Tuesday 11th of August 2015
Business ownership encompasses navigating your company through challenges and critical situations
...with efficiency. While acumen is vital in overcom...
Business ownership encompasses navigating your company through challenges and critical situations with efficiency. While acumen is vital in overcoming obstacles, it cannot salvage the entity from a financial shock. The recent COVID-19 pandemic is a case in point wherein small and large businesses faced disastrous consequences despite the best efforts of entrepreneurs.
The uncertain times have made it necessary to protect your venture from unprecedented situations. Business insurance is a defence mechanism that safeguards your entity from various threats that lead to financial distress or bankruptcy.
Insurance ensures that the investment of the entrepreneur is guarded during testing times. Thus, when you purchase a business for sale in South Africa, you must check the insurance coverage to evaluate its protection. Here is a list of small business insurance that every business needs.
Every business has to deal with other people, such as customers, employees, suppliers, investors, etc. General liability insurance covers the business against the claims made by these people. The business is the first party in the case and the person making a claim is the third party.
The employer’s liability insurance is mandatory for South African businesses with employees. It covers bodily injury caused to a customer on the business premises, the customer’s property damaged by an employee or reputation damage and accidents caused by the employee while using a third-party vehicle. They can be categorised as public liability insurance, employer’s liability insurance and motor liability.
Business interruption insurance is needed when operations are affected by a natural disaster or property damage. It usually helps the business to stay afloat during downtime when the income decreases and expenses rise.
The insurance provides cover against damage caused by fire, earthquake, storm, snow, thunderbolt, trees, aircraft, vehicles, rocks, explosions, etc. It does not protect the business from the impact of a health crisis, such as COVID-19, and the intentional closure of the entity. The pandemic-affected businesses took advantage of the support offered by the government, as insurance was unable to help them.
Customers dissatisfied with your products or services can sue the business for unprofessional services. Professional indemnity insurance protects against the loss caused by a lawsuit filed by a third party. Businesses that offer professional services, such as accountants, advocates and real estate agents, are more vulnerable to these legal liabilities.
The pandemic has forced many businesses to move their data and operations online to allow remote working. It has made them susceptible to cyber-attacks that are rising in the country. Thus, it is vital to have cyber liability insurance to save your company from threats that can damage its reputation and lead to huge losses.
Businesses that have vehicles plying on the road need to take out motor vehicle insurance in South Africa. It covers the expenses that have to be paid in case of an accident caused by the business vehicle.
The employer must pay for the compensation if an employee gets injured on the job. The worker’s compensation insurance covers the business from this expense. The cover pays for the medical bills, wage replacements and funeral expenses in case of death.
Thus, employers in South Africa have to register with the Compensation Fund covered by the Compensation for Occupational Injuries and Diseases Act. It protects both the employees and the employers.
How to Choose the Right Business Insurance Policy
While choosing the insurance policy, the business owner must look for the best brands in the country and the insurance cost. The policy price depends on the entity type (high risk or low risk), its size and number of employees, the location of the property (high risk or low risk) and previous claims. So, you must have a budget in mind. You should compare quotes from different providers and read the policy details before proceeding. It is vital to check the exclusions from the cover so that you do not feel duped at the time of claiming insurance.
Besides the cost, business owners must pick insurance applicable to their specific industry. For example, a plumbing service should opt for handyman insurance, and a restaurant owner must take out retail insurance. The amount of coverage should also be considered when buying insurance. It must be sufficient to cover losses like natural disasters that can wipe out the entire premises.
Benefits of Business Insurance
Insurance acts as a shield for the business against challenges that can damage its foundation. Here is what it can do for a small business:
Small businesses need capital to grow and accomplish their business goals. An unforeseen problem like a fire can disrupt the whole process and derail the organisation. However, the insurance cover ensures it can bounce back and compensate for the lost time.
The business can incur significant expenses if it gets entangled in a lawsuit because of a disgruntled employee or customer. General liability insurance keeps the business capital safe and pays for the expenses. If you are planning to purchase a business for sale in South Africa, you must check for this insurance.
A natural calamity or disaster cannot be predicted. If you operate a high-risk business or are positioned in a high-risk location, you are exposed to the danger of property and equipment damage. Business insurance helps to reduce the risk and gives you the peace of mind you need to operate without any stress.
When you have business interruption insurance, you do not have to worry about disruption that can affect your sales. It ensures that you are up and running in no time and prepares it for the unexpected.
Business insurance aids in protecting the business in troubling times and keeps it afloat. Lawsuits and cyber attacks can damage the reputation and image of the business. It can impact the confidence of the buyers and stakeholders.
Conclusion
Business insurance is the protective shield that saves the company from losses due to various threats, such as lawsuits, property damage, injury, and accidents. It ensures that you can continue to operate without hassles, even in difficult situations.
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