Types of business risk insurance: cost, conditions, pros and cons

Hello, dear readers. In this article we will tell you about business insurance.

Today you will learn:

1. Why is it necessary to insure a business?
2. Types of risks in business activities;
3. Which companies provide business insurance services and how much does it cost?

What is business insurance

Why insure your business?

This question may arise for those who are just starting their own business, sometimes through trial and error.

If you have created your life's work, developed a good client base and are creating competition for other companies, then you should take care that it does not collapse in an instant due to unforeseen circumstances.

Business insurance is a product with which you can preserve your capital and continue your activities without financial losses.

Of course, many young entrepreneurs try to save their own money and do not believe that a fire, an accident could happen, or that someone will let you down or someone will “throw away” their money. But you must admit, it’s nice to work and know that at any moment everything can be restored using the insurance payment received.

We can conclude that insuring your business is an additional “airbag” for your business. The main thing is to evaluate the business and choose the right insurance product.

Therefore, if you are just starting to develop, you should not react negatively to offers from insurance organizations. It’s better to carefully study the commercial offers of several insurers and purchase a profitable contract.

Benefits of business insurance

The advantages of business insurance are obvious:

• Protection against financial losses and bankruptcy . In a market economy, starting your own business is a risky business. The client base will not be developed in one day. To reduce losses that may arise as a result of business activities, it is worth purchasing insurance protection.
• Protection of real estate . The premises in which you operate may be damaged by fire, explosion or natural disasters. Restoration costs can be high. It is through insurance that you will be able to repair the property.
• Personnel insurance . Having experienced and qualified personnel is the key to running a successful business. A protected team feels calmer and is more loyal to the company’s management.

What do you need to open an insurance company?

You need to start by familiarizing yourself with legislative standards. They make a number of serious requirements that must be strictly observed. First, the organizational and legal form of the enterprise is selected. You can register your insurance company only as a legal entity:

• LLC is a limited liability company.
• CJSC is a closed joint stock company.
• OVS is a mutual insurance company.
• OJSC is an open joint stock company.

But! In this case, it is necessary to have at least three founders, then undergo mandatory registration of a financial institution and enter data into the Unified Register. It will not be possible to go through this stage without having the amount of authorized capital fixed at the legislative level. It also has its own conditions: the capital must be only cash. Although 25% of the required amount is allowed to be registered as government securities. Loan funds and other papers do not count.

Until recently, opening an insurance company required 240 million rubles per person to provide life insurance. According to the new laws, this amount is 450 million/r. For reinsurance operations, at least 600 million rubles are required, for other types of insurance - at least 300 million rubles. The smallest investments – 120 million/r – are required for medical insurance. In addition, the following conditions must be met:

• Mandatory monitoring system to track illegal transactions.
• Compliance with the form of contracts in accordance with government regulations.
• Availability of necessary financial reserves.
• Compliance of personnel with the requirements for having an impeccable reputation and appropriate education.
• Availability of special technical and computer equipment in the office.
• Accommodation in a separate building or non-residential premises.

Insurers undertake the responsibility to engage in insurance and reinsurance operations. You need to choose an area in which you have extensive experience. After the formation of the authorized capital, it is entered into the Unified State Register with registration of the legal address.

This is followed by the preparation of at least fifty documents associated with visiting numerous state tax, financial, and other structures to obtain licenses for each type of insurance. The procedure may take many months. Therefore, experts advise entrusting these manipulations to specialists involved in specialized registration.

Businessmen who do not have much experience are advised not to start a business with a large enterprise; to begin with, it is best to open an insurance agency, for which the requirements are not so high, and the starting capital will need much less. This may be a small office with a maximum of three full-time employees. You will need a tidy room and a computer with special financial programs. Better yet, start trying your hand as a regular insurance agent. This is the only way to understand whether the big thing will be possible.

Entrepreneurial risks

Every commercial activity involves great risks. The best way to protect yourself from possible losses is to purchase a business insurance contract.

Main types of risks:

• External . This type of risk does not depend on the activities of the company. This may include inflation and changes in market demand.
• Internal . These are risks that arise solely through the fault of the enterprise itself. Here you can highlight a strike or an incorrectly drawn up business plan for developing your own business.

According to the occurrence factor, they distinguish:

• Political , related to changes in the political situation in the country;
• Economic , arising due to unfavorable changes in the economy.

Classification of risks by area of ​​occurrence:

• Production risk associated with failure to fulfill obligations to produce goods or services;
• Commercial risk arising from the sale of goods and services;
• Financial risk is associated with failure to fulfill financial obligations;
• Insurance risk is associated with possible losses that will occur as a result of the occurrence of an insured event.
• Innovation risk is associated with the emergence of new technologies and the release of a new, more advanced product on the market.

To choose the right insurance coverage, you should take into account:

• What risks may there be at the enterprise;
• The probability of occurrence of each risk;
• The loss you will suffer as a result of each risk.

It is worth assessing future damage by taking into account the following methods:

• Analysis of all company activities;
• Comparison of own forecasts and data obtained from external specialists;
• Using the experience of other companies operating in a similar industry.

The importance of personnel selection

What do you need to open an insurance company? As mentioned above, first of all, thoroughly understand this service sector. This business is for professionals only. To become an employee of a large organization, you need to gain a certain amount of seniority and have a lot of experience.

When applying for a job, the candidate undergoes an interview to determine professional suitability. The questions can be the most tricky. The employer needs to understand how well the employee understands this area and whether he is able to understand any confusing situation. Since insurers deal with various types of insurance, you need to know how to communicate with the client and be able to find the right words to persuade him to conclude a contract. For example, OSAGO is the most common form, which means the agent must know how to open auto insurance.

How many people will work in the office is decided by the business owner. It is clear that the more there are, the higher productivity will be. Although this also depends on their professionalism. Agents' salaries are calculated as a bonus based on a percentage of concluded transactions. The profitability of the establishment depends on their number. To work productively you will need:

• Insurance agents – from three to ten people (at the start).
• Accountant.
• Lawyer.
• Managers.

Agents mainly search for clients and involve them in concluding a contract. It is good practice to have young agents assigned to professionals to learn from experience. The rest are considered office workers, spending more time indoors.

The amended legislation of the Russian Federation has tightened the requirements for administrative staff. The director, deputies, and heads of departments must necessarily obtain a higher education. The main condition is to have experience in managing an enterprise or any other organization of a financial institution. At least two years of experience. All management, including the accountant, must have an unblemished reputation, a clean credit history, and no criminal or administrative liability.

Types of business insurance

Even the most courageous entrepreneurs, who have not been in business for the first time, do not forget to “spread a straw for themselves.” Business insurance is a mandatory process that cannot be neglected or put off until later.

There are several types of risk insurance:

1. Property insurance. In this case, products, equipment and the premises itself are subject to insurance;
2. From a production break. For example, you had a fire at your enterprise. It will not be possible to quickly restore the workflow. It is necessary to spend time on repair work and purchasing new equipment. Don’t forget about employee salaries, which have not been canceled, and all mandatory tax deductions. Insurance will be able to compensate for all expenses that you incur in such a situation;
3. Insurance of business liability to third parties. Under this agreement, all obligations to partners will be insured. For example, in the event of a fire, you will not be able to fulfill your obligations in full. The insurance company will compensate for all penalties that will be incurred as a result of the insured event.

Property insurance

Let's say that you opened a business, rented an office, or bought your own premises. In addition to the premises, you had to buy the necessary equipment and furniture. If we are talking about big business and the production of goods, then expensive equipment is needed. All acquired property can be damaged at any time.

If this happens, you will simply receive compensation from the insurance company equal to the full cost of the damaged or stolen property. It is worth noting that the amount of insurance is significantly less than the value of the property.

Under the contract you can insure:

• The building itself and the buildings and structures attached to it;
• Material values;
• Money in a vault or safe;
• Equipment: computers, phones, faxes, printers, scanners, etc.;
• Interior items.

Business interruption insurance

Business cannot operate 24 hours a day. There may be scheduled days for rest - these are weekends and holidays. But what to do with unplanned work days that may arise due to force majeure?

As a result of downtime, you:

• You will incur losses in the form of lost profits;
• You will be forced to spend money on damage compensation, and these are unplanned expenses;
• Obliged to pay wages to their employees, taxes and rent.

The insurance company will help cover all expenses.

It is also worth remembering about the additional useful insurance package:

• Voluntary insurance for employees;
• Civil liability to third parties;
• Company vehicle insurance;
• Insurance of goods during transportation.

Liability Insurance

This is an excellent protection if, due to unforeseen circumstances, you caused harm to the customer and he has claims.

Let's say you decide to open a beauty salon. Your employee, when applying a mask to a client, mixed cosmetic substances incorrectly and the client developed redness and burns on his face. Agree, a very unpleasant situation.

If an injured client files a claim against the salon, you will have to pay compensation. But it’s not you who will pay, but the insurance company, within the limits of the insured amount.

Types of insurance contracts for organizations

Note 1
Risk insurance of an organization can be implemented both under the main contract and under an additional one.

The main policy is used to protect property owned by an organization, excluding insurance of agricultural crops, animals and protection of perennial plantings.

Finished works on a similar topic

• Course work Insurance of organizations 470 rub.
• Abstract Insurance of organizations 260 rub.
• Test work Insurance of organizations 220 rub.

Receive completed work or specialist advice on your educational project Find out the cost

Additional insurance under the policy is used in cases where the property base was accepted by the organization from another company or individual. Moreover, an additional policy can be issued only if the main one exists.

Small Business Insurance

For a small business, any unforeseen situation can turn into a big tragedy. In most cases, small businesses do not have reserve funds, and working capital cannot compensate for the damage. In such a situation, insurance protection will help minimize possible losses.

Currently, small business insurance includes:

• Business liability insurance;
• Property insurance;
• Possible losses in production.

It is also worth knowing that if a novice businessman wants to take out a loan from a bank to open his own business, the bank will take care of the safety of assets that will serve as collateral. In this case, drawing up a business insurance contract will become a prerequisite.

If we talk about insurance in our country at the voluntary level, then business insurance in Russia is at the initial stage of its development.

Small entrepreneurs are deprived of government support. By law, they must receive insurance at reduced rates. Only one question arises: where to buy preferential insurance? Unfortunately, no one knows the answer. It turns out that a novice businessman must spend his time and look for the most profitable option for himself.

Medium business insurance

Today, economic conditions cannot be called stable. This applies not only to Russia, but to the whole world. Every day you hear about financial crises that can affect the activities of large companies. But how can representatives of medium-sized businesses survive? This business is in a special risk zone.

Experienced insurance consultants advise purchasing protection against force majeure circumstances, such as:

• Fires;
• Accidents, including utility ones;
• Change or illness of employees;
• Malfeasance;
• Equipment breakdown.

Few entrepreneurs know that business insurance protection provides additional advantages and benefits, namely tax benefits. All premiums you pay to an insurance company for life or accident insurance are deductible from your income tax base.

Cost of business insurance services

Insurance companies offer several business insurance programs. You can even make a calculation on the official website of the insurance company, or by calling the operator on the toll-free customer support line.

Approximate cost of insurance services:

It turns out that the cost of insurance protection is within reasonable limits. Every beginning businessman can afford to buy insurance and protect himself from possible risks. Some companies offer to purchase an insurance policy with minimal risk packages. Such insurance can cost from 5,000 rubles.

general information

It is believed that enterprise insurance should be carried out in several areas. The totality of different policies and products is necessary to ensure that a business is fully protected from risks. What can act as an object of insurance? These are property, inventory, financial risks. You should also carefully discuss the conditions under which it is considered that an insured event occurs. If this is handled carelessly, there is a chance that the organization will receive nothing when a problem arises.