Some small businesses consider insurance premiums to be an unnecessary expense, yet without insurance cover, they can experience financial difficulties if a peril covered by insurance was to occur. Insurance cover for business is available to protect, lessen the impact of the loss to the business owner, and the employees from events such as fire, storm flood and injury to employees whilst they are in the course of their employment.
It is advisable that every business should effect insurance to prevent serious financial difficulties which could cause the closure of the entity which would result in loss of jobs for the employees and the livehood of the owner . Insurance is very important for business and should not be treated as a luxury in an attempt to cut costs. To ensure that start-ups and SMME’s succeed, business owners should have the necessary insurance covers in place.
There are a number of options available that provides cover for the small business owner, and the following are recommended for SMME’s.
Worker’s Compensation/ Employers liability:
Since employees are very important to the success of a business, their well being must receive top priority to compensate for injuries sustained at work as required by law. Worker’s Compensation covers employees in the event of bodily injury, scheduled diseases stated under the Act schedule , or any disease which results in disablement or death whilst at work.. Worker’s compensation is mandatory in Botswana; and penalties can be imposed by the Department of Labour, if this insurance is not in place.
Buildings and Contents: SMME’s can also be protected by insuring their buildings and office contents, stock, furniture, fixtures and fittings, tools and machinery. Fire insurance, covers buildings of a commercial nature such as shops, stores, workshops and warehouses against perils such as fire, lightning, storm, floods and explosion and other additional perils. Office Contents Insurance covers damage to office furniture or/and other contents that a business owns that is inside the premises against fire, lightning, thunderbolt, explosion and other perils stated.
Business Interruption:
This type of policy is not normally offered on its own, but only as an additional cover to your main fire and perils cover. Briefly the insurance cover is meant to provide for the loss of profits due to a decline in the revenue generated by the business after the loss and increased costs of work. This loss is calculated based on the time frame which you have determined at the commencement of the policy and known as the indemnity period.
This normally is the period that it would take to repair the property, or the lease a similar premises, including retooling and restocking, to bring the business to the condition it was before the loss. This policy also provides coverage of wages which must be paid to your employees based on contractural agreements and for skilled employees which you would like to keep during the interuption period Botswana Insurance Company recommends small medium enterprises to seek guidance from an Insurance Broker or Agent to ensure that you have ample coverage. If businesses are not adequately insured this can result in devastating losses which often results in business closure. Remember that “Prevention is better than cure”