Small business owners need to carefully consider and evaluate their business insurance needs since they are financially exposed.
The risks your business faces are determined by the industry you operate in for example a manufacturing and a consulting business face different risk. The location of your business, some areas are more prone to theft, vandalism, floods, or fires. Size of the business and the number of employees also determine the type of risks a business may face.
Insurance cannot cover everything. There are some risk elements of your business that you need to manage on your own. Good risk management reduces the cost of insurance. For example, the risk of theft can be managed by installing CCTV cameras and security alarms. The risk of fire can be managed by installing smoke detectors and fire sprinklers. Training employees on workplace safety will reduce accidents and therefore reduce losses / damages.
Some industries have a legal obligation to insure some aspects of their business. For example, lawyers and doctors are required by law to have professional indemnity insurance. Building contractors are required to have Contractors All Risk insurance. All employers are expected to compensate their employees if they are injured while doing their work.
If you do not feel like you can assess business risk to determine what kind of insurance you require, consult with an insurer, agent or broker. Be sure that these professionals are licensed by the Insurance Regulatory Authority
Get several proposals or quotations from various insurance companies to ensure you get the right fit, both in terms of coverage and premium, for your business needs.
Ensure you clearly understand what is covered, not covered as well as the terms and conditions of coverage. Avoid the temptation of auto-renewal when the time comes. Business processes, people, assets, products change over time, all these factors should be factored into your insurance to always ensure adequate cover. No one knows your business better than you, so make it your business to ensure proper coverage.
Your business requires the best possible insurance cover, but can your business afford it? Consider, and negotiate for, flexible policy terms and any available discounts that could save you some money. You need to strike a balance between cost and insurance coverage.
Be careful not to take a cheap, but inferior policy with poor coverage that will not cover you in case a loss occurs.
There are different types of business insurance covers based on size, location, industry, number of employees and others. Overall, insurance covers the following main areas.
This is cover against claims resulting from injuries and damage to other people or property. For example, a customer gets injured or sick from using products from your business and they sue the business. In this case, product liability insurance will cover for legal costs and pay-outs if the insured party (your business) is found legally liable.
If your business has employees, then you are required by law to compensate them should they be injured in the line of duty. Work Injury Benefits Insurance is a legal requirement for businesses under the Work Injury Benefits Act (WIBA). Work Injury Benefits Insurance provides compensation to employees for work-related injuries and diseases contracted in the course of employment.
Businesses have property in various forms. For example, motor vehicles, motorcycles, furniture, buildings, machinery and equipment, stock etc. Insuring business property is important as it is expensive to replace when damaged or stolen.
Taking out business insurance makes you more aware of the risks your business faces and getting your business insured helps you to manage these risks effectively and efficiently. It ensures that, as a business owner you plan for the uncertainties or risks and continuity of your business in case of any adverse situation. For example, should your machines breakdown or get damaged in a fire or are stolen, with insurance, you can plan for resumption of business since your machines will be repaired or replaced. Without insurance, it will be a struggle to have alternative cash flows to repair or replace the machines and reopening the business becomes difficult.
Insured businesses have a better chance at accessing credit facilities compared to uninsured businesses. Insured businesses can obtain a loan by pledging their insurance policy as collateral for the loan. Similarly, insurance companies can also offer loan facilities especially to their clients using the life insurance policy as collateral.
A business that provides insurance cover for its employees is more likely to attract and retain skilled employees compared to one that does not. Businesses that are heavily reliant on human capital should consider providing insurance covers such as medical, life insurance, Group personal accident insurance and pensions as part of their employee benefits package. This makes your business an attractive employer and you can retain staff.
If your clients or customers know your business is insured, it gives them peace of mind and increases your credibility score. Business insurance can help you in contract negotiations and in some instances, you will be required to have some form of insurance before a contract is awarded.
Insurance for your business makes you more actively involved in managing risks. For example, installing CCTV cameras and security alarms to manage theft, drafting clear contracts between you and clients to reduce disagreements and chances of lawsuits, training employees on workplace safety will reduce accidents and therefore reduce claims, or installing smoke detectors and fire sprinklers to address fire risks. Good risk management reduces exposure and will attract discounts when paying insurance premiums.
Yes. Insurance companies offer combined business insurance covers. These covers vary from one company to another, and they vary from one business to another. Combined insurance covers make it easier to manage and save on cost. It is therefore important to get several quotes and proposals to help you identify the best option for your budget.
Each business and its set-up is unique. Therefore, there is no fixed cost for insuring your business. An insurance company will consider several things while assessing the risks and calculating the premium. These considerations will broadly include;
Professional liability insurance protects professionals and consultants against negligence claims that result from mistakes or failure to perform. Professionals such as doctors, media and PR consultants, Architects, quantity surveyors, lawyers, accountants, engineers, property valuers, event planners and others can be covered under professional indemnity.
There is no one-size-fits-all professional indemnity coverage. Each industry has its own unique concerns that are addressed in the cover.
Protecting business assets is critical for the continuity of any business should an unplanned event occur.
Business property can be protected against fire, flooding and theft.
Any vehicles used for business should also be fully insured. At the very least, businesses should insure against third-party injury, but comprehensive insurance will cover the vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident.
This type of insurance is especially applicable to companies that require a physical premises to do business, such as shops, garages, factories, hotel etc. Business interruption insurance compensates a business for lost income during events such as fire, floods, and others that cause a disruption to the normal course of business.
If your business manufactures products for sale, product liability insurance is critical. Any business can find itself named in a lawsuit due to damages caused by its products. Product liability insurance protects a business in such cases.
If your business has a physical location where customers can visit and suppliers deliver items, then public liability insurance is important. Simple accidents like liquid spilling over a client’s computer or a wet floor causing the supplier or customer to fall and injure him/herself could dent a business financially if not insured.
Public liability insurance will cover the costs of lawsuits due to accidents, injuries and claims of negligence by third parties.
Fidelity Guarantee insurance covers an employer against loss of money, business equipment, securities or other goods belonging to the business resulting from an act of fraud or dishonesty by employees for improper personal financial gain in the course of their duties. This would be valuable to businesses such as retail chain store or those that deal with lots of cash transactions.
Does your business involve moving goods from one point to another? Goods in Transit insurance covers loss or damage to goods or merchandise while moving it from one place to another.
