Starting a business in Hong Kong is a huge task. Not only do you have to come up with an idea, service, or product that’ll be profitable, but you also have to navigate the world and responsibilities of being the owner of a company. Startups and Small to Medium Enterprises (SMEs) are still held to the same compliance, corporate governance, and liability standards as larger companies. This includes having to manage the risks associated with operating a business, which often involves business insurance.
This Kwiksure article offers a brief introduction to the world of corporate and business insurance products that you’ll need to have considered if you want to ensure compliance with local laws and protection from unexpected disruptions.
Business insurance: what’s legally required, and what’s important to have?
In Hong Kong, there’s only one mandatory insurance requirement for businesses – Employee’s Compensation (EC) insurance. Other products, such as Professional Indemnity or building insurance, are not legally required but they’re seen as an absolute necessity for ensuring your business is protected from the unexpected. Essentially, your business or startup is an asset – and one that needs protecting. Here are our top business insurance products that are vital to running and maintaining a successful company.
Employee’s Compensation (EC) insurance
As the sole insurance product for businesses that’s required by law, this is one of the first things you’ll want to secure. EC is made compulsory to protect workers in the workplace. This insurance protects not only your staff but also your business in the event that a staff member is hurt or injured carrying out their duties for the company. With its status as a legally mandated business insurance product, the market includes a range of basic to more comprehensive coverage plans. Pricing is generally determined by the number of employees you have and their salaries.
Not having an EC Certificate of Insurance can see you fined up to HKD $100,000, with possible imprisonment for two years. For startups and SMEs that begin operating out of a personal home, getting coverage can be a bit trickier as such plans can have issues drawing the line between what’s business and what’s personal in home-run companies. The Hong Kong Government, however, can offer EC coverage under its Employees’ Compensation Insurance Residual Scheme Bureau.
General liability insurance
Before looking at how to get liability insurance for startups, you first want to understand what liability insurance actually is. Most companies can benefit from general liability insurance as it covers claims such as bodily injury, property damage, and more. If a customer injures themself on your business premises, this policy can help cover medical expenses.
Likewise, general liability insurance can help pay for any damages that may occur while your employee is delivering products or services. It can also protect your company from reputational harm by covering slander, libel, and personal privacy violations. Copyright infringement claims and certain rental repairs may also be covered by this type of policy.
Professional Indemnity insurance
Professional Indemnity (PI) is a business insurance product that protects you from the costs of legal action brought against your company and its staff. This can be from claims of inadequate advice, services, or designs that have caused losses to clients or third parties, as well as harm or damage caused to third parties by your staff carrying out their duties. PI insurance can help you meet the costs and expenses of mounting a legal defense, in addition to any damages or costs that are awarded to claimants.
While not mandatory under Hong Kong law, particular industry bodies may require that your business purchase PI insurance for registration or qualification reasons. This may include:
Management and business consultancies
Technical engineers and contractors
Private education workers
One important business insurance for startups or SMEs operating from a business premise is property (or office and contents) insurance. Similar to personal home and contents insurance, property insurance is designed to protect the building you and your staff work in, as well as the assets inside that keep your business running. Any damage the building and contents sustain due to natural weather and disasters, fire, or other events can be covered by property insurance plans.
Business interruption insurance
As the name suggests, business interruption insurance plans offer coverage for the financial costs associated with disruptions to your normal order of business. Think about how extreme weather events, such as Hong Kong’s turbulent typhoons, can shut down transport and delay product deliveries. Likewise, a supplier may suffer a disruption that holds your own business operations up. Business insurance plans that cover interruptions can offer financial support to keep you going until the disruption passes, making it worth factoring in when it comes to startup business insurance costs.
In an increasingly online world, the risks associated with doing business connected to the internet are getting greater. Previously, the concern for acts of cybercrime was theft of personal and sensitive information. As businesses become more sophisticated in how they utilize the internet, so are the ways cybercriminals are looking to benefit illegally from the information stored in the cloud. Cyber insurance can protect against costs associated with lost, locked, or stolen data that is either held for ransom, or becomes the center of a lawsuit against your business by clients or customers that are affected.
Getting the right business insurance solutions for your company
With questions like “What insurance does a startup business need?” or “What health insurance is for startups?”, wrapping your head around the insurance needs for your company can be a headache. Fortunately, getting help with your insurance requirements can often make the process much easier. While there are plenty of insurers and intermediaries that offer business insurance products, what will make the difference is engaging the services of an expert insurance broker that offers support and solutions.
Kwiksure not only has the expertise in helping businesses get adequate coverage, but offers ongoing support for the life of your plan. Our experienced advisors and account managers are dedicated to ensuring your insurance experience is the best it can be. We’ll discuss your business needs and goals to ensure that your insurance is not only right for what you need now, but sustainable through the future.