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.

bushfire insurance

Prepare For More Devastating Bushfires

Australians are being warned to prepare for another devastating bushfire season this year, particularly in New South Wales, Tasmania and Victoria.

A new report by the Climate Council warned the length and severity of the bushfire season is increasing year on year.

“Record-breaking heat and hotter weather over the long term in NSW has worsened fire weather and contributed to an increase in the frequency and severity of bushfires,” the report said.

The report linked the intensity and length of the bushfire season in Australia to the impact of climate change, stating extreme fire weather has increased over the last 30 years and will only get worse in the future.

NSW was declared a state of emergency in October 2013, with areas in the Blue Mountains and Central Coast up in flames and more than 100 fires burning across the state. Early estimates suggest the cost of damages from the bushfires would be more than $180 million with 768,000 hectares of land affected, destroying 279 homes, with two people losing their lives.

This year will be no exception, with NSW firefighters battling 90 blazes in August this year and 55 local councils declaring the start of bushfire season well before the start of summer.

Meanwhile, the Tasmanian Fire Service has warned that a number of inner-city areas are considered bushfire risk hotspots this summer.

The economic cost of bushfires in Australia is also devastating, with an estimated cost of $337 million per year, with that cost expected to reach $800 million annually by mid-century, the report said.

The legal profession are encouraging homeowners and businesses to check their insurance policies to make sure they are adequately covered if disaster strikes.

Checking your insurance policy now and better understanding your legal rights, could save heartache and financial stress down the track.

“Our lawyers have found that if people had checked their policies each year before the extreme summer weather kicked in, they could have avoided some of the problems they faced when making a claim.” said Legal Aid Queensland CEO, Anthony Reilly.

People who are insured should check their policies and ask themselves:

  • Am I up to date with my payments?
  • Does the sum insured on my building cover the total rebuild cost?
  • Do you understand the BAL rating (Building Attack Level) and how it affects your property?
  • Do I know where my policy is?
  • Does my policy really cover what I think it covers?
  • What can’t I claim for under the policy?
  • Are there maximum amounts or limits I can claim?

If you can’t answer these questions then you need to speak to 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.

cyber insurance

Insurance issues for 2015: Cyber, Terrorism & Climate Change.

A survey has found that cyber attacks and terrorism represent the two biggest emerging risks to the reinsurance industry in 2015.

The survey, by Guy Carpenter & Company in the United States, found that 40% of those polled ranked cyber attacks as the most threatening emerging risk of 2015, while 31% labelled terrorism as the biggest risk for the coming year.

Third place went to climate change; with 29% of the reinsurance professionals surveyed noted the changing environment as the biggest emerging risk.

Andrew Marcell, Managing Director of Guy Carpenter, said of the survey: “Cyber attacks are one of the most serious economic and national security challenges facing not only the insurance industry, but governments and businesses around the world.”

Jaydon Burke-Douglas, Specialty Risks Practice Leader at leading Cyber insurer, DUAL Australia commended:

“Cyber risks are definitely real. The majority of claims that we’re seeing aren’t actually coming from some computer hacker sitting at their computer stealing your data. The majority of the claims that we are seeing are coming from really quite straight forward human errors like someone leaving their laptop on the train or accidentally sending client lists to everyone in their address books.”

Mr Burke-Douglas added, “One trend that we are seeing is the increase in attacks against SMEs. For example, 61% of targeted spear-phishing attacks were aimed at SMEs in 2013.”

In another study undertaken in Australia by Ernst & Young, fifty-one per cent of Australian companies lack the agility, budget and skill to mitigate known vulnerabilities and successfully address cyber security. The survey outlines that 80% of companies believe they face an increased cyber threat. For the first time in 17 years, the survey reveals that the biggest threat is posed by external forces such as ‘hacktavists’ and criminal syndicates.

Interestingly, despite the widespread media attention, only 19% of survey respondents saw the threat of natural disasters as the leading threat to growth thanks to a relatively calm year for disasters around the world.

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.

santa business insurance

Is Santa covered this Christmas?

Far, far away in the North Pole, Santa was worried. With the busy Christmas period coming up and an ageing workforce of elves and reindeers, would this be the year something went wrong?

Santa had the same insurance for years now after a recommendation from his good friend, the Easter Bunny. But it has been year since he had sat down with his broker and gone over his insurance and his business risks.

For a busy and successful small business, Santa is typical of most business owners: “We are all busy — sometimes too busy — especially around the holidays, and I don’t have time to look at my insurance, it should be okay.” Is what I hear a lot.

If Santa was worried, he really should be looking at his insurance policy more regularly. As an insurance specialist, I’d be recommending Santa check the insurance for his North Pole operations:

  • Products & Public Liability – Santa builds and distributes toys to children all around the world. No other business has the same reach as Santa, yet he probably hasn’t updated his public and product liability cover. If one of his overworked elves makes a defective toy, Santa could be sued for compensation as a result of an injury to that child.
  • The elves’ tools — Santa should have employees’ tools coverage under his property insurance for the extra small equipment his workers bring to the workshop. While the North Pole doesn’t get many visitors, he should check his limit provided for theft under the property form.
  • Reindeer insurance — These are expensive livestock that Santa should insure against mortality, loss of use and major medical. If Rudolph breaks a leg Santa needs sufficient cover to make alternative arrangements.
  • The sleigh — This should be covered by an inland marine policy (like a cargo truck). As Santa used the sleigh to send his toys and goods to multiple locations, Santa needs to cover these valuables all over the world.
  • Business interruption — Santa works year-round to get ready for Christmas. Losing the workshop for just one day could make a difference between December 25 and December 26. Business interruption insurance would ensure that Santa has enough cash on hand to make sure he meets his obligations, continues to employ the elves and could set up a temporary facility at the South Pole.

Just like Santa, every business has specific risks that need to be reviewed regularly by an insurance expert. Like Santa, next time you think you’re too busy to properly review your insurance, remember that your family, staff and customers rely on you whatever may affect 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.

social media and employees

Anti-Social Media and your employees

Employers are to expect the very best from their employees but what if employees don’t act on good faith, trust and fidelity and don’t have the best interests of their employer at heart? The number of unfair dismissal claims has increased due to employers not having appropriate policies in place to set the boundaries for employees when it comes to appropriate use of social media.

Examples range from employee rants on social media, approaching public forums to voice unfavourable information and even speaking out to journalists about their work.

Technology and access to many media forms, especially social media sites, is easily available. Employers need to protect their business against negative publicity. This can be achieved by;

  • Having clear employee contracts;
  • Media policies which prohibit employees from making public comments, or leaking information to the media;
  • Social media policies in place which clarify disciplinary action for sharing harmful information or identifying employer or company name;
  • Internal channels available for employees to voice complaints

These procedures protect employers from being ridiculed in the media and help avoid unfair dismissal claims.

When it comes to social media let’s remember that employees have a right to ‘social justice’ but is it not appropriate for an employee to engage in conduct that damages the reputation of an employer. All employees must have a fair and acceptable social presence online and in the office.

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.

 

business interruption insurance

Why business interruption insurance matters

The majority of Australian small businesses choose to go without Business Interruption insurance – but that’s often because they don’t realise the implications and the risk they’re taking on.

While small business owners are aware of the need to insure their property, equipment and stock, most do not protect themselves from the potentially crippling impact of being temporarily out of action.

If something happens that triggers your insurance policy such as a fire or malicious damage, there is a high likelihood that your business operation will be ‘interrupted’ and this will cut your profitability – often drastically.

What is Business Interruption insurance?

In simple terms, Business Interruption covers you for loss of profits. While your income may stop after an accident, storm, fire or other ‘event’, many business expenses will continue.

A small amount of property damage will often cause a significant disruption, turning your profitable business into one that’s operating in the red. What’s more, it can be many months before you’re profitable again.

It’s not uncommon for the Business Interruption component of an insurance claim to be greater than the cost of repairing the physical damage. Many small business owners do not appreciate just how expensive it can be to have their trading interrupted – even for a short period. By the time they realise, it’s too late.

What does Business Interruption insurance cover?

Apart from lost income, Business Interruption can also cover the increased cost of working that is normally incurred as a result of the accident or event that has impacted your business.

This could be the cost of relocating to a temporary property while repairs are done, paying overtime, hiring equipment and additional temporary staff costs as you try to make up for lost time. It can also pay for advertising to tell your customers that you have just moved around the corner or that you are now ‘back in business’.

In other words, it covers costs you would not normally incur and that are necessary in order to get your business back to where it was before the event.

Indirect impact

Business Interruption not only covers interruption from events that impact your business directly, it also includes events that have an indirect impact.

A common example is if you operate in a shopping centre and there’s a fire in another part of the centre and that means customers cannot access your shop. Although your shop didn’t have the fire, your Business Interruption cover can be triggered and protect your profit.

While Business Interruption is almost universal for larger companies, the majority of small businesses in Australia elect not to take out Business Interruption insurance. Operating without Business Interruption insurance is a serious risk.

Your best business decision was to go into business. Having Business Interruption insurance is an investment worth considering as it can help put you back in business if things go wrong.

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.