Insurance for Start-ups and SMEs

By Ope Osiyemi | 4 min read
19th September 2018
Insurance for Start-ups and SMEs

As a start-up or growing business, it is important to take into consideration insurance and place it as a priority in your business budgeting and planning. To build a sustainable business, risk management must be at the heart of your planning and execution. This is because something could go wrong while planning or when you commence business and so, you want to ensure that relevant insurance are in place to get your business going without interrupting your operations or impacting negatively on your projections.

As a start-up or growing business, getting the appropriate insurance to cover your business could be a demanding task but with the help of an independent insurance agent this task is simplified and every burden taken off you.

Most start-ups generally begin in a home office and with most family having no home insurance, even if they do, it is tempting to simply want to rely on your home insurance policy cover. However, if customers or suppliers visit your home, then this automatically changes your risk profile because of that element of commercial activity taking place on the premises. Regardless of where you trade from, it is advisable that you have a word with insurance professionals who are able to structure a good plan for you with underwriters including ensuring that your home based/complex office equipment are adequately structured into your policy. 

From the day you commence business as an entrepreneur, you are exposed to certain risks right before the first employee is hired. One lawsuit or tragic event could wipe out a small business before it could get a chance to get off the ground.

Fortunately, businesses have access to a wide range of insurance types to protect them against these dangers. Here are some insurance types that you can leverage as a start-up:

Home-based Businesses

Many entrepreneurs begin their small businesses in their own homes. Unfortunately, homeowner's policies don't cover home-based businesses in such a way commercial property insurance does. If you're operating your business out of your home, contact an insurance agency who will be glad to help you arrange additional insurance to cover your equipment and inventory in the event of a problem.

Property insurance

As a business owner, whether you own your space or leased your space, property insurance is a must have. This insurance covers equipment, signage, inventory and furniture in the event of a fire, flood, theft and other related event. However, events like floods which are generally exclusion in standard property insurance policies can be negotiated and structured separately. Take a free assessment to help you figure it out.

Motor Insurance

If company vehicles will be used, those vehicles should be fully insured to protect your business against liability if an accident should occur. At the very least, businesses should insure against third-party injury, but comprehensive insurance will cover that vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception to this is if they are delivering goods or services for a fee.

Business Interruption Insurance

Business interruption insurance compensates a business for its lost income resulting from damage caused by an event.

If a disaster or devastating event occurs e.g fire engulfing a business premises or equipment, a business's operations will likely be interrupted. During this time, a business will suffer from lost income due to its teams' inability to work in the office, manufacture products or make sales calls. This type of insurance is especially applicable to companies that require a physical location to do business, such as retail stores, farming, manufacturing etc

By having the right insurance in place, a business can avoid a major financial loss due to a lawsuit or devastating event. The OIAS Team is able to help you structure the most suitable form of insurance for your type of business. It is important that you put those plans in place as soon as possible.

Group Life Insurance

Once you have up to 3 hired staff or employees, the law mandates that you effect a Group Life Insurance.

Group life insurance covers the death of your employee while in active service. The benefit of this cover is paid to the beneficiary or dependents of the employee.

The employer pays for this coverage and the benefit goes to the beneficiary of the employee who dies in active service in your business. The benefit is typically, a payout equivalent to 3x (three) times of the annual emolument of the employee. This serves as a good incentive for your workforce. To arrange a plan, click here for help

Employers' Compensation Insurance

Employers' Compensation Insurance provides income replacement and medical benefits to employees injured in the course of employment or active service. This helps you as a start-up business not to have to deal with lawsuit that an employee would have brought against you as a result of negligence. Once the first employee has been hired, workers' compensation insurance should be added to your business's insurance policy. This will cover medical treatment, disability benefits in the event any of your employees is injured or dies as a result of discharging his duty.

 Professional Liability Insurance

Professional liability insurance, also known as errors and omissions (E&O) or professional indemnity insurance covers your start-up business legal cost and expenses in defending claims made against you due to negligence, harm or loss etc caused by inadequate advice, mistake resulting from professional advice or service rendered by your business to your client.

If you provide advice, designs or service to your clients, this type of insurance must be top on your priority list.  So if you are into Consultancy, recruitment services, designing, fitness business etc PL is a must have.

 Product Liability Insurance

If your start-up manufactures products for sale on the general market, product liability insurance is an important cover you must have. A business that takes every measure possible to make sure its products are safe can find itself named in a lawsuit due to damages caused by one of its products.

Product liability insurance works to protect a business from lawsuit claims caused by use of a manufacturer's product. OIAS is able to help start-ups tailor this coverage to specific type of products.


Ope Osiyemi
Ope' Osiyemi is at the fore of negotiating better outcomes for the insurance sector in Africa working with business leaders and professionals in the industry. At her core, is a passion for creating sustainable value in people relationships and in the restoration of the dignity, global relevance and competitiveness of insurance in Africa. She does this by advocating policy reforms, strengthening the insurance workforce, driving insurance digital transformation and innovation, through business intelligence and strategy consulting; and dealing in her specialization, Oil and Gas insurance. She is an Energy Risk Expert, Co-Founder of Claimsify and the Managing Director, EdgeEdwards Company Limited. She’s certified in London Market Insurance, holds a B.Sc in Insurance from the University of Lagos, and an MBA in Oil and Gas Management from the University of Dundee, Scotland, United Kingdom.
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