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What is sme package insurance & why is it a “must have”

SME’s, or Small Medium Enterprises to use their full title, are a major part of the local economy in the UAE and employ more than 50% of the workforce here. From butchers to bakers, cafeterias to clinics and supermarkets to salons, we’ve all come to rely on the essential products and services they offer: and may even be employed by one ourselves! Whether a small start-up or a large established business, one thing’s for sure: establishing and running an SME takes inspiration, perspiration and a lot of time and money so protecting those investments is critical!

What is SME Package Insurance?

SME Insurance, also referred to as SME Package Insurance, is a Commercial insurance policy specifically designed to protect small medium enterprises from the most commonly occurring risks under one convenient “umbrella” or product. These typically include Property Insurance (covering buildings, contents, stock, equipment etc against material damage, loss or theft), Liability Insurances (Workmens’ Compensation, Public Liability, Products Liability), Money (whether on the premises or in transit), Goods in Transit (items being transported by road between locations such as a shop or warehouse), Employee Dishonesty & Personal Accident to name the main lines.

Some Insurers also offer dedicated, specialist policies catering for specific industry segments, such as Education, Healthcare clinics and Retail insurance cover. These policies operate on a package basis but include a suite of insurances to suit the unique operational/trading needs of these businesses.

Why should I have it?

Whether you’re a start-up or a more established company, the impact that any physical or financial loss or indeed any trading interruption has on your business can be huge. Building up a business takes considerable time and money and something that most small to medium enterprises can ill afford. Aside from the actual money lost due to damage to or loss of physical items there are also more “invisible risks” to consider like liability to employees (Workmens’ Compensation) and customers/visitors (Public Liability) and also those that are consequential and intangible, such as disruption (Business Interruption/Loss of Profits) and reputational damage. A good SME Package Insurance can help to protect you so that in the event of many different types of loss, you get practical, expert help to manage and contain the situation, as well as financial assistance to cover your losses.

What’s covered under an SME package insurance policy?

An SME Insurance policy is a “package” in that it offers several types of cover under one policy or product. It gives great flexibility and affordability as it provides all the commercial insurances considered essential for your business whilst allowing you to choose which level of cover you need.

For example, here in the UAE and especially in Dubai, most people rent their business premises so are classified as tenants. The responsibility for insurance of the Building lies with the landlord (who will doubtless pass the cost of insurance onto you): however, as an SME owner you should still consider coverage of your Contents, Stock, Money etc: as well as your Liability to your customers and employees: to ensure you are suitably protected and in compliance with relevant legislation or trading regulations.

Key Features and Benefits offered by SME Insurance policies

So, what are the main benefits provided by such a Policy? There are probably some obvious ones but doubtless many that you are somewhat unfamiliar with. We’ve summarised the key features below:

  • Contents
    Whether you are a shop, office, salon or cafeteria, your business will have essential items needed to help you run your business and support your customers. For example, offices will have computers, desks, chairs. Shops will have shelving and racking systems and cash registers/electronic point of sale devices. Make sure these items are suitably protected against risks such as fire, water damage or theft.
  • Stock
    If you are a retail business in particular, this is a critical cover to ensure you can continue to trade if you suffer a loss. Under a dedicated Retail SME insurance policy Stock can be covered in a variety of ways: for example, whilst in road transit between locations, whilst in the shop/retail outlet against common perils such as fire, water damage etc, and even in the freezer/chiller cabinet where it is protected against appliance failure/interruption of power supply (this is known as Deterioration of Stock cover).
  • Business Interruption
    Often referred as Loss of Profits insurance, this business continuity cover gets your business back on track by recompensing profits lost directly as a result of an insured event, as well as additional essential costs to rebuild your business.
  • Public Liability
    This essential cover protects against your legal liability to your customers/clients and other third parties for their accidental injury in the course of trading with you. It further covers your liability for loss or damage to the property of your customers, neighbours, landlord and other third parties. Important to note, this cover is a legal requirement so good to know that it’s a standard cover in these Package policies.
  • Workmens’ Compensation/Employers’ Liability
    As an employer, you have a duty of care to your employees and any accidents, injury, disease or death suffered by them whilst carrying duties in connection with their employment, would be covered under this invaluable insurance.

Additional Services & Added Value Benefits

There are so many more covers and add-on benefits under SME Insurance that vary from Insurer to Insurer.
These include covers such as:

  • Employee Dishonesty protecting against fraud committed by employees.
  • Personal Accident protecting you and your employees against death or permanent disablement caused by an unforeseen accident.
  • Money protecting against loss of or damage to money as part of your daily business activities.
  • Electronic Equipment Breakdown covering your equipment against breakdown with reimbursement of costs of repair, replacement and essential extras.

What are the key areas SME insurance doesn’t cover?

We’d like to assure you that there is more covered than not but like most insurance products, SME Insurance won’t cover everything and all eventualities.  It should be noted that there are some losses or costs that typically will not be included in the Policy.

Typical Exclusions

SME Insurance policies are standard Commercial Insurance contracts and most Insurers typically follow the same thought process when it comes to the risks they would wish to exclude. Common examples include:

  • Wear and tear to your contents & equipment (dents, scratches, chips, discolouration or holes for example)
  • Any loss or damage caused by a gradually operating cause (think a small, gradual leak caused by a hole in a water pipe or leaking joint in a heating system pipework that causes damp to a wooden floor that then collapses through rot)
  • Any costs you have incurred in improving your business premises after suffering a loss (insurance seeks to put you in the same position that you were prior to suffering a loss; any improvement is seen as “betterment” and this is not covered)
  • Loss of items through “walk-in” theft: for example, a customer walking into a supermarket and stealing a bar of chocolate from the shelf.
  • Any deterioration in the condition or age of an item which affects its value (depreciation) or corrosion/rust etc.
  • Loss of profits if not directly linked to a loss caused by an insured peril or event (eg loss of profit following a decline in trade is not covered).

So, what should I do to protect myself against these excluded risks?

You should consider each of these areas of non-insurance carefully and create a robust contingency plan to cover your exposure. For example:

  • installing CCTV to record incidents can deter walk-in thefts and also helps provide crucial evidence in convicting thieves; as well as defending any potential Public Liability claims for accidents and/or injury on your premises
  • employing a dedicated security guard within your retail outlet
  • taking out extended warranty insurance to cover your equipment
  • making sure you carry out essential maintenance to your business premises on a regular basis
  • keeping items clean and in good working order by having them regularly serviced etc.
  • storing more valuable stock in “less accessible” places, such as high shelf or in a secure cabinet so customers have to ask for assistance in selecting them (this minimises Theft risk as well as water or pest damage)

How can i get the best SME insurance, quickly & easily!

SME Insurance is rapidly becoming one of the most widely available and affordable products in the Commercial Insurance market and with a great range of reputable, reliable Insurers offering policies, there’s never been a better time to buy. But is it for everyone?

Eligibility

Anyone can apply for SME Insurance: whether a sole trader, partnership or a larger business with multiple locations. Requiring the answer of a few simple questions, Insurers will generally ask for basic, but essential, details such as:

  • Whether you are an owner/occupier or a tenant of your business premises
  • Your occupation/business description (note you should declare/include all your business activities so that you are fully protected)
  • Address of the main registered business premises including GPS/Makani code location, as well as details of any additional trading locations
  • Details of any security protections in operation at the property, such as alarms, CCTV, security guard/patrol, secured entry/exit
  • How long you have been in business &/or what experience do you have in this sector of industry
  • Details of your employees: how many people do you employ, do you use contractors, how do you recruit/select, are they qualified/experienced (think about salons or clinics where treatments are administered)
  • What operating procedures do you have in place? Do you maintain good stock control records? Do you have an inventory or your contents? Do you record any on-premises incidents in an accident book?
  • Whether you have made any claims in the past or encountered any incident from which a claim could arise

Hints & Tips

Many Insurers appreciate you may not have established procedures, or security protections in place: however, you’ll need to show you have considered these factors and are committed to putting them in place. Failure to do so could invalidate any future claims and even if you choose not to take out the insurance, it would be wise to have these measures sorted anyway.

Insurance policies are just one protection solution and only operate “after an event”. Sensible “risk management” operates continuously and can even prevent some incidents or losses from occurring so why not think about how you can minimise your potential for claims? This is not only good for your business but also your premiums and low/no claims equals lower premiums through rate discounts in recognition of your business being a “good risk”.

Some good practices for you to consider are:

  • Keep all your receipts in a file so you can prove purchase and price paid in the event of a claim for loss or damage to an item
  • Have any valuable items appraised every couple of years so they are adequately insured
  • Take photos of your items so you have a “picture inventory” per room. This is a great tip in the event of a burglary, fire or flood as often we find it hard to remember what we own and where it is!
  • Make sure when cleaning that you always display “wet floor” or “cleaning in progress” signs so that visitors, customers and other employees are aware, to minimise the risk of what we call “slip and trip” incidents
  • Divide day-to-day responsibilities to a designated member of staff with a second trained as a “back-up”. This ensures that the essential tasks are always carried out
  • Regularly “health check” your procedures to ensure that how you run your business is keeping pace with required rules and regulations

Is SME insurance worth buying?

SME Insurance is an invaluable addition to your essential insurance shopping bag! The potential for loss in a small business is no smaller than a larger business: the main difference is that the larger business usually has a larger turnover & larger profits so the effects of a similar size loss would have a smaller impact! For a comparatively low premium, you can protect thousands of dirhams: can you afford not to?

So, I’m convinced! What next?

You could try to obtain this insurance yourself but why not simply use our expertise? In partnership with the UAE’s leading Insurers, we at InsuranceMarket.ae are able to arrange your SME Insurance quickly and simply with our easy-to-fill digital Proposal Form. Contact us today and let one of our friendly team help you secure a deal that suits you best. We make it our business to insure yours!

About Author

Rachel Al Mughairi
Rachel Al Mughairi

About Author

With over 32 years in the international insurance industry in a variety of senior management roles, and a holder of the Diploma in Insurance from the Chartered Insurance Institute, Rachel surely knows her insurance! Having enjoyed a long career in The City, London’s financial district: as well as experience across continental Europe (working in Switzerland, France, The Benelux, Italy and Germany): Rachel moved to the UAE 3 years ago: starting her career with a major Insurer before joining InsuranceMarket.ae in July 2020.