The insurances in an SME company can be divided into three parts:
1. Statutory insurances:
These insurances are mandatory required to be taken by the companies. They are directors liability insurance, labour law related insurances, etc
2. Required insurances: They are required by the banks and the related industries stakeholders as a part of contract. For example, a bank may require a company to take insurance of the inventory based on whose value a loan is granted.
3. Strategic insurances: These are special variety of insurances that the companies take to protect their business risks. This decreases the perception of risk in the eyes of the investors. It makes the restructuring of the company e relatively easy in case of unfortunate events. It also protects the company against the force majeure events.