Reading time: 4 minutes

Insurance is essential to help you manage your business risk, hand-in-hand with good contracts and good business practices. Do you know what insurance your business may need? This article sets out the main types of business insurance for you to consider, provides assistance on choosing an insurer, and gives practical ways to minimise your business risk.

The Main Types of Insurance for Small Business

The main types of insurance for small business are as follows:

Public and Product Liability Insurance – to cover your business for liability to a third party (such as a customer) who might claim for an injury caused on your property. Examples of events which are covered include a client sustaining an injury on your premises, property damage you may cause to clients’ property on their premises, and personal injury to people using products manufactured or altered by your business.

Professional Indemnity Insurance – to cover professional services businesses e.g. an accountant, doctor or designer.

Revenue and Assets Insurance –this includes insurance for content damage, stock deterioration, loss of profits, employee theft or destruction to electronic equipment.

Worker Compensation Insurance – you need to provide injury insurance for your employees through an insurer approved by the relevant statutory body in your state or territory. This should also cover you if you work in your own business.

Motor Vehicle Insurance – you must insure all business vehicles for injury liability to third parties. There are a range of business motor vehicle insurance options such as compulsory third party, third party property damage and comprehensive.

Fire and Perils – to cover your business for damage caused by accidents or faulty equipment, including fire and flood.

Income Protection Insurance – to cover you if you are unable to work due to illness or injury.

Death and Permanent Disability Insurance – Life insurance provides a cash lump sum in the event of death. Some policies pay on the diagnosis of a terminal illness. Total and permanent disability insurance is usually an optional extra on a life insurance policy and covers against a permanent disability.

Choosing an Insurer

How will you choose insurance? You can go directly to an insurance company, your bank or building society, or you can go through an insurance broker. You will be required to disclose all relevant information to the insurance company when you make an application.

Here are some issues to consider when choosing an insurer and signing an insurance contract:

  • Does the insurance broker or agent have experience with businesses similar to yours?
  • Is the insurance broker or agent licensed?
  • How are insurance premiums calculated?
  • What can you do to reduce premiums?
  • Do premiums reduce if you do not make claims?
  • What is the maximum payout for a claim? What is it per item? What is it in total?
  • Is an excess payable?
  • Are there any exclusion clauses? How do these relate to your business?
  • How can you or the insurer end the contract?
  • How do I challenge an insurer’s decision if I don’t agree with it?

Manage Your Own Risks

You can manage your business risk, and minimise your insurance premiums, with practical steps including the following:

  • Identify potential risks. Consider all the steps involved in delivering your product or service. What could go wrong? Can this be minimised?
  • Consider ways to manage those risks.
  • Do you have clear policies and procedures so your staff know how to perform their roles?
  • Train your staff in safe work practices to help prevent accidents.
  • Keep equipment and machinery well maintained to help prevent accidents.
  • Have contingency plans. For example do you have another location that you can work if your premises are flooded or destroyed in a fire? How is information stored? It may safer to store it in the cloud/remote servers rather than on your premises.

A business lawyer can help you identify business risks and can put you in touch with an insurance broker to go through your business insurance needs.

Webinars

Construction Contract Essentials

Thursday 12 August | 11:00 - 11:45am

Online
Understand how construction contracts are drafted and how to protect your construction business.
Register Now

Startup 101: Understanding Cap Tables and ESOPs

Thursday 19 August | 11:00 - 11:45am

Online
Cap tables and employee share option plans are essential for fast-growing startups. Learn more with this free webinar.
Register Now

Expanding to NZ: Structuring Your Business For Success

Thursday 26 August | 2:00 - 2:45pm

Online
Launching a business in New Zealand? Understand how to structure your business for success with this free webinar.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards 2021 Law Firm of the Year - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer