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I have a startup that is a sole proprietorship. I want to hire one employee soon. How much insurance do I need and what type of insurance do i need? There seems to be so many options available, and not all of them that seem customised to a very small startup business. Part of the business involves taking students on education trips to China and the US. Does this change the type of insurance that I need in Hong Kong?
There are many types of cover that could be appropriate for a business of this nature, including EC, PI, and Travel Insurance.
In Hong Kong any business or individual employing a worker (in any capacity) must hold Employee’s Compensation Insurance. This is a legal requirement under Hong Kong law, and would be a starting point with regards to your coverage options.
Employee’s Compensation Insurance, also known as EC Insurance, covers an employer’s liability to their employees against any accidents or illnesses the worker may suffer as a result of their normal job duties. EC Coverage is normally priced according to your employees’ salary, and it should be noted that if you are being paid by the business (or if you hold an employment contract from the startup) you will need to obtain EC Insurance protection to cover yourself.
EC Insurance is the only legally mandated form of insurance coverage, so the rest of your coverage options really come down to the risks your business may face and how you would like to go about mitigating those risks. All of these options can be taken for small businesses and companies, but depending on the risks being covered some of the options may be more expensive than others.
One valuable product type CCW would recommend you consider is Professional Indemnity (or PI) Insurance. You may know this type of Hong Kong Business Insurance product by the name “Errors and Omissions Insurance”
Simply put, a Professional Indemnity Policy will protect by covering the costs of a defense should you have a claim of negligence leveled against you. We normally recommend that any business in an advice giving industry consider purchasing a Professional Indemnity Insurance plan. The reason for this is that negligence claims can be extremely hard to disprove, have large settlement fees attached, and will completely derail a startup if they are ever brought forth. As you will be taking students overseas there is a high risk of a number of things going wrong (a student may get injured, may be the victim of a theft, or may otherwise get into trouble) for which you could be held accountable as the temporary guardian.
Consequently, while not legally required under Hong Kong law, we would strongly recommend that you consider your options with reference to Professional Indemnity coverage. Furthermore, this type of protection will be invaluable when standing alongside a Public Liability Insurance plan.
A Public Liability Insurance policy will protect you against any the costs of any accidents or injuries a 3rd party (or member of the general public) may experience as a result of your business activities – which is the reason this type of insurance is commonly referred to as 3rd Party Liability Insurance. However, while this can be a great product for protecting your business in Hong Kong it is important to realize that many locally available Public Liability Insurance options will not provide coverage to your startup while you are overseas.
Public Liability Insurance can be obtained on a standalone basis, or you can often receive this type of insurance protection through an Office Contents Insurance policy. As a startup your equipment may be the most valuable assets you possess, and as you will be dealing with sensitive personal data for students (passports, ID card numbers, etc.) you may want to consider insuring your office and its contents against theft and other forms of loss (like fire or flooding).
An Office Contents insurance policy is actually one of the most flexible types of business insurance coverage available in Hong Kong and a really good office contents policy will also provide you with your required EC coverage – enabling you to kill many birds with a single stone in terms of getting maximum value out of your policy. Office Contents plans generally don’t break the bank in terms of cost either, so this could be an excellent starting point for your insurance search.
All of the above mentioned options can be taken out for very small startups with only 1 or 2 employees, and CCW can help you to do a thorough investigation of all the products best suited for your needs which are currently available on the market. However, virtually all of these plans will stop providing cover at the Hong Kong border, and almost none will cover you in the USA. Consequently there is one last type of insurance which you may wish to consider and which we would strongly recommend:
As you will be taking students on trips outside of Hong Kong (you mentioned the USA and China), we would strongly suggest that you request your students to buy a high-quality Travel Insurance policy before being allowed to join the excursion. At present, the best Travel Insurance plan we can recommend is the IHI-Bupa Travel Insurance policy which is available for purchase on this website.
The IHI-Bupa Travel plan provides unlimited medical coverage with no deductible or excess payments; which will be extremely useful should one of your students require medical attention in the USA – the world’s most expensive medical market. Additionally, this policy will also provide options for non-medical coverage enabling your students to receive protection against things like lost baggage, theft, and even personal accident claims.
You could purchase this type of policy for the students attending your trip (and price it into the overall cost of the service you are offering), or require the students to obtain their own travel insurance products – there are a number of good options out there from companies like AXA and Starr which, while serviceable, will offer less comprehensive coverage than the IHI-Bupa option.
Ultimately, the choice of what type of insurance protection you will need will be largely down to you. Outside of Employee’s Compensation cover there are no other legal obligations for insurance purchasing for businesses in Hong Kong.
If you have any further questions, or if you would like to discuss your Hong Kong insurance concerns, please Contact CCW Global today to speak to one of our expert Hong Kong Insurance Brokers today!
Answered on: 12 March, 2018 16:21
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