COVID-19 has changed circumstances for many businesses, whether it’s moving to a new location, purchasing new equipment or pivoting of business activities. With the disruptions caused by the pandemic, it’s now more than ever, important that small businesses protect themselves against unforeseen loss. The right small business insurance product can help in this regard.
Buying the right business insurance can be confusing. Below we answer some of the most common questions about business insurance to help you find the right product for your business.
Why do you need business insurance?
An emergency could come along to disrupt any small businesses at any time. These disruptions can spell financial disaster for a business. Business insurance protects a business’s property and income, and safeguards it against liability claims.
What does insurance cover?
Some of the most common business risks a business faces are: accidental damage, fire, theft, business interruptions, damage to reputation and public liability.
Increasingly, cyber threats such as internet-related theft and fraud are a growing risk to businesses in South Africa. These can have massive financial implications such as lost revenue and expenses to repair IT systems.
What types of business insurance are available?
There are many different types of insurance businesses can get, below are some of the most popular:
- Property cover protects your businesses property, equipment, furniture, tools and inventory.
- Commercial vehicle cover protects business vehicles in the event of damage or theft.
- Business interruption cover protects your business in the case of loss of income as a result of a disaster.
- Business liability insurance protects the financial interests of companies and business owners in the event that they face lawsuits or any third-party claims.
- Employers’ liability insurance covers a business owner against any injury, illness or death caused to an employee during their work.
- Cyber insurance protects businesses against income loss, data restoration and cyber extortion, third party liability.
What is my risk profile?
Insurance is all about risk and how insurers assess your level of risk. The more high-risk your business is considered to be, the more expensive your cover will be. The overall cost of your cover will depend on the following main factors – location and your claims history.
Other factors insurers will look at are:
- Nature of your company’s business operations.
- Number of years in business.
- Annual sales or revenue generated by your business.
- Whether any insurance has been declined or cancelled.
How do I know how much coverage I need?
It can be tempting to choose inexpensive cover, however this can sometimes leave out the most common risk factors. It’s important to consider every aspect of your business and all assets that need to be protected.
Businesses should also remember to re-assess their risk on an annual basis and be sure to update their insurance.