Best Insurance Cover For Small Business Owners 2021
Insurance grows driven by digitization, and in addition to conquering young people through technology, year after year they are more present in the business fabric. This sector is, in fact, one of the best adapting to the challenges of the future.
That is why it is not surprising that it managed to overcome the complicated 2020 losing only 8.30% of turnover, and closing the total accumulated in no less than 58.850 million euros.
Also Read: Why is it Important to have Digital Presence for SMEs
When is it mandatory to insure an SME?
Just as a self-employed person has no further obligation than to pay the corresponding social security contributions, an SME is not forced to carry coverage related to its legal entity.
The situation changes the moment the company crosses paths with other subjects and assets that by law must have protection insurance. Thus, in practice, almost all SMEs end up needing to take out a minimum number of policies.
In addition, “for certain activities, regional or local regulations do require businesses to have civil liability insurance in order to carry out their activity .” This would only be one of the policies that meet the aforementioned casuistry.
Mediator: a manager who contacts the SME, visits its facilities, and determines the most appropriate policy for the business.
Adjustment: it is vital that the SME adapts coverage and capital. In other words, the policy contracted covers the total value of the asset, and not just a part of it.
Market: exporting SMEs ” must consider both the territorial scope in which they operate, as well as the jurisdictional scope .”
Always liability insurance
Civil liability is a duty that comes into play when “he who by action or omission causes harm to another, intervening fault or negligence .” This being the case, it would be “ obliged to repair the damage caused ”.
Why is insurance mandatory for SMEs in this regard? Taking into account the permanent risk associated with all business activity, it is logical that businesses should protect themselves from the damages that their work may cause to third parties .
However, before hiring the policy it is important to make sure what its meaning is in the applicable regulations, and distinguish between the subtypes within civil liability to obtain the greatest efficiency and competitiveness.
For the self-employed, for example, the most common insurance is professional civil liability . Doctors, lawyers, mechanics, physiotherapists come to this coverage fulfilling their basic requirement: to have an academic degree .
For both these and SMEs, it is best to study the market and compare the conditions offered by each insurer. Of course, at a general level, policies always usually include:
- Personal, material and / or property damage.
- Intellectual property.
- Data Protection.
- Consequential damage: ” economic loss of the claimant as a direct consequence of the damage .”
- Defense expenses in criminal and civil proceedings.
- Dishonest damages caused by employees.
- Professional disability.
Operating without liability insurance means risking having to face possible damages with your own assets . That is why it is rare to find companies without any type of coverage.
The alternative to liability insurance
At present it is practically impossible to take out insurance that is entirely civil liability. Insurers tend to include other services, and thus converting their policies into the well-known multi-perils .
These insurances, in addition to protecting against the aforementioned civil damages, include coverage related to material damage to the premises and to business merchandise. It is an interesting alternative because its fixed fee is usually cheaper than the RC policy.
All this without taking into account that companies in the sector have specialized and adapted over the years, and are now able to offer very specific coverage designed for businesses in digital sectors with little experience.
If you do not have knowledge in the world of insurance, and you do not have many resources to scrutinize the market, they are the most attractive option to settle this front quickly.
With employees, insurance according to agreement
If you have workers in charge and you do not want to deal with legal problems, it is appropriate that you take out the insurance according to the agreement that corresponds to you . Keep in mind that its omission can result in fines of almost 200,000 euros .
The policy will protect you in the event that an employee suffers an accident at work, dies, or becomes incapacitated during working hours. The type of insurance will be reflected as ” mandatory ” depending on the registered labor agreement.
The most common is the accident insurance agreement, common in sectors such as the hospitality industry. This includes automobile insurance – to Third Parties, with travel assistance and accident coverage – in companies with delivery service.
For companies dedicated to construction, the most recurrent insurance is the decennial one ; policies to be contracted by the developer, which cover the entire process of raising homes and buildings .
In any case, companies will have to take out life or accident insurance for each and every one of their workers. To clear up any doubts, it will be enough to consult the legal agreement in its respective sections.
Other non-mandatory but interesting insurance for SMEs
The market is practically infinite, and when it comes to insurance a company can spend whatever money it wants to protect its assets. However, at the moment of truth, the policy that appears without being mandatory is the health one.
Many SMEs turn to these types of products because they consider them beneficial on a social level, in order to take advantage of them in their internal communication, their labor policies, and their fiscal and personal competitiveness.
At the moment of truth, a company with insured employees could reduce the periods of sick leave and medical citation if they go to private health instead of public. Policies usually include everything from diagnostic services to hospitalization.
In recent years, other insurances that are also gaining strength are all those related to technology. Cybersecurity is striking, fueled by the growing threat of hackers and digital damage.
Insurance and tax deduction
This is a very common practice in the self-employed group, and especially relevant in certain coverage for companies of all sizes. Can the contracted insurance be deducted from the payment of taxes?
The answer is almost always yes when it comes to health insurance. The self-employed under the direct estimation regime have the right to deduct personal income tax from their own premium, that of the spouse and that of children under 25 years of age with incomes lower than those established by law.
The maximum per person is 500 euros, and 1,500 euros if the subject has a recognized disability . In total, the family unit can never exceed 4,500 euros , and the deduction will always be applied on the tax base.
In the case of SMEs and companies subject to corporation tax, the entire expense paid for medical insurance may be deducted as a social expense. That is, the amounts will be subtracted from the declared profits.
The only exception that the law makes and that prevents this tax saving is the one that refers to companies that include medical insurance as part of the compensation to employees.
What about the rest of the insurance? It is possible to deduct personal income tax in the Professional Civil Liability insurance, provided that the coverage is focused on eventualities of economic activity. And that could include vehicle insurance.
The same happens with multi-risk policies, ” whether the premises are rented or owned, ” Infoautónomos recalls. Regardless of whether it covers the continent or the content.