Why would you get insurance?

Insurance is a safety net, a way to manage risks. Buying insurance means transferring the cost of potential loss to the insurance company in exchange for a fee, known as the premium. Commercial insurances – insurances aimed at protecting and providing safety nets to businesses, employers and employees – are crucial in protecting enterprises and companies against the risk of business failure.

Purchasing insurances is proven useful to protect oneself, a group of people, belongings, businesses, and more. Indeed, they protect you against health issues, accidents, unemployment, and any other kind of risk, more generally. Commercial insurances – insurances aimed at protecting and providing safety nets to businesses, employers and employees – are crucial in protecting enterprises and companies against risks of business failure. Additionally, those types of insurances serve an important role in countries with developing infrastructures and politics. Indeed, they prepare against poor infrastructure, insufficient financial support, and globalization of markets, international expansion, and weaker government-sponsored assistance.

What are the types of insurances relevant to companies and business startups in this country?

13 types of insurance a small business could have. Not all companies will need all types of insurance mentioned below.

General Liability Insurance

This type of insurance protects the entrepreneur, its employees and its products or services against either body injury or property damage caused to a third party.

Property Insurance

The property insurance protects the business property including office equipment, computers, inventory and tools that belongs to the enterprise. It is meant for scenarios such as fire, vandalism, theft, smoke damage etcetera.

Business owner’s policy (BOP)

This is a package that contains several insurances which might be important for an entrepreneur to have. In general this package includes business interruption insurance, property insurance, vehicle coverage, liability insurance and crime insurance. The package can be designed in such a way that it meets the company specific needs. This type of insurance costs relatively less than the total cost of all the individual insurances in total.

Commercial Auto Insurance

The above mentioned insurance protects the company’s vehicles that transport employees, products or equipment from damage and collisions. In case a car from a third-party is used, a non-owned auto liability will protect the company in case the third party does not have insurance or inadequate coverage. It is possible to add the latter to the previous mentioned ‘BOP’ insurance package.

Worker’s Compensation

The worker’s compensation provides insurance to employees who injured themselves while working. As an entrepreneur the worker’s compensation protects from legal complications.

Professional Liability Insurance

Also known as Errors and Omissions Insurance, the policy provides defense and damages for failure to or improperly rendering professional services (general liability insurance does not provide this protection, so it is important to understand the difference).

Directors and Officers Insurance

This insurance protects the directors and officers of the company against their actions that affect the profitability or operations of the company. This insurance can cover the cost or damages lost as a result of a lawsuit.

Data Breach

If a company stores sensitive, or non-public information about its clients and/or employees on its computers, servers, or in paper-files, they are responsible for protecting that information. In the case information leaks out, the Data Breach insurance will provide protection against the loss.

Homeowner Insurance

The homeowner insurance is very important as it protects against damages to the home, to items inside the home and also protects against accidents that take place at home.

Renter’s Insurance

This is a subset to the homeowner insurance unless it applies to the rented homes. It protects against physical damages against the home, against items inside the home, and against accidents that take place inside the home.

Personal Automobile Insurance

This insurance protects all road vehicles. This insurance has a dual function as it protects against physical damages to the vehicle and bodily insures but also protects against any liability that might result from the collision.

Personal Umbrella Insurance

This insurance provides additional coverage on top of the insurance policies you already have. This type of insurance is an extension to the previously acquired insurance and covers beyond the regular policy.

Which offerers are there? What are the best-rated products for young entrepreneurs?

The Tanzanian Insurance Regulatory Authority has a list of licensed insurance companies in Tanzania.

Is there any mandatory insurance I need to get? What are they?

As outlined in steps 8 and 9 in the guide on how to start your business (the more detailed guide, click here), the two mandatory insurances for Tanzanian entrepreneurs are the Workmen’s Compensation Insurance and the National Social Security Fund.