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Why Insure Your Venture?

Provided by SME.com.ph

Running or owning a business involves risks both in your venture and your liabilities. That is a fact you cannot deny, no matter what. It is the mere reason why liability insurance deals with this possible risk that your business will be facing in the not foreseen future.

Thus, your business would be badly hurt if you will not protect your business in any way. Consider this, would you have the financial capabilities to replace your assets if they get damaged? What if you consider moving to a new locale and the existing venue is rendered uninhabitable or needs further improvement? What is worst then, if you need to defend a lawsuit that you might possibly run into and need to pay for damages and legal fees?

Those are just a few things you need to consider why you have to insure your business one way or the other. Would you have the financial muscle to replace your assets when it is faced with a disastrous occurrence or you find risks such as mentioned previously? A classic example of a worse situation you could imagine is the September 11 terrorist attack at World Trade Center.

You wouldn’t want that to happen to you, that you’d end up feeling helpless and feeling you’ve died along with your lost investments.

Even if you’re a small-medium entrepreneur, the need to consider insuring your business is indeed a BIG

To date, there are 115 companies in the Philippines offering insurance products to corporations and individuals. Philippine insurance companies generally follow international practice but with a few local variants for good measure. The legal system governing the industry is a mixture of Spanish, Islamic and Anglo/American codes so it is wise to read the small print just to be sure you know what you are getting.

Three (3) Compelling Reasons

• Insurance protects your assets.
Don’t disregard the fact that even frivolous claims will cost time and money to just defend yourself. There are insurance programs that are automatically for your company’s defense—your company only pays if there is judgment in the plaintiff’s favor or a settlement; ensuring that your assets remain to be yours.

• Your ally: when a claim is brought against you.
If you are a policyholder of certain insurance company, they’ll match a defense attorney who will fight for you and your reputation. There is this Small Firm program that will pay your defense costs up to your policy limit, not to mention the pre-claims assistance to help you come to terms with a problem before it turns into a claim.

• Some requires professional liability coverage.
If you are an architect or an engineer or a professional, there are a lot of projects that would need your services with project liability insurance. If you keep your professional liability coverage—this is a good means of making sure that you’re meeting your obligations (both past & present, which shows that you’re eligible for more projects).

Types of Insurance you may want to look into and consider:

With its vision to bringing in various new types of insurance, its system has been improved in order to ensure smooth fund flows that will help meet SMEs’ needs. The maximum amount of insurance for one enterprise was raised several times. The Japan Small and Medium Enterprises Corp. (Jasmec) offers the following eight types of insurance for indirect finance to CGCs, which are:

• Ordinary insurance to facilitate the borrowing of funds for general purposes;
• No collateral insurance to allow SMEs to borrow money without collateral;
• Special small-sum insurance to give small-scale enterprises with 20 employees or fewer, (in the trade and service industries, five employees or fewer) access to loans without collateral and guarantor;
• Accounts receivable-backed insurance to allow SMEs to borrow money by using their accounts receivable as collateral;
• Environmental pollution preventive facilities insurance, energy saving facilities insurance, overseas investment financing insurance and new business development insurance to promote the smooth flow of funds for specific projects without difficulties.

Note: The type of insurance to be applied depends on the nature of the guarantee provided by CGCs.

Special Treatment of Insurance

Based on the government’s policy for SMEs, to actively take special measure, there are 32 special treatments, which offer preferential insurance conditions in terms of the maximum insurable amount, coverage and premium rates. For instance, these treatments can be applied to help SMEs damaged by natural disasters, to support SMEs suffering from changes in the economic environment or credit contraction and to promote business start-ups.

A prospective entrepreneur, basically excluded from the conventional credit supplementation system (CSS), is eligible for insurance when he qualifies for one of these special treatments related to business start-ups, for instance.

Somehow, if you have a venture that has assets worth no more than 3 million (micro enterprise), 15 million (small enterprise) and 100 million (medium enterprise) in pesos—these are a lot of money, which you need to take care and secure.

All these are for you to avoid future trouble or even just a minor headache that would also deem to cause disruption to your business. Also, your business is your profession. And projecting such an image, your clients (now and the future) would have great expectations of your work because they would rather seek to work with someone who has taken time to get insured.

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