In the last post, we had discussions on the insurance requirements for startups in Nigeria. However, in this post, we would be examining important points on why having insurance covers is ideal for your startup. Though, it is mandatory in certain instances. Not in all cases would a company be required to have insurance covers. Yet, it is necessary for start-ups. The question is: WHY? Let’s find out.
Importance of Having Insurance Covers as a Startup
Depending on the startup industry you are operating, having insurance policy in respect of varying risks is helpful for the following reasons.
1. Risk and Liability
With an insurance policy in place to cover risks inherent in your business operations, startups can confidently undertake huge projects with little worry over financial risks.Additionally, startup founders can effectively transfer liability for losses and damages to the insurance company and evade the burden that comes with the unilateral liability.
2. Investor Confidence
Investors and VC firms are motivated to invest in insured startups knowing that risks associated with their commitments are minimally mitigated.
3. Profitability
With a working insurance policy in place, startups can delegate matters like liability, risks, losses to the insurance company and focus on the business itself to generate optimum productivity. There are varying types of insurance covers startups can undertake ranging from vehicle, building, life, health, etc. Each of these has their advantages and they go a long way in affecting startups in the long run. It is important for startups to comprehensively seek advisory on this matter to make informed decisions on Insurance policy.
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References
Icicilombard, “The importance of Business Insurance for Startups” available at https://www.icicilombard.com/blog/online-insurance-info/article/the-importance-of-business-insurance-for-startups accessed on September 28 2023
Vouch, “What is Startup Business Insurance and Why Do I Need It?” available at https://www.vouch.us/insurance101/what-is-startup-business-insurance-and-why-do-i-need-it#:~:text=Startup%20business%20insurance%20protects%20your,unforeseen%20liabilities%20and%20business%20losses accessed on September 28 2023
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