Taking insurance for your business is important – and has a cost, although it does not have to be expensive. It is even more important when your business is a proprietorship or a partnership and not a corporation (where you have limited liability) .
There are all sorts of insurance, and you need to be aware of the main categories.
- damages to people and objects; caused by your employees / your business e.g. you go to a customer and sit on his glasses, or a customer visits you and a lamp falls on his head…. (‘Betriebs-Haftpflichtversicherung’ in Germany)
- professional indemnities for consultant, doctor, architect, lawyer etc. who need to insure themselves againt claims from customers that they have advised them wrongly (‘Berufshapfplichtversicherung’ in Germany)
- damages to objects through fire, water, flood, natural disaster, vandalism, theft (‘Sachversicherung’ in Germany)
- damages to the environment (‘Umweltversicherung’)
- transportation insurance (‘Transportversicherung’, ‘KFZ-Versicherung’ )
- litigation (‘Rechtschutzversicherung’)
For employees (some of these insurances are compulsory, others optional; this vary by country):
- Medical insurance (about 15% in Germany, shares by the employer and the employee)
- Retirement insurance (about 20% in Germany)
- Unemployment insurance (about 4% in Germany)
- Accident insurance (‘Unfallversicherung’)
Insurance does not have to be expensive. For all insurance forms the price you pay depends on the exact scope of the insurance and maximum liability (you need to read the small text…); and your ‘risk’ profile, including location (where the business is; whether you have world coverage).
When things are difficult to ensure, e.g. that software will work properly, you can limit your liability by contract (e.g. commercial contract between buyer and seller limiting the liability of the seller; software licence). That’s why you have sales contract in the first place!
There are things that are impossible to insure e.g. a lack of market success leading to bankruptcy!