How to Protect Your Business in a Pandemic (such as COVID-19)
The COVID-19 pandemic has resulted in unprecedented business disruptions, to a point that we are now in a technical recession – so it is with a sigh of relief that we are gradually returning to a sense of normalcy, after the Circuit Breaker.
The show must go on!
However, don’t relax just yet – other than a higher need for cyber security while working from home (read more here on Cyber Insurance), you now have to struggle with regaining the lost profit/income during this period.
While the severity of COVID-19 had caught the world by surprise, the Singapore government has been trying their best to help keep businesses alive – but any more standstills to the economy can be a deathblow to any companies.
Here’s how your business could have been protected from COVID-19, and how you can safeguard yourself from future (knock on wood) pandemics or other disruptive scenarios.
Business Continuity Plan (BCP)
First off, you need to create or update your Business Continuity Plan (BCP). It is not just necessary for large corporations, but companies of any sizes!
A BCP outlines procedures and instructions an organization must follow in the face of disasters or cyber attacks etc; it covers business processes, assets, human resources, business partners and more.
It is essentially a handbook you can whip out in case of emergency, designed to make sure your company can function quickly when disaster strikes.
Business Interruption Insurance
Did you know that your business could have been protected with insurance during the last few months?
Business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster, which can include a pandemic. The income loss covered may be due to disaster-related closing of the business facility, or due to the rebuilding process thereafter.
In today’s globally connected economy, a disruptive scenario can be any of the following:
- Breakdown in core IT systems
- Quality breakdown/product recall at any stage of the supply chain
- Terrorism, riots, or regulatory changes
- Man-made or natural disasters/acts of God (pollution incidents, natural disasters, pandemics etc)
The policy can cover both material(physical) damage, and also consequential loss(e.g. loss of income, rental etc). Hence, business interruption costs could have been paid during our government imposed closure!
Do You Need Business Interruption Insurance?
The aim of business interruption (BI) cover is to restore the Insured to the position they were in before the event occurred, in terms of lost profits or additional expenditure.
If you own the building/shopfront where your business is operating out of, you will be recommended the comprehensive Business Owner’s Policy – where it’ll cover property, liability and business income interruption all in one policy.
In Singapore, it is more than likely that you are renting the premises, so you can simply look at a targeted policy such as BI.
And if you know to purchase personal insurance policies for a peace of mind, shouldn’t you have a contingency plan to keep your business afloat in case of unforeseen circumstances?
So the answer is – Yes. If you run a business of any kind, you definitely need Business Interruption Insurance!
Here’s what BI can cover, in a nutshell:
- Lost nett income (based on financial records)
- Physical loss/damage to property
- Mortgage, rent and relocation(if any) payments
- Loan payments
- Employee payroll
At AWG Insurance, we are committed to a long-term relationship as your trusted Insurance broker, and would like to help you protect your businesses from future disruptions.
We will be delighted to assist in your enquiries, so do drop us a message below or call us at AWG (6294 6688) for assistance!