Why small businesses should be insured

Mugabo sobs uncontrollably as he hits fits against a smoke-covered wall of his hitherto popular shopping mall in Kimironko, a Kigali suburb, which was destroyed by a fire the previous night. He curses and swears as he sobs and paces about his burnt commercial building helplessly. Amahoro Mall 2010 housed over 20 shops, bars and restaurants, which were all destroyed, leaving the owners in tears, misery and uncertainty. What if Amahoro Mall and the businesses it housed were insured, would there have been so much grief and uncertainty about the future? Yes, Mugabo would have been sad that his building was destroyed, but he would be hopeful that he would have it rebuilt without having to use his savings or acquiring a loan, thanks to compensation from his insurers. Like Mugabo, many business people in Rwanda, especially small business owners, think business insurance is not essential, with some saying that taking insurance cover is a waste of money or luxury. Although insurance is costly, it is an expense every business, regardless of the industry, size or period existence, should consider. Benefits of insuranceInsurance protects a business from collapsing due to a catastrophic loss, fires, burglary, floods or earthquakes. These usually are a common threat to businesses. When a company carries insurance against these threats, closure and loss are only temporary setbacks, experts say. “Insuring businesses, whether small or big, is undeniably crucial because it does not only restore property when disaster strikes, but also enables one to work without worrying,” points out Tonny Twahirwa, the acting managing director of Sonarwa, a local insurance company.It also caters for liability, for instance, if a customer slips and falls while on your business premises or your product has a defect that injures a customer and you do not have insurance, this could spell the end of your business. If a company car is involved in an accident and someone is injured, that could be disastrous as well. Business liability insurance covers accidents that occur on the business premises, product defects and mishaps that occur during normal operations on and off premises. If one takes out cover against theft, they will not be overly worried about thieves. Usually, thieves target new computers, furniture and other office equipment, so in case they are stolen, your insurer will come to the rescue and you resume normal operations after a short while. “Besides providing financial support during unfortunate events, insurance helps in increasing the credibility of your business among employees as they feel secured knowing that they are insured,” notes Joseph Mubumbyi of TM Consult, a local business consultation firm.Also, as an employer, it is your responsibility to take care of your employees at workplace. If any employee falls sick, gets injured or dies while working, as a business owner, you will be held accountable. That is why businesses should have policy to cover workers. You need to take care of their medical expenses. Workers’ compensation insurance helps you by covering the risk of injury to workers and the consequent medical expenses.Insuring one’s business can be costly, but the rewards are seen when, like Mugabo, one loses the merchandise to a fire and thieves.Let’s do business wisely and reap handsomely.