Life Insurance

Cover the Biggest Asset Your Business Has: YOU

While many business owners understand the importance of a comprehensive insurance program, most Australian business owners are less likely to understand that a life insurance policy is equally important.

According to a Rice Walker Actuaries estimate, the cover held by those with life insurance through their Superannuation represents only 20% of the cover needed to support their families. In fact, 60% of people with dependant children only have enough life insurance cover for less than one year if they were to pass away.

The people who work for you depend on you for business continuity and so do yours and their families. Often small business owners have much of their assets tied up in their business, and a smooth transition helps ensure that the business continues to be an asset your family can rely on.

The people who work for you depend on you for business continuity, and so does your family. Often small business owners have much of their assets tied up in their business, and a smooth transition helps ensure that the business continues to be an asset your family can rely on.

What does life insurance cover you for?

Small businesses arrange life insurance for a number of reasons. It can be used for issues ranging from ensuring the daily operations of your business if the owner dies, to buying out a director or partner’s share from their family, or to providing income to help find a replacement for a key staff member.

  • Personal life insurance. A personal life insurance policy is usually held separately from policies associated with your business insurances. Personal coverage provides protection in the event of your death to help your family financially.
  • Key person insurance. Business owners may take out individual policies on key staff such as partners, executives or staff who significantly affect your company profits. Policies should be owned by your business and cover the cost of replacing that staff member, as well as any potential lost revenue in their absence.
  • Buy-sell agreements. Life insurance can be used to fund a buy-sell agreement, where the surviving business partners buy out the shares of a deceased partner at a previously agreed-upon price. The life insurance policy covers that agreed cost and is usually outlined in a contract among the owners of your business.

How to choose the right life insurance policy

You can choose from a wide array of life insurance products dependant on your company’s specific needs and size.

Much like business insurance, different policies have different covers and benefits so it is important to seek advice from a professional who can work with you to advise on the right life insurance option for you.

 

PSC Connect works with life insurance specialists who can advise you on what life insurance options will work for you. Contact us if you would like to know more.

 

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 Insurance Claims

5 Most Common Small Business Claims: How To Protect Your Business

Australia’s biggest business insurer, CGU has recently released information on the 5 most common small business claims. The report examined their Business Pack claims and identified Theft & Burglary, Storm Damage, Property Damage, Machinery & Equipment Breakdown and Liability as the biggest risks to Australian businesses.

To avoid unnecessary cost and potential disruption to your business you should try to minimise the chances of these losses occurring . By knowing these common business risks, you can take steps to minimise your risk exposure.

1. Theft & Burglary

In order to prevent a theft or burglary on your premises it’s important to make sure your business is as protected as possible. There are several ways that you can do this. First and foremost, you should ensure you have fixed security systems in place as well as lighting in exterior and interior areas in order to deter trespassers. Ensure your business is not an easy target for thieves by securing all doors, windows and other access points when the business is unattended. Anti-theft policies should be put in place and all employees educated on these processes.

2. Storm Damage

Storm damage is a huge cause of insurance claims for Australian businesses. While you can’t control the weather, there are certain things that you can do to protect your business from this risk.

It’s important to understand the geography of your area, specifically considering storm damage risks such as the proximity of surrounding trees, and elevation for storm water run-off. Drainage systems should be maintained and cleared of all material that may have built up over time While the geographical location of your business may not be easily changed, if you are aware of potential dangers you can reduce the chance of a storm having a severe impact on your business. For example, any overhanging tree branches should be trimmed back, other loose objects should be secured, and outdoor equipment should be anchored.

3. Property Damage (Accidental & Malicious)

Property damage, both accidental and malicious, can result in significant costs to your business. The best ways to protect your business from this risk are similar to the above suggestions, in terms of ensuring your business is secure and in good repair. To ensure the continuing operation of your business, it’s important to maintain your premises and proactively repair any small issues before they become bigger ones.  Waste material should be removed from the premises and not left to build up against an exterior wall.

4. Machinery & Equipment breakdown

The majority of businesses these days rely on certain pieces of machinery and equipment in order to operate effectively. When these items do not work properly, it can have a significant impact on the business.

In order to minimise the risk of your machinery or equipment breaking down, you should be proactive in implementing regular checks and ensuring maintenance is up to date. All equipment and machinery should be properly stored, with electrical connections clear of dust and obstructions. Remember that all pieces of equipment should only be used in the way they were intended, and should only be operated by experienced and trained operators.

5. Liability

Liability claims are some of the most unpredictable and distressing claims that a business may face. They arise as a result of a third party sustaining injury or property damage from an activity associated with your business. These situations are difficult to plan for and can be catastrophic in terms of impact. Minimising risk can be difficult, however there are certain steps that you can take to reduce the risk of a liability claim. Ensure walkways and floors are kept dry and clear of tripping hazards at all times with adequate lighting to prevent slips, trips and falls. Furthermore, any dangerous areas of your business should be restricted to the public. This includes places that house machinery or hazardous materials. You should also have systems in place to ensure you and your employees handle clients’ property with care and diligence.

While all business owners should consider the above steps, a comprehensive business insurance policy can ensure your business is adequately protected. Speak to your insurance advisor to ensure that you have the right cover in place.

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.

Tax Audit Insurance

How to Sail Through a Tax Audit

The possibility of being subject to a Tax Audit is increasing every year. If your business finds itself on the receiving end of an audit, you’re likely to face substantial disruption to your operations and incur significant costs. The entire process of a tax audit can be an incredibly intimidating for SMEs, which is why most business owners panic at the mere thought of it.

However, there are however several things that business owners can do in the coming financial year to save time, money and stress in the event that they are audited.

Be Organised

First off, it’s important to be organised. Ensure your business documents are filed appropriately, so that you have easy access to all of your financial records exactly when you need them. It helps to have a system for employees to follow and a specific place for filing receipts and important documents, as well as any passwords for accessing online documents that you may have.

A potential consideration is to use a cloud-based accounting software program. There are several solutions available that allow you to take a picture of an expense and upload it automatically, which not only saves physical storage, but also the hassle of searching through paperwork and receipts that you need for tax purposes.

Hire a Professional

Small business accounting can quickly become complex if you try to do it on your own, so a good accountant or bookkeeper is often a smart investment. An accountant will typically save your business far more than they cost, and they will be able to carry out a range of tax related tasks. Some of the things an accountant or bookkeeper may be able to do for your business include:

  • Keeping you up to date with the latest tax laws
  • Preparing annual statements of accounts
  • Keeping your company’s status updated in the government’s company register
  • Maintaining records of directors and other administrative personnel
  • Dealing with payroll and ensuring that all employees’ tax codes and payments are recorded correctly

Having a record of all of the above will come in handy in the event of a tax audit.

Take Out Tax Audit Insurance

Research conducted by First Class Accounts showed that 48% of business owners had no idea that Tax Audit Insurance existed. However in the event of a Tax Audit, an appropriate policy could save your business thousands of dollars.

In the event that your business finds itself subject to a Tax Audit, costs can accumulate quickly. Having to engage the services of professionals such as accountants, bookkeepers and lawyers can be expensive; Tax Audit Insurance is relatively inexpensive in comparison and will cover the professional fees that arise from an audit.

We can give you more information on Tax Audit Insurance and whether it may be an appropriate option 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.

Insurance Brokers

Insurance Brokers: Your Best Friend at Claims Time

Without an insurance broker on your side, making an insurance claim can be complex, frustrating, and time-consuming. To make matters worse, you have to do it all at the worst possible time, after an unforeseen event has negatively impacted your business. While you’re trying to rebuild your business and recover from the event itself, you don’t want to be filling out forms and waiting on hold while claims staff deal with your request.

However, if you purchase your insurance through a broker, you don’t have to go it alone.

Insurance Brokers don’t simply find your cover and leave you to it; we work with you and your business for the long term, ensuring you always get the most out of your insurance cover. In the unfortunate event that you have to make a claim, we really come into our own. The following are just some of the ways that your broker will help you when it comes to claim time.

We Act on Your Behalf

Using a broker helps to alleviate some of the stress at an undeniably difficult time. We are your first point of call at the time of a disaster and will communicate with the insurer on your behalf throughout the process. We will keep you informed for the duration of the claim and act as an intermediary between you and the insurer so matter is resolved as quickly and easily as possible. We work for you, not the insurer, and as such, will work hard to secure the best possible outcome for your business.

We Know the Claims Process

Completing forms and collating the necessary documents and information required to support your claim can seem overwhelming. Your insurance broker will help you throughout the process, from helping complete claims information to lodging the claim and ensuring you receive the payment you are entitled to. Furthermore, in most cases Insurance Brokers have more experience than the average insurance company claims representative, which can only work to your benefit.

We Know Insurers

We speak the same language as insurers. We also work hard to develop strong relationships with the insurers that we work with, which means we know how to get the best possible outcome from them. We know each policy inside out, and apply our expert knowledge to every claim. If the claim is disputed, we know how to best resolve the issues and have more bargaining power to negotiate with the insurer on your behalf.

We Ensure You are Protected in Future

Once you have been appropriately compensated for the damage you suffered that meant you had to claim in the first place, your insurance broker will ensure you have the correct cover going forward. We will also be happy to carry out a business risk assessment and advise you of ways to minimise your chances of further losses in the future.

Using an Insurance Broker who understands the complexities of your policy and who is familiar with the claims process makes claims time quicker, more efficient and considerably less stressful for business owners facing a difficult time.

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.

Tax Advantages

Tax Advantages Have A Down Side

The Federal Government passed new laws in 2015 to allow small businesses (with an aggregated turnover of less than $2M) to claim an immediate deduction for the cost of each and every depreciating asset that they purchase costing less than $20,000 up until 30 June 2017.

In this year’s budget, announced on the 3rd of May, the Government raised the threshold to $10M, meaning even more businesses will take advantage of this ‘accelerated depreciation’ incentive, which is designed to help small businesses invest more, grow more and employ more.

96% of all Australian businesses are small businesses, and it’s likely that many of them are already taking advantage of these Government initiatives.

Are Your Business Assets Constantly Changing? 

These Tax Advantage measures are designed to incentivise small business owners’ spending, which means that the business assets are likely to grow.

It’s common for business owners to forget to contact their insurance adviser each time they purchase a sizeable asset, which means they are likely to find themselves underinsured.

What is Underinsurance?

According to CGU, brokers estimate between 70-80% of businesses are underinsured, which could result in huge losses for them when trying to rebuild and repair after damage to their business.

Underinsurance occurs when a policy provides inadequate cover to the policyholder. For example, if a business property is valued at $1 million on the insurance policy, then the business expands and the property becomes worth $1.5 million, the business is not covered for the appropriate amount. The policyholder is often unaware of such as discrepancy until the event of a disaster, when they find themselves having to payout the amount that is not covered by the policy.

This often results in a significant financial burden, sometimes so great that the business can’t survive. Policyholders are often underinsured due to improper guidance or planning, but there are steps you can take to avoid underinsuring your assets.

How to Avoid Underinsurance

As a small business owner, your business is your livelihood and should be protected. There are certain steps you can take to ensure you don’t fall into the underinsurance trap:

  • Assess Costs Accurately: Ensure your insurance cover represents the true value of the business including buildings, equipment and assets. Your policy should also allow for the cost of rebuilding and recovery, which is known as the replacement value. Don’t try to lower your premium by insuring only a percentage of the replacement value as this can cause financial trouble if disaster strikes.
  • Keep Up to Date: If you make any improvements in your business, renovations or acquisitions, it’s important to notify your broker or your insurer to ensure that the sum insured is kept up to date.
  • Speak to Your Broker: Accurately valuing your business requires a number of considerations and can be extremely challenging to get right. Your broker specialises in advising businesses of their risk exposure to ensure they are not underinsured.

With new tax advantages, it’s likely that your business will be constantly evolving and growing over the coming years. It’s important that your insurance is reassessed as changes occur, to account for these new developments.

We can help ensure your business is adequately covered and you don’t find yourself in the difficult position of being underinsured when it counts.

 

This article references information from the ATO website, please click here to view the content in its entirety:

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Small-Business—expanding-accelerated-depreciation/

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.

Self Managed Super Fund

Changes to Insurance Laws for SMSFs This Financial Year

Did You Purchase Personal Assets Through Your SMSF?

They may not be insured under your standard home and contents policy from the 1st of July 2016.

There are major changes regarding the laws around SMSFs that mean personal use assets must be insured separately by 1/7/2016 including personal use assets acquired prior to 1 July 2011.

The following assets owned by an SMSF are subject to this requirement:

  • Artwork – including paintings, sculptures, drawings and engravings
  • Photographs
  • Jewellery
  • Antiques
  • Artefacts
  • Coins, Medallions or Bank Notes
  • Postage Stamps or First-Day Covers
  • Rare Folios, Manuscripts or Books
  • Memorabilia
  • Wine or Spirits
  • Motor Vehicles and Motorcyles
  • Recreational Boats

The changes to the laws around SMSFs mean that any of the above assets cannot be covered under a home and contents policy, group policy, master policy or business policy.  These items must be insured separately and in the name of the SMSF, prior to the 1st of July 2016.

It’s important to act now to avoid penalties for non-compliance.

We have knowledge in this area and will be happy to advise you on how to best cover your assets.  We have connections with specialist Underwriting Agencies that deal with all of the above categories to ensure we can source the most appropriate cover for you.

Contact us for more information.

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.

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.