Insurance: Adopting An Insurance Strategy For Small Business

Every business needs an insurance strategy but this is perhaps more critical for small businesses. Their size is the number one reason why they should not just jump into taking any kind of insurance. Some small business owners fall into category and it is a mistake. You do not just take up insurance for the sake of it, doing that could end up costing you and catching you unawares for good measure. For instance, you can take up third party insurance, which will help offset liability to others but not cover yourself or business, meaning you have to address the issue of recovering from your loss without help from the insurance company who have rightfully acted according to the insurance plan.

Insurance Strategy Defined

An insurance strategy is a comprehensive look at your areas of highest risks in terms of liability and loss and devise a composite plan with the insurance plans that attempts to cover such areas as effectively as possible with due regard to your limited resources. It is you sitting that with an insurance officer and drawing up a unique plan that will serve to give you the best coverage possible with respect to your financial capability.

As a small business owner, you could be facing risks at several fronts. There are risks associated with your employees like injury during the course of working for you. Let us do it like this; I will list out several risks and you get to pick the ones that are peculiar to your business. At the same time you can get to see where I am going with this and be able to add others since nobody knows your business better than you.

Possible Risks and Liabilities that could face a small business owner

• Employee risks


• Manufacturing risks


• Transport of products risks


• Factory damage risks


• Force of nature risks


• Equipment damage risks


• Clients risk

You can add to the list above as you get to see the kind of liabilities your business is exposed to and know how best you can approach the issue of insurance cover. The first thing you will notice is that you could be exposed to multiple risk that you cannot feasibly take up individual insurance plans to cover. This underscore the importance of insurance strategy.

Importance of Insurance Strategy

An insurance strategy first of all gives you what I will call a risk map. That is, it lays down the possible risks you are exposed to and this big picture view gives you the scope of your entire business area. Aside from it being the first step to drawing up an insurance strategy, which is done with your insurance relationship officer, it could help you streamline your operations in such a way that you reduce or eliminate some risks.

For instance, if you look at fire or injury risk and realize that it is quite high, you could decide to invest in upgrading your factory in such a way that fire risks are minimized and maybe equip your staff in such a way that injury is all but eliminated. Something as little as a hard hat or gloves could save you millions; and you can quote me on this. So getting to know your risks could give you valuable insight into the degree of exposure you have to such risks and help or convince you to implement simple and cost effective upgrades that will mitigate such risks. Meanwhile, you have not even set your insurance strategy in motion. You are still at the assessment stage. This shows you how important drawing up an insurance strategy can be.

An insurance strategy presents an outlay of the options available to you. The options are the best combinations of unique plans that can cover as much risk exposure and at the same time stay within the boundaries of the financial ability of your business. Taking up an insurance plan should not hold other areas of your business, which you have to invest in to ransom. It gives you the opportunity to create comprehensive plans that is tailored to deal with risks your business is exposed to in a manner that is affordable to you.

The plan you chose by developing and implementing a insurance strategy is always better than taking up traditional insurance plan. Let us break this into nuts and bolts; it is like a person making a bulk purchase rather than single item purchase. The cost of the bulk purchase is far cheaper than when make single items purchases of the same product. The discounts available for single item purchases is not as high as when you do bulk purchase. Working out a comprehensive insurance policy plan with your insurance relationship officer gives you the best bargain.

It Is A Form Of Investment

Almost every type of insurance is a form of investment because you can have insurance rebates. This is more so when it comes to comprehensive insurance tailored for your business. They are also a form of investment because they protect your business from risks, mitigating damage to the extent the insurance policy covers.

A business insurance strategy gives you a comprehensive framework to adopt that will mitigate exposure to risks at different level. It helps in securing a comprehensive plan at the best affordable rates, making it ideal for small business ventures to cover risks associated with doing business.

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