Insurance - your bridge over troubled waters
Something like 80% of all small businesses are not insured as well as they should be. Recent disasters like the New Orleans floods in the US or the power outages in Auckland or South Canterbury have given us thousands of examples where the "basic" small business cover proved totally inadequate to cover losses - those businesses will never open their doors again.
Of course some types of insurance are mandatory (e.g. ACC) or required by third parties (e.g. mortgage repayment insurance). The exact kinds of insurance you need will depend on your type of business, and it's true to say that no two businesses are exactly the same. Here are some of the more common, and useful, types of insurance cover you can take out.
- Business Interruption - expenses incurred if the business is interrupted by fire or other natural events. A business may be forced to close for any number of reasons including a power failure, a fire to a neighbouring business, a war or even the failure of a key supplier. Having business interruption insurance can save a business allowing it to continue covering costs such as salaries, utilities and rent, as well as lost profits, until the business reopens.
- Crime Coverage - covers the theft, disappearance or malicious damage of company assets
- Directors' and Officers' Liability - indemnifies officers and directors of the company for legal expenses and court costs incurred as a result of acting on behalf of the company
- Employment Practices Liability - covers lawsuits brought by employees for such things as sexual harassment and wrongful termination
- Errors and Omissions - covers claims for commercial malpractice and for errors and omissions in providing services
- Health and Medical - covers health and medical needs for employees and their dependents
- "Key Man" Life Insurance - a life insurance policy payable on the death or disablement of a key employee. This can include the owners of the business.
- Liability - liability for injuries to people or property caused by your company or by the actions or negligence of its employees
- Motor Vehicle - liability for damage caused by your company's vehicles and in some cases by your employees' vehicles when used for business purposes
- Product Liability - liability in the event that an item manufactured or developed by your company is responsible for an accident, injury or death. There can always be a significant risk of injury from manufactured products. Safety measures and precautions taken in producing the product and explaining its use are factored in when determining your premium.
- Professional Liability - protects professionals from claims made against them personally for errors made while they are performing their services
- Property Damage - damage to your business property due to fire, wind, explosion, accidents, robbery or theft
- Website - covers various claims such as libel, copyright infringement and damages to computers and data as a result of vandalism and viruses
- Workers' Compensation - covers injuries to employees for work related matters
Many businesses carry "umbrella" insurance packages that supposedly cover all the basic SME insurance needs. However, you should read the fine print carefully to make sure there are no gaps where your business specifically needs coverage. Also be sure to ask about the scope of the coverage, exclusions from coverage and the policy's deductible amounts. Insurance isn't worth a cent if it doesn't provide the cover you need when you need it.
Copyright © 2006 RAN ONE Inc
For more information contact your RAN ONE business professionals at
Academy of Business Excellence Limited