Any small business owner knows that it is important that you ensure you are protected against possible disaster and especially against being unable to trade. To understand what the possible insurance pitfalls are that every small business-owner should know about 99FM’s MYD Smart spoke to Garth Panton of Panton Insurance Consultants.
Garth outlined the top five insurance pitfalls to be aware of if you are a small business owner.
According to Garth “Many small business owners cut on sums insured, to reduce the monthly premium” As he explains this is “Not a wise move as insurance policies incorporate the Average Clause under many sections of the insurance policy. The sums insured must reflect the current replacement value (including VAT) of the property insured and not the purchase value. Should the sums insured not be adequate at the untimely event of a loss, insurers will only settle a portion of the amount claimed”
2. Risk Management
This refers to the practise of identifying potential risks in advance and taking steps to reduce your risk as much as is possible. According to Garth this can include being aware of things like “Wear and Tear which is a policy exclusion. A claim must be as a result of an external or internal force that has resulted in the claim occurring.”
3. Claims Reporting
Garth explains here that “In the event of a need to claim, it is important that the claim should be reported to the agent, broker or insurer as soon as is reasonable possible. Thereafter all circumstances, proofs and information must be submitted” In terms of what is reasonably possible; Garth says “48 hours is regarded by insurers as a reasonable reporting window and 30 days as a reasonable submission window.”
Considering the cash based nature of most small businesses it is critical to consider how you handle and store you money in order to safeguard that your risk is covered. As Garth explains, if the small business owner does not have a safe “monies collected during the day are sometimes stashed away within the premises or are taken to the owner or managers house for overnight safety” In this case “Small business owners must advise their agent, broker or insurer as their policy will need to be extended to include the additional premises”
If the small business owner does have a safe your policy will have to “clearly state the amount of money allowed to be kept in the safe” why this is important is because “should the amount being kept in the safe exceed the amount allowable, insurers will only settle up to the amount allowable as per the insurance policy limits”
5. Motor Vehicles
Appropriate cover for your motor vehicles is a careful balancing act. As Garth explains “cover for motor vehicles is based on the retail value at the date of the loss and not the purchase value of the vehicle. The retail value is ascertained for the Auto Dealers Digest.” Garth advises that every small business owner should review the value of their vehicles “every three months to avoid over-insurance and thus higher premiums.” He explains too that “additional factors that also affect the value of a vehicle are kilometres done, general condition of the vehicle and accessories attached to the vehicle.”
You can get in touch with Panton Insurance Consultants on 061- 253 061 or visit them at 342 Sam Nujoma Drive, Windhoek.