Running a small business can be a daunting task. The challenges come from all angles and money is tight. Sorting out your insurance is generally one of the least enjoyable or gratifying tasks, but probably the most important. What else could save you from a multi-million dollar compensation claim, or replace all of your stolen contents and equipment? Yet, staggeringly, around 12% of small businesses currently do not have any insurance1.
Here, we’ll give you an overview of the major insurance types and their relevance to small businesses like yours.
Public Liability - The Essential Insurance
This insurance protects the business against the financial risk of being found liable for causing damage, injury, loss or even death to a third party.
You probably see your work premises as a safe place, but any minor slip, fall or bump could place your business in a compromising financial position. You have a ‘duty of care’ to keep clients, suppliers, and any other visitors free from harm while they’re on your premises, and any breach of this could result in a claim. Public Liability insurance will also generally include Product Liability cover, and is essential for all businesses.
Professional Indemnity - For Those Selling Professional Services
This covers professionals who provide advice or a service against legal costs and claims for damages arising from any act, omission, or breach of duty in the delivery of a service.
This is a critical consideration, especially if you’re providing a professional service from home. Consultants, bookkeepers and beauticians are examples of the kind of professionals that need to think about the possibility of a client lodging a professional indemnity claim. Even if the case turns out to be invalid, ‘PI’ insurance will protect against court costs and any compensation claims that you may be hit with.
Business Insurance - Protect Your Things (And Your Income!)
Business Insurance can cover your work premises and contents against loss, damage or theft, and guard against financial loss arising from any interruption to the business.
The cover options you choose here will depend on the nature of your business and the specific equipment you wish to insure. Generally, you’ll want to protect your business premises, furniture, machinery, tools and stock with an insurance policy that includes a fair and proper valuation of all your essential business assets. Also consider Business Interruption insurance, which helps keep you afloat if an insured event (such as a fire or storm) stops your business from being operational.
Personal Accident - Cover Your Most Important Asset
If you’re temporarily unable to work due to an accident, this cover provides up to 85% of your income (up to $3,000 per week) until you’re fit enough to get ‘back on deck’ again.
Unfortunately, accidents do happen. A simple injury could put you out of action and unable to earn an income for a considerable amount of time. For more comprehensive cover you can also include Illness insurance, which would pay you the same benefit if you fell ill and were unable to work. Premiums for both are generally tax deductible.
Cyber Liability Insurance - Do You Work Online?
Cyber Liability Insurance protects against the expenses and legal costs of data breaches or hacking, including the loss or theft of client information.
As online activity become increasingly critical in business operations, hacking and data breaches become more numerous and progressively more sophisticated. Small businesses, especially, face a unique set of risks because they generally don’t have the kind of robust security systems that larger firms can afford, and are consequently highly targeted by cyber criminals. Expenses could include the cost of business interruption, data recovery and forensic investigation, crisis management and extortion as well as mandatory notifications and other legal costs.
The insurance types noted above could also be extended to include ‘Management Liability’ to protect against legal costs of mismanagement or misconduct breaches, as well as ‘Tax Audit’ to cover accounting fees in the event of an ATO audit. Business owners should also take into account their statutory workers’ compensation requirements and appropriate personal insurances.
Running a successful business can be incredibly gratifying, but ignoring your insurance needs could put your business in a seriously precarious position. Organise a balanced and appropriate set of insurance policies to protect your business and its assets now and in the future.
*BizCover provides multiple online quotes from leading Australian insurers at competitive rates. Click here to get a quote today and protect your business.
BizCover™ Pty Ltd (ABN 68 127 707 975; AR 338440) is a corporate authorised representative of Mega Capital Pty Ltd (ABN 37 098 080 418; AFSL 238549). This is general advice only.