8 Test Situations Where Insurance Can Pull You Out of Big Financial Trouble.

That's the basic role and objective of insurance - to pull you out of deep trouble when life throws one at you. Seriously speaking, getting occassionally thrown into one crises or another is simply part of life. Insurance is about ensuring that one's back is not broken by any of such life's encounters.

Insurance benefit - that indemnity against the impact of a particular risk - is only available to those who formally buy and pay for a cover (protection). Understandably, the individual can only seek protection when he understands the dangers or risks that he faces and knows the kind of shield that can be provided through insurance. The truth is that insurance (real insurance by a goosd insurance company) can insulate you from life's many troubles that have the potential to derail or permanently undermine a man. Eight of such 'deep blue sea' experiences are examined here to provide an insight into the hard knocks that are possible and how insurance can be a big mitigant and literally your saving grace.

1. House Gutted By Fire
If you own a house, possibly the one you live in, you'd obviously know what it cost you in money and effort to acquire or build it and set it up. Close your eyes for a moment and think of getting a phone call from a neighbour while at work, alerting you that your house is on fire. Trust the Fire Service to fail to get there or contain the fire. You rush home and find that everything has been razed down. Luckily, no life is lost, but the house that cost you some N25 million (savings and loans you've already repaid) is gone. You took no insurance. So, what will you do next?

This obviously devastating scenario was stripped of complications - like loss of lives, debt on the house, etc - but it is still a tramatic incident. The reality two is that similar experiences have afflicted many property owners. Often, because there is no insurance coverage, the individual licks his wound, painfully too. Yet, the risk of such a painful occurrence can be substantially transfered to an insurer, leaving you with the minor inconveniences that are inherent. A fire and defined events policy will give far more: cover for buildings, contents, equipment, etc and protection against other defined events, for example storm, explosion, lightning, fallen trees, etc.

2. Stolen New Car
Yes, it has happended to quite a significant number of people. I'll relate two cases that I'm familiar with. This guy (let's call him Remy) took a car loan from the employer and bought a car. The company required the car to be insured, but usually allowed the staff to get it done and submit the papers. Perhaps because Remy invested all his personal savings in the purchase, he delayed in taking the insurance. Unfortunately, the car suddenyly disappeared from where he parked it. Remy was devastated: no car to call his, but to complicate matters, a car loan to settle. Regular deductions continued on his salary, leaving him miserable for several months after. Chiji, on the other hand was luckier. Before armed bandits snatched his brand new car in just under two month's of its purchase, he had taken a comprehensive insurance cover. What a relief it was when the insurer paid him the adjusted value! He was able to replace his car shortly after. Compare the two cases (real life) and choose which you'll deal better with.

A comprehensive auto insurance may appear a waste of resources when nothing happens to the car and you're paying the premium. But think of the kind of disaster these two guys encountered. Would it be better to cope alone?

3. Food Poisoning From Your Eatery
You may not be running an eating outlet, but if you did, have you considered the huge risk you face everyday preparing meals and serving to the public? Think for a moment of a serious incident of food poisoning or other contamination (whether accidental or maliciously inflicted) which leaves many customers for the day either in the intensive care units of hospitals or cold in the morgue. A staccato of claims is sure to follow at the end. How will you cope? The big danger is that, unless the business has already accumulated massive resources or has an effective insurance protection, it may not survive the experience.

A product liability insurance is simply the shield you need to protect a business that offers consumables to the public. With growing consumer rights advocacy, some of the kinds of experiences that the public endured in the past and took no action may no longer go unchallenged. Your best bet: protect your business with the right coverage.

4. Machinery Breakdown
Your've battled as an entrepreneur to get your manufacturing outfit up and running, investing signficant amounts of your saving and loans from two trusting relatives. Fortunately, you've got a big order from a major customer. However, as you pace to deliver on time on the contract to leave a lasting impression, your equipment goes kaput. Something serious has gone wrong, putting you out of production. Because it is major in scope, immediate restoration is impossible as it needs money that isn't available. Meanwhile, one of your trusting lender-relatives has to be repaid. More excrutiating is your inability to perform on the contract, which not only damages your reputation but also exposes you to claims for damages for nonperformance.

A crises of this magnitude can destroy a man and his business, but that is only if he has taken no insurance coverage on the equipment (or heavily underinsured). A machinery breakdown or asset protection policy would just change the color of this experience, limit your losses and save you and the business from untimely demise. A tailored business protection plan may also be the tidy solution.

5. Major Personal Accident
True, nobody wants to think or talk of a personal accident. The only problem is that our roads, for instance, tell a different story - many fatal accidents occur and frequently too. Accidents occur elsewhere too. In air travel. In the stadium, market, even at home. Often serious casualties are left. That was exactly Polycap's fate when, on the way to Abuja late last year, he was involved in a major accident. He was lucky because many perished in it but he survived, miraclously. There was a price though. Severe injuries, including a damage to the spinal cord. So, he became bed-ridden, abandoning work and accumulating medical bills. Terrible ordeal it became and unfortunately, Polycap had no insurance.

A personal accident policy couldn't have prevented the accident but would have cushoned it considerably: settlement of medical bills, compensation for injuries, etc. If he had a personal disability policy (income protection plan), his loss of earnings due to incapacitation would have been compensated. A similar policy for the business could help meet running expenses to keep things afloat for some time. Similarly, those who died would have left their families in better shape if the took some form of life policy or accident plans.

6. Staff Bolts With Money Cashed for Salary Payment
A common experience, your 'trusted' staff could turn into an enemy in the house and inflict a severe, crippling loss on your business. Take withdrawing a huge sum for salary payment and disappearing with it. Many SMEs still pay salaries in cash! Besides, staff can divert sales proceeds or rob the business in many other ways. While going to Panti CID and pressing for arrest may be your response, often much of money is gone even if the culprit is eventually caught. If you borrowed money from the bank for the business, this compounds your problem. Sadly, many businesses are substantially set back or ruined by such incidents.

It is however possible to position your business against the devastating onslaugth of unfaithful staff. That's simply the turf of fidelity insurance - it provides you a coverage against staff infidelity. You fall back on the insurer in a geniune case of staff dishonesty and consequently save your business.

7. Doctor Leaves Surgey Tools in Patients Stomach, Causing Death
A painful professional error but an occupational harzard to the doctor. And it happens. Patients die from various acts of ommission or commission by professionals that easily interprete as negligence. While because of cultural orientation and religious beliefs many victims endure such without a contest, the potential liability of the practitioner to a compensation claim is obvious.

As stated , it's not only doctors that face professional risks. Other professionals do: engineers (structural design error causes a N500 million building to collapse), investment advisor (investment advice leads to a huge loss), accountants, lawyers, IT professional, archtects, etc. Depending on the incident, a professional liability claim could be of back-breaking magitude, capable of ruining a practice.

A professional indemnity policy is the armour to wear. Not as a licence for reckless, unprofessional conduct but as a protection against a geniune human error.

8. Political Thugs Break Loose and Vandalise Your Business Outlet
Maybe not even political thugs. Any crises could create problems for the innocent. And it happened to Mr Nwaokike, when a clash in the Idi Araba area some years back cost him his entire well-stocked pharmacy shop. The destruction was simply total, as if he was the subject of the crises. Though he was lucky to escape unhurt, he lost virtually everything.

Trust a Nigerian business-owner, there was no protection. It was total loss, with no remediation. Unfortunately, an insurance broker friend, he confessed, had pestered him for a coverage for the stock and equipment (airconditioners, computer, etc) in the outlet, but he couldn't see the point. As he admitted, it never crossed his mind that an incident of that magnitude was possible. With the benefit of hindsight, a tenth of the loss, he said, was enough justification for any premium he would have paid.

It Shouldn't Be You!
Weigh the odds, but it sounds pretty clear that taking some insurance that provides targeted protection remains a wise step. Big, well-run businesses get protected. Discerning individuals and small businesses also do. If your worry was the alleged underperformance of Nigerian insurers, their recapitalisation seems set to lift that performance. If you've never really given it serious thought, may be you should just ask a few more questions of the experts and weigh the pros and cons. You may just be creating a soft landing that you could need unexpectedly.