As a business, it is essential to comply with legal insurance obligations to protect your business, your employees, and your assets. Failure to take out mandatory insurance can result in financial penalties, legal action, and jeopardize the sustainability of your business. In this article, we detail the main mandatory insurances for businesses and why it is crucial to comply with these obligations.
1. Why is Insurance Mandatory for Businesses?
Mandatory insurance aims to protect companies against the risks to which they are exposed, while guaranteeing the safety of third parties (customers, partners, employees) with whom they interact. Taking out this insurance allows you to:
- Protecting the business against financial risks : Insurance covers potential damages that could harm the business's activity.
- Legal compliance : Complying with legal obligations avoids administrative and criminal sanctions.
- Protect third parties : Ensure the safety of customers, partners, and employees in the event of damage or accidents.
2. The Main Mandatory Insurances for Companies
a. Professional Civil Liability Insurance (RC Pro)
Professional liability insurance is mandatory for certain regulated professions (lawyers, doctors, real estate agents, etc.), but it is strongly recommended for all businesses. It covers bodily injury, material damage, and immaterial damage caused to third parties in the context of the company's activity.
- Examples of coverage : Error in service, accident caused to a customer on your premises, material damage caused during an intervention.
- Why it's mandatory : This insurance protects your business against third-party claims, avoiding high legal costs and compensation that could jeopardize your business.
b. Directors’ Liability Insurance
Directors' liability insurance covers management errors, mistakes or omissions made by the company's directors. It protects their personal assets in the event that their liability is called into question by third parties, shareholders or employees.
- Examples of losses : Management decisions leading to financial losses, violations of social or tax laws.
- Why it's mandatory : Although it's not legally mandatory, it's highly recommended to protect managers from the consequences of their business decisions.
c. Multi-risk Professional Insurance
Multi-risk professional insurance is not compulsory, except for certain professions, but it is essential to protect the premises, equipment, stocks, and other assets of the company against various risks (fire, water damage, theft, etc.).
- Guarantees included : Property damage, operating losses, theft, vandalism, natural disasters.
- Why it's mandatory in some cases : Commercial property owners often require this insurance to ensure that the premises and business are protected against loss.
d. Company Vehicle Insurance
Any vehicle used for professional activity must be insured with at least third-party liability insurance, covering damage caused to third parties. This obligation applies to both company cars and utility vehicles.
- Types of coverage : Third party insurance, extended third party, or comprehensive insurance depending on the use of the vehicle.
- Why it is mandatory : To cover material and bodily damage caused to third parties while driving the vehicle.
e. Ten-year insurance (BTP)
Mandatory for building and construction professionals, ten-year insurance covers damage affecting the solidity of a structure or making it unfit for its purpose, over a period of ten years after acceptance of the work.
- Examples of guarantees : Poor workmanship, hidden defects, lack of conformity affecting the construction.
- Why it is mandatory : The law requires this insurance to guarantee customers compensation for damage affecting the building.
f. Work Accident Insurance for Employers
Work accident insurance is mandatory for all employers. It covers medical expenses, compensation for lost wages, and disability coverage in the event of a work accident or occupational illness.
- Guarantees : Coverage of medical expenses, daily allowances, pensions in the event of permanent disability.
- Why it's mandatory : To protect employees in the event of a workplace accident and avoid costly litigation for the company.
3. Consequences of Failure to Comply with Insurance Obligations
Failure to subscribe to mandatory insurance can result in severe penalties for the company:
- Fines and criminal sanctions : Failure to comply with insurance obligations can result in significant fines or even criminal sanctions for managers.
- Repairs at the company's expense : In the absence of insurance, the company will have to cover the entire cost of the damage, which could jeopardize its financial situation.
- Loss of credibility and trust : Not being insured can damage the company's reputation, affecting the trust of customers and partners.
4. How to Choose the Right Insurance for Your Business
To help you choose the right compulsory and supplementary insurance for your business, here are some tips:
- Assess your specific risks : Identify the main risks linked to your activity, your premises, and your employees.
- Compare offers : Use comparison sites or hire a broker to find the best offers based on your sector and your needs.
- Consult an insurance advisor : An advisor can help you understand legal obligations and choose the right insurance for your business.
Conclusion
Complying with legal insurance obligations is essential to protect your business, your employees, and your assets. By taking out mandatory insurance and supplementing your coverage with suitable insurance, you ensure the sustainability of your business and protect yourself against financial risks.
At KT Assur&Bank, we support you in setting up the insurance necessary for your business and offer you personalized solutions for optimal protection. Contact us today for a free audit and a personalized quote .