Published — December 16, 2017
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
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Considering the nature of insurance as a contract where the assured shall be reimbursed against loss, damage or liability arising from an unknown or contingent event, it would be wise for businesses to secure insurance policies to cover their assets, or even their key personnel, to protect the enterprise from possible loss, or from incurring liability to another, should something untoward happens.
In the desire to safeguard the interest of the assured, it must be noted that insurance is primarily a risk-distributing device, a mechanism by which all members of a group exposed to a particular risk contribute premiums to an insurer. From these contributory funds are paid whatever losses occur due to exposure to the peril insured against. Each party therefore takes a risk: the insurer, that of being compelled to pay the entire sum agreed upon the happening of the contingency, and the insured, to pay the amount required as premium, without receiving anything in return in case the contingency does not happen [See: G.R. No. 119655].
Here in the Philippines where natural disasters are very common, it is within the realm of unfortunate possibility that the hard-earned assets of a business get wiped out in an instant due to, say, flash floods. This is not to mention the various risks that abound due to other unforeseen acts of men such as robbery, infidelity of employees that results in misappropriation and embezzlement of company funds, or even negligence resulting to losses or damage to company property.
It must be stressed, however, that where the assured himself, or through his connivance, had caused the loss, then the insurer shall not be liable for such loss. The insurer, however, shall not be cleared from liability if the assured was merely negligent [Sec. 89, Insurance Code].
So, what are the various types of insurance coverage that can protect your business against unwelcome contingencies? Here are some insurance policies that you may want to consider.
Property insurance
Property insurance gives protection to the company’s physical assets, such as the office premises, machineries and equipment, and other facilities against damage, destruction or loss due to fire, theft, and other events that may cause such loss or destruction. It is therefore advisable to secure a property insurance policy that covers natural calamities or “acts of god”, especially for companies that are located within or near calamity-prone areas.
Business income/expense insurance
Aside from reimbursement of the value of the cost of the damaged property, some insurers offer special arrangements such as business income coverage where the insurer covers the company’s lost income while the damaged property is being repaired. Some also offer business expense coverage where the insurer covers the expenses incurred by the company during such period of repair.
Marine insurance
It is also important for companies to protect their properties while being transported, as the risk of loss or damage greatly increases while such goods/cargo are in transit. Many things can happen while in transit such as mishandling of the cargo by the crew, potential delays in the delivery of perishable goods, marine accidents, robbery or hijacking, and many others. Thus, it would be a wise move to protect the cargo by securing ocean marine insurance or inland marine insurance (when travelling by land).
Liability insurance
While property insurance gives protection to the company’s physical assets, liability insurance, on the other hand, protects the assured from incurring liability to third persons arising from accident or mishap. It includes, but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance [Sec. 176, Insurance Code].
Life/accident insurance for key personnel
Unlike property insurance that covers damage or loss to property, life/accident insurance covers loss of life or bodily injuries suffered by a covered person. Just like company property, manpower is also considered as a resource, and businesses would benefit if its key personnel who earn for the company are covered. Receipt of the insurance proceeds may be treated as a way of recovering, to a certain extent, some of the income that the covered employee might have generated for the company (especially if the covered employee generates a lot of money), instead of not getting anything at all.
Fidelity insurance
For those who have employees who handle huge amounts of money, the temptation to steal is strong. That is the risk being assumed by fidelity bonds. When an employee steals the money by committing fraudulent and/or dishonest acts, then the bond will cover for the losses suffered by the assured.
Peace of mind can never be purchased. However, by insuring your business, peace of mind is exactly what you avail of. Surely, it is one effective way of shielding your enterprise and its assets with another layer of protection against unwelcome contingencies, or from possible liability, which can potentially break your business.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding insurance and asset protection, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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