Whether you’re a baker, a doctor, or a bookkeeper - no business is without risk. If you do not have the right type of coverage, a single unforeseen event could drain your hard-earned resources and you may be forced to close shop.
Business insurance could help to save your business when a simple blunder turns into something more damaging. From stock lost in a fire to a key employee falling to injury at work, a business insurance policy is a safety net that every serious business owner should have in place.
To compare business insurance policies with Money Expert, all you need to do is enter a few details and we will request the quotes from the different providers on your behalf. This is a quick and easy way to shop around for the best type of business insurance that will have all of your needs covered. Comparing quotes is the first step towards ensuring that your business is in good hands.
Frequently Asked Questions
What Is Business Insurance?
Business insurance provides a way to protect your business from financial risks. It’s available to both small businesses and larger corporations and in most cases, an insurance plan is tailored to meet the niche requirements of each company.
This type of insurance helps to protect individuals against the everyday risks that come with running a business. It can cover you against things like on-site accidents, theft, damage, and even legal fees.
Because you cannot predict what might happen to your business in the future, the right insurance can protect you from unforeseen events that can threaten your business or put it under financial strain. It’s an agreement made between you and your insurance company that allows you to have peace of mind knowing that your business can continue to run under pressure.
How Does Business Insurance Work?
Business insurance encompasses the different types of cover that will compensate a business when losses occur due to events that put strain on the everyday functioning of a business. Each business will require a unique type of cover and a business owner is responsible for evaluating their insurance needs based on the potential risks that apply to their business’s environment.
In South Africa, not all types of business insurance are compulsory (although you will need to ensure that you are registered for UIF, Workmen’s compensation, and Public Liability Insurance at the very least). Most business owners opt for comprehensive cover, however, because they are aware that one meagre accident could cost them their entire business and income.
Like with most insurance policies, an insurer will offer you a plan based on your needs. You will be quoted on a monthly premium and to qualify for the agreed-upon cover, you need to ensure that your premiums are paid promptly.
If the time arises where you need to make a claim, you can contact your insurance company and supply them with the necessary information. Most insurers will want a police report or a case file number to help them understand what occurred and why. You will also be requested to submit quotes you have received to cover damaged or lost property as well as for any legal fees that may incur. Once your claim has been approved, you will receive a pay-out to cover your costs. This claims process may differ slightly depending on the type of business insurance you have.
Remember that, as with most insurance policies, payment of excess may apply.
Depending on your plan, your business insurance policy can provide cover for the following:
- Vehicle insurance for vehicles owned and used by the business (for business purposes)
- Accidental damages made to your business property or damages made to a third party’s property that your business is responsible for.
- Loss or damages of business property caused by an accident, fire or a natural disaster
What Types of Business Insurance Are There?
You cannot predict what might happen to your business in the future but you can put safety measures in place. Business insurance ensures that no matter what befalls, you will have debt-free financial aid at your disposal to get your business functioning like a well-oiled machine once again.
Depending on the type and size of the business you own, you may want to consider applying for one or more of the following plans:
Commercial Property Insurance
This type of insurance plan will provide coverage for the property on which your business is situated as well as the physical structure and any installed equipment. Most commercial property plans will approve claims that are associated with loss due to fire, theft or natural disaster.
Credit Risk Insurance
If you sell products and services on credit terms, then credit risk insurance will apply to you. This type of policy will protect your business from loss due to payment default on trade receivables.
Employer’s Liability Insurance
This product will cover a business against any injuries, illnesses or death caused to an employee while they are working. This cover is a lifeline when it comes to paying compensation costs and legal fees.
Professional Indemnity Insurance
Some businesses may be legally required to take out this form of cover but professional indemnity insurance mostly applies to businesses that provide a professional service or advice. It provides protection where legal fees and damages become payable.
Product Liability Insurance
A product liability policy will give a business financial cover in the event that damage, death or an injury occurs as a result of the products sold or supplied by the business. In most instances, the cover is used to pay for costs associated with medical and legal fees.
Key Person Insurance
If a valuable contributor to your business (such as a key employee or a business partner) can no longer work due to death, illness or disability, then key person insurance will provide cover so that you can cover any losses until you are able to sufficiently replace their position with someone new.
Do I Need Business Insurance?
Business insurance protects businesses, business owners, and employees of businesses. Without it, you may have to pay out-of-pocket for costly damages and legal claims. This financial burden can put a strain on the business, if not close it altogether.
While not all of the insurance types will apply to your business, every business owner should have cover for the very basics. Insurance for your business is an investment that will help protect your business, your livelihood, and the livelihood of your employees.
Depending on the type of cover you choose, business insurance can have the following benefits:
- It helps to promote business continuity. Business liability insurance helps to minimise risks so that a business can continue to function and grow even when mishaps occur. This ensures that everyone still gets their salary at the end of the month.
- It helps to minimise financial losses. Even if your business is left out-of-pocket due to an unforeseen event, business insurance can help to drastically reduce any financial loss.
- It can help to get your business out of hot water. If a business causes damage of any sort, then third-parties may press charges. Business insurance will give you the relief of paying for the investigation and legal expenses when a lawsuit is filed.
- It protects a business’s image. If a business suffers from an event that was impossible to predict, then it could have a negative ripple effect on everyone involved.
Stakeholders, shareholders, customers, and even the general public may suffer. Business insurance helps to manage this occurrence so that the business and everyone connected to the business is protected.
Who Can Get Business Insurance?
Whether you are a new business owner or have been in business for many years, it’s never too late (or too early) to apply for business insurance. Even if you are a small home-based business, the right type of cover will help you to get out of a pickle so that you can continue to generate an income (and your living).
Business insurance applies (but is not limited to) the following types of businesses:
- Professional businesses (lawyers, accountants, engineers, architects, etc.)
- Tradesmen (plumbers, electricians, handymen, painters, etc.)
- Medical professionals (doctors, dentists, psychiatrists, optometrists, etc.)
- Food industry businesses (restaurants, bars, delis, caterers, guest houses, etc.)
- General businesses (retailers, e-commerce stores, florists, bakers, beauty salons, etc.)
Because every business is unique, most business insurance providers offer a variety of products for different types of entrepreneurs.
How Much Does Business Insurance Cost?
If you are shopping for business insurance, one of the first questions you are likely to ask is, "how much is it going to cost?" This question is difficult to answer because the amount you pay for your policy will depend on a number of factors.
What type or level of cover do you need? Some business insurance products are cheaper than others and the amount you pay will be determined by the comprehensiveness of the cover you require.
What is the size of your business? Premiums are quoted according to the amount of financial cover you need. The bigger your business, the more you will need to pay.
What industry is your business in? Businesses in hazardous industries will pay more for insurance because they pose more of a risk.
Other factors that can affect the price of a policy can include your claims history, the number of years you have been in business, and your location (do you operate from a danger-zone)? Costs can also vary from one insurance company to another.
How to Get Cheap Business Insurance?
Finding cheap business insurance is possible but it means that you will have to shop around a bit before making a decision. To get realistic pricing, you will also need to determine what accurately suits your business’s risk needs (inexpensive quotes may come with exclusions that could leave you with an uncovered claim).
There are many companies that offer competitive business insurance rates. To see what’s on offer, you can use the Money Expert tool to request quotes from the different providers. This will help you to make an accurate comparison.