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What is Business Insurance?

Business Insurance* is an insurance package that you can customise to suit your business’s needs, and is designed to provide cover for your business contents, stock, tools and commercial premises when an insured event occurs (such as fire, storm, theft or even accidental damage).

A Business Insurance package can also cover your portable equipment, glass and for loss of revenue due to business interruption in specified circumstances.  In addition, cover is available for public liability, tax audit, employment practices liability and statutory liability risks.

The best part is, there are so many cover options available, so you can tailor a policy to protect against the issues that your business may be most likely to face.

Why is Business Insurance important?

Regardless of the industry, you’re in, the size of your business, or how long you’ve been operating, running a business of any kind involves a certain amount of risk. Business insurance transfers that risk to the insurer and can protect you against financial loss, which is an important part of being a responsible business owner.

Life is full of surprises – some good, others bad. Unfortunately, you can’t predict when things go wrong and could affect your business. It could be fire or storm damage; accidental damage; malicious damage; or theft. It could also be legal action taken against you following a third property suffering injury or damaged property.

If your business is not insured the effects could be financially crippling to your business and could in some cases lead to the closure of your business for good.

This is where business insurance can provide protection and peace of mind. Having the appropriate type of insurance and level of cover can help you get back up and running sooner after suffering a loss caused by an insured event like fire or flood.

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How much cover do I need?

When choosing your level of insurance cover you need to consider the following:

  • Legal or contractual requirements – for example, do you require a minimum level of Public Liability cover for a contract you are servicing, for a board that you are a member of, or for leasing a property?
  • How much is your stock, property and premises worth?
  • What are the potential risks and how much would it cost to get your business running as normal? Hint: think worst-case scenario and work back from there.
  • How much could it cost if any action is taken against you? Be sure to consider legal and defence costs, as well as compensation costs.

As your business grows you may need to think about whether to increase your level of cover as the potential for something to go wrong could also increase.

What cover options are available?

Businesses have the option to insure against a range of risks to protect their property, assets and finances, which can make choosing the right types of business insurance confusing. To help make it easier, here are some of  the different types of cover more commonly taken out by small businesses:

Cover Options Details
Public Liability* This covers legal fees and compensation costs if a customer, member of the public, or a supplier claims against you for injury or damage to their property as a result of your alleged negligent business activity.
Building* Covers your building if it is damaged as a result of a fire, storm, malicious activity or another defined event listed in the policy.
Contents* Covers your business contents or stock if they are damaged in a fire, storm or due to malicious damage or some other defined event listed in the policy.
Theft* Theft insurance can cover your contents, stock or specified items from theft, attempted theft or armed hold up.  It is not uncommon for theft insurance to require the item stolen to have been securely stored before the theft and for there to be evidence of forcible entry in the commission of the theft.
Glass* Covers for breakage of internal and external glass and signage you own or for which you are legally responsible, at the insured premises.
Business Interruption* Covers for financial loss as a result of an interruption to your business caused by an insured event.

Other types of cover that you may want to consider, depending on the kind of business you operate and your business activities, are:

Cover Options Details
Machinery Breakdown* Machinery breakdown insurance covers the cost to repair or replace specified machinery following a breakdown.  You can also choose to insure the additional costs to your business or business interruption expenses caused by a breakdown of machinery.
Electronic Equipment* Electronic equipment insurance covers the cost to repair or replace specified electronic equipment following a breakdown.  You can also choose to insure the additional costs to your business or business interruption expenses caused by a breakdown of electronic equipment.
General Property/ Portable Equipment* Portable equipment or general property insurance can cover specified items such as tools, business equipment or electronic items.
Money* Money insurance protects your business money from loss or damage whilst on your premises or in transit.
Employee Practices Liability* Employment Practices Liability (EPL) Insurance is designed to help employers minimise the risk and potential cost of claims taken against them by employees. Covered claims may relate to allegations of discrimination, unfair dismissal and sexual or workplace harassment.
Statutory Liability* Protects you, your business and your employees against certain unintentional breaches of some Australian laws. It will also cover the costs of representation related to investigation costs for alleged breaches, as well as defence costs, and fines or penalties payable following a conviction.
Tax Audit* Covers for accountants’ fees incurred in connection with an audit by the Australian Taxation Office.