Most people are not even sure what insurance actually is. Well… it is “an arrangement where a company commits to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium”. In simpler terms, insurance is a financial policy that covers the risk of loss in your business, in a variety of instances. Business insurance allows you to protect yourself against uncertain risks.
The key to running your business effectively is properly planning for all circumstances, including the unforeseen ones. Businesses are exposed to a variety of risks, ranging from traditional fire and vehicle damage, to legal liability/lawsuits, accidental damage to property or even injury/death of a person in the performance of business activities. Without protection, these risks (which could carry costs of hundreds of thousands) may present a real threat to the operation and growth of your business.
For most people, insurance of any kind is a grudge purchase. Business owners would prefer not to have to think about it, let alone pay a monthly cost to protect against something that might not happen. But while you’re taking the time to grow your business and bring your vision to life, it’s also incredibly important to ensure your business remains financially secure. So, insurance is a vital part of running your business smoothly. Over and above your own peace-of-mind, many funders and potential customers (particularly corporate customers) may require you to have certain insurance in place and certain industries have legal requirements for insurance cover.
There is a wide selection of insurance products and providers to choose from, making it an overwhelming experience for most entrepreneurs. For that reason, you should educate yourself on the following options and consider their relevance to your business:
Small business insurance isn’t as much fun as creating a product or making your first sale– but you must take the time to understand what you need and what is the best option for you and your business. Don’t go to a broker straight away. Speak to other business owners, mentors and even your accountant. Many products are similar, so the choice of provider largely comes down to customer experience and how likely the insurer is to pay out your claim.
Because each business is unique – you ought to speak to a professional advisor once you have an idea of which insurer you’d like to engage with. Take the time to consult them about your specific business needs, risk and budget. Importantly, be sure to read the TERMS and CONDITIONS to understand in what circumstances your business is/is not covered.