Finding insurance for a small business can be a difficult task. Although there are many insurance offerings aimed at small to medium-sized enterprises (SMEs), the cost, contract terms and additional fees can be too much. For SMEs, the difference between having and not having insurance boils down to finding an affordable insurance provider.
According to SBS, only 18% of SMEs in South Africa have formal business insurance. Despite contributing an estimated R5 trillion to the national economy and employing more than 50% of the workforce, small businesses remain vulnerable and exposed to shocks.
For SMEs, insurance is more than just an extra expense; it’s a tool that helps to protect the business, business owner and staff from unexpected occurrences. In this article, we look at what business insurance is and its benefits, and we compare some of the most affordable small business insurance offerings in the country.
What is Small Business Insurance?
Small business insurance is a commercial protection policy that shields a company’s physical assets, financial resources, and legal liability from unexpected events like theft, fire, vehicle accidents, or customer lawsuits.
Types of Small Business Insurance
The type of insurance you need will depend on the type of business you run. Most comprehensive business insurance solutions cover against loss, damage, theft and third-party liability. Some of the different types of insurance are:
Loss and Damage
Insurance against loss and damage usually includes the business premises, the furniture within it, stock, equipment, and machinery.
Your insurance will cover you against acts of nature like lightning, storms, fires, high winds, hail, snow, earthquakes, floods, and explosions. You’re also covered if an act of theft or attempted theft leads to damage to your premises, such as broken windows and locks.
Theft
Your machinery, equipment, stock, and furniture, like laptops and desks, at your premises are covered if they are stolen.
Third-party Liability
All businesses are vulnerable to being held legally liable for mishaps that occur during the course of usual business. This could be an employee or customer who is injured on your premises, or you could provide a service that leads to financial loss for a client. Third-party liability cover protects you financially should you have to face lengthy and expensive court battles or pay damages should you be found negligent.
Portable Possessions
If your business involves visiting clients, you might be travelling with your laptop or work smartphone. Business portable possessions cover will make sure you can repair or replace these items if they are lost, damaged, or stolen.
Directors and Officers Insurance
If you are a director or officer for an SME, you will be working under pressure and sometimes make mistakes which lead to financial loss or reputational damage to the business. When this happens, you could be held legally liable. Directors’ and officers’ insurance protects you financially if you’re held legally responsible for an error in judgement and need to pay damages.
Professional Indemnity
If you provide services, such as consulting or professional advice, you might make a small error that could lead to disastrous consequences for you and your client. Professional indemnity is specifically designed to cover businesses that provide professional services in case they face legal action.
Business Motor Insurance
If you use a vehicle in the course of your business, whether it’s your personal car that takes you to clients and site meetings or delivery vans to get your goods to your customers, you’ll need business-specific motor insurance. You can either insure your personal car for business use, or you can take out a separate business motor insurance policy.
Loss of Income Insurance
Unlike large corporates, small businesses often don’t have the financial safety net to endure a protracted loss of income. If you are unable to run your business for an indefinite period of time, whether it’s due to damage to your premises or an infectious disease that forces you to temporarily stop trading, loss of income cover can be the difference between reopening your business or permanently shutting your doors.
Comparison: Small Business Insurance Providers
The following insurance providers are ones that have solutions built for SMEs.
MiWay Business Insurance
MiWay Business Insurance is a South African direct insurer offering short-term business cover. It lets SMEs build a policy around their needs, from insuring assets and stock to liability and business interruption, dealing directly with the insurer.
What you get
- Cover for business assets, stock and equipment.
- Public and product liability options.
- Business interruption cover to protect income after an insured event.
- Direct-to-insurer service and claims.
Premiums are entirely quote-based, depending on your business, its risks and the cover you choose. Get a tailored quote rather than assuming a standard cost.
First for Women
First for Women’s small business insurance offers short-term business cover with a focus on women-led businesses. It provides the essential protections a small business needs, from assets and liability to income, from a recognised South African insurer.
The offering suits a woman-owned or led small business looking for tailored business cover from an insurer that markets specifically to women, with the usual short-term protections.
What you get
- Cover for business assets, stock and equipment.
- Liability protection against claims.
- Business interruption cover for income.
- Policies and service aimed at women in business.
Premiums at First for Women are quote-based. The quote is based on your business, its risks and the cover required.
Budget Insurance
Budget Insurance offers short-term business cover positioned around affordability. It helps small businesses protect their assets, liability and income without over-complicating the policy. Its offering fits a cost-conscious small business owner who wants essential business cover from a recognised local insurer at a competitive premium.
What you get
- Cover for business assets, stock and equipment.
- Liability options to protect against claims.
- Business interruption cover for income protection.
- A focus on affordable, straightforward policies.
Budget Insurance provides tailored quotes based on your business, its risks and the required cover.
Selecting the right insurance solution provider is dependent on various factors. Consider what your business model is, what potential risks require cover, and keep in mind the cost of insurance.
