Importance Of SME Insurance For Entrepreneurs
Free Book Preview Money-Smart Solopreneur
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The pandemic had downed the shutters of multiple businesses across the country. However, with the relaxed restrictions and increasing prospects in vaccination, many small businesses are getting back to work and adjusting to the new normal with precautions. With the number of small businesses snowballing, the need for business insurance has also increased. While SME is believed to be an important aspect of the economic development of the nation, SME insurance is still underpenetrated. Lately, with the increased awareness of the importance of insurance coverage, along with the technological advancements in processes, there has been a rise in demand for SME insurance. It is further aided with microfinance and NBFCs, as well as government initiatives to promote SMEs.
Insurance does more than mitigate loss, and it is high time we realize its necessity. For instance, according to the National Crime Record Bureau statistics, a burglary takes place once every three minutes in India. According to the Indian Risk Survey, fire outbreak is ranked as the 3rd biggest risk to business continuity and operations. While no one plans on being robbed or predicts a fire outbreak, one would rather be safe than sorry. Being safe does not only include choosing the right security measures, but also means one should be prepared if such misfortunes are to occur and have a contingency plan in place. A policyholder can reap considerable benefits from the right policy during such times.
Most SME insurance policies cover loss due to fire, burglaries and natural calamities. However, one can find policies that cover other types of losses such as lawsuit coverage, third-party liability and copyright security are few among the other covers available in the market. One can choose the right insurance cover by evaluating the need.
Benefits of SME insurance
The peace of mind: One of the biggest boons of an insurance cover is the peace of mind it gives the business owner. One cannot predict the future, and one must always be prepared for any uncertainty that may occur. It is the insurance that provides the business owner with the hope that the business will stay afloat even when things go south.
Mitigation of risk: Insurance helps the business owner mitigate the risk when he starts new ventures. Starting a new business is never easy, and the financial burden can be tremendous. Insurance companies understand this and mitigate the financial risk carried by the business owner.
Shock absorption: Insurance companies help absorb losses. Though the extent of absorption differs from policy to policy, one can claim a certain amount. The absorption of loss that may have incurred is one of the essential benefits of insurance.
Credibility: Having insurance increases the credibility of the business. The credibility helps the business owner avail of loans more quickly and helps in times of valuation of the company.
An SME insurance is extremely vital as it allows you to protect your shop and its contents against all unforeseen and unfortunate situations. The right insurance can be the safety blanket that one can fall back upon in case of unexpected loss.