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Business Insurance in South Africa Explained

Owning and running a business is not an easy task and there are a number of risks that can affects the failure or success of the business.

As we know, accidents happen and they not only happen to us in our personal lives, but they can also happen in our businesses.

This is why business insurance is important for all business owners should have, regardless of the size of your business. Whether you are running a small, family-owned business or a large corporation, the risk of financial loss is equally great and can be devastating.

In this article, we take a look at business insurance in South Africa, what it covers, and why you should have it.\

business insurance south africa

What is Business Insurance?

Business insurance is an umbrella term which refers to various types of insurance cover that protects your business against serious financial loss. Financial loss can occur due to a number of uncontrollable factors which all business owners can potentially face at any given time during the normal course of business.

Although all business face potential risks, different types of businesses are more prone to different types of risk and evaluating these risks is the first step to understanding what type of insurance is appropriate.

Different Types of Business Insurance

In South Africa, there are certain types of cover which are considered compulsory while other types are recommended but not mandatory.

Compulsory Business Insurance in South Africa

Unemployment Insurance Fund

According to the Unemployment Insurance Act, employers and employees must contribute to the Unemployment Insurance Fund (UIF). Monthly contributions to the fund will ensure that when a contributing employee becomes unemployed, they will be paid a certain monthly amount for a period of up to 26 weeks or until new employment is found. This does not happen immediately, instead the unemployed person must follow the necessary process to apply for the funds to be released to them.

Motor Vehicle Fund

This cover protects the owner or driver of a company vehicle when a third party is hurt or killed in an accident caused by negligence. Contributions to the fund are collected through levies charged on petrol sold to the motorist. The motor vehicle fund will pay for medical expenses, compensation for pain and suffering, and loss of income due to the accident.

Public Liability Insurance

This type of business insurance protects the business against potential lawsuits based on accidents that happen at the business during normal business hours. Some businesses are available for the public to visit and should something bad happen to someone while they are there and they sue the business for damages caused by the accident, public liability insurance will protect the business and cover costs related to the legal action taken against them.

Workmen’s Compensation

Employers are legally required to insure employees against death, injury, or disability as a result of accidents that happen at work, while on duty. This is especially necessary for high-risk jobs such as construction, rope access, or any other duty which poses a risk for serious injury or death. The Workmen’s Compensation fund will provide compensation to employees and their dependents which can be used to cover medical expenses, disability, or loss of life.

Non-Compulsory Business Insurance in South Africa

Vehicle Insurance

If your business depends on vehicles to carry out its functions, vehicle insurance will protect the employer against damages caused to the vehicle during the normal course of business. This covers cosmetic damage, mechanical issues, and theft.

Building Insurance

If your business operates from a physical building, it is at risk of being damaged by fire, vandalism, looting, and flooding to name a few. Repairing or replacing a damaged building can be extremely expensive and building insurance protects the business owner’s personal assets in the event of the unthinkable.

Business Contents Insurance

Contents insurance covers the costs incurred when there is loss, damage, or theft of the moveable assets within the business. This is different to building insurance, but the damage is similar. In other words, fire, wind, flooding, theft, looting, and vandalism can all cause loss or damage to the moveable assets inside the building.

Disability and/ Dread Disease Insurance

These policies serve to cover your and your employees’ income as well as medical costs which arise as a result of disability or dread disease, rendering you and/or your employees unable to work.

Medical Aid

Business owners should encourage employees to have medical aid cover, whether subsidized by the business or not. When a key employee falls ill or suffers serious injury, their absence can negatively impact the functions of the business.

Olemera Financial Services – Financial Planners in Johannesburg

Insuring your business is a wise financial move and will ensure that you are protected against a number of risks which can otherwise cripple you and your business financially.

Our financial planners in Johannesburg are available to assist you with choosing the right business insurance for your business.

Contact us for more information.

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