Insurance is a means to protect business from risks identified that may occur without warning; it provides peace of mind that in the event of a disaster, regardless of the magnitude, the business will not have to dig deep in its pockets to cover the costs to recover. Choosing adequate insurance cover is crucial to ensure  that benefits are claimed when it matters most. There are a number of factors to consider when assessing insurance, such as the significant business risks, policy exclusions and coverage limits.

It is important to evaluate the cost of insurance with the corresponding benefit – a low premium may be attractive, however it will come at a cost of high excess payments at the time of a claim.

Being underinsured may delay business activities as the limited resources available to the business may be spent to cover the shortfall of the insurance claim. The business may not have access to adequate resources to rebuild and repair damaged property, further delaying the business from resuming operations.

On the flipside, if businesses have not done an accurate business risk analysis and have not calculated the value of insured assets correctly, there is a chance that the business is over insured. This will result in high costs incurred for no reciprocal benefit.

Before purchasing business insurance, it is important to calculate the total value of assets and costs required to repair/replace them when an unforeseen event happens.

It is advisable to utilise the services of insurance experts as they will help to identify adequate insurance coverage after looking at all the aspects of the business.

Your business may be thriving now, however incidents such as accidents, natural calamities and cyberattacks, etc. can change the sustainability of your enterprise in a moment.

Some simple guidelines to take into account when considering insurance policies for your business and your budget:

• Request quotes from a reputable insurance broker.
• Look at the insurance quote wholistically and compare the cost to benefit. Do not be swayed by price only.
• Understand the insurance policy – what is covered and what is not. Identify what risk elements of the business can be self-insured. You don’t want to purchase a policy, only to find out when it’s time to file a claim that it doesn’t have the protection you need.
• Choose insurance limits that can adequately shield the business from damaging claims over liability lawsuits or other financial losses.
• Set realistic deductibles in your policy. Deductibles is the amount paid by the business before the insurance benefits apply, on a claim. Usually, the higher the deductible, the lower the premium. Do not pick a deductible amount that is more than the business can afford to pay if it needs to file a claim.
• Compare insurance costs on an annual basis to ensure premiums paid are market related.
• Make use of an insurance broker. One of the biggest perks of working with a broker is that they can help assess your biggest insurance needs and guide you through the comparison process.

Aneesa Khan | Finance Manager