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I run a medium-sized shop with 2/3 employees and wish to protect my business against accidental losses.
Posted by Royal Sundaram on 14 Aug 2009
Your medium-sized business faces the same risks as any large business but the impact on yours can be much greater especially if the shop is not insured. In the event of a loss, you will have to pull out money from your business, from your personal savings or borrow, to repair the damage or replace the lost stock. If there is insurance, this financial loss caused by an insured peril can be paid by the insurance policy.
Further, if you have borrowed money from a bank or a financial institution for your business, you will need to insure the hypothecated/pledged property to protect the banks’ financial interest.
No one knows your risks better than you. Take some time to make a list of ways in which your business can suffer financial loss.
Protect Your Business from Accidental Losses:
- Malicious damage by other people
- Terrorist attack
- Burglary of Stock and Goods
- Fraud by an employee (Money or Goods)
- Accidental loss or looting of money while it is being carried between shop and bank
- Compensation demanded by a customer who meets with an accident in your shop (slipping on wet floor or injury caused by a falling object)
- Accidental breakage of plate glass or damage to neon sign
- Short-circuiting or breakdown of electrical equipment (Example: air conditioners) or computers
This is a long list but the good news is that all of these can be covered by standard insurance policies. You may be able to list many other risks but remember that not all risks are ordinarily insurable (Example: default by your customers, wear and tear of items, credit card frauds, contamination).
Now select the risks that you think are most relevant to your business and look for an insurance policy/s that covers these selected risks as a minimum. You may wish to seek advice from an insurance company, a broker, an agent or a licensed intermediary.
Estimate your the values for stock, other contents and building. Also estimate the cash you carry between your business and your bank and the amount you keep overnight in the safe. Also assess the amount of cash/goods handled by your employees. This information will be needed to work out your premium. Please ensure that your values are accurate else you will be underinsured and will have to bear a part of the loss yourself.
You will ordinarily not need to produce any document for buying a property insurance. You only have to complete a proposal form and pay the premium.
You are faced with a choice; taking the risk of a losing a large sum of personal/business money OR paying a small amount as premium for the assurance of recovering the lost amount.
– Vikas Shukla
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