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Top insurance considerations for up-and-coming entrepreneurs

by Tia

For any aspiring entrepreneur, starting a new business is a thrilling process. Deciding what the business will do, how it will operate, and where it will be located are among the ‘fun factors’ to consider at the outset. However, while this is an exciting journey, once the business is operational, it becomes essential to safeguard the venture with the right kind of insurance coverage.

This is the opinion of Karen Rimmer, Head of Distribution at PSG Insure, who says an adviser is best positioned to address unique needs and the different risks that could disrupt operations or even threaten the existence of a business without proper protection. While insurance might not be the most exciting step in building a successful brand, it can be invaluable when the unexpected happens.

“The risks facing a business will ultimately be determined by the industry it operates in, but business continuity risks due to unforeseen events, fraud, and cybercrime are among the factors any business owner could encounter,” she says.

Commercial insurance provides peace of mind and, with the help of an adviser, a robust strategy to protect the newest project and assets will assist in times of disaster.

Be Future-Forward

Consider the roof over the business and what is under that roof, ensuring these items are covered for their true replacement value. These factors typically increase year on year as the cost of living and rebuilding rise, so coverage needs to increase accordingly. According to Rimmer, adequate coverage is necessary for the premises in the event of a fire, flood, or incidents like a burst geyser destroying the office or stock.

“Business contents must be covered to maintain operations if equipment is damaged or stolen, and all-risk items carried to and from work should also be insured, as these are essential tools for business operations.”

Be Fallout-Ready

Liability insurance should be considered in case a third-party claim arises. For instance, if unforeseen circumstances prevent the completion of an agreed-on service by the contract date, resulting in a client’s loss, liability insurance can manage the associated costs. Contractual liability insurance covers such scenarios.

As Rimmer explains, business interruption cover is essential for unexpected problems that prevent ‘business as usual’ operations. By maintaining coverage that keeps the business running despite the unexpected, resilience and longevity are ensured.

“Depending on team size, key man insurance provides protection against unfortunate events such as death, disability, or critical illness, ensuring the business remains operational if such tragedies occur.”

Be Fraud-Aware

As many businesses operate online, cyber risk becomes a possibility the moment a computer is turned on. Regardless of the business size, if there is data to steal, there is a risk. Rimmer advises that measures to protect data should be in place alongside cyber insurance cover to manage the impacts of a security breach. “Unfortunately, crime or fraud can also come from within, in cases of dishonest employees.”

Fidelity insurance protects against losses incurred by staff who steal from or defraud the business. The type of business, staff, and stock levels will determine the necessary level of fidelity insurance. For small businesses, in particular, fraud can be very difficult to recover from without a financial safety net.

Be Prepared from the Outset

It is important to remember that life typically happens while making other plans, which is why consistent and up-to-date insurance is crucial. Tailored advice specific to the business and its unique risks can make all the difference.

As Rimmer concludes, “While it is impossible to predict what may be around the corner, adequately insuring the business against negative outcomes strengthens the brand.”

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