NEVER IGNORE YOUR BUSINESS INSURANCE
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Very few small businesses adequately understand
the importance of risk management.
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In most cases, entrepreneurs fail to evaluate
both the common and not-so-common risks.
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Even those that do, fail to realize that with an
increase in the scale of operations, the risks are compounded.
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This is made worse by the critical, and largely
ignored, fact that all businesses have unique risks that are not applicable to
other sectors.
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You can’t avoid risks altogether, but there are
ways to contain them.
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Small businesses and start-ups can remain free
of disruptions if they apply due diligence and insure themselves against high
risks and huge losses at very low premiums.
1. Steps to take
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The first step is to record every stage of your
operations to enable you to pinpoint risks at each stage.
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The second step is to think of the sudden and
unexpected disruptions that can affect your business, where the possibility of
such events may be low but the losses due to them could be huge.
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Finally, you need to prioritise your risks and
decide which are the ones you can bear and which should be transferred to an
insurer.
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Contrary to popular perception, the premium
costs are very low.
2. Must-buy covers
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For traders, a shopkeeper’s cover is essential in the event of theft or damage to
goods and stocks on the premises.
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The policy has no upper limit on the extent of
the cover, and offers the flexibility to increase it as the business grows.
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For small manufacturers, a break-down cover for their machinery is also essential, as a
break-down at any stage can lead to a huge loss of revenues.
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If your business entails handling heavy
machinery or hazardous chemicals, death of an employee or injury to someone is
a distinct possibility, which can impose a severe liability on you, even if
they aren’t fatal but may require hospitalization of an employee or a customer.
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Liability
insurance covers the compensation payable to employees or third-parties, or
their dependents, in the event of accidental death, bodily injury or property
damage.
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You can always opt for group covers at huge
discounts.
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A money
cover protects you against cash losses in transit, in the safe and in the
cash box.
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Professionals starting their own businesses,
such as doctors, accountants and architects must consider professional indemnity policies, which will cover them in case they
incur a liability for deficient services or a genuine error of judgement or breach
of client confidentiality.
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The policy covers all amounts that the insured
professional is legally liable to pay as damages to a third party on account of
any error or omission on his part while rendering professional service.
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The legal expenses incurred in defence of any
civil cases (excluding criminal cases) are also payable with the prior consent
of the insurance company, subject to the overall limit of the indemnity
selected.
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However, the policy excludes willful or
deliberate acts of negligence, financial setbacks due to loss of goodwill, and
other similar acts specified by the insurer.
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The premium will vary according to the nature of
the cover and profession.
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A fidelity
guarantee policy helps you deal with monetary implications of corporate
frauds, chances of which are high if the owner spends a lot of time outside
office to source business and work on deals, by covering your legal liability,
and towards third-party and employees.