Business Insurance for your business largely depends on the type of work you do. For some regulated professions—like lawyers, healthcare providers, builders, real estate agents, and transportation services—having liability insurance isn’t just a suggestion; it’s a requirement.
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| Complete Guide to Business Insurance: Protect Your Company and Assets |
This is to protect clients and customers from any harm that might result from professional mistakes. Even if you’re not legally required to have insurance, it’s still wise to assess the potential risks involved in your business and consider if coverage could save you from major financial hits down the line.
Generally, there are three key types of insurance that every business should consider:
- Professional Liability Insurance (RC Pro): Covers damages caused to third parties.
- Decennial Insurance: Mandatory for construction companies.
- Commercial Vehicle Insurance: Needed for vehicles used in business operations.
There are also other types of insurance that, while not required, can offer valuable protection. Multi-risk insurance, for example, can help safeguard your business assets, loss-of-income insurance can cover you if a disaster disrupts your operations, and specific coverage for stock or premises can be especially useful. Each business has unique needs, so it’s crucial to assess which types of coverage best align with your goals and ensure the right level of protection.
Is it mandatory to insure your business?
The obligation to take out an insurance contract depends on your business activity. Certain regulated professions are required to subscribe to business insurance for civil liability. This is particularly the case for:
- Legal professionals (notaries, lawyers, judicial representatives, bailiffs, auctioneers);
- Healthcare professionals (anyone providing care, diagnosis, or health prevention, as well as those who produce and supply health products);
- Construction professionals;
- Professions that involve the use of vehicles (cars, trucks) transporting goods or people, such as movers and taxi drivers;
- Real estate professionals (real estate agents, architects);
- Tourism professionals like travel agencies.
You must therefore inform yourself about your activity and the risks it entails.
If your activity does not require you to take out insurance, carefully consider the risks that may arise. It is up to you to assess the risks that the business can bear (equipment, signage, etc.) and those that it is preferable to transfer to the insurer (fire, theft, etc.).
To determine which insurances are essential for your business, you need to ask yourself the right questions. This involves identifying the risks to which the business is exposed, assessing the consequences, and implementing necessary preventive measures.
What are the three mandatory insurances for businesses?
As a precaution, all businesses should be insured. However, this is not an obligation, except for certain professions regulated and defined in the Insurance Code. Thus, the three main mandatory insurances are for:
- Businesses engaged in healthcare professions involving prevention, diagnosis, and/or treatment, as well as all professionals who supply or operate. In this case, it is necessary to have at least medical civil liability insurance.
- Legal professionals are required to take out professional insurance, such as notaries, judicial representatives, lawyers, bailiffs, auctioneers, etc.
- Construction companies must take out construction works insurance corresponding to ten-year insurance as soon as a construction site opens, and companies using motorized ground vehicles must have insurance for these vehicles. This insurance is still mandatory for many professions such as architects, real estate agents, tourism agents, etc.
Why are certain insurances mandatory?
The obligation for insurance applicable to certain professions is driven by the imperative to protect consumers.
Damages resulting from a medical error, construction defects, or poorly drafted legal documents can far exceed what a typical small business could bear. The legislator thus aimed to protect citizens, even in these situations.
Professionals engaging in activities not listed among those required to take out professional insurance must still consider the damages that an error caused by them could incur on a third party, often a client. The interest in taking out professional insurance should arise from this reflection.
Is it mandatory to have insurance as a self-employed/micro-entrepreneur?
A micro-entrepreneur is subject to the same rules as other professionals. Insurance remains mandatory depending on the regulated activity. If the activity is regulated, then the self-employed entrepreneur must subscribe to a professional civil liability insurance contract.
If working in construction, they must have ten-year liability insurance. If in the healthcare sector, they must take out medical civil liability insurance. If they use a motor vehicle as part of their profession, they must take out civil liability insurance for using that vehicle, especially for transporting people or products.
If this micro-entrepreneur does not engage in a regulated profession, there is no obligation to take out professional insurance, but it is strongly recommended in all cases.
What risks should you insure your business against?
There are numerous insurances covering different risk sectors. They are grouped into three main categories of professional insurance: property insurance, activity insurance, and personal insurance.
Insuring the company’s property
Essential for a company's activity, property (buildings, equipment, stock, vehicle fleet, etc.) can often be very costly. It is therefore advisable to protect all your company's assets against risks of fire, theft, or natural disasters. For this, you need to take out multi-risk insurance.
To complement this basic coverage, you can also take out stock insurance, premises insurance, or business interruption insurance (protection in the event of activity stoppage due to a claim).
Insuring the company’s stock
Stock insurance covers losses and damages related to incidents affecting the company’s goods and raw materials, whether stored in premises or in transit to the client. It is therefore indispensable if you are engaged in distribution or import-export activities.
Insuring the company’s premises
Fires, floods, or water damage, natural disasters: your company’s premises are exposed to many risks. To protect yourself against these, you can choose professional premises insurance, which will compensate you if any of these risks occur.
With this compensation and depending on the extent of the coverage taken out, you can rebuild your premises or rent others while yours are functional.
Insuring business interruption
Generally included in multi-risk business insurance, the business interruption guarantee allows you, as its name indicates, to be compensated in the event of loss of revenue due to an incident. It enables you to continue your business activities by covering fixed costs (salaries, rents, etc.) and expenses incurred due to the damage.
Insuring the company’s vehicles
If you engage in transporting goods or people, you are required to take out civil liability insurance, whether for construction vehicles, cars, or forklifts. It will cover bodily injury and property damage affecting third parties.
For better protection, you can add theft and fire guarantees. You can choose between an individual contract and a fleet contract for 3 to 5 vehicles.
Insuring the company’s activity
When you have employees, receive clients, or rent premises, your liability may be engaged in the event of damages caused in the course of your activity.
This is why it may be useful to take out professional civil liability insurance, which covers damages caused by the products manufactured or services provided by the business, or a works damage insurance. If you are engaged in a regulated profession, you will even be obliged to insure your business!
Professional Liability Insurance (RC Pro)
Insuring the business with RC Pro covers:
- Damages caused by employees or to employees;
- Damages caused to third parties by the business (for example, falling equipment on a pedestrian);
- Damages to property (for example, if there is breakage at a client’s premises).
Good to know: RC Pro insurance is mandatory for all regulated professions, regardless of the industry.
Works Damage Insurance
Insuring a business with works damage insurance is mandatory if you engage in project management and construction work, and this must be done before launching the first construction site. This obligation thus concerns builders of individual houses, real estate developers, etc.
This insurance aims to guarantee payment for repairs related to the ten-year guarantee, without any search for liability. It covers defects and malfunctions that threaten the stability of the construction.
The Ten-Year Guarantee
The ten-year civil liability insurance is directly linked to works damage insurance. It also concerns the project manager, builder, real estate developer, etc. However, the subcontractors of these companies are not required to subscribe to ten-year guarantees.
Good to know: Craftsmen and self-employed craftsmen in the construction sector must mention this insurance, the contact details of the insurer, and the geographical coverage of the contract on their quotes and invoices.
Good to know: If you do not take out ten-year insurance when required by law, you risk a fine of €75,000 and 6 months of imprisonment.
Insuring the company's personnel
Insuring business leaders
It is possible to arrange insurance for the business owner with a special "majority manager" contract that offers sufficient social coverage, or through "key person" contracts. This insurance should be put in place when the presence of a leader is essential for the operation of the company. It will come into effect if that person is unable to work or passes away.
There is also civil liability coverage for corporate officers that protects the leader if they are implicated in cases of management errors or violations of labor law.
Insuring the company’s employees
Regarding employees, your business is subject to certain obligations concerning social protection. Individually, your employees are insured under the general social security scheme.
However, you can supplement this scheme with group insurance contracts, such as disability or death insurance. Furthermore, you are required to offer your employees collective health insurance and to contribute financially to the premium, covering at least 50%.
How to insure your business?
To insure your business, you can contact an insurance company. This could be either an insurance company or a mutual insurance organization that directly provides insurance services.
You can also rely on intermediaries such as a general insurance agent, who represents one or more insurance companies in a specific geographic area, or a broker, who acts as a consultant and negotiator to find the best options.
Insuring the business through an insurance company
You will need to go to an agency to insure your business. This way, you will benefit from personalized advice based on your business needs. On the downside, scheduling an appointment may take time, and you need to understand all the nuances of the insurance contracts to negotiate with insurers effectively.
Using a broker to insure the business
Acting as an intermediary between the insurance company and you, the broker's mission is to obtain the most comprehensive contract under the most advantageous conditions.
They are not affiliated with any company, thus maintaining their independence. Using a broker allows you to save time and reduce the cost of business insurance. Of course, you will need to compensate them for their service through brokerage fees.
Insuring your business online
The final option is to insure your business online. Many reputable companies offer this service. The advantage here is a significant time saving in comparing offers and accessing favorable rates.