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.

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mwaikusa

IAM experienced geography teacher with more than three years of teaching and creating content related to geography and other subjects for both high school and college students. hope you will find the content of this website useful to your studies and daily life