When you are planning to take out business insurance it is a good idea to identify all potential risks.
Some of these risks include crime, natural disasters such as fire and flood, fraud and general liability insurance.
Identifying all potential risks to yours business is imperative – these include:
- Natural perils such as hail, lightning, storms, wind and hail can all impact negatively on your property and assets and cause damage.
- Other damage through crime needs to be identified – these include theft, fraud, armed robbery, and hijacking of vehicles – all posing a risk to your business.
- Liabilities that include litigation will also cost you dearly – these could include being sued for a product being sold, motor accidents where you or your drivers are negligent and more.
Evaluating these risks in terms of their likelihood and the potential size of the loss is also important:
There is a strong chance that you or your staff will be involved in a car accident and the size of the loss could range from small to large – this could be due to a vehicle or van being written off as well as loss to the other person’s property or vehicle.
If you do suffer a fire on your property – even if the chances are relatively low, the size of the loss would be high to very high.
Pro-active management makes sense:
- Arranging with suppliers to deliver stock instead of collecting your own will reduce the risk of loss of products during transit – bear this in mind when taking out business insurance.
- The installation of effective anti-theft deterrents such as burglar alarms and guards or security gates and burglar bars, will reduce and deter burglaries and theft.
How to calculate an asset of value:
Obviously not all assets are treated in the same fashion; insure plant, machinery and equipment for the new replacement value – in other words the cost to replace the items with new items of similar capacity as well as design.
Insure your stock for the invoice amount.
Insure motor vehicles for the reasonable market value – in other words insure the vehicles for the amount the business owner would be pay for a second-hand vehicle in a similar condition.
There are a couple of areas that are commonly overlooked – don’t fall into this trap of simply overlooking some of the vital areas of your business such as underestimating the impact that damage to your equipment, stock and buildings will have on your cash flow.
It is also detrimental to forget to consider the legal liabilities of your business; and last but not least simply ignoring or not adhering to the insurance service provider’s rules and stipulations will most certainly result in your claim being refuted.
When taking out insurance to cover your business – it is imperative that you identify all potential risks to your operation.