As a business owner, you’ve not only put a lot of time and effort into building the business you love, but you’ve also had to become knowledgeable in a wide range of disciplines; from Accounting, to HR, IT, and Sales. One area that is often overlooked however, is Insurance.
Many small business owners and entrepreneurs find insurance very confusing with so many options, and as such may not have adequate protection for their company. Having the wrong type of insurance or not enough coverage in place can put even the most successful company out of business, fast.
The following are 6 things that you should be aware of when it comes to protecting your business.
1. Certain Types of Insurance Are Compulsory
Some types of insurance are mandatory for Australian businesses. Your insurance obligations will vary depending on your circumstances and the state that you operate in, however you may require insurance in the following situations:
- If you employ people, you may need Workers Compensation to protect your employees in the event of an accident or sickness
- If your business owns a motor vehicle, you may need to have certain types of insurance in place such as compulsory third party insurance.
- When competing for business your customers may require that you have a Public Liability Insurance policy in place
2. Your Insurance Needs Should Not Be Underestimated
Many business owners underestimate the amount of insurance that they need and can be overwhelmed by all the different coverages that are available on the market, and choose the simplest, or cheapest cover. However this can be a costly mistake … A claim where you don’t have adequate insurance in place could mean the demise of your business. Your assets should be insurance for replacement value and your indemnity period for your Loss of Profits cover should be at least 12 months
3. Consider the Specifics of Your Business
While there are core elements of insurance that all businesses should consider, there are also coverage needs specific to different business types and industries. For example, a food and grocery distributor may require a number of cold storage units in order to operate, a manufacturing plant will need immediate machinery replacement cover, while a fitness instructor may have greater liability needs.
4. Professional Advice Is Important
Every business is unique, and so are the risks that they face. Your insurance advisor is an expert in navigating the insurance market and can help guide you through the options available for your business. No one business is the same therefore a tailored solution should be provided that meets your needs.
5. Your Insurance Advisor Can Help You Long Term
To ensure that you have someone that fully understands your business and its needs you need to be able to build a long term and trusting relationship with your insurance advisor.. As your business develops, your adviser will be there to work with you to ensure that you have considered the risks and that appropriate cover is in place. Also, in the unfortunate event of a claim, they will be be your advocate and help you work through the claim to ensure you reach a suitable resolution as quick as possible.
6. Remember to Budget for Insurance Costs
It is a good idea to budget for insurance costs when you’re drawing up a business plan. In the same way that you’d budget for staff, premises, marketing or advertising, insurance costs should also be included in these costs. The cost of your insurance will vary depending on the details of your specific business. Your insurance advistor can help you with costs from a number of insurers.
Taking out Business Insurance is the best way to protect your business and ensure its continued success into the future. Contact your insurance advisor for more information.
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.