From Hero to Zero: The vital importance of Commercial and Specialist Insurance
Congratulations, you have finally started your own business or you might have been able to grow and sustain it into something that you can be proud of! Bear in mind that many risks that are entirely beyond your control can take your business from hero to zero, especially in a constrained economy.
An interruption of your business due to unforeseen circumstances is not only an irritation; ultimately it will also affect your bottom line.
One of the most vital conversations you will ever need to have is with a professional risk advisor who can determine the risks of your business and provide you with adequate options to cover these risks.
Commercial and Specialist Insurance exists to provide comprehensive cover for businesses. Very generally speaking, the following categories should be covered to prevent your suffering severe financial losses:
- Property insurance will cover damage to your business property;
- Liability insurance will cover damage to third parties;
- Workers’ compensation insurance will cover any injuries your employees might sustain while they’re on the job.
Every business is different; depending on the specific risks involved in yours, you might require additional specialised coverage. A reliable financial advisor should be able to foresee these and provide you with clarity on what else should be included to benefit your individual circumstances. Public liability, professional indemnity and employers’ liability are vital (sometimes legally required) areas of cover, while the following general list of possible types of specialist insurance might or might not include categories that apply to you:
- Product liability insurance
- Business buildings insurance
- Business contents insurance
- Business interruption insurance
- IT equipment and laptop cover
- Stock insuranceTools and equipment insurance
- Plant and machinery insurance
Effective property insurance will take into account any fortuitous risks, like earthquake, flood, drought and fire coverage, but your advisor might suggest that your policy include “named perils” (or Special perils) according to the specific nature of your business: for example, the owner of a manufacturing enterprise will be exposed to entirely different possibilities of mishaps than somebody who runs a business involving transporting tourists to out-of-the-way, potentially hazardous game reserve locations.
Equally, commercial health insurance can be designed according to the renewal provisions you require and the medical benefits you desire. Exposure to potentially dangerous substances or equipment, for both you and your employees, could necessitate specialist insurance here.
If you are an entrepreneur or deciding to open an additional new business, these following explanations could aid in ensuring you are properly covered against vulnerability to a lawsuit, catastrophic event, or a range of other mishaps that could cripple the venture.
Professional liability insurance
“Liable” is the legal term that covers all of the following meanings: responsible, accountable, chargeable, blameworthy, etc. It is also labelled as errors and omissions (E&O) insurance. It will protect you against negligence claims if harm befalls an employee in a manner resulting from the specific nature of the business. The right advisor is duty-bound to ensure that you have a customised policy drawn up against any occurrence where blame for a ‘mistake’ or ‘failure to perform’ could be directed at you and result in your being sued.
You might not own the space where your business performs its functions, but even if you are leasing it, you must insist on property insurance. Check with your financial or insurance advisor exactly what will be covered under standard property insurance policies, because you might well require a separate policy, for catastrophes that fall into the ‘mass-destruction’ category, for example. Usually this insurance will cover equipment, signage, furniture and other listed inventory items that are damaged or stolen.
Workers’ compensation insurance
The minute you have hired somebody to work for you, you could face crippling costs if you have not added this compensation category to your policy. Keep in mind that a myriad entirely unforeseen accidents, like simply slipping on a smooth or wet surface, could mean that you are liable to fork out for any medical costs, or disability that results, or even death benefits to which your employee is entitled. Remember that even a home-based business run the same risks. A homeowner’s policy is not the same as commercial property insurance, so ensure you are covered for both.
Product liability insurance
This kind of insurance cover is only necessary if you have established a business that designs or manufactures products for sale to the general public or to other enterprises. These can include perishable or non-perishable goods. No matter how strict your supervision or stringent your hygiene and safety rules, a calamity beyond your control can occur. Product liability insurance must be tailored to protect you against lawsuits related to any possible damages caused by the specific nature of your product.
If you are using your own vehicle for business purposes, then your personal insurance should cover any damage inflicted on it. It is important to bear the following in mind: if this vehicle is delivering goods or services for a fee, this circumstance will require additional insurance that also covers delivery personnel. Vehicles allocated for company use only must be fully covered by commercial insurance. It is also wise to insure against third-party injury, so check with your advisor that you have adequate, comprehensive insurance.
Business interruption insurance
This last important category is self-explanatory: obviously your business will suffer from lost income once production, delivery or sales come to an enforced halt. This will include any staff member’s inability to perform. It is also applicable when or where access to a physical business location, such as retail stores, is prevented due to external, problematic circumstances.
A pithy, yet powerful quote by Samuel Richardson is an apt one to recall when dealing with insurance issues with which we need to protect our interests against the numerous, unpredictable assaults in life:
“Calamity is the test of integrity.”
Because life invariably provides so many unforeseen loopholes, make absolutely sure that you entrust your concerns to a decent, conscientious insurance advisor whose integrity is beyond question.
The BellRyck Financial Group boasts a proud history spanning three decades. We offer short-term insurance, as well as long-term financial investment products and advisory services through our specialist network of service providers.
Our commitment to fostering lasting relationships built on trust and personal service, has allowed us to create valuable partnerships with both individuals and businesses. Prescribing to the highest standards of ethics and integrity, we have developed the acumen and flexibility to successfully evolve with the changing financial needs of our clients.
Find out more by visiting: www.bellryck.co.za