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Do I need to have insurance for my business?

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QsId 109
Asked by Isaac Thuku
Category Personal Question
Title Do I need to have insurance for my business?
 

What types of insurance do I need for my business?
What types of risks should I insure my business against?

Tags insurance, entrepreneur, business insurance, risk, loss, indemnity
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Answers

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GURU Lwanga

Do I Need to have Insurance for my Business?

Insurance refers to a contract or agreement between a person or an institution where the insured voluntarily agrees to pay premiums to the insured in exchange for protection /compensation against specified tasks.

Common terms used in insurance that are in this article;

INSURED:Is a person or an institution that wishes to take the insurance cover.

INSURER:Refers to the insurance company that accepts to cover insured against certain /specified risks

PREMIUMS:these are regular payments by the insured to the insurer.

RISKS:Are occurrences or events that can cause lose to the insured.

Note,insurance has one main principle,THE PRINCIPLE OF INDEMNITY,which states that,the aim of insurance is to provide compensation for an insured loss and not to enrich the insured.

Types of Insurance You Need for Your Business

Insurance types are classified into two main categories:

- Life Insurance

- general insurance

Life Insurance

Life insurance covers the risk of death and is further classified into the following subcategories:

✔ Term insurance is a type of insurance that provides protection within a specified period of time whereby if the policy holder dies within this period,compensation is offered to beneficiaries.

✔ Whole life Assurance requires the assured to pay premiums until he/she dies and in event his/her beneficiaries are paid the sum assured as indicated in the policy.

✔ Endowment insurance the assured is required to pay regular premiums for a specific period of time and the sum assured is paid at maturity.

✔ Annuities are a type of policy that requires the assured to pay a certain sum of money to the assured.

✔ statutory scheme is a type of insurance offered by the government which aims at providing welfare to some members of the scheme I.e NHIF-National Hospital Insurance Fund

General Insurance

General insurance covers property against various risks which may result to loss or damages. This category includes;

✔ Fire insurance covers loss or damage of property caused by fire.however it has some conditions.the fire must be accidental,fire must be the immediate cause of loss.

✔ Accident insurance it covers all sorts of risks which occur by accident.

✔ Marine insurance provides insurance cover for water vessels and cargo against sea perils which may lead to financial loss.

Types of Risks a Business can Insure

✔ Goods in transit

✔ Bad debt cover

✔ Loss of property due to fire outbreak

✔ Theft and buglary

✔ Loss of property due to business interruption or consequential loss

✔ Occupation hazards for employees.

Why You Need to Insure Your Business

✔ Insurance companies may advance loans to their policy holders

✔ It is used as a form of savings by the policy holders to assist them in future

✔ It ensures protection against business failure from misfortunes which removes fear in business.

✔ Insurance is an investment initiative for these insurance companies do invest in the economy.

It is very important for one to insurance his /her business.however one should be able to identify and follow all processes involved while claiming an insurance policy.

2017-04-10

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