What insurance cover do I need when setting up a business?

Tue, 06.04.2021, 08:00

Many small and medium-sized businesses do not have adequate insurance cover. If a key person is unable to work or operations are interrupted, the very existence of a business may be at threat. That is why it is so important to take a close look at your insurance and pension cover when establishing a new business – so that you can plan the future with the certainty you need. After all, business owners have to face risks in a wide variety of areas – risks they can minimize with tailored insurance and pension solutions. Below is a summary of the key facts:

Social insurance – the key is your company’s legal form

Sole proprietorship, general partnership, limited company or stock corporation? The rules for social insurance differ depending on the legal form you choose when setting up your company. The OASI/IV information office can answer FAQs and provide information on the common types of legal entity and the social insurance obligations they entail.

Partnerships – what is and isn’t mandatory? 

The advantages are readily apparent: a sole proprietorship or general partnership is easy to found and no minimum capital is required. But what’s the situation when it comes to social insurance? When a business is established, OASI checks its legal form. If the new business is a partnership, the owners must take account of the following: 

Compulsory:

• OASI/IV/LEC (Pillar 1)
• Family allowance

Voluntary:

• Pension fund (Pillar 2) 
• Occupational accidents (AIA)
• Non-occupational accidents
• Daily sickness benefits
• Tied pension provision (Pillar 3a)

Not possible:

• Unemployment insurance (UI)

In the case of a corporation or limited company, occupational benefits are handled via a pension fund. Things are different with a partnership, where the partners have to provide for their retirement income themselves. The self-employed can pay 20% of their annual income – up to a maximum of CHF 34,416 – into a Pillar-3a solution. Self-employed persons who want to remain insured in a pension fund can also join either the pension fund of their respective professional association or the Substitute Occupational Benefit Institution.

Corporations – watch out for gaps in cover

Those working for limited companies and stock corporations, including the company’s owners, are automatically classified as salaried employees for social insurance purposes. That means the following types of insurance are mandatory:

• OASI/IV/LEC (Pillar 1)
• Family allowance
• Unemployment insurance
• Pension fund – as of an annual salary of CHF 21,510 (NB: insurance obligation – begins at the earliest on 1 January of the year after the employee reaches the age of 17 (contribution for risks of death and disability) and, for retirement pensions, at the earliest on 1 January after reaching the age of 24 (savings contribution)
• Occupational accidents (AIA)
• Non-occupational accidents – as of eight hours’ work for the employer per week
• Daily sickness benefits – if stipulated in the collective employment agreement

Compulsory pension insurance always prescribes minimum benefits only. It is thus worth checking right at the outset whether these minimum benefits are adequate in all areas. Better benefits than offered in the basic contract may be needed, particularly as regards the pension fund, accident insurance and daily sickness benefits.
Even though private pension provision – Pillar 3 – is voluntary, it is worth investing in. Pillar-3 pension solutions can be used to close any further gaps in cover and to safeguard not only dependants and partners, but also residential property. They also offer tax incentives. What is more, setting aside money for retirement enables you to lead an independent life in old age.

Customized solutions for specific risks

Who covers damage caused by fire, water or storms? And what happens if your company is broken into or an accident occurs involving machinery? These are just two examples of many potential sources of loss or damage. A tailored package solution protects your company from the consequences of such risks, allowing you to focus entirely on what is really important: managing and growing your company. Some of the key elements of such a package solution are:

• Property insurance indemnifies you for damage caused by unforeseen events to your movable goods, installations and IT equipment.
• Technical insurance  protects you against the financial consequences of damage to machines and equipment. It can be easily adapted to suit the specific machinery involved.
• Building insurance pays out in the event of damage to buildings and the surrounding premises due to storm, fire and other unforeseen events.
• Property owner’s liability insurance keeps your business safe and secure against the financial effects of claims for damages, e.g. if the postman slips and falls on your premises or a roof tile comes loose and falls on someone’s car. 
• Public and professional liability insurance protects your business if third parties are injured by you, your employees or your products.
• Legal expenses insurance provides your business with comprehensive cover – whether for the cost of seeking legal advice or taking a dispute to court.
• Transport insurance covers damage occurring to goods in transit. It also extends to the loading, unloading and reloading of goods and to goods in use at trade fairs. 
• Assistance insurance provides businesses with financial security when business trips are delayed or cancelled, when travellers are forced to return home early, or where a company vehicle is damaged or breaks down.

One thing is clear: the type of insurance and pension provision you need is closely correlated with the type of business you are in and with your firm’s legal form. That is why we recommend you seek professional advice as early as possible and obtain a customized solution from a single source. Helvetia supports start-ups with a discount of 50% on the premium for their insurance solution.