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Why do you need insurance for your business?
Business is about taking risks:
1. Risks that you should avoid e.g. avoid buying a property in a flood zone, are those that are known to have happened and will most certainly happen again;
2. Risks that you can try to prevent or reduce its impact e.g. installing burglar alarms; safety check of electrical equipment, dealing with only customers who can pay; keeping public areas in your premises safe and free of hazards;
Despite what you have done, events may still happen, e.g. a fire in your office; a customer slipping in your property; a product which caused personal injury; a customer suing you for damage allegedly caused by your errors or omission, etc and they will cost your business crippling losses.
To protect your business, you need to share this risks with other businesses so as to minimize your loss by purchasing the appropriate insurance. The aim of a business insurance is to protect your business by reducing or compensating you for the losses caused by increased expenses or reduced revenues due to a claim or damage.
How do you get the “appropriate insurance” for your business?
First of all, you need to determine:
- what risks you may have in your business and
- how costly these risks will be if and when they occur.
As the business owner/executive, you are the best person to make this assessment. However, to get the right cover to protect you against these risks identified, you will need a broker to assist you in finding, arranging, and managing the insurance for you.
Why do you need a broker to assist you?
You need a broker because having the right insurance is more than just handing your money over to the insurance company. To make sure your insurance really protects your business, your broker will:
- Find out what type of policies are available in the market to cover you against such risks;
- Find out if there are exclusions and conditions in those policies that do not fit your requirements;
- Find out if there are extensions and endorsements that may give you more protection;
- Identify and select those insurers capable of providing such covers;
- Negotiate with them to get the best price, cover and service;
- Investigate the insurers’ claims service to see who is helpful and responsive;
- Check the selected insurer’s financial strength rating to make sure they will be there when you need them;
- Report their findings to you and provide recommendations;
- Place your insurance based on your instruction;
- Assist you to seek funding for premium - if required;
- Provide you with all the policy documentations promptly and assist you in understanding the coverage;
- Update and maintain your insurance to ensure no wastage nor gap;
- Assist you, if and when you have a claim, to achieve fair and speedy settlement from the insurer.
Is your insurance adequate?
Your insurance is adequate when all perils (or risks) which:
- can be covered AND..
- are commonly known to similar businesses OR..
- are specific to your business AND
- which you want to be covered ..
are covered to the extent (sum insured) that you want.
Is there an insurance that covers “everything” in your business?
No. There is no such insurance.
Be aware that an insurance policy will only cover those risks spelt out in the Policy Wording and the Policy Schedule. In fact there are many risks that will happen eventually and therefore cannot be covered by insurance, e.g. wear and tear; loss of business; rising costs, etc.
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