How can you determine the essential insurance you need for your unique business?
Your aim is to balance minimising risks with maximising profit. Insurance helps small and medium-sized enterprises by mitigating threats, offering financial support and paving the way to sustainability. Having the right insurance also builds business credibility in the eyes of your customers, contractors, suppliers and other stakeholders.
The Government’s business website has some helpful information as a starting point.
Biggest risks to today’s businesses
Risks and threats to your business can be universal or relative, and both can be tackled with a risk management plan you continuously update. Your package of insurance policies plays a key role in that plan.
These are the top issues for businesses, according to sources, including a recent Forbes survey range from the insurable to the uninsurable:
- Data breaches
- Staff shortages
- Natural catastrophes, including those due to climate change
- The continuing pandemic
- Poor inventory stock
- Burnout of staff, management and leaders
- Navigating changes in laws and regulations
- Inflation
- Financial crisis
- Failure to innovate.
Brief overview of the most important insurance types
General liability offers public and product liability coverage for claims of third party injury or property damage due to business activities. Copyright infringement and reputational harm can also be covered by such a policy.
Professional liability is covered by professional indemnity insurance. It can help cover legal costs for contract breaches and businesses that have given negligent advice or service, such as improperly auditing a company’s accounts or medical malpractice.
Product liability protects your business liability should your products cause property damage, injury, death or nervous shock to a third party. This is cover for selling, supplying or delivering goods, including repairs or services. Product Liability is generally included in a General Liability Policy. Learn more about this policy type from the Australian Competition & Consumer Commission.
Directors and officers insurance (D&O insurance) is designed to protect the directors and officers of a private and/or public company for alleged wrongful acts including claims of mismanagement, for example breach of fiduciary duties, of the company.
Commercial property provides cover for loss of or damage to your premises, technology, equipment and inventory. If you lease your premises, this coverage may be a requirement of your rental agreement. This policy can also be called business property or commercial building insurance. For small and medium sized businesses the insurance is usually included in a Small Business Insurance package policy covering a number of different events and contingencies. Larger businesses usually take out Industrial Special Risk (ISR) Insurance which is a wide coverage business insurance policy that provides cover for a range of loss scenarios or damage done to high value physical assets including property, buildings, materials and machinery.
Motor vehicle and fleet insurance aims to cover business vehicles: company cars, commercial vans and trucks. Motor Fleet Insurance is ideal for businesses that have typically more than 15 commercial vehicles, with coverage options available to suit a wide range of needs. Your options include comprehensive cover for damages from fire, theft, vandalism, flood, and covered perils. Workers’ compensation is compulsory if you have staff and covers your workers and you for the financial liabilities due to work-related injury or illness. Find out more about the law in your state or territory from the Fair Work Ombudsman.
Business interruption, also known as business income insurance, aims to protect you against financial losses due to an insured peril disrupting your operations. It helps to meet costs such as business loan repayments, staff salaries, rent or mortgage of your business premises and taxes. Often this is included as a Section in your business property insurance policy.
Cyber insurance gives you considerable peace of mind should cyber incidents cause your business financial losses. You can opt for first-party and/or third-party coverage.
Your next step
That’s a lot of types of business insurance to consider! Rather than take out separate insurance policies, you can consider a customised package which often works out cheaper.
Speak with us for insights into policy inclusions and exclusions. We’ll help ensure your insurance is in order because accidents and disruption happen.