Article

Small Business Insurance
September 14 , 2012

'Prevention is better than cure' is a line hammered into our brains since school days but many times as we chant it we are totally oblivious of what we're saying. This line applies to businesses as well and more so to small businesses. Ironically it is small business owners that overlook the need for insurance more often than the bigger businesses do.

Common insurance gambles in small businesses

Often owners of small businesses like stores, professional services, hotels and restaurants, educational institutions etc are tempted to believe that their business is impregnable. They assume that since their business operations work on a small scale, risks facing big business won't matter to their business. One explanation for this belief could be that many entrepreneurs in India still do not view their business as a separate entity. They do not distinguish between personal finances and business finances. Other small business owners might buy insurance but leave the business poorly insured because only certain assets have been covered.

Insurances not be avoided

Four types of insurance cover are crucial for any business: 1. Property insurance covers loss and damage to property and equipment including computers, printers etc. 2. Liability insurance covers legal liability of business owners. A common mistake owners commit here is to assume that clients with whom business has been wrapped up do not pose risks. This is hardly true. Clients can return after years to file suit against service provided long ago. 3. Workers' compensation policy covers liability on injury or death of employees due to accidents or diseases arising out of and during the time of employment. 4. Commercial vehicle insurance of office vehicles takes care of damage and loss to vehicle and third party liability. Apart from these, owners might have to cover any other risks that are specific to the business.

Insurance is effectively sharing ones risks with others exposed to the same risks and in the process lightening the effect of an unanticipated blow that could turn fatal for the business. Many entrepreneurs may lament about the premium outgoes for risks they do not believe are real but a prudent entrepreneur does not leave business in fate's hands.

Companies offering small business insurance

The four types of insurance covers discussed above can be bought as separate packages. Some insurers offer comprehensive policies covering many types of risks of small businesses. Tata AIG offers custom made products for small business. Future Generali has Business Suraksha, a comprehensive policy suited for small businesses. Others like Raheja Qbe offer office package that caters to requirements of offices.

Be acquainted with what your insurance policy covers and what it excludes. For instance electronic and electrical appliances insurance does not cover maintenance costs for wear and tear and damage that happens over a period of time.

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