In today’s volatile economy, there’s a great deal of uncertainty that comes with running your own business. Being an entrepreneur does have its benefits, and making your own money is something we all strive for. However, as with any valuable entity, you need to protect it.

Many South Africans shy away from the topic of insurance because it ultimately involves spending money. Which no one wants to do unless deemed absolutely necessary.

In this article, we’ll be discussing the importance of business insurance and why it needs to be a priority when planning your financial future.

Why is Business Insurance Important?

Successfully running a business also involves planning for potential risks and hazards.  There is plenty at stake, not just financially, but with regards to your stakeholders as well. As a business, you are financially liable for all costs involved in the running of your business.

From the building you operate in and the equipment you use to your company investors, customers, and society at large. All these aspects have to be compensated for in the event that your business revenue is threatened in some way.

How Do You Cover Your Company For Business Insurance?

The easiest route to financially insure your company is to speak to a third-party broker or financial advisor. Before choosing an insurance premium, you need to first assess what your business needs are, what you can and can’t afford, and which components of your company keep your business running.

The insurance industry is a competitive and price-based market, so you need to be thorough when doing your due diligence. Do your research on the individual companies, compare business insurance quotes, and choose the company that best aligns with your professional needs.

5 Reasons Why Business Insurance Is Important

The reasons why companies need to be insured range from the small acts of safeguarding their revenue to the big preparations for those unpredictable life events. Here are 5 reasons why business insurance is worth investing in:

South Africa’s Volatile Economy

The Covid-19 pandemic and the mass looting that took place in 2021 are prominent examples of how volatile our South African economy can be. These crises are ones that no one could have predicted, yet, their impact was heavily felt throughout the country.

Many businesses were impacted by the sudden restrictions that fell over the economy in an attempt to curb the Covid-19 spread. Companies also fell underground due to the effects of the mass lootings and struggled to make ends meet.

In both these national crises, insurance companies played a major role in assisting companies to climb up the corporate ladder. These widely unpredictable events are some of the most vital factors why business insurance is important.

Potential Lawsuits

Every company, whether you’re offering a product or a service, faces a potential lawsuit. The risks vary for different industries and professions, but having measures in place for when these risks occur is crucial.

Because of human error, no company can guarantee a 100% success rate on any product or service that they offer. These errors greatly affect the livelihood of your business.

A lawsuit could be from an employee, customer, or bystander incurring bodily injuries while at your premises or from a faulty product. There could also be the issue of a miswritten or omitted fine print on your company policies. Sometimes, it could be an internal affair of unfair dismissal or a similar case.

Worker’s Compensation

Your employees are your company’s most valuable asset and as such, they need to be covered. Protecting the interests of your workers in the event that they incur bodily injuries on the job, are retrenched, or reach retirement age is a requirement for most businesses.

Every employee wants to feel safe and regarded in their workplace. Hence employee benefits and worker’s compensation are some of the main reasons people choose to work for a certain company. Ensuring that your company can provide these employee needs is one way to protect and effectively maintain your most valuable asset.

Income Protection

Ensuring that your company’s day-to-day operations are protected is the most important reason insurance exists. There are many natural and man-made factors that could hinder your company’s progress and revenue such as storms and fires, property damage, and theft. These liabilities are costly, even though you’re not directly responsible for them.

There are also uncommon instances, like the Covid-19 pandemic and the mass looting, that also have a massive impact on your daily operations. Without insurance, potentially paying for the liabilities incurred on these events could leave you bankrupt, especially if your business is still growing.

Having a plan in place and safeguarding your employees’ salary and the continuation of your business after these crises happen is a vital component when planning for your company’s future.

Credibility and Peace of Mind

Insuring your business grants your company credibility in the event that you may need financial assistance to boost your operations or build your company further.

This is especially vital for small businesses or companies that are still growing. Banks and other financial institutions need the assurance that you’re worth the risk and insurance is the easiest way to provide that.

Insurance also grants you peace of mind as a business owner. You’re able to focus on the successful running of your day-to-day operations without worrying about the potential liabilities that might happen. There’s peace of mind in knowing that you’re prepared for whatever storms may come and that your company will survive those storms.

Final Thoughts On The Importance of Insurance To A Business

There are as many risks as there are rewards to owning a business. The freedom that comes with setting your own hours is a coveted privilege for those who venture into the world of entrepreneurship.

However, ensuring that your business is covered for any and every life event is a crucial necessity and one of the first priorities in running a successful business. There is no way around predicting the potential dangers that stand in your way.

Making sure that you’re financially prepared when those events do occur is one of the most important reasons for business insurance.

Finding the perfect insurance premium is a long and tedious process, but the rewards are greatly beneficial to your future endeavours.