Business insurance can be complex, but getting the right cover will give you peace of mind of knowing that your business is protected from risks such as theft, accidents, business interruption and liability claims.
For small business owners who don’t know where to start, Francois Potgieter, Managing Director at business insurance platform Bi-me, offers the following advice and questions to ask to help them decide which insurance policies they need:
1.What potential risks are my business exposed to?
Look at the risks your business encounters every day as well as the threat they pose to your finances and operations. Some facets to consider include:
- Do you interact with the public on your premises?
- How does your business operate? Is there a physical store or online operations?
- Does your business or employees provide specialised advice or professional services?
- How large is your team and do you use suppliers and outside services?
- Does your equipment have to be moved off-site to perform your services, and do you own any valuable equipment, tools, machinery, or supplies?
Once you’ve completely analysed your business operations and activities, you’ll be able to think about the risks and liabilities of each aspect that will affect your business.
2.What types of Business Insurance should I consider?
Depending on your industry and the services you provide, the types of cover you’ll need to include in your policy will vary. Here are some types of insurance cover that will protect your business.
- Professional indemnity insurance protects your business from claims as a result of negligent acts or omissions in providing your professional services or advice. This policy will also assist with the legal costs to respond and manage such claims. It is especially important for professional services businesses like accountants, architects and consultants.
- Buildings insurance covers the cost of repairing or rebuilding your premises in the event of events such as fires, storms, explosions and lightning damage. This applies if your company operates from a building it owns—if you rent a premises, the property owner should purchase this cover.
- Contents insurance covers the items inside your building. This includes office content, plants and machinery, stock and materials in trade, and miscellaneous items. It is designed to protect the valuable assets of your business from theft and accidents.
- Public liability insurance is designed to protect you and your business in the event an employee, customer, or a member of the public is injured or experiences damaged to their property as a result of negligent business activities.
- Accidental damage insurance provides protection for events not covered in the buildings, contents (fire, flood, storm, etc.) or theft sections.
- Business interruption insurance provides protection from a loss of income and increased costs as a result of an insured event (such as a fire, property damage, etc.). It is designed to help your business recover from the losses of such an event by paying for ongoing expenses, such as wages or rent.
- Portable possessions insurance, also known as business all risks, provide cover for the loss or damage of your portable tools or work items. Such items could include equipment, tools, laptops, and mobile phones. More unique items are also seen, such as art, gate motors, marquees, and musical instruments.
- Theft insurance covers your office contents, stock, machines and other items inside of your buildings for theft, attempted theft or armed hold-up.
3.How much cover will my business need to be fully insured?
Each business will need different amounts and types of cover, depending on its size and the operational risks in its industry. A large legal aid company will have different needs to a small florist. Here are a few factors to consider when trying to judge how much insurance cover your business will need:
- Add the cost of all your equipment and valuable items, and ask yourself how much it will cost to replace them if they are damaged or stolen.
- Consider how common and costly professional indemnity and public liability claims are in your business. Ask how much the legal fees could be.
- Think about the business interruption risks in your industry and whether you have the cash reserves to get through a disaster that impacts your ability to trade.
4.What terms will I need to consider when selecting a policy?
This is an important step in the process of insuring your business. Each insurer/insurance company will have different terms and coverage for the different types they have to offer. It is of great importance to understand the conditions of the policy and ensure that all areas of your business are insured.
