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Guide to Business Insurance in India

Business Planning

Business Insurance Guide for Indian Entrepreneurs


Business insurance protects your enterprise from unexpected losses — fire, theft, natural disasters, lawsuits, and employee injuries. Most bank loans also require insurance on the assets financed.


Types of Business Insurance


  • Fire & Burglary Insurance
  • Covers damage from fire, lightning, explosion, storms, and burglary
  • Required by banks if you take a secured loan
  • Premium: 0.05-0.15% of sum insured per year
  • Available from all general insurance companies

  • Shop Keeper / SME Package Insurance
  • All-in-one policy covering fire, burglary, money, liability, and breakdown
  • Best for small shops, clinics, restaurants, salons
  • Premium: ₹3,000-15,000/year for sum insured of ₹10-50 lakh

  • Commercial General Liability (CGL)
  • Covers third-party bodily injury and property damage claims
  • Important for businesses with customer footfall
  • Premium: ₹5,000-25,000/year

  • Professional Indemnity Insurance
  • For consultants, doctors, lawyers, CA/CS, IT professionals
  • Covers claims arising from professional errors or negligence
  • Premium: ₹3,000-15,000/year

  • Workmen Compensation Insurance
  • Mandatory if you have employees
  • Covers employee injuries, disability, and death during work
  • Premium based on annual wages and industry risk class

  • Keyman Insurance
  • Life insurance on key person (founder/promoter) whose loss would impact business
  • Premium is a business expense (tax deductible)
  • Banks may require this for large loans

  • Cyber Insurance
  • For businesses handling digital data and online transactions
  • Covers data breaches, cyber attacks, and business interruption

    • How to Choose

  • Start with fire/burglary insurance and shop package policy
  • Add liability insurance as your business grows
  • Compare quotes from IRDAI-registered insurers
  • Consider deductibles — higher deductible = lower premium
  • Review and update sum insured annually

    • Key Takeaways

    • Fire/burglary insurance is typically required for bank-financed assets
    • Shop package policies (SME Package) offer best value for small businesses
    • Workmen compensation is mandatory if you have employees
    • Premiums are tax-deductible business expenses
    • Compare quotes from multiple IRDAI-registered insurers before buying

    Official Links

    IRDAIInsurance Information Bureau

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    Disclaimer

    This guide is provided for informational and educational purposes only. EduMetrics is not a legal, tax, or financial advisor. Regulations, procedures, and fees are subject to change. Please verify all information on the respective official portals and consult a qualified professional before taking any action.