MUST HAVE SMALL BUSINESS INSURANCES

Six insurance types you may need to safeguard your business.


Small businesses are drivers of economic growth and development in South Africa. They play a key role in combating unemployment in the country as the formal sector continues to shed jobs. But, for most entrepreneurs, business insurance might seem like just another unnecessary expense.


The recent spate of violence that gripped parts of KwaZulu-Natal and Gauteng proved that business insurance is an important safeguard for small businesses, their owners, employees, and clients against any unforeseen circumstances. Business owners must ensure that they purchase appropriate and adequate insurance products as not having the right insurance products can be the same as not having it at all, leaving businesses with no protection against many types of risks.


Business insurance types entrepreneurs can consider and the protection they provide:


Third-party liability insurance

This type of business insurance is important for businesses that come into contact with the public and compensates for losses suffered due to actions or negligence of the business. Third parties include clients, suppliers, and any other member of the public who could make a compensation claim against your business if they are injured or their property is damaged.


Cyber insurance

The move to digital has changed the way businesses operate and has also created a new set of risks. Cyber-attacks target businesses of all sizes and this can be devastating to your business, both financially and in terms of reputation. Cyber insurance helps businesses cover costs of getting IT systems back to normal, recover from financial losses and repair reputational damage caused by cyber-attacks, online fraud, and data breaches.


You and your small business must realise that you have a legal responsibility for the information which you keep for your clients. You can’t lose your clients’ details. You can actually end up with serious liability.


Workers’ compensation

Work-related injuries happen even in the safest of workplaces. This type of insurance protects your employees from job-related accidents and illnesses. It pays for medical bills, lost wages, and other costs if an employee is sick or injured due to their job.


There are state insurances that are available which you must subscribe to, but you can also have your own additional privacy policies.


Professional indemnity insurance

Professional indemnity insurance safeguards businesses, freelancers, and the self-employed who offer professional services if clients claim they are unhappy with their work.


As a professional or a business offering professional services, you may give bad advice or make a mistake that costs your client money and professional indemnity insurance helps protect your business from such unexpected scenarios. In many instances, professional bodies require you to have professional indemnity insurance but make sure it is something you have.


Directors’ and officers’ liability

This insurance type protects the personal assets of directors and officers should they be personally sued for actual or alleged wrongful acts in running the business. It also helps compensate businesses for legal fees or other costs incurred in defending such individuals against lawsuits.


Key person insurance

People are a key aspect of a business, and most businesses have key persons. Should the key person be unable to work as a result of death, illness, or disability, the business could suffer financial loss.


Key person insurance compensates businesses if the business owner, a partner, or any employee who plays a key role in the business dies or is unable to work due to illness or disability.


Freelancers and self-employed individuals should look into building networks of skilled, reliable freelancers to cover for each other should one be unable to work.


If you are a key person in your business and you cannot work, you need to have a person nominated to do your work. Key person insurance pays that person market-related rates to do your work. It means that your company does not fall, especially if you are a key person.


Business owners must do their homework, compare insurance policies and take their time before deciding on which insurance products to take for their businesses.