfortunately,
homeowner’s policies don’t cover home-based businesses in the way commercial
property insurance does. If you’re operating your business out of your home, ask your
insurer for additional insurance to cover your equipment and inventory in the event of a
problem.
5. Product liability insurance.
If your business manufactures products for sale on the general market, product liability
insurance is a must. Even a business that takes every measure possible to make sure its
products are safe can find itself named in a lawsuit due to damages caused by one of its
products. Product liability insurance works to protect a business in such a case, with
coverage available to be tailored specifically to a specific type of product
6. Business interruption insurance.
If a disaster or catastrophic event does occur, a business’s operations will likely be
interrupted. During this time, your business will suffer from lost income due to your staff’s
inability to work in the office, manufacture products or make sales calls. This type of
insurance is especially applicable to companies that require a physical location to do
business, such as retail stores. Business interruption insurance compensates a business for
its lost income during these events.
📋 Insurance Schemes for Small Scale Businesses in India
Insurance Type Risk Covered Key Features Suitable For
1. MSME Fire, burglary, natural Comprehensive All types of small
Insurance disasters, machinery coverage including enterprises
(Package Policy) breakdown, public liability building, stock,
machinery
2. Fire & Allied Fire, lightning, storm, Covers structure and Shops, factories,
Perils Insurance flood, earthquake content loss due to fire storage units
or natural calamities
3. Burglary Theft, burglary, Covers stock, contents, Retailers,
Insurance housebreaking and cash against theft showrooms,
warehouses
4. Machinery Sudden Covers Manufacturing units,
Breakdown mechanical/electrical repair/replacement of processing plants
Insurance breakdown machinery
5. Electronic Damage to computers, Covers accidental IT-enabled
Equipment servers, POS machines damage, theft, or short businesses, cyber
Insurance circuits cafés
6. Marine Cargo Transit damage/loss Covers goods in transit Traders,
Insurance (road, rail, air, sea) exporters/importers
7. Public Third-party injury or Mandatory for handling Manufacturing,
Liability property damage hazardous substances processing, chemical
Insurance units
8. Workmen Worker injury, disability, Covers legal liability Any business with
Compensation death at work and medical expenses labor workforce
Insurance
9. Group Health Employee medical Covers hospitalization, Startups,
Insurance expenses OPD, COVID-19 (if manufacturing units
opted)
10. Cyber Cyberattack, data breach Covers data loss, Online businesses,
Insurance business interruption, fintech, e-commerce
legal costs
11. Product Injury/damage due to Covers legal defense Manufacturers, food
Liability defective products and compensation processing units
Insurance
Government-Supported Insurance Schemes
Scheme Name Target Group Coverage Launched/Backed
By
CGTMSE (Credit Loan default risk Guarantees loans up SIDBI &
Guarantee Fund Trust for to ₹2 Cr without MoMSME
Micro & Small Enterprises) collateral
Pradhan Mantri Jeevan Business ₹2 Lakh life cover Government of
Jyoti Bima Yojana owners/workers at ₹330/year India
(PMJJBY)
Pradhan Mantri Suraksha Accidental ₹2 Lakh cover at Government of
Bima Yojana (PMSBY) death/disability ₹12/year India
Stand-Up India Scheme Women/SC/ST Credit and risk SIDBI
entrepreneurs support
Aam Aadmi Bima Yojana Rural artisans, Natural & accidental LIC-backed
small traders death
✅ Why Insurance is Important for SSEs
Risk Management: Mitigates unforeseen losses.
Business Continuity: Helps resume operations after disruptions.
Legal Compliance: Some insurances are mandatory (e.g., Workmen Compensation).
Employee Welfare: Health and life insurances increase retention.
Trust Building: Insured businesses are more credible to clients & investors.
