5 short-term insurance secrets to make your business impenetrable
The risks involved in maintaining a successful business are real. If you don't protect yourself from unexpected and destructive events, you could see all your hard work crumble.
It's important to secure the future of your business by making shrewd and informed short-term insurance decisions.
Here are five insurance secrets you can use to protect your business in the face of a deteriorating economy.
Insurance secret #1: Update your policy every 3 months
Consider the following scenario. You insure the contents of your small business for R100,000. Three months later your enterprise expands and you purchase new computers, office equipment and even refurbish your premises. This spending, combined with inflation on the value of your business contents, increases the replacement cost of your business equipment to R200,000.
Then the unthinkable happens...
An electrical fault causes a destructive fire, burning your business to the ground. You put in a claim with a long list of damages and the assessor finds that replacing the contents will cost R200,000. The insurer’s required to meet only the portion of the claim covered by your premium which is R100,000 – half the real value of your business.
However, underinsurance is easy to avoid if you simply read your insurance policy and carry out insurance reviews on your business assets every three months. Make an inventory of all the goods already covered and a list of everything that requires insurance cover and review it monthly. Don’t forget to include expensive stationary like binding machines, guillotines and industrial staplers.
Insurance secret #2: Avoid costly medical bills
The safety of employees isn’t usually considered in a small business. But this mistake could spell the end of your company. Even if your enterprise has one or two employees, it should be made as safe as possible for yourself, your staff or any visitors to the working area. In addition, you should have the necessary short-term insurance cover to compensate for any injuries on your premises.
It’s important to note that Personal Household Insurance may offer protection to an accident in the home.
But as soon as you start using a portion of your home for commercial purposes, that portion of the house and the business is not covered by your household insurance. If someone’s injured on your grounds, you’ll be liable for all the costs incurred.
If you’re considering starting a small business from home or already have one in operation, ask your short-term
insurance broker about Commercial Public Liability Cover and make sure the working environment is safe and people friendly.
Insurance secret #3: Don’t pay for insurance when you don’t need it
If your business is dependent on the time of the year, like a B&B during holidays, knitting jerseys in winter or swimming lessons during summer months, why spend money on insuring your business during the off-season?
You could use the savings to invest in the future growth of your company.
Shop around for new types of insurance cover every year, especially if you have a policy that renews automatically. Some insurance companies offer lower premiums in the first year to draw you in as a policyholder. The second year could see your payments increase by as much as 10 to 20%.
Also some short-term insurers take advantage of small business owners that neglect to review their insurance policies. So always make sure that any changes made to the policy are outlined before signing the deal.
Changing insurance companies is daunting, but it could save you a lot of money.
Insurance secret #4: Make sure you know about Business Interruption Insurance
Just when you thought your business was covered for everything, an unfortunate accident could see your industry temporarily shut down and your income severely hindered. Any interruption in operation could result in massive losses to your daily income and monthly turnover.
The loss of profit could be far more devastating to the business than you might think. Let’s say Telkom lines are down in your area, you run the risk of losing lucrative tenders, important sales and vital incoming enquiries.
Business Interruption Insurance is designed to compensate you for any loss of business over a predetermined period. If you feel that your company is vulnerable to a potential lapse in daily business, you should definitely invest in Business Interruption Insurance.
Insurance secret #5: A packaged deal could save you thousands every year
Every small business is unique in its short-term insurance requirements.
Unfortunately, not every insurance company in South Africa offers comprehensive business cover at affordable rates. In many cases, you might be forced to take out different policies to suit your business, which could see your monthly premiums increase dramatically.
So make sure you approach a broker with vast knowledge of a variety of short-term insurance companies and you could find a tailor made business insurance package that could save you thousands in premiums.
Small business insurance is complex, especially when your business starts to grow. Taking insurance cover seriously and absorbing the costs effectively is one of the wisest decisions you can make.
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