SME’s are vital in job creation in South Africa and the South African economic growth, but their size and the huge amount of challenges that are linked with being an SME makes them hugely vulnerable to unplanned crises including scams, corruption, fire and flood.
Furthermore the costs that are associated with these disasters are compounded by the failure to guard their business sufficiently through proper insurance – that is why it is so important to ensure that the business you are running is the right one for that particular industry.
Although the greatest losses are experienced when the business is not insured, under-insuring your business, business property, or assets can also have a detrimental effect on your finances.
Here is a list of five key tips for insuring your business, regardless of size:
- It is vital to always declare all the relevant information to your intermediary, no matter how little or insignificant the detail might seem. Specifying all the risk reduction measure you have implemented will indicate that you are pretty serious about your business and will assist you in the negotiation of a better premium.
- It is a good idea to spend time identifying all exposures to your business. Do this with your intermediary as he or she will be able to shed some light that you may not have when it comes to business insurance.
- It is a good point of entry to pretend you are not insured as insurance should be used for large catastrophic claims that are difficult to predict and to avoid and not for small, regular losses as this would impact negatively on your insurance premiums.
- By taking appropriate precautions, such as installing proper security measure and fire precautions will substantially reduce your insurance premiums.
- If you are prepared to pay a higher excess, you will be able to negotiate a premium reduction – ask your intermediary, broker or insurance service provider for advice as you also need to keep in mind the impact on your cash flow, should you suffer a number of losses within a short space of time.
As an entrepreneur setting up a business can be a costly affair and it is important to get the right insurance to suit your business needs and requirements.
Intermediaries exist to help business owners to find the correct insurance cover and to ensure that there is enough cover should the need to claim arise.