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Sep 27, 2022

Business Insurance: What Business Owners Didn’t Know in 2020

There are many ways in which businesses have suffered immensely since 2020. The global pandemic arrived in South Africa on the 1st of March 2020, and heavy restrictions on activity arrived with lockdown commencing on the 26th of March and only lifting in 2022. The post-lockdown journey of recovery was bound to be slow and challenging, but the inclusion of the July 2021 unrest and the 2022 KZN floods have put even more pressure on businesses. Effective business insurance is one major factor which sets survivors apart. So, how do you prepare for the worst-case scenario?

PetroCONNECT have put together five guidelines to help you future-proof your fuel retail business, from business insurance to environmental study of the proposed service station site. These strategies can help you create a sustainable business in the face of adversity.

The lowest price point shouldn’t win

Choosing business insurance based purely on a low premium can get a business owner in trouble. It has become essential to understand insurance better than before and to avoid the trap of making the decision purely on price-point. A short-term saving can cost immensely in the long term.

Insurance companies themselves are adjusting their strategies since paying out millions to affected companies over the past two years. After the July 2021 riots, Sasria Executive Manager Stakeholder Muzi Dladla stated that “this unrest showed us that we need to have tighter actuarial and scenario planning, like extra buffers in calculations so that we are able to withstand new emerging risks.”

Avoid underinsurance

Entrepreneurs entering the fuel retail sector need to understand that, in this industry, insurance goes beyond just the equipment. Underinsurance is a common mistake which can easily be avoided with the right strategy and guidance.

Sharon Theobald, Claims Consultant at Alan Boswell Group warns that she’s seen businesses underinsure their buildings by half, resulting in the owner needing to find the other half to cover the damage before repairs can begin. “And it isn’t just buildings where we see underinsurance,” Sharon adds. “Stock, contents, machinery and business interruption all need careful consideration to ensure the sums insured are adequate.”

Understand your business insurance policy

Business owners that were affected by the July unrest and the floods have learnt the hard way the importance of checking what you are covered for and revising the policy as assets and risks change. Owning a cash business such as a fuel station has inherent risks that the business owner needs to understand thoroughly and buy business insurance to cover.

There are stipulations in insurance policies which need to be complied with in order to be able to have a claim approved. Not only should the business owner be aware of these requirements, but staff also need to be trained to comply. This includes keeping the fuel station clean of spills which could exacerbate a fire, and maintaining security measures according to the policy.

Insuring for business interruption

According to the Allianz Risk Barometer 2022 report, the top four global business risks are cyber incidents at 44%, business interruption at 42%, natural catastrophes at 25%, and pandemic outbreaks at 22%. That indicates the necessity of insuring for business interruption, a fact brought home by the July 2021 unrest and 2022 KZN floods which halted affected business in its tracks.


To adequately insure for business interruption, it’s important to know the difference between Financial Gross Profit and Insurance Gross Profit. According to Santam, “calculating the Insurance Gross Profit based on only the uninsured costs, the rate of Gross Profit would be higher, enabling the client to pay the on-going expenses.” Ongoing expenses include staff wages, fuel retail overheads, water and lights.

Identify flood lines before you build

While you can insure for flooding, it is ideal to avoid a disaster rather than to deal with the consequences. While extreme climatic and social events are inevitable in our unstable world, fuel retailers can avoid establishing a service station which is likely to be a victim of flooding.

The environmental studies, conducted before a service station is built, should include a soil test for identifying flood lines. Geotechnical engineers are capable of identifying these types of risks, as this analysis of eThekwini geology by Dr Charles MacRobert shows.

Risk management and insurance solutions

Risk management and insurance solutions are key to running a sustainable, 24/7 retail operation in the energy industry. Dealers are regularly exposed to a myriad of business risks ranging from theft and security challenges, environmental challenges, unexpected closures or revamps of sites, card fraud, protest action, drive-offs, and public liability to name a few.

More than just business insurance, we have partnered with risk management experts to help you anticipate and proactively plan for potential challenges and risks so you are not caught off-guard.

Through our partners PetroCONNECT offers:

  • Risk management planning and consultation for service station owners and dealers.
  • Individually crafted insurance policies for service station owners and dealers.
  • Cover in death whilst in service for staff.
  • Cover for contamination, pollution, defective workmanship and public liability.

Read more about what each entails and make wise decisions for your business insurance needs.