An insurance cover refers to a contract of agreement between an insured and insurer; the insurer undertakes to cover the insured on a certain risk and compensate when risk covered occurs (https://www.myrepartnere.no/). Below is some of the importance of insurance;
1. Build confidence in investors
Risk is uncertain because one can’t tell when they may occur and the extent of the loss (https://www.myrepartnere.no/nemi-forsikring/). Having an insurance cover builds confidence to the investors because they are sure that in case the risk insured occurs, they will be compensated and therefore they won’t suffer any loss. This means investors can put trust in their business and invest heavily without fearing existing risks.
2. Spread risk
Taking an insurance cover is a way of spreading the possible risk to other people. An individual or organization can take the same insurance cover with more than one company. In an event of risk covered occurring, the insurance companies will contribute proportionally towards compensation. This is the best way to ensure that you don’t suffer loss alone and thus spread it to the insurance companies.
3. Create employment
Insurance creates job opportunities for those people working in insurance companies. This is a benefit to the economy because the people absorbed by the insurance company will reduce the number of unemployed people in the economy.
4. Facilitates continuity of the business
Many businesses are unlikely to continue operating after suffering a loss. This is not the case for the businesses which have an insurance cover because they will be compensated by the insurance company. The insurance company will always compensate for the risk insured regardless of the extent of the loss or damage (https://www.myrepartnere.no/forsikringsselskap/). This move ensures that there is continuity of the business in case of a loss occurring.
5. Encourages savings
Some insurance policies like life assurance can be a scheme for saving money. This is because the premiums contributed can be later refunded which acts as a way of saving money.
Taking an insurance cover should be a priority of any business to ensure that one is well covered against any risk associated with his /her business.