A quarter of Small Businesses would not survive if they had to shut their operations for 3 months

A recent survey of nearly 500 small businesses found that one in four would not survive if they had to close their doors for three months. The survey found that a quarter of small businesses would have to shut down if they experienced a business disruption such as a major fire or storm. Perhaps the most striking finding was that 1 in 7 businesses did experience a shortfall in income because of a business interruption in the past 12 months.
(CGU Blog, January 14, 2016)

Business Interruption Insurance makes sure that the financial position of your business returns to where it was before the loss. Your insurer will assess your profits and turnover and factor in seasonal variations and trends for an understanding of your potential loss after an insured event.

In order to be eligible for Business Interruption Insurance:

  • You need to have a property policy in place
  • The damage incurred must be of the type that would be covered under that property policy

Business Interruption Insurance also covers elements that you may not have even thought about. If you have suffered a major interruption to your business, you might also find that you need to spend extra money to get back up and running. For example, there’s the additional rent you might have to pay for temporary premises, or the costs of employing additional staff to assist in the clean-up process.

Business Interruption Insurance can:

  • Give you peace of mind. Business Interruption Insurance provides the safety net you and your family need should the unthinkable happen.
  • Keep you afloat while you wait for plans to be drawn up or council permits to be approved when rebuilding.
  • Cover the costs of finding and fitting new premises as well as advertising costs incurred to let your customers know you have moved and when you’re fully open for business again.
  • Ensure you are able to continue to pay and retain key staff while the business gets back on its feet.
  • Cover interruption costs to your business such as suppliers not supplying, key customers unable to purchase your goods, or when power or gas outages limit your ability to do business.

While Insurance can be complex, but there are six keys to understanding Business Interruption Insurance cover:

1. It Provides Indemnity Cover with an Indemnity Period

This means that Business Interruption Insurance is designed to put your business back into the same financial position had the damage to your business not occurred. The cover starts from the date of the loss and extends to the time when your profit levels have recovered to pre-loss levels (called the ‘indemnity period’).

2. It Covers for Loss of Gross Profit

Business Interruption Insurance covers you for loss of your Gross Profit during the indemnity period. However, it’s important to remember the definition of Gross Profit under a Business Interruption policy is different to the standard accounting definition of Gross Profit, as this definition can impact the calculation of the amount of lost profits you can claim.

You should carefully consider your gross profit – is your business growing? will revenue and profit grow over time? Is your revenue particularly seasonal? This could affect the calculation of insurance profit.

Does your business have expenses or costs that are fixed and do not vary with sales? In other words, despite covering your gross profit, some expenses may be fixed no matter how much income you earn and you may wish to specifically cover for the amount of these expenses rather than simply cover your business for estimated Gross Profit.

This is a complex area for many business owners and we recommend you seek advice from your insurance broker or accountant.

3. There Must be Damage which Causes a Loss

Business Interruption insurance is designed to respond in the event that there is damage to your business property through an event such as fire, storm or earthquake that is covered under the policy. Business Interruption insurance covers loss in Gross Profit that results from the impact to your trading or operations as a result of these damages to property or assets.

4. Consider Additional Increased Costs of Working

Business Interruption Insurance can also cover additional costs that you may incur in order to get your business up and running after damage. For example, you might need to spend money on additional rent for temporary premises or additional wages for people to assist with the clean-up of your business after a fire or storm.

5. Loss of Rent for Commercial Property Owners

Business Interruption Insurance is also important for Commercial Property Owners. If you have tenants, Business Interruption cover will insure for the loss of rent that you experience if tenants are not able to occupy the premises while the clean-up and repair process is underway. With rent, do not forget to ensure that the outgoings are also insured. If the tenant has the right to temporarily cease paying rent, they will also have the right to cease paying rates, land tax and any other outgoings. If these are not insured as part of loss of rent, then as the landlord you will have to meet the ongoing outgoings yourself.

6. Beware of Underinsurance

Business Interruption cover is subject to underinsurance or co-insurance clauses. This means that if you under insure, even in the event of a partial loss, you may be deemed to be carrying some of the risk yourself and the Insurer will require you to bear a portion of the claim.

Every Business Interruption cover is different. While the principles above are generally true across most policies, you need to research and determine what policy and coverage best suits your needs. It’s a complex area so we suggest that you seek advice from a professional to help point you in the right direction.

Your PSC Connect Authorised Representative can answer any queries you have, or provide you with more information on Business Interruption Insurance.

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.

Protecting Your Business: Weighing Up Your Options

Being in business involves risks, no matter what industry you operate in.

As a business owner, when it comes to managing your risk and protecting your business, you have three main choices:

  1. Accept the risk and its consequences.
  2. Manage the risk to reduce or eliminate it.
  3. Take out insurance to protect your business against the risk.

1. Accept the Risk and its Consequences

The first strategy brings with it serious risk as most businesses couldn’t survive the financial loss in the event that the worst does happen. Without taking steps to reduce risk, it is more likely that your business may be affected.

Most business owners protect their business with a combination of the second and third strategies. They insure against the major risks they face, while also taking active steps to reduce, minimise and eliminate risks.

2. Manage the Risk to Reduce or Eliminate It

Risk management involves identifying, assessing and treating risks that could potentially affect business operations. The first step to doing this is to make a risk management plan detailing your business’ strategies for dealing with each risk in order to reduce the likelihood of an incident affecting your business.

It’s important to remember that risk identification and management should not be a one-time practice and your business’ risk management plan should be regularly monitored and updated in order to ensure effective control measures are in place for existing, new and developing risks.

3. Take Out Insurance to Protect Your Business Against Risk

Insurance can help to protect your business against risks that cannot be completely eliminated. There is a wide range of policies available on the market, however the most appropriate for your business will depend on your specific circumstances, such as the products / services you provide, the number of employees you have and the risks that your business is exposed to.

Some common policies to consider include:

  • Public Liability Insurance: Protecting your business against financial claims if you or an employee is found liable for the death or injury of a third party, or damage to their property through negligence. For example, if a customer is injured on your premises. 
  • Product Liability Insurance: Insurance covering any legal action arising from death, injury or damage caused by a product that your business manufactures or markets.
  • Professional Indemnity Insurance: Providing personal protection against claims that arise as a result of professional advice you’ve provided.

There are many other covers available on the market that may be appropriate for your business. Speak to your insurance advisor about how to best 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.

Data Privacy and Your Business: 6 Essential Tips

Any business that deals with customers, suppliers, or contractors has to store certain pieces of necessary information on these third parties. Most businesses will store personal information such as email addresses and physical addresses as well as phone numbers and credit card data, and depending on the industry they operate in, sensitive information may also be held such as medical records or detailed financial information.

This data is subject to the Australian Privacy Principles detailed in the Privacy Act, 1988, and as such must be protected. The following tips can help you ensure your data stays secure to minimise your business’ risk of a liability suit.

1. Create Internal Privacy Policies, Processes and Procedures

Processes and procedures should be put in place so that managers and employees alike understand how to handle personal information. Regular privacy training should be provided and updated as technology, laws and business infrastructure continues to evolve.

By ensuring that all staff follow these internal processes and procedures, you are able to manage and mitigate the risk of a data breach incurring expenses for your business.

2. Appoint Someone to Be Responsible for Privacy

While everyone in the company has a role to play in ensuring data privacy is respected and protected, a member of staff should be appointed to ensure the policies and procedures are adhered to. This person will have overall accountability for privacy, and assume responsibility for:

  • understanding the Privacy Act and how it relates to the business
  • dealing with data access and correction requests, as well as any complaints or enquiries about data handling practices
  • handling issues with privacy processes and procedures reported by other members of staff

3. Only Collect the Information You Need

Don’t collect personal information because you think that it may become necessary or useful at a later date. Only collect enough information necessary for the current task, and if it turns out that you do need it later, it can always be collected then. Remember, you can sometimes conduct your business activities without collecting personal information.

4. Be Especially Careful With Sensitive Information

Under the Privacy Act, sensitive information is given a higher level of privacy protection, and business owners have additional responsibilities if they collect, use or disclose it.

There are several different types of sensitive information that you should be aware of, including an individual’s:

  • racial or ethnic origin
  • religious beliefs or affiliations
  • sexual orientation or practices
  • health
  • genetics
  • biometrics

5. Only Access Personal Information on a Need-to-Know Basis

As a general rule, business owners and employees should only have access to personal information that is necessary to fulfil their role or function. By limiting the personal information that you and your staff access, you can protect the information from unauthorised access, use or disclosure and minimise your business’ risk.

6. Create a Data Breach Response Plan

In the event of a breach, a quick response can substantially decrease any potential impact on the business. In order to ensure you respond quickly and appropriately, have a data breach response plan in place and make sure all managers and employees are familiar with it.

 

Your business can be protected from a privacy breach. Speak to our advisors today about which insurance options are available.

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.

Read more about how Cyber Insurance can mitigate the risks related to Data Privacy Breaches.

Insurance Terms

9 Insurance Terms & Products All SME Owners Should Know

According to the 2015 DNA of an Entrepreneur Report [Hiscox], 1 in 5 entrepreneurs don’t know if they’re insured against the most common SME business risks.

Most industries have their own vocabulary and use distinctive words to convey specialised meanings, from doctors to architects, accountants, and lawyers. Insurance is no different in its use of key terms. However, unlike other industries, most people (especially business owners) will at some point come to have firsthand experience with these terms, which is where the confusion begins.

It’s therefore vital that as a business owner, you have a basic understanding of the most used insurance terms. If you are aware of the following terms, when it comes to renewal time, you’ll be one step ahead. The more you educate yourself about the insurance vocabulary, the more adept you’ll be at determining the type and scope of the coverage necessary for your business.

All SME Business Owners should know the following Insurance Terms & Products

1. Business Pack Insurance (BusPack): A policy that groups several types of business insurances together in a relatively simplistic one-sized fits all policy. Bundles may include property insurance, public liability insurance, business interruption insurance, or other combinations of insurance.

2. Business Interruption Insurance: Business Interruption Insurance is designed to protect your business from loss of income or expenditures sustained as a result of direct loss, damage, or destruction to your insured property.

3. Certificate of Insurance / Currency: The document issued by an insurance company that is used to verify the insurance coverage under the specific conditions granted to listed individuals. It will list important information with regard to the policy such as the effective date, the type of insurance cover purchased, and the types and amount of liability.

4. Named Insured: A common insurance term is ‘named insured’. Named insured is any person, firm, organisation, or any of its members specifically designated by name as an insured. Others may also fall within a policy but will be distinguished as unnamed.

5. Public Liability Insurance: Public Liability Insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or economic loss resulting from your negligence.

6. Premium: The insurance premium is the amount of money that an individual or business must pay in return for transferring those risks in an insurancepolicy.

7. Professional Indemnity Insurance: Professional Indemnity Insurance is designed to protect professionals against legal costs and claims for damages to third parties, which may arise out of an act, omission or breach of professional duty in the course of their business.

8. Property InsuranceInsurance that covers loss or damage to assets, including equipment, inventory, or other real property owned by a policyholder.

9. Underinsurance: Underinsurance refers to the circumstance where a business has a form of insurance in place, but it does not offer complete financial protection. In the event of a claim, this results in the underinsured business incurring out-of-pocket expenses to bridge the gap in cover.

It’s important to know exactly what you’re getting when you pay your premium. Your Authorised Representative can provide you with further information or explanation.

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.

Mistakes with Insurance

5 Mistakes SMEs Make With Their Insurance

Insurance can be complicated for today’s small to medium-sized business owner. With so many priorities to juggle, insurance often isn’t at the forefront of their mind, which can result in mistakes. The following are some of the most common Business Insurance mistakes we’ve come across:

1. Not Buying Insurance At All

This is the biggest mistake a business owner can make with their insurance. In some cases, the business owner may think that the benefit doesn’t justify the cost or maybe they don’t realise that they need coverage.  What these business owners may not realise is that even if you operate under strict rules and meet all your obligations, certain circumstances can occur without warning that will have a negative impact on your business. Without insurance, you will have to absorb the financial impact yourself, which may be significant enough to put you out of business.

2. Buying the Wrong Insurance

There is a wide range of insurance policies available on the market to protect you and your business against a variety of risks. Each contains complex fine print, clauses and conditions, which can be difficult to understand. Business owners who don’t work with an insurance adviser to help them assess their risk and secure the most appropriate cover to protect their business run the risk of having to absorb costs that are not covered by the policy in the event of a claim.

3. Buying Inadequate Coverage

Some business owners that do purchase insurance often don’t buy enough to cover their potential losses.  In this case, the mistake often isn’t realised until it’s too late and the business has to make a claim, which can leave them significantly out of pocket. In the event of a claim, having inadequate coverage is only slightly better than not having any coverage at all.

4. Misunderstanding Terms of Coverage

Business owners who buy the right amount of the right coverage can still have problems with their insurance if they don’t take the time to understand what is excluded from their policy.   Most business insurance policies have certain exclusions, which business owners may not realise that they’re not covered for until the time of a claim.

5. Thinking Going Direct is cheaper

In the Australian insurance market, there are a wide variety of cheap direct insurance policies available that are pitched as attractive options to the busy business owner. However going direct is not necessarily cheaper. A good insurance adviser can negotiate cost effective insurance pricing for SME customers and will recommend policies that suit your occupation or industry. Furthermore, direct insurer products are often more general and have more exclusions to allow for ‘cheaper’ pricing. In the long run, if the cheap policy doesn’t cover your needs, it may well be the most expensive mistake you make when a claim is not covered.

A professional insurance adviser can help you avoid making these mistakes with your insurance. Your adviser can make sure that you get the most appropriate cover for your business, and ensure your business is fully protected.

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.

Insurance Comparison Websites

The Shortcomings of Insurance Comparison Websites

Insurance comparison websites are pitched to today’s busy consumers as a convenient and simple way to buy financial products online. However, these sites have come under increasing criticism of late.

Comparison websites were the subject of a 2014 report conducted by the Financial Conduct Authority. The report found that these sites were not meeting the requirements of delivering fair and consistent outcomes for consumers. Furthermore, the report warned that most consumers had some misconceptions about the services they provided. In reality, these sites have various shortcomings.

Comparison Sites Prioritise Price Over Cover

According to the Financial Conduct Authority, price comparison websites are breaking regulatory rules by prioritising price over cover in many cases. Business owners looking to cut costs may use these websites to find a cost-saving insurance solution, however in the event of a claim, policyholders risk having to foot the bill if the cover does not meet their needs.

When it comes to purchasing insurance, it is important for consumers to understand that not all products are the same and the cheapest product may not always be the most appropriate fit for their needs.

Comparison Sites Can Be Vague

In some cases, Insurance Comparison websites do not provide clear information on basics such as the terms of the policy, the cover it provided, and the excess that is payable by the policyholder in the event of a claim.

As a result, the policyholder may end up with insufficient cover, which most likely won’t be noticed until the event of a claim, where the business may incur huge unexpected costs.

Comparison Sites Are Not Necessarily Cost-Effective

Some comparison websites fail to disclose certain fees that policyholders would have to pay such as policy cancellation fees, or fees associated with making adjustments to the policy part way through the policy period. The Financial Conduct Authority found that certain comparison websites had even charged customers for changing their address before the expiry of a policy.

Many businesses are put off using an Insurance Broker as they think that a comparison website will be more cost-effective. However, often this is not the case, as insurance brokers have in-depth knowledge of the insurance market, as well as the ability to negotiate with Insurers on behalf of the business. In the event of a claim, you are also less likely to incur unexpected expenses, as your broker will have thoroughly advised you of the costs that may be incurred at the time the policy is taken out.

Without the right insurance in place, your business may not survive an unexpected disaster. Trying to save money in the short term can result in huge losses long term. Don’t take the risk!

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 Pack Insurance

What is Business Package Insurance and Do I Need it?

As the owner of a small to medium-sized business, it is particularly important to be careful when evaluating your business insurance needs due to the potential financial impact in the event of a loss. In today’s volatile business environment however, risks are increasingly diverse and complex, which makes it difficult to find insurance that will fully protect your business.

Common risks faced by today’s business owners include:

  • Financial Risk: The risk that your business will not be able to meet its financial obligations.
  • Security Risk: The risk of fraud, theft, embezzlement, or misdirection of funds.
  • Property Risk: The risk of flood, fire, storms or earthquakes causing damage to business property.
  • Legal Risk: The risk of your business facing legal action from customers, suppliers, employees, competitors, investors, or other parties.

Business Pack (or Buspack) Insurance is a common insurance package that provides cover for a wide range of risks. However, it is a complicated insurance as it has many features that are designed to help protect your assets, employees and customers from these risks by offering financial support if an unforeseen circumstance negatively impacts your business.

What is Business Pack Insurance?

Business Pack Insurance provides a wide range of insurance protection for your business. It protects companies from losses that may occur due to unforeseen events during the normal course of business operations.

A typical Business Pack will combine a wide range of insurance types such as coverage for property damage, financial loss, legal liability and some employee-related risks.

Does My Business Need Business Pack Insurance?

Business Insurance is vital for SMEs across Australia. For many people, their business is their livelihood and their main source of income or assets. Protecting your business from the range of risks that can negatively impact or even cripple it is critical.

You should consider insuring your assets, revenue, and liabilities to protect your company against potential risks. A Business Pack Insurance policy will ensure you meet these requirements, as well as protecting your business for other circumstances that pose a risk.

Business Pack Insurance is important for businesses regardless of their size or industry; from sole traders to owners of Small to Medium sized businesses, you should have an insurance policy that protects you against everyday risks.

Why Choose Business Pack Insurance?

A Business Pack comprises the most common insurances you need to run your business with peace of mind. By ‘packaging’ your business insurance you can potentially cover many of the risks your business faces in the one policy. Furthermore, by grouping and underwriting several risks together, insurers may offer better premiums and terms than if individual policies were purchased.

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.

Small Business Risk Management Tips for 2016

According to the recently released Allianz Risk Barometer, 2016* businesses are less concerned about the impact of traditional industrial risks such as fire and natural catastrophes, and are increasingly worried about the impact of fierce competition in their markets and cyber incidents.

The risk landscape is changing and it’s more important than ever for small and medium sized businesses (SMEs) to be aware of all the risks they are exposed to. The key to surviving today’s challenging commercial environment is to effectively manage your business risks, both traditional and evolving.

What is Risk Management?

Risk management is a process in which businesses identify, assess and treat risks that could potentially affect their business operations.

As a business owner, you must decide how much risk you are able to take in your business. While taking some risks may be critical to the success of your business, exposing your business to certain perils can be extremely harmful.

Making a Risk Management Plan

Once you’ve identified the main areas of concern in your business, a risk management plan is essential. The plan should detail strategies for dealing with each risk. Reduce the likelihood of an incident affecting your business by devoting adequate time and resources to your risk management plan, and follow the following steps:

1. Identify Your Risks: Conduct a review of each function in your business to identify the potential risks that may occur, particularly those which could have an impact on your ability to continue operating to a satisfactory level. Analysing records of previous safety incidents or complaints can also help to identify issues and be sure to consider external risks that could have an impact on your business, e.g. suppliers and the political climate.

2. Assess the risk: Once you have identified the risks that are most likely to affect your business, each one should be assessed to establish the likelihood of it occurring and the consequences it would have if it occurred. A Risk Analysis Matrix can help you to determine the level of each risk and your business’ ability to manage each individual risk. The Risk Analysis Matrix encourages you to consider the following for each risk:

  • Adequacy of existing controls
  • Consequence rating
  • Likelihood rating
  • Level of risk
  • Risk priority

Click here for more information on this topic, and a practical Risk Management Matrix that you can use in your business.

3. Manage the risk: Managing risks involves developing cost-effective options to deal with them. Risks can be eliminated, reduced (usually through development of policies and procedures), transferred (via insurance), or accepted. Look at all the risks that your business is exposed to and decide the best way to manage each. An insurance broker can assist you to find insurance policies that will help cover those risks that cannot be minimised or avoided.

4. Monitor and review: Risk identification and management should not be a one-time practice. Your risk management plan should be regularly monitored and updated in order to ensure effective control measures are in place and insurance cover is adequate. New and developing risks should also be incorporated into the risk management plan as they occur.

*Allianz Risk Barometer 2016: http://www.agcs.allianz.com/assets/PDFs/Reports/AllianzRiskBarometer2016.pdf

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 Insurance

Melbourne Tyre Fire Highlights Importance of Insurance

The year got off to a bad start for a recycling plant in Melbourne’s West, when a pile of tyres caught fire, causing a plume of toxic black smoke to billow 50 metres into the air.

The fire started shortly before 9am on Monday the 11th of January at a recycling plant in the industrial area of Broadmeadows where over 150,000 tyres caught alight and water bombers had to be called in to help extinguish the blaze. Despite efforts to contain the fire it continued to burn for several days and affect the surrounding suburbs.

While there were no reported injuries or damage to surrounding property, the incident is likely to incur significant costs for the recycling plant, which is now embarking on a huge clean up mission. From fire and theft, to legal liability, natural disasters, economic uncertainty, and technological risks, this incident shows that disaster can strike at any time.

If an unforeseen circumstance does impact your business, as the business owner you are often left exposed to a number of costs that have not been planned or accounted for. Most businesses would struggle to cope with an unexpected financial hit, and may be forced to cease operations either temporarily or permanently. With appropriate Business Insurance in place, this can be avoided.

Business insurance can protect your company from losses incurred as a result of events that occur during the normal course of running a business. Insurance can cover many different aspects including property damage, legal liability, consequential financial loss and employee-related risks.

In order to obtain the most appropriate business cover, your insurance needs need to be evaluated based on the risks your company is exposed to. A company’s risk exposure varies significantly based on a number of factors such as the industry you operate in, the number of employees you have and the types of goods or services that you provide.

Effectively assessing your business risks and the types of coverage available to you from different insurers and policies can be overwhelming. This is particularly important for the owners of small to medium sized businesses, who are more likely to have more personal financial exposure in the event of a major loss.

We have the experience and expertise to help you make sense of it all and we can recommend the most appropriate cover to fully protect your business and assets. Speak to us about making sure your Business Insurance is right for your circumstances.

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.

 

Management liability insurance

Management Liability: Learning from the Office Christmas Party

After the Christmas break, there are inevitably a few employees coming to work red-faced after their behaviour at the office Christmas Party. While you may consider these issues to be between your employees, as a small business owner, you can be held responsible for the actions of your staff at a work function.

The month of January brings with it an increase in the likelihood of a workplace claim arising from inappropriate conduct at the office Christmas Party. Harassment, sexual harassment, bullying, discrimination, and workplace health and safety issues are common complaints.

Under anti-discrimination laws, the employer can be held vicariously liable for the actions of its employees in relation to harassment, sexual harassment or discrimination committed ‘in the course of employment’. Employer-sponsored events such as the office Christmas Party falls under an events that occurs ‘in the course of employment’, but it’s also important to be aware that employers are responsible for the conduct of their employees at all work related events, both on and off-site. This includes unplanned and spontaneous events that may occur, for example, after a client meeting.

Ben Thompson, CEO at HR consultancy firm the EI Group warns that employers have been found to be liable for an employee’s inappropriate conduct at work-related events. He advises the potential cost of claims against the business for the drunken actions of a staff member could be in excess of $10,000.*

It’s important for employees to be aware of this risk and take reasonable steps to minimise the chance of it occurring, for example:

  • Ensuring that employees are made aware that responsible and respectful behaviour is required by all attendees at any work event, formal or informal
  • Advising employees that unplanned and spontaneous functions or events may also be work related and therefore workplace policies and rules apply
  • Sending an email to all employees prior to any organised event to remind them of their responsibilities and to refresh them on relevant workplace policies
  • Providing training where required to enable employees to adhere to workplace policies and behaviour standards
  • Making employees aware of the consequences of failing to adhere to the policy
  • Ensuring the responsible service of alcohol and making sure food and non-alcoholic drinks are available at all work-related functions you organise.

While these procedures may minimise the risk of this occurring at your workplace, the possibility always remains that an employee will act out with the guidelines and leave your business in the firing line.

A Management Liability policy helps to protect your business against risks of this nature, but it’s important to have a solid understanding of what you are seeking coverage for first. We can help you make sense of the policies available and ensure that you purchase the appropriate product for your business needs.

* Source: http://www.hcamag.com/ ‘Avoid Christmas Party Liability’ [Published 15th November, 2011]

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.