A lot of risks are involved in business and you face this daily as you open up the metal shutters to the world. Business Insurance covers your business from any losses as a result of lawsuits, accidents, illness, or other factors beyond your control. The range of small business disasters in Africa is varied and some issues may be unique to the continent.
While you may do your best to avoid disaster you cannot control what happens in your environment due to natural disasters (earthquakes) or human errors (riots and fires). We all have seen fires destroy whole buildings or markets resulting in losses that traders are just not able to recover from.
Some people will not insure because disaster rarely happens or they feel they cannot afford it. While this may be true, going into business may be the biggest risk and investment you ever take in your life and it would be in your best interest to guard against any possible loss.
Insurance costs can be cut down significantly if you take steps to reduce your risk e.g. having a security system, fire fighting equipment, limit cash in transit, and other such interventions. There is also a wide variety of policies you can take that can be tailored to fit your budget.
Take time to break down what you want to be covered, prioritize the list, and then check out what is available in the market. There are more insurance companies that cover homes and cars than business but you will find as a small business owner, you have a lot of leeway in what you can get with some ingenuity. Some of the priority items covered will automatically result in coverage of the other low priority items.
All said, exposing your business to risk is something that is unnecessary and you will sleep so much better knowing you have covered your business. Some of the areas you would want your insurance to cover include, but are not limited to:
- Business income insurance: This covers you when you experience losses because of delayed or suspended operations. This could be because of government regulation or delays in the importation of a piece of equipment or a problem with machinery.
- Copyright cover: this protects you in case you are accused of copyright infringement. This is important if you are involved in creative productions e.g. music and movies or developments that may require you to poach experienced staff from other companies. They could bring ideas that may be theirs originally but have been copyrighted or patented by the company they were working for.
- Equipment breakdown insurance: protects equipment when damaged due to power surges, operator error, or mechanical breakdown.
- Employment liability: will cover you in the event an employee sues you for unfair labor practices
- Property insurance: which protects your building, equipment, and inventory
- Staff medical cover: it is said that having a medical cover reduces absenteeism. Staff medical cover tends to be significantly cheaper per employee once you have at least 10 employees. Increasingly microfinance institutions are coming up with covers that are very suitable for micro-businesses. Pick what is suitable for you. Either way, a cheap cover is better than no cover at all.
- Public liability insurance: this is insurance that protects your business when a third party is injured either on your premises or when your employees, products, or services cause harm to other people or their property.
- Commercial vehicle insurance: Will cover your fleet of vehicles. while it is a standard requirement to have insurance for your vehicles there are packages that offer a little extra like income loss insurance which covers instances when your vehicle is impounded by police and you lose income.
- Political violence & risk: covers you in the case of political uproar in a country that could lead to damages and theft by rioters and protesters.
- Sector-specific insurance: insurance companies will have insurance packages that are sectors specific. For example, in agricultural insurance will cover your livestock and risks associated with climate change that affect your crop.
- Workers compensation: covers you in case an employee gets ill or is injured while working. Also referred to as employer liability.
- Professional indemnity: professionals sell their skills and experience to others however sometimes a client may sue for errors and omissions they feel should have been covered by the professional. This may be rightfully so or not. When this happens this policy covers you for it. As a small business owner, it will be important if you are offering services as a doctor, or other consulting expertise.
These policies pretty much cover most of what you may want to consider however there may be something unique to your business that may not be covered. Talk to your insurance company or agent to ensure that you are well covered. One other insurance I would like to highlight is Funeral insurance.
This is one of the cheapest covers and I mention it not because it should be amongst the covers you take for the business but because it is important considering the number of communities in the continent that do elaborate funerals that can leave your employee’s family devastated should they pass on. When you have a welfare program the staff can shop around for what they want or encourage each other to take it.
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