Business Insurance: Where many are getting it wrong
Johannesburg, 10 April 2024 – In the dynamic world of business, unexpected events can strike at any moment, threatening the stability of even the most well-established enterprises. “From property damage caused by natural disasters to lawsuits from disgruntled customers, the need for comprehensive business insurance cannot be overstated,” says Peter Olyott, CEO of financial services provider, Indwe Risk Services (Indwe).
Despite its critical importance, many businesses find themselves entangled in common missteps when procuring and managing their insurance coverage. “One of the most prevalent mistakes is underestimating the scope of necessary coverage. Businesses often believe that a basic policy suffices to address all potential risks, leaving them vulnerable to crippling losses when adversity strikes,” says Olyott.
A crucial aspect that often eludes many businesses is legal liability insurance. This essential coverage protects companies from significant financial liabilities arising from lawsuits alleging negligence or damages caused by business operations, products, or services. Neglecting legal liability insurance can expose businesses to immense financial risks and potential bankruptcy in the face of litigation.
Similarly, the significance of business interruption insurance is frequently overlooked. “Disruptions to operations can pose a significant threat to business continuity, yet many businesses fail to recognise the importance of safeguarding against revenue loss, ongoing expenses, and the risk of bankruptcy during temporary shutdowns. Integrating business interruption insurance into coverage portfolios can mitigate these risks and ensure smoother recovery processes in the aftermath of unforeseen events,” says Olyott.
As businesses evolve, so do their insurance needs. Neglecting regular policy reviews can result in coverage gaps or inadequate protection. “It is imperative for businesses to schedule periodic reviews with their insurance providers to reassess coverage requirements and make necessary adjustments as their operations expand and confront new risks, Olyott emphasises. This proactive approach ensures that businesses remain aware of the significant risks their businesses are facing and are adequately protected against emerging threats and changing circumstances.
While minimising expenses is essential for any business, prioritising affordability over the comprehensiveness and quality of insurance coverage can prove to be a costly oversight in times of crisis. One purchases insurance so that when a claim occurs, the policy provides financial recompense. Instead of focusing solely on price then, businesses should emphasise value by comparing quotes from reputable insurance providers and considering factors such as coverage levels, deductibles, claims settlement history, and customer service quality. This strategic approach allows businesses to strike the right balance between cost-effectiveness and robust protection.
“By addressing these common pitfalls, one can avoid having too much of the wrong cover and too little of the right cover, ensuring businesses have optimal protection and peace of mind,” says Olyott. “Remember, business insurance is an investment, not an expense. A comprehensive and well-managed policy can safeguard your company’s financial well-being, allowing you to focus on what truly matters – growing your business and achieving your goals.”
For questions or advice regarding business insurance, contact Indwe on: 0860 13 13 14 or email: [email protected].
Indwe is an authorised Financial Services Provider FSP 3425