Running a small business is exciting. But it comes with its challenges and the 2 + million actively trading small businesses in Australia would likely agree.
Getting insurance is generally one of the least enjoyable parts of owning a business. But it’s also very important. Can anything else save you from multi-million dollar compensation claims, or replace your contents?
It’s also a complex and confusing experience if you’re unaware of the cover that you need. In this guide, we’ll demystify the 5 major insurance types that your business should consider.
Public liability protects your business against the financial risk of being found liable for causing damage, injury, loss or even death to a third party.
You may believe your workplace to be a safe place. But a small slip or fall could potentially leave your business struggle financially.
You have a ‘duty of care’ to keep clients, suppliers, and any other visitors free from harm while they’re on your premises, and any breach of this could result in a claim. Public Liability insurance will also generally include Product Liability cover, and is essential for all businesses.
This covers professionals who provide advice or a service against legal costs and claims for damages arising from any act, omission, or breach of duty in the delivery of a service.
Are you providing a professional service? If so, Professional Indemnity is critical for your business. Some professionals, such as Tax Agents, must hold professional indemnity cover by law.
Whether you’re a beautician, accountant or consultant you need to consider that a client may lodge claim against you. Even if the case turns out to be invalid, ‘PI’ insurance will protect against court costs and any compensation claims that you may be hit with.
Business Insurance can cover your work premises and contents against loss, damage or theft, and guard against financial loss arising from any interruption to the business.
Every business must consider different cover options here. And it will depend on business activities and equipment you need to insure.
In most case, small business owners want to protect their premises, stock, tools and machinery. Business interruption insurance should also be considered. This will help cover your expenses if an insured event, such as a fire, stops your operations.
If you’re temporarily unable to work due to an accident, this cover provides up to 85% of your income (up to $3,000 per week) until you’re fit enough to get ‘back on deck’ again.
Accidents happen, and it’s often out of your control. A simple injury could leave you unable to work. In turn, unable to earn an income for a considerable amount of time.
For further coverage you could opt to include illness insurance. This can pay you the if you fell ill and were unable to work. Premiums for both are generally tax deductible.
Cyber Liability Insurance
Cyber Liability Insurance protects against the expenses and legal costs of data breaches or hacking, including the loss or theft of client information.
Most businesses are now operating online to some degree. As activity increases small business become more exposed to hacking and data breaches. Small businesses are at greater risk due to less sophisticated security systems.
Expenses here could include the cost of business interruption, data recovery and forensic investigation, crisis management and extortion as well as mandatory notifications and other legal costs.
Other insurance types to consider that are not mentioned above include management liability. This can protect against legal costs of mismanagement or misconduct breaches. Also tax audit insurance to cover accounting fees in the event of an ATO audit.
Small business owners should also take into account their statutory workers’ compensation requirements and appropriate personal insurances.
To run a successful small business is a rewarding experience. Failing to meet your insurance needs could put your business in a detrimental position. Organise a balanced and appropriate set of insurance policies to protect your business and its assets now and in the future.
BizCover™ Pty Ltd (ABN 68 127 707 975; AR 338440) is a corporate authorised representative of Mega Capital Pty Ltd (ABN 37 098 080 418; AFSL 238549). This is general advice only.