The Importance of Insuring Your Small Business

By Oluwakemi Afolabi | 2 min read
26th May 2017
The Importance of Insuring Your Small Business

Business Insurance is an important aspect of the business startup process that is often over looked because its importance is not understood by a lot of entrepreneurs. Business insurance is important to you as an entrepreneur because it protects your business from unfortunate events and different types of losses (whether temporary or permanent). No business is risk free no matter the industry so insurance should be an important part of your business risk management plan so that you don't find yourself going bankrupt when you face or encounter such situations. There have been cases of entrepreneurs loosing valuables to fire incidents, theft etc. only to run out of business or struggle to recover because of the resources required to replace such valuables.  

Standard Insurance companies understand the risks affecting your industry and they often have coverage options to help ensure your business is adequately protected. A good insurance company however can always modify to suit your business needs.

Some Reasons Why You Need to insure your small business include: -

  • Legal Requirement - by law, you are required to have a certain type of insurance cover for your business against certain losses before the business starts to operate. Failing to abide by this requirement can lead to closure of your business.
  • Protection Against Fire and Natural Disasters - It is also important to insure your business against fire and natural disasters. In the event of natural disaster or fire your business will not come to an end or find it hard to recover after the loss because your insurance company takes care of every expense
  • Coverage for Customers - It is also important to protect your customers and workers against accidents. In the event where an employee has an accident or a customer is injured by your product you would not have to worry because the insurance will take care of it
  • Coverage for Workers - If your company provides some facilities to its workers, then you should consider letting an insurance company handle it. This is because it can be done effectively and efficiently by an insurance company. These facilities include Health, Education, Transport, Housing etc.
  • Protection against Theft - replacing equipment or business property stolen can be expensive. Having an insurance cover against burglary is very important. In the event that something gets stolen you just sit while the insurance company takes care of the expenses to replace the stolen item(s)

 Insurance contracts you might want to consider as a business person

Business Insurance

Personal Insurance

Financial Services

1

Industrial/Commercial Property

Property Insurance

Contract Bonding

2

Construction/Engineering Projects

Liability

Trade Credit

3

Specie

Casualty (Personal Accident)

Miscellaneous Financial Loss

4

Commercial/General Liability

Travel Medical Insurance

5

Group Accident/ Group Life

Private Medical Insurance

6

Group Medical Reimbursement

Lifestyle

7

Special Risks (Oil, Power, Aviation)

Directors and Officers Liability Insurance

8

Agriculture (SME/Integrated/Commercial); Micro; SME

Key Man Insurance

Before you engage an insurance company ensure you carry out your due diligence to be certain that the company is able to cover your losses when the need arises[1].

[1] MS. Adetola Adegbayi, Protecting your Personal Assets from the Risk of Business Operations, March 2017

Oluwakemi Afolabi
Oluwakemi Afolabi started as a Microsoft Intern at FATE Foundation. She is a graduate of Economics from Bingham University, Nigeria. She is passionate about impacting lives positively.
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