In places like Nigeria, Insurance is usually not big on your agenda if you’re looking to start a side hustle or business. You’ll most likely be more concerned about capital to kick off the business off the ground or permits that you may need to sell that product or service. But like a business plan or market research, all of these things are just as important as each other – including insurance.
You may be wondering, “What is insurance and why is it important to my small business?” Well, simply put insurance is protection from financial loss and stands as a very useful form of risk management in business. In other words, insurance protects you (and your business) from uncertain loss and unforeseen circumstances.
For example, if you have insurance and your shop gets burned down (God forbid) for some reason, you’re protected. The insurance company can reimburse you (probably in full) so you don’t have to start from scratch again.
Here are three types of insurance you should consider for your small business:
- General Liability insurance:
This is important for every business – whether you have a place of business or run the business out of your house. This type of insurance provides protection if you, your employees and your products or services causes (or are alleged to cause) damage or bodily harm to a third party. For example, if you produce soap and for some reason someone that used your soap has a skin rash that spreads to the rest of their body, this type of insurance covers you financially if the person decides to sue your business.
- Property Insurance:
If you have tools or property that you use in the process of carrying out your business, this one is definitely for you. Things like computers, photocopying machines, hair dryers and other equipment are covered by this type of insurance. You should also consider business interruption/loss of earning insurance to protect your earnings if the business is unable to operate.
- Business Owner’s Policy (BOP):
This type of insurance usually packages together all the type of insurance covers that a business owner may need. BOPs typically include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance. While BOPs are designed to save the business owner money, they may also be quite expensive depending on the size of your business. The good thing is you can talk to your insurer and specify what coverage you want under the BOP.
Of course it is important that you do your own research and be sure that you are aware of the specific terms of your insurance policy. Double-check with your insurer and understand what you’ll need to pay vs what you’ll be getting. Having insurance can save you a lot of trouble as a business owner so it’s definitely worth investigating.
As you know, when you win, we win. To the moon!