Getting insurance for small business

Insurance is essential for most businesses.  Without insurance, an accident or disaster can mean the end of your business.  Insurance premiums can be very steep, so make sure you budget for insurance!

The Main Types of Insurance for Small Business

Revenue and Assets Insurance – this really is insurance designed to protect against damage to your livelihood.  This includes insurance for content damage, stock deterioration, loss of profits, employee theft or destruction to electronic equipment.

Personal Accident and Illness Insurance – this insurance exists to protect you if you get sick, injured or become disabled, includes – income protection, trauma, and permanent disability insurance.

Public Liability Insurance – is insurance which protects against you being sued by the public (e.g. if someone comes into your shop, slips and falls).

Professional Indemnity Insurance – this is generally insurance to cover people whose business is to provide people with advice or a service (e.g. an accountant or doctor).

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.  Investigate them carefully so you understand what they cover and so you can determine which type of cover is appropriate for your business.

Worker Compensation Insurance – you have to provide injury insurance for all your employees through an insurer approved by the relevant statutory body in your state or territory.

Picking an Insurer

When getting insurance you can either 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.

Set out below are a number of factors to look out for when choosing an insurer and signing an insurance contract:

  • Does the insurer have a limit as to how much money they will pay  in the event of a claim?
  • Is an excess payable?
  • Are there any exclusion clauses?
  • What are the conditions for ending the contract?
  • How do I challenge an insurer’s decision I don’t agree with?
  • How are premiums calculated?
  • Is the broker or insurance agent licensed?
  • Does the broker or insurance agent have experience with businesses similar to yours?
  • Make sure all quotes are made in writing

Learn to Manage Your Own Risks

Insurance premiums can be a substantial financial burden on your business.  There really isn’t an alternative to insurance, but you can minimise your exposure and premiums by managing your own risks.

You can do this by:

  • Identifying potential risks (ask yourself what do you anticipate could happen which would lead to an insurance claim).
  • Consider ways to manage those risks.
  • Act to prevent accidents.
  • Collect information about risks and consider this in future decisions about your business.

What Kinds of Risks do I Need to be Aware Of?

Of course, this really depends on what sort of business you are in – though insurance claims usually result from the following types of risks:

  • Workplace accidents.
  • Natural disasters.
  • Financial risks, such as changes in broad economic conditions.
  • Faulty IT systems.
  • Poor record keeping.
  • Changes in the market.
  • Staff illness.
  • Not complying with legislation such as taxation obligations.

A good business lawyer should be able to put you in touch with a good insurance broker to go through your business needs in more detail.

 

Lachlan McKnight

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