How to simplify the complex issue of insurance for small business.
Insurance is a grudge purchase – no company really wants to spend money on it because it’s based on a fear of something you hope will never happen. But there’s no escaping the fact that it’s a critical part of doing business in South Africa.
Small companies, in particular, can find it confusing as they lack the in-house resources and expertise to explore and understand the wide range of business insurance options available. The following are some of the key types of business insurance.
- Strike Insurance – The nature of labour relations and political/social activism in South Africa means that strikes and labour disputes frequently degenerate into violence and damage to property, stock and equipment. The South African Special Risks Insurance Association (SASRIA) offers cover against damages resulting from strikes and lockouts.
- Riot Insurance – The recent high profile riots in London and other British cities were a timely reminder to businesses in South Africa, particularly in the retail sector, of just how vulnerable they can be. Once again, the South African Special Risks Insurance Association (SASRIA) offers cover against damages resulting from riots and civil unrest. These are typically risks which the mainstream private insurance companies will not cover.
- General Liability – Is usually the backbone of insurance for small business in South Africa. It provides cover for the company in the event of accident and injury to employees, whether on-site or off-site, provided the injured party can show negligence by the company. Having this cover is vital as it often involves prolonged court cases and awards of damages that can run into many millions.
- Product Liability – Is also one of the most important types of business insurance. This provides protection for the company if damage, injury or death is caused by a defective product. For example, an exploding gas heater or malfunctioning factory equipment.
- Professional Liability – Also called Professional Indemnity insurance, it gives protection to companies/individual professionals offering a service, in the event that error, negligence or misrepresentation is found to have caused financial loss to a client. Professionals who should have such cover include doctors, accountants, physiotherapists and lawyers.
- Business Interruption – Provides cover for a company in the event of business losses caused by interruptions such as electricity or water cuts.
- Vehicle/Fleet Insurance – Is a must for any business which operates delivery vehicles or provides company cars for salespeople and management. This covers accident, theft, fire, hijacking, etc.
- Glass Cover – Offers cover for windows which are part of the business premises and is particularly applicable to retailers and shopping centres with large glass frontages.
- Out-of Office Insurance – Provides cover for laptops, cellphones, notebooks, pagers and other equipment taken off the premises for business purposes. This is useful for sales representatives or technical crews working off-site on a regular basis.
- Building Insurance – Is a critical business insurance product and covers business premises and outbuildings, including permanent fixtures and fittings, gates, gate motors, etc. Underground cables and pipes may also be covered, depending on the policy.
- Electronic Insurance – Provides stand-alone protection independent of Content insurance. This typically includes licenced software, computers, printers, scanners, television and sound equipment, as well as electronic industrial equipment.
- Accidental Damage – Provides cover for business goods which are accidentally damaged.
- Accounts Receivable Cover – Gives business owners compensation in the event that records of accounts and amounts outstanding from debtors are lost or destroyed.
- Personal Accident Cover – Offers cover for employees, management or business partners/owners in the event of dread disease, disability or death. This is particularly important if the incapacity of a key individual can lead to significant business losses.
The above are only a selection of the types of insurance available to South African businesses, and managers and owners need to consult with experts to determine their own needs according to the nature of the business, its budget, and the risk profile of the organisation.