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Top 7 Business Insurance Questions Answered

If you have questions about business insurance and your company, you have come to the right place. Many business owners, especially small to medium enterprise business owners, are not sure about whether they need business insurance or what it covers. Is business insurance valuable for your enterprise?

Maybe you’re concerned about a loss of capital during the COVID-19 lockdown. Is there insurance for businesses that covers pandemics or the losses your business may experience in this time? How does the lockdown affect what insurance your business needs, and can you somehow save on insurance during this time?

 

Business Insurance and the COVID-19 Lockdown in South Africa

During the lockdown, many businesses have lost large amounts of money or the ability to earn income. If your company already has business insurance, you could save money on your premiums. You can speak to your current insurance provider about how to adapt your plan for the changes in your company’s needs. A company that has insured movable objects through a business plan, for example, can remove this option during lockdown when equipment like laptops are not being moved around.

Unfortunately, insurance that covers the financial impact of a pandemic on businesses does not currently exist in South Africa. Other measures should be taken to minimise the impact of the Coronavirus pandemic on your company. The government has offered a relief program, and adjustments to your operations like obligatory paid leave are a good idea.

 

What Are the Most-Asked Business Insurance Questions in South Africa?

1. What Kind of Business Insurance Do I Need?

You can make two lists to determine what kind of insurance you need. First, list the risks that your business is exposed to going from most expensive to least expensive. These risks can be legal claims, corruption, theft, accidents, loss of income due to power cuts, liabilities, and more.

Next, list risks your business is exposed to going from most likely to least likely. Compare the two lists and insure the most likely and most expensive risks. In South Africa, you can get different kinds of business insurance that cater to specific business risks, or you can get bundled or comprehensive business insurance solutions.

2. What is Business Insurance in South Africa?

Business insurance is insurance that covers risks your business or organisation is exposed to. The point of business insurance is to mitigate risks and to cover the possible financial impact of these risks. Examples range from the impact of natural disasters to theft and the legal costs of claims against your business.

3. Are Business Insurance Premiums and Pay-outs Taxable?

According to the South African Institute of Chartered Accountants, short-term insurance policies can be taxed, but this tax can usually be reclaimed under the VAT Act. Pay-outs may be taxed depending on whether the VAT Act applies to the services or goods the claim is for. Long-term business insurance plans like life insurance policies for executives are not usually taxed. If you are unsure about whether your tax obligations regarding business insurance are met, it’s best to speak to your insurance provider or your tax accountant, as there are multiple laws, exceptions, and terms involved.

4. How Much Business Insurance Do I Need?

Ideally, you need enough business insurance to cover your business risks. Assessing what these risks are can seem overwhelming. A step-by-step consideration of your processes and operations can result in a list of risks to consider. Think about how much you will need if things go wrong and what the scope of your work is.

Your business insurance should be enough to meet contractual obligations and to ensure business continues to run as it should even if things go wrong. You can use your risks list to figure out how much cover you need. For example, if my factory burned down, how much would I need to restore it and cover any losses while construction happens?

5. What Does Business Insurance Cover?

The cover you can get with business insurance depends on the policy or policies you have. Comprehensive business insurance plans can cover a lengthy list of insured events, or you can get an insurance plan made to cover only specific kinds of risks. Examples would be business liability insurance, fleet insurance, or insurance tailored for professions like pilots and farmers.

6. How Much Does Business Insurance Cost?

You can get insurance plans for your business that are affordable or more expensive. It depends on your insurance provider and on the extent of your cover. More basic insurance plans are often cheaper, and insurance for smaller operations and certain kinds of industries may be cheaper. It’s best to get quotes for the insurance plans you are considering from a few different providers to compare costs.

7. What Business Insurance Do I Need as a Sole Trader?

When you operate as a sole proprietor or sole trader, you carry all the financial risks yourself. If the business fails, the debt falls to you to pay. If someone claims against your business or if you experience an insured event like theft, business insurance can protect you personally and also the business, because anything the business is liable for, you are liable for as the sole trader. Your insurance should be sufficient to cover the costs of any risks that relate to your business, for example liability claims, damages, theft, fire, and more.

You can also learn about the lockdown’s impact on South African Businesses

DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.

Sources: saica; integrate immigration;

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Covid-19 South Africa

For information about the SARS-CoV-2 virus and the disease it causes, plus statistics on its spread in SA and related government press releases go to https://sacoronavirus.co.za/

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