The Seven Types of Small Business Insurance You Should Know About

As a small business owner, your business is your livelihood and something that should be protected.  You face a number of challenges on a daily basis, most of which are unpredictable and unpreventable.

In some cases, events that occur result in damage to your assets, legal claims being made against you or injury to employees, which can have huge financial repercussions.  Many businesses don’t have the financial resources to survive such an event, so a good insurance policy is imperative.

Some types of insurance are highly recommended for Australian businesses.  Depending on your operations, you should have the following policies in place:

Worker’s Compensation: If you employ staff, you must have workers compensation insurance to protect them in the event of sickness or injury. This type of insurance provides wage replacement and medical benefits to those who are injured while working, and protects your company from facing legal action following an incident.

Commercial Vehicle Insurance: Third party insurance is mandatory if you own a motor vehicle.  Other types of vehicle insurance are optional, but should be considered depending on your usage.  If your company uses vehicles to transport employees or equipment, you should consider protecting them to save costs in the event of damage or theft.  Or, if your employees drive their own cars on company business, non-owned auto liability can protect the company from being liable to pay out in the event of a collision.

Public Liability: Liability insurance covers the company in the event of causing damage or injury to another person or property.  Depending on industry, liability insurance can be optional but is highly recommended as facing legal action can be unpredictable and costly.

It also makes sense to protect your assets, revenue and liabilities against potential risks.  There are a wide variety of insurance policies available, so you should take time to consider which are for your business.  Some of the most valuable policies for small businesses are:

Property Insurance:  A property insurance policy can protect your building against damages, theft, fire or vandalism.  If you do not own your building, property insurance also covers valuable assets that you own personal property, including office equipment, computers, inventory or tools you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage etc.

Business Interruption: You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.

Professional Liability: this type of insurance is also known as Errors and Omissions Insurance. The policy provides defence and damages for failure to or improperly rendering professional services.  Your general liability policy does not provide this protection, so it is important to understand the difference.   Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, architects, hair salons and technology providers to name a few.

Cyber Insurance:  If the business stores sensitive or non-public information about employees or clients on their computers, servers or in paper files they are responsible for protecting that information.  If a breach occurs either electronically or from a paper file a Data Breach policy will provide protection against the loss.

PSC Insurance Brokers specialise in finding insurance solutions for small to medium sized businesses.  Call us today for a confidential discussion on the most appropriate cover for your company.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

How an Insurance Broker Can Benefit Your Small Business

This year’s Vero SME Insurance Index has found the number of small businesses using brokers has dropped this year to just 44%.  The report attributes this decline to the increasing use of technology and digital platforms, where more and more companies are offering easy access to business insurance policies.

Price-conscious business owners believe that by going direct to the provider, they will get the most cost effective insurance solution.  However this is most often not the case.  A trusted adviser can add value to your business that extends far beyond any initial cost saving you may find online.

Cost Saving

Your broker may charge a direct fee to cover their time and expertise in sourcing your policy, however using them is likely to save your business money in the long run.

Not only will your insurance broker obtain quotes appropriate for your business from several insurers, but they will also be able to highlight the benefits and discrepancies of each to find the most cost effective cover.  In addition, they are able to leverage their knowledge and networks in the market to negotiate a better price on your behalf, providing more strategic value to your business.

Sourcing Appropriate Cover

Standard Business packs are readily available online for a wide variety of trades and businesses.  However it can be difficult to assess whether the specific risks your business is exposed to are covered based on the information provided.  Any resultant shortcomings with the policy chosen without expert advice are often not exposed until a claim is made, leaving your business to take the financial hit.

With different policy wording, insurance solutions vary greatly in the cover that they provide.  Applying years of training and experience, a good insurance broker can make sense of the policy’s fine print and ensure your cover will withstand in the event of a claim.

Protecting your Business

Insurance brokers are best placed to assess and understand the specific risks of the sector you operate in.  They can advise on best practice for managing your business’s risks and recommend ways to reduce or eliminate them where possible.

Many risks that cannot be eliminated can be covered by an insurance policy.  Your broker will combine the risk assessment of your business with their in-depth knowledge of insurance policy wordings to find the best solutions to protect your business.

Assisting with Claims

Your relationship with your insurance broker doesn’t end with the purchase of your policy.  If you need to make a claim, your insurance broker will help you reach the best possible settlement under the policy you have taken out.  This saves the costly and time-consuming process of directly negotiating with your provider and ensures you aren’t losing any money that you should have received with the payout.

A Beneficial Relationship

Remember that your insurance broker doesn’t work for the insurance companies; they work for you and have a vested interest in the ongoing success of your business.

 

If you decide to employ a broker, you will benefit most if you develop an ongoing business relationship.  Your broker should understand your future plans, the associated risks and how you like to do business, in order to continue sourcing the most suitable, most cost-effective cover that works for you and your business.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Is your Childcare Centre Fully Covered?

Pelican’s Childcare Centre in Cairns has recently been found liable to pay compensation to the family of a 20 month old boy who severely cut his fingers on a set of tongs under their care.  After a visit to the emergency ward of Cairns Hospital, his single mother, Ms Villaflor, had to take a fortnight off work to care for her child.  Villaflor asked the Centre to reimburse her for lost wages, which the manager originally disputed.  Consequently, the company was held accountable and had to pay Villaflor’s lost wages, amounting to six days worth of pay – which was covered by their insurance company.

This example illustrates the importance of having a comprehensive insurance policy in place when operating within the childcare industry.  Whether you run a Childcare Centre, Kindergarten, Pre School, Before & After School Care, Vacation Care or Home Based Care, you should consider the variety of risks to which your business is exposed.  A comprehensive insurance policy can cover your business and staff for a number of risks, including:

  • General liability coverage that protects you if someone claims you caused their injury, and pays to defend you if you are sued.
  • Hard-to-find liability coverages, such as sexual abuse/molestation, child care providers/teachers professional, and corporal punishment.
  • Comprehensive property and business interruption cover that covers you whether you rent or own your premises, including storm, flood, theft and temporary accommodation
  • Entity liability and employment practices liability cover.

Speak to an experienced PSC Connect Authorised Representative to obtain the right insurance cover for your childcare business.  They can assess your specific needs and recommend the best value insurance solution with the highest standard of cover for your business.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Managing Small Business Cash Flow with our Partner Macquarie

Poor cash flow management is one of the leading causes of small business failure: over 60% of businesses that go bust are still profitable, but just ran out of cash.

The ongoing success of your small business is therefore dependent on your ability to manage inward and outward cash flow. Put simply, it’s important that you have enough available cash to pay your bills when they’re due. If a business makes a profit yet loses cash flow, eventually it will run out of funding.

Your cash flow is a result of your profit as well as the changes in your balance sheet, such as increase in stock or debtors. If you buy something for $120 and sell if for $200 you have made a profit of $80, but if you do not collect the money from the sale, your cash flow is zero. If you have to pay the $120 before you collect the $200, your business cash flow is actually negative $120.

That’s why managing your cash flow is so important. Some successful ways to manage your cash flow include:

  • negotiating the best terms from your suppliers
  • holding as little stock as possible (slow moving stock is dead money)
  • sending your invoicing out on time with clear instructions about when you expect your payment
  • taking payment at the time of the job; offer your clients payment options such as BPAY or ecommerce on your tablet or mobile phone
  • leasing capital equipment rather than making outright purchase.

PSC Connect Authorised Representatives care about the financial performance of your business.  With this in mind we have entered into a partnership with Macquarie, to offer an alternative way of managing your business finances.

Macquarie is a leading provider of business finance to SMEs across Australia.  There are a variety of products available to finance items of capital equipment. Macquarie Leasing can provide a choice of products depending on the nature and usage of your equipment being financed, and your individual financial and tax circumstances.

Finance leasing has a number of benefits for small businesses.  Firstly, it can reduce your risk on general banking and free up assets for future growth requirements.  Additionally, by minimising the impact on your working capital requirements, a finance lease can allow you to expand your company while protecting your business and personal assets.

Speak to us today if you require help with your business finances.


PSC Connect Pty Ltd may receive a benefit from Macquarie Bank of 0% to 3% on successful loan applications following this referral, a percentage of which is shared with the authorised representative. The borrower recognises that PSC Connect Pty Ltd and the authorised representative are not a party to the loan application and indemnifies PSC Connect Pty Ltd and its authorised representatives and employees from any claims you may have against the lender.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

How Legal Expenses Insurance Can Benefit Your Business

Being a small business owner is not for the faint hearted. With the innumerable rewards that come from owning your own business, also comes a great deal of risk.

Risks are managed and mitigated by business owners on a daily basis, from small every day issues to more serious strategic worries. One issue that faces many Australian businesses today is the pursuit of legal action against their company. Although you think that this will never happen to you, you should be prepared in the event that it does.

Reasons Businesses Are Taken to Court

Australian businesses find themselves in court for a number of reasons: 

  • Unlawful Pre-Employment Questions: Laws such as the Disability Discrimination Act make it imperative that you ask only what you are allowed to during an interview, and treat all applicants equally to avoid claims of discrimination.
  • Disciplinary & Termination Errors
    Dishonest Evaluations: Managers often play down employee’s bad performance on reviews, so when the termination occurs, the ex-employee may file a wrongful termination suit.
    Termination Errors: If due diligence is not observed, employers leave themselves open to an unfair dismissal claim in the event of a termination of employment.
  • Uninformed Staff: Supervisors and managers must be trained and updated on the full range of organisational policies and relevant workplace laws as they can be held responsible if a lawsuit ensues, causing enormous liability for the company.
  • Injury: If an employee is injured at work, you can be held accountable. This is a very real threat to Australian businesses as preliminary data shows there were 117,815 serious workers’ compensation claims in 2012–2013 [Australian Workers’ Compensation Statistics, 2012–13, Worksafe Australia].

Whether you are ultimately found to be in the wrong not, defending yourself or your business against a lawsuit brought against you can be a costly process.

Legal Expenses Insurance can be taken out by individuals or businesses to protect against the costs of defending civil and criminal actions brought about by other individuals or companies. PSC Connect Authorised Representatives specialise in Legal Expenses Insurance and can provide expert advice and assistance in this area.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Would your Insurance Endure a Natural Disaster

Late February saw Cyclone Marcia damage thousands of Queensland homes and businesses.  Now the storm has passed, those affected have begun the process of launching insurance claims so they can start rebuilding their lives and businesses.  The Insurance Council of Australia has stated that 11,250 insurance claims have already been made with the total cost of payments reaching $67 million and counting [Sky News Australia].  Unfortunately Cyclone Marcia is just one of many catastrophic natural disasters to occur in Australia in the last 5 years.

In 2011 Queensland floods affected over 5000 businesses, and the bushfires of 2012-2013 destroyed 33 properties in New South Wales and a further 170 in Tasmania.  The cost to recover from a natural disaster is huge, with many relying on their insurance policy to cover the damages.  However it is at this crucial time that many business owners discover they are underinsured, leaving them with crippling out of pocket costs.

Roy Morgan Research conducted a study after the 2011 floods in Queensland, finding that of the 88% of businesses affected by the flood with some type of insurance, only 34% of had Property Insurance and only 14% had Business Interruption Insurance.  In the event of a natural disaster, property damage and the costs incurred as a result of business interruption are likely to have the biggest financial affect on the business.  Under insurance is a trend that is all too common Australia-wide, with 80% of businesses thought to be under insured by at least 10% [Insurance Risk & Professional Report 2011].  It is essential to be adequately covered for these environmental risks, as 70% of under insured and uninsured small businesses affected by a major event such as earthquake, fire or storm will never recover [Insurance Council of Australia, 2014].

Some business owners choose to be under insured as they do not want to pay the extra premium for full coverage, however it is often more cost-effective in the long run to pay an increase in insurance than to rebuild a business in the event that disaster does strike.  Other businesses find themselves under insured as their assets have not been properly valued for insurance purposes.  Another issue is the hidden costs that are incurred after a loss that many business owners are unaware of, such as: access difficulties, lead times for demolition, legal and professional fees, site and zoning conditions and business interruption.  Your Authorized Representative can offer advice on how to best deal with these issues and manage your risk portfolio to ensure you obtain appropriate.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Are Fatigued Drivers A Risk to Your Business?

Organisations that adopt a risk-based approach to strategic planning are more likely to thrive.  Managers should control and manage the business to ensure it is properly mitigating, avoiding, transferring, and accepting risks.

When implementing their risk management plan, one risk that organisations should take in to consideration is fatigue.  According to this year’s Major Accident Investigation Report carried out by National Transport Insurance, fatigue is a major cause of serious road crashes amongst heavy motor vehicles.  This finding addresses an issue that affects businesses and business owners industry-wide.

Any company that pays employees to drive should incorporate fatigue into their risk management strategy.  From those operating machinery, to delivery and taxi drivers, the effects of fatigue present in the same manner:

  • Employee Health: Poor quality or insufficient sleep has an adverse effect on employee’s physical and mental health and can increases stress levels. When driving, this is particularly dangerous as it can result in accidents that your company may be held liable for.
  • Employee Safety: Fatigued employees have a negative impact on general workplace safety, increasing the probability of something going wrong under your supervision.  If the employee is behind the wheel at the time, damages can be severe and lead to huge costs incurred by your organisation.
  • Employee Wellbeing:  Employees are less productive and cannot operate at optimal levels when they are tired.  Driving with reduced levels of awareness puts both your employee and others at risk and can result in costs incurred through the serious injury of one or both parties.

In the event that an employee is responsible for an accident while working, the business can be held accountable for any costs incurred as a result, including property damage and injury.  It is therefore imperative that strategies are put in place to minimise your company’s risk of being affected by employee fatigue.

It is the employer’s responsibility to have strategies in place to reduce fatigue in their drivers.  For example, employers can ensure drivers are taking regular breaks, and make sure all cars and machinery adhere to the upmost of safety standards to reduce the risk of an accident occurring.

Recognising and reducing risk is vital to the success of any business.  It is important that you implement strategies to reduce risks associated with fatigue, but also have insurance in place to covers you in the event that an accident does occur.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Product Recall: Learning from Nanna’s

Australian frozen foods brand Nanna’s has made the news recently after infecting 18 Australians to date with Hepatitis A.  National Health departments have got involved and the company has had to put out a nation-wide recall for four of its frozen berry products.  However, this is only a taste of what’s to come for Nanna’s who have been operating in crisis mode since the story broke on mainstream media.

Nanna’s is set for a financially difficult time.  On top of immediate costs associated with the product recall, the brand looks to be facing a costly legal process, with Slater and Gordon law firm already gathering evidence to bring a class action against them.  The story is accelerating at pace, and the brand’s reputation is suffering the consequences.  Consumers have lost faith in the brand and are boycotting its products in favour of locally produced fruit.  It’s going to take a lot of effort for Nanna’s to regain the trust of their former consumers.

Consumers trust the brands they buy from and manufacturers have obligations towards consumers under Australian law, with a clear requirement that any goods they produce must be free from safety defects.  As is evident with the Nanna’s case, when a situation like this occurs, it sparks consumer and can quickly spiral out of control.  The effect on the business can be catastrophic.

Product Recall insurance can protect against any costs incurred in the event that your product has to be recalled and replaced with a safe one.  The Nanna’s example highlights that while the chances of occurring are minimal, the effects on your business are considerable. Protecting your business and personal assets, Product Recall insurance allows the company to continue to pursue their goals, safe in the knowledge that strategies are in place, plans are tested and potential financial losses are appropriately covered. Whatever your business situation, it is important that you have considered every possible risk as part of your insurance program as the unexpected can have an astronomical effect on the your business.

Find out more detailed information on Product Recall Insurance or Business Interruption insurance from your insurance broker.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Unfair Dismissal Claims on the Rise

A recent study has found that unfair dismissal claims have risen by 10% a year since the introduction of the Fair Work Act in 2009.  Now sitting at an average of 17,000 annual claims [Paul Oslington, Australian Catholic University, December 2014], unfair dismissal presents a considerable risk to today’s business owner.

Regardless of blame, the effect of an unfair dismissal claim on the business can be extremely damaging, both in terms of reputation and cost.  In the event that the claimant is successful, costs incurred can be irreparable.  The Fair Work Commission found that in 57% of cases where a payment of money was awarded, the payment amounted more than $10,000 [Resolving Issues, Disputes and Dismissals, 2014].

Under the Fair Work Act, claimant success rates have increased to 51%.  The outcome of unfair dismissal cases can be difficult to predict, and even the smallest oversight on the part of the business makes it impossible for them to win.  For example in Dent v Halliburton Australia Pty Ltd [2014], Mr Dent was dismissed for breaching the company’s driving safety policy when he was found speeding in a company vehicle.  The Fair Work Commission found that Mr Dent had been speeding in the company car, but concluded the dismissal was unfair as Mr Dent had not been given sufficient notice of the disciplinary meeting and was therefor denied a reasonable opportunity to respond to the allegations.  Mr Dent was awarded compensation in the amount of 11 weeks wages.

Cases like this are on the increase, so it is imperative that you and your business are covered.  Without adequate protection a claim against you and your Directors can have a significant impact on your cash flow and even personal assets.  Management Liability insurance is designed to protect you and your company against the risks and exposures of running the company. This includes unfair dismissal claims as well other claims brought against the Directors and Officers from shareholders, statutory bodies, competitors and even the corporation itself.

Management Liability is an important part of any business insurance program. Check whether your current insurance policy covers Management Liability or whether you need specialist Management Liability cover.  We have access to employment specialists, Employsure, who can review your workplace policies and provide advice and assistance on a range of employment policies and procedures. Contact us if you would like Employsure to help protect your business.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.