When SMMEs don�t insure, what are implications?
Correspondent | Tuesday March 21, 2017 14:58
Does insurance synonymously, come with the aspiration of a startup, unfortunately not, it’s often overlooked! Every business no matter how big or small, requires insurance cover. Whether you are seeking funding for your small business or already operating, insurance is key.
Startups and established SMMEs ranging from restaurants, grocery stores, manufacturing, film production companies, auto garages and construction firms, are more prevalent these days and contribute significantly to employment creation.
SMMEs are after all the engine of economic growth. It's however disheartening to know that some of the businesses overlook insurance as an integral part of successfully running a business.
In most cases, it is the uncertainty and lack of clarity when it comes to selecting the right insurance and how it fits in with the business continuity plan. If anything were to happen to the business, such as theft of equipment, flooding or fire, it would certainly interrupt daily operations and in this case insurance would indeed come in handy and help the company achieve continuity.
If you’re planning to start a business or expand operations and require a loan, then it’s important for you to note that, financial institutions who fund businesses can offer advise and make recommendations on the type of covers you may need for your small business.
There are basic insurance solutions that apply to all SMMEs and provide cover against everyday risks that your business may face. The common types of covers include but are not limited to: Workermen's Compensation, business interruption, liability covers and asset insurance. The impact of an uninsured loss on a business and the owner can be devastating. Without the right insurance cover, you may have to close business or further inject capital just to keep afloat.
What if something happens to your employees? Every business owner is accountable for whatever happens to their employees at work or liabilities incurred in relation to the business. There is a possibility that one of your employees can get injured whilst at work and as a small business owner you will be held liable for that. Workmen’s Compensation will protect your employees in the event of bodily injury, a scheduled disease, or any disease which results in disablement or death whilst at work during the employment contract.
Business have burnt down. It’s a fact! Whether you are operating from your own or a rented premises, fire insurance will provide cover for damages to property, buildings and structures caused by fire, lightning or thunderbolt, explosion and other natural hazards.
Business interruption is another vital cover for your small business’ survival should anything happen. Loss of working capital and revenue is a drawback to the business and may even cause misunderstandings with employees and suppliers. Business interruption protects your business by settling the operating costs, including wages in the event of a loss.
It covers for financial losses incurred and helps to make up for revenue lost when the business is not operating. The business owner would need to select the indemnity period, with options from 6-12 months, which is the maximum time expected to get the business back up and running at the level it was before the loss occurred.
Most small business owners use their personal vehicles for business and personal motor cover does not provide cover for damages or losses incurred whilst using your personal car for business. It is important to ensure that you state the purpose of use as business to avoid lawsuits and having to pay for repairs from your pocket.
Every business that owns equipment or keep inventory needs to cover their assets against loss or damage. Theft insurance covers all contents against robberies and burglaries.
Customers can get injured whilst on your premises and as an owner, you will be held liable for all their bills.
To avoid lawsuits and paying hefty medical bills from your pocket it is ideal for every small business owner to have public liability insurance. The policy covers your business against accidental loss or damages to third party property, or accidental death or bodily injury of any person while on a business owner’s premises.
It is important to ensure that you are properly covered for your needs. As a client the last thing you want is being partially paid for a loss or for your claim to be rejected because of a certain clause.
Insurance is not expensive when you compare it to the cost of replacing your assets following a major catastrophe such as fire. It is reasonably affordable and can start from as low as P300 monthly. Brokers, agents and insurers are available to advise further and help the client with risk assessment.