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Insurance and Small Business - What do you need to consider?

13-04-2018

As a small business owner it's important to protect your business against unforseen events such as loss or damage to assets and revenue, legal claims and injury to employees.

The right type and level of insurance is essential to business success. If your business is uninsured or underinsured it's vulnerable to major loss and may not survive  an adverse event. Instead of paying for the loss or damage out of your own pocket, it is a smart business move to transfer that risk to an insurance company. Also, it's much easier to budget for insurance premiums than to try to meet large claims as they occur.

There are many insurance products available to small business owners, so it’s vital to understand what they mean and to talk to a broker about getting the right advice for you.

Types of insurance for businesses include:

Business Interruption Insurance

If your company owns the building you operate from and it suffers major property damage (fire, flood, etc), then your building will be repaired (if insured). With changes to building codes or permits, often rebuilding isn’t as simple as you would expect, which means you won’t be able to operate your business as you would normally but will still have to pay wages, leases, government taxes and other recurrent expenses. If your business is closed down temporarily, these costs can become difficult to maintain. Business Insurance covers you for these interruptions.

Find more information on Business Interruption insurance.

Liability Insurance

You might think that your business has enough coverage, but did you know that around 70 per cent of Australian businesses go bankrupt because they don’t have adequate insurance cover? A liability risk relates to your responsibility as a business owner and your financial responsibility to others, from staff to customers to the general public. Being aware of your business’ unique risks will go a long way to ensuring you, your business and your staff are looked after.

Find more information on different types of liability insurance.

Management Liability Insurance

Australia is the second most litigious country in the world, which means that owning a company and employing people can leave you open to legal action. Intentional or unintentional contravention of Acts of parliament may lead to enormous financial and emotional costs if a company or person makes a claim against you, all of which can be transferred to an insurer to deal with, rather than you.

And when you factor in that the price of a management liability insurance premium can equal that of just one meeting with a solicitor, it’s a no-brainer.

Cyber Insurance

Did you know each person has almost a one in two chance of being affected by cyber crime? That is 5,000 times more likely than being involved in a car accident. Studies have shown that small businesses have become the number one target for cyber criminals as they’re considered easy targets. The fallout of a cyber attack can leave a business reeling financially, with many businesses failing within months of the attack. Cyber insurance can protect you financially from the consequences of a data breach. Find out more information on cyber insurance.

Fidelity Insurance

Employee dishonesty or fraud is major problem for small businesses making fidelity insurance must for any business owner. this type of cover provides financial protection for your business against the theft of property or misappropriation of funds by employees or committee members. 

These are just a few examples of the more frequently sought-after insurance policies for growing businesses. However, it’s important to remember that every business is unique, and so it’s important to check with an insurance broker if you are unsure of which policies could be useful for protecting your business. Try using the MyRisk business tool to see what risks your business might face.

 

Originally posted on KnowRisk.com.au

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