Understanding the unique challenges faced by small businesses can help you become successful or grow more successful, although it doesn’t stop at knowing the kind of perils that may affect you, finding a solution to these challenges will help to minimize loss or damage to your products. Small scale businesses refer to enterprises that are characterized by a relatively small size in terms of workforce, revenue, and production capacity. These businesses typically have a limited number of employees and operate on a smaller budget compared to larger corporations or companies.

Challenges faced by small scale business owners include health challenge or illness of the workers, natural disasters (e.g. flood, fire outbreak, pest, drought etc.), theft issues, etc.

Getting a personal security guard or well built cyber security system for theft issues in your small scale business is “not” an effective risk management decision to make, same as spending large sum of money to construct drainage systems to prevent flood from destroying your goods.

However, there are companies ready to help you manage the aforementioned risks or challenges in whatever business you do, these companies are called the Insurance Companies, and they are all over different countries of the world including Nigeria. Of course the government tires constantly to invent solutions that will be needed to overcome the constraints faced by these small scale business owners by bringing in more access to credit or loans, more reliable power supply and internet access, and organizing business orientation programs. Yet, the risks that petty traders face such as those from natural disasters like flood, weather, fire outbreak, pest, drought etc, are largely left untouched.

This is where insurance comes in to address most of the risks, though not all of them. In this article, we have explained in simple terms, what insurance companies do and their precise efforts towards risks management in small scale businesses like BaseNaija. Also, we are here to guide you on which insurance plan to choose, why you should go for it and a list of best insurance companies you can safely work with.

What Insurance means and what companies that offers them do

From background knowledge, the first thing that should come to your mind when you hear the concept Insurance is “protection against financial risk or loss. There are so many definitions of insurance by different authors, but each definition centres its concern on those guarantee offered by insurance companies to an insured individual. Insurance creates a relationship between an individual who wants financial protection and an insurance company who offers the financial protection to the individual under an agreement or a policy.

The policies determine how much the insured will pay the insurance company or how long. The amount of money paid to the insurer or company called a premium usually come in form of a contract that lasts for a particular duration then it expires and no damage or loss is guaranteed except if the insured person renews the contract. More on [url]Rekodex.com[/url]

Irrespective of age, financial status, education or health status, we all need insurance because its major benefit compensate us from uncertainties; things we cannot prevent from happening. This may include disease, natural disasters like fire, flood, or drought, or it may be pests or other setbacks from within our environment.

Insurance does not only compensate, it gives room for you the insured party, your properties and also creates financial security and opportunities for families (e.g. in life insurance) risks are not completely guaranteed by the insurer (and in some cases where they are, highly affect cost of premiums and/or revenue generated by the insurer) there may be limitations/exceptions and those damages not covered are clearly stated in the policy.

Although it is advisable you know what is covered and what is not covered as these are one among the key factors used for determining premium costs. (I.e. how much you will pay an insurance company for a policy) the guide below gives you all you need to know about premiums and how to acquire them at a cheaper rate.

What is a premium?

We can clearly understand premiums as the money an individual pays an insurance company under a policy in order to enjoy insurance benefits for a particular period of time. Each insurance company tries to reduce the premium cost for most of insurance policies but at the same time try to displace guaranteed risks so as to maintain the periodic generation of revenue in the industry and to avoid liability issues, some small companies even acquire reinsurance in order to meet up with demands or guarantee.

Anybody that wants to purchase an insurance policy will want a cheaper premium, but it’s safer to understand that premium costs are determined by certain criteria depending on the type of insurance policy in quest for.

How small scale business insurance works

Just the way it’s done in any scale of business, small scale business who want to minimize loss from the business acquire a plan by paying for a policy. The amount of money or the premium to be paid is decided considering factoring like, what you when to protect, how many products you want coverage for, and the state of your business. The next section explains different coverage suitable for small scale businesses.

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