Natural disasters in India caused INR 3.2 trillion in damages between 1990 and 2016. Only 11 to 12% of those costs were covered by insurance. Small business owners in poor areas tend to be particularly affected by these disasters. When these entrepreneurs can’t keep their businesses running, communities suffer. As they can’t access the supplies they need for survival. In this case, microinsurance may be able to help.
A survey of close to 5,000 small business owners was undertaken in Guwahati, Assam; Puri, Odisha; and Cuddalore and Tamil Nadu. As per the survey, between 81 and 96% of respondents said they’d been affected by disasters. In both Guwahati and Puri, about a third of respondents had their businesses damaged. Whereas in Cuddalore, 96% of respondents experienced damage. If you own a business, these numbers may be shocking to you. You may be wondering what you can do to protect your livelihood.
When disaster strikes, many business owners like you have to rely on savings accounts or expensive loans. In other cases, you may have to close your business and forgo basic personal necessities. To avoid this eventuality and protect your finances, you may want to look into microinsurance.
How Does Microinsurance Work?
Microinsurance works just like regular insurance but on a smaller scale. When you’re earning money, you make small payments to the microinsurance program. Then, if disaster strikes, the insurance program helps you cover your costs. Some options include :
– the Afat Vimo microinsurance scheme in Odisha State and
– the national agricultural insurance scheme available throughout the country.
You may also want to look for programs in your area. Or search for other types of insurance that meet your specific needs.
To track your insurance payments, look into cloud-based accounting software like QuickBooks. The right software can help you budget to ensure you always have enough money to cover your payments.