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  Every entrepreneur understands that the business environment is filled with so many uncertainties. These uncertainties are generally referred to as risks and they come in different forms, shapes and sizes. While some risks may not pose a great threat to the survival of a business, there exist many risks that when not properly mitigated can ruin any business.
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These types of risks that can ruin businesses are best managed through well thought out strategies and plans. One of such strategies that can help an entrepreneur manage his or her business risks is called Insurance.

What Is Insurance?

Insurance refers to an arrangement put in place by a business or individual as a guarantee for compensation in the event of loss or damage. That is to say, insurance helps protect business owners from risks that arise in running their businesses.

Business Risks In Nigeria

I once read a statement credited to Dave Hitz, Founder of NetApp in which he stated that ā€œa lot of times people look at risk and ask, ā€˜What are the odds that I will succeed?ā€™ A different way to look at risk is to ask, ā€˜Whatā€™s the worst thing that would happen if I failed?ā€ His statement clearly captures how most entrepreneurs in Nigeria go about their businesses. From Kantin Kwari to Alaba, and from Wuse to Ariaria, you will find a great number of business owners running their businesses without any clear plan as to how to take care of these risks that arise in business. The result? Irrecoverable losses. Due to the nature of Nigeriaā€™s social, economic, infrastructural and political landscapes, the risks of doing business in Nigeria are higher than those of most countries of the world. For instance, the poor security system in Nigeria means that the rate of burglary, theft, robbery and hijacks are high. So, if you do business in Nigeria, you need to ensure you take out good enough insurance cover for your business so as to help you bounce back in the event of losses.

The 4 Insurance Covers

1. General Liability Insurance

This type of Insurance cover helps take care of all claims from customers against your business on issues relating to damages or losses they suffer while on your property or while using your products. With General Liability Insurance, your businessā€™ assets and properties are protected. It also takes care of all legal fees in the event that your business is sued.
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2. Vehicle or Auto Insurance

This is one of the most common insurance coverage available in Nigeria. Vehicles operating in Nigeria are required by the Motor Vehicle Insurance Act, 1950, to take out at least a third-party insurance cover. This type of cover caters for liabilities such as death, property damages, and bodily injuries to third parties while using the vehicle. Aside from third-party insurance covers, there are other forms of vehicle insurance coverage that you should consider for your business vehicles so as to protect you from losses in the event of any damage to your vehicle.

3. Property (Commercial) Insurance

This type of insurance caters for all damages that may arise on your business property. With this type of insurance cover, you are compensated for any damages or loss to the physical property of your business, whether it is owned by the business or rented property.

4. Life Insurance and Health Insurance

While your properties and equipment are important to your business, your life (and health) and those of your employees are also important and should be of utmost priority to you as a business owner. You may not necessarily take out both covers; you can choose from either life insurance or health insurance.

Closing

I have a friend who once jokingly told me that most Nigerian businessmen and women run their business on ā€œGod forbidā€. What this means is that most entrepreneurs in Nigeria will rather hope and have faith not to encounter any form of loss rather than make adequate plans to guide against such. As a business owner, it is important for you to understand that ā€œGod forbidā€ is no plan at all. No one prays for losses but they may arise one way or the other. The best thing to do is to protect yourself in such a way that you will not suffer major setbacks as a result of them. Featured Image Source: The Vistek
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This article was first published on 1st February 2022

victor-ifegwu-mbonu

Ifegwu-Mbonu Victor is a Personal Growth and Leadership Trainer who provides training and coaching to individuals and organizations.

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