Six Tips to Insure your Small Business
If you are planning to start a new business, please take note of the following important tips to ensure your business is insured adequately:
The importance of Business Interruption cover
Business Interruption cover is critical for businesses and represents indemnity. Make use of an intermediary to obtain sound advice about insurance for your new business. An intermediary will assist you by ensuring that you have the right cover in place that fits the needs of your business.
The cover is designed to put your business back into the same position, or as close to the same position, as before the occurrence of a loss. It is imperative that the intermediary you choose to manage your business insurance is experienced and qualified. They must be able to analyse the entire risk management programme of your business as well as financial statements.
The importance of an intermediary
Make use of an intermediary to obtain sound advice about insurance for your new business. An intermediary will assist you by ensuring that you have the right cover in place that fits the needs of your business. Too often we see business interruption claims reduced or repudiated because the intermediary has incorrectly calculated the appropriate level of cover. Your intermediary should request a copy of your financials, in order to accurately calculate your level of business interruption.
The cheapest option is not always the best option
More often than not it pays to opt for an insurer that is reputable and has a good claims track record. Do the necessary homework to determine which insurance company provides the best cover at the most affordable premium.
When choosing an insurer consider insurance companies that pay their claims quickly, efficiently and that provides 24/7 assistance.
Be truthful and disclose relevant information
In order to get the best possible premium, you need to be honest and provide your insurer with as much information as possible. Generally, insurers ask for your previous insurance history, which includes a claims history. You run the risk of your claim being repudiated if you have provided incorrect information to your insurer.
Type of cover that must be considered and remember to insure for the correct amount
Entrepreneurs must consider legal liability cover as it protects you, should your business be sued following injury to a third party or damage to a third party’s property. These types of losses can be financially devastating to a small business and is becoming increasingly more important, especially with legislation such as the Consumer Protection Act in South Africa.
Don’t underinsure your business. Identify the five most valuable assets in your small business and obtain adequate insurance cover. These assets could range from buildings and stock to the company’s motor vehicles. From there, identify five risks that could potentially have an impact on your business and obtain adequate insurance cover for them. These risks could range from a fire or storm to flooding or even crime.
Setting up a business can be a costly affair.
Safeguarding your company against potential risk is the single most important way to ensure that your income is protected against possible accidents or natural disasters.
- Content Source: FINWEEK, Entrepreneurship: March 17, 2014