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      Need for Insurance

Insurance has two major purposes:
  • Protection against Liabilities & Uncertainty
  • Protection against Catastrophe

Insurance needs are a minimum requirement, but a variable. It is recommended that insurance needs are reviewed once every three months as the business profile undergoes changes.

Some examples of change in needs are:
  • Substantial increase in cost, resulting in a change in asset value
  • Damages and losses resulting in depletion of assets
  • Increase in liability and risk factors due to change in activities
Since change is not a constant, change in needs cannot be prevented, but insurance can be reviewed. However, to prevent proposing multiple insurance policies at different points in time, it is recommended that the Insurance Portfolio be reviewed once in three months to cope up with the requirements.


Business expansion would mean increase in asset value under operation. Hence, the Insurance cover should also increase proportionately to protect against eventuality.

Diversification in business activities results in changes in the Risk Matrix, which evolves different financial objectives. A fine line is to be drawn between Risk Absorption and Insurance Premium to protect the business assets. Risk Management and Insurance Plans provide a fine balance between risk Coverage and Premium expenses and provides for financial protection in case of eventuality. Any increase in liability exposes the business to creditors in case of eventuality. The prime objective of increase in liability is to ensure business expansion in secured direction. The whole purpose of conducting the business being secure will be defeated if liability is not covered.

More importantly, any of these can happen suddenly, with out any prior information. A proper insurance plan if chosen correctly will ensure all these changing needs are taken care of adequately without any discomfort.