Importance of insurance for businesses

Importance of insurance for businesses

  • Transfers the risk from the business/insured to an insurance company/insurer.
  • Transfer of risk is subject to the terms and conditions of the insurance contract.
  • Protects businesses against dishonest employees.
  • Protects businesses against losses due to death of a debtor.
  • Protects the business against theft/loss of stock and/or damages caused by natural disasters such as
  • floods, storm damage, etc.
  • Protects businesses from claims made by members of the public for damages that the business is responsible for.
  • Businesses will be compensated for insurable losses, e.g. destruction of property through fire.
  • Businesses assets, e.g. vehicles/equipment/buildings need to be insured against damage and/or theft.
  • Businesses are protected against the loss of earnings, e.g. strikes by employees which result in losses worth millions.
  • Life insurance can be taken on the life of partners in a partnership to prevent unexpected loss of capital.
  • Should the services of key personnel be lost due to accidents/death, the proceeds of an insurance policy can be paid out to the business/beneficiaries.
  • Replacement costs for damaged machinery/equipment are very high, therefore insurance can reduce/cover such costs.