There are so many peripheral aspects to running a small business – all of which can take your focus off the core purpose of your business. However, you can relieve this pressure and the anxiety by taking steps to properly insure your business, and the value of that business to your life as a whole. While the insurance cover options listed below may seem daunting, they need not be. All these important aspects can be addressed with the assistance of a professional business advice partner.
Types of insurance
Key person insurance: a business can experience great difficulty in maintaining efficient operations if a key person who specialises in any specific area, becomes unavailable due to illness, accident or untimely death. Key person insurance works in two ways – firstly, in giving funding to find and train a replacement and secondly, in compensating for any interim cash flow losses.
Buy and sell insurance: if you own a business together with a partner, it is important to know what will happen to their share of the business if your partner should die or become disabled. Having a buy-and-sell policy will mean that the share of the deceased or disabled partner can be bought back – and the partner’s family can be fairly compensated for the asset without putting the business in difficulty.
Contingent liability insurance: this insurance covers debt. For instance, if a business borrows money from the bank to help cover the initial costs of setting up the business, the owner is liable for the repayment of this loan. Should the owner unfortunately pass away, this loan must still be repaid, or any other debts. To alleviate threat to the business and pressure on the owner’s family, insurance cover is there to provide assistance with repayment.
Physical assets: this insurance should cover theft, along with fire, flood and storm damage – to cover potentially catastrophic loss with regard to stock, machinery and property as a result of natural events or theft.
Public liability cover: this covers the loss or damage to a third party (or a third party’s property), while on a business owner’s premises.
Product liability cover: if the business manufactures goods, this will cover claims with regard to defective workmanship. It will also cover aspects such as food poisoning if the business produces or supplies food and beverages.
Business interruption cover: this ensures that all operating costs, including wages, can be paid in the event of a major business loss. Cover options usually run from 3 to 24 months, which is the maximum time considered necessary to get the business back up and running at the level it was before the loss occurred.
Cyber and internet insurance: with the many liabilities and losses that have resulted from matters in the online arena, insurance companies have introduced new products to insure your systems in the event of a virus destruction, and to cover claims made by third parties (or even employees) for libel and slander on the web.
Credit insurance: if you’ve taken out loans to start up your venture, or know that the risk of unpaid debt might cripple the business, you can also consider credit insurance that will settle outstanding amounts should you find yourself in this situation.
Employees’ insurance: many businesses take out life and disability insurance to cover both the company and employees against injuries that may occur while at work. Providing a contribution towards your employees’ health insurance is both a compelling employee benefit, and a way of protecting your business from problems caused by illness. A healthy staff is a happy staff, and can only impact positively on your business.
Vehicle and travel cover: particularly important if the business relies on sales representatives or transportation and delivery of goods. If employees travel frequently as part of their job, it is expected, and best practice, for the business to provide travel insurance.
See business insurance in a whole new light
- Insurance doesn’t need to cripple your business. There are ways of reducing one’s premiums without putting your business to higher risk. Make sure you have the right information to hand before you make decisions.
- Evaluate risks and events in terms of size of loss; for instance a vehicle accident would be less expensive than a fire. Focus on value rather than price.
- Requesting a professional risk valuation and survey by an insurance company will provide you with assessment expertise, advice on the correct covers, and the options available.
- Choose a broker familiar with your specific industry sector and who is aware of the particular risks this sector poses. By building a long-term partnership with one broker, you reduce the dual risks of excessive cover and/or duplication of cover, as often happens if you purchase insurance cover piecemeal, and from different sources.
- You should review and update your insurance cover every year. There may be unnecessary insurance that you can remove; or you may be over-paying for vehicle insurance because you have not adjusted for depreciation value.
- Carrying out simple tasks like regular maintenance of equipment, or improving security systems, can help to reduce your costs. And implementing risk reduction measures will assist you when negotiating a preferential premium.
- Business packages are often cost-efficient. There is always the risk of over-insuring, and you certainly don’t need each and every insurance product available on the market, but securing appropriate and adequate insurance is sound investment in your business.
- Technology, like computers and the internet, has definitively changed the nature of risks that businesses face. Damage to computers or business systems can prevent a business from carrying out day-to-day work. Cyberattacks and reputational risks, not to mention social media and multimedia liability, are non-physical business interruptions and can be covered by insurance.
- In a nutshell, insurance allows small business owners to focus on growth, knowing that they have the required protection.
Find the top-class professionals who can meet your expectations
Complete Financial & Business Solutions (CFBS) comprises a group of top-class professional financial advisors and business analysts committed to sound financial and business solutions based on a highly personalised approach. Passionate about ensuring peace of mind through the in-depth analysis of individual financial and business circumstances of our clients, we are able to create unique solutions, and regularly review these solutions to consistently meet service expectations and lifestyle goals.
Find us at: www.cfbs.co.za
