6 Things SMEs Need To Know About Insurance
Written by: YOURS INSURANCE AGENCY, September 01, 2019
Nobody wakes up in the morning and says ‘Yay! I get to buy insurance for my company today’. It’s just not something to look forward to. We are optimistic by nature - entrepreneurs & business people perhaps even more so than average. But there are really important reasons why you shouldn’t keep putting off that buy decision — even though there is clearly no instant gratification.
Here are some of the key points to keep in focus:
1. It’s not that expensive
For a small business, a reasonable package covering basic needs is pretty reasonably priced. For around 5 or 10 people the basic needs for property, liability and worker compensation can be covered with a bundled policy that will probably set the company back just a few hundred dollars. But the protection provided is worth hundreds of thousands of dollars when something goes wrong. It can really mean the difference between life and death for the company in certain circumstances — especially if cash flow is tight. For many small business owners that also means life and death for your family’s financial security. Why would anyone take that risk?
2. It sends a good signal to your team
When you let your colleagues know you are protecting their interests with the right insurance package that makes them feel better about working with you. No matter the type of policy, when the benefits are explained clearly to the team, they can see business leaders taking everyone’s interests seriously. No one wants to work long term for a company where the bosses are only out for themselves.
3. You minimize the risk of a major disruption to your customers
You are just completing that major project for a big client and everyone gets in early the next morning to add the finishing touches before submission. That’s when you discover the building water tank leaked overnight and everyone who left their stuff out has a big problem. Of course, most of your data is on the cloud, so it’s not the end of the world. But a prompt on account payment from your insurer lets you quickly replace key hardware, get temporary premises arranged and still hit that submission deadline. No insurance means that lucrative deal is offset with a significant hit on your balance sheet and perhaps a lost client. Incidents of this type happen more often than you would think. When it does, it pays to be prepared.
4. Legal liability is a real thing. Just because you ignore it doesn’t mean it goes away.
Whether we like it or not the world is getting more litigious. There is an increasing chance for a small business to get caught in the crosshairs of a legal action. Whether it’s by supplying a food or other item that makes someone ill, or perhaps causing someone to trip and injure themselves when they come into your premises, it’s more likely than ever that the individual involved may start legal proceedings against your company to recover their costs and compensation. The defence and legal costs alone — whether right or wrong — can soon spiral out of all expectation for a small business caught in a dispute of this nature.
5. Some insurance is required by the law.
The requirements vary widely depending on where your company is domiciled and the activities you perform. It’s not just vehicles that must have insurance by law. In many jurisdictions, where an SME hires employees there is an obligation to buy certain insurance types. Workers Compensation Insurance is a good example which is required in many countries by law, especially for lower paid employees. Forget to buy these essentials and you won’t just take a hit on the bottom line, you could face fines, criminal action and jail time — or all of the above.
6. A little education goes a long way.
No matter how good the policy the onus remains on the buyer to understand what has been purchased and how it works. There is no point waiting for the agent to come and help in your hour of need. Most insurance salespeople vanish when there is a claim to manage. By nature and expertise, they are usually fair weather friends. Be prepared to have to sort out your own mess in the event of a claim. Remember, it’s really important to act quickly and notify insurers as soon as possible with as much relevant information you can lay your hands on about the event.