safety management
Managing risk

Why business insurance matters

Whether you’re a small business or large corporation, when it comes to the crunch and the unexpected happens, the right business insurance could help prevent worst outcome and help your business come out on the other side. Here are some of the most common types of insurance to consider.

The benefits of business insurance

Life is full of unexpected moments, especially in business. So when the worst happens, be it an accident, a natural disaster, or even a pandemic, a safety net may come in handy. This is where business insurance comes in. The appropriate insurance cover may protect your assets and your staff, and could potentially help you recoup actual or projected losses your business may encounter as a result of an incident.

There are many types of business insurance, so when browsing the web for options, it can be helpful to look at the most vulnerable areas of your business to see where you might benefit from having a cover. For example, through a top-level risk assessment that identifies likely threats to your business.

Types of business insurance

There are a great variety of insurance policies available for business in Australia, depending on the nature of your business and industry. Insurance companies often take into account risk factors common to your industry and bundle tailored policies as a standard starting point. This way you might be able to avoid unnecessary extras, and further tailor your coverage to suit your business.

There are a few types of business insurance that are compulsory for certain Australian businesses:

  • Workers’ compensation insurance: Under Australian law, workers’ compensation is compulsory for every employer. Each state has its own scheme but it’s important to note requirements can change. As a business owner, you’re responsible for remaining aware of any adjustments.
  • Compulsory third-party insurance: This is compulsory if your business practice includes owning and operating motor vehicles. The requirements are specific to each state. You can access the information through your licensing centre.
  • Public liability insurance: This refers to protection for compensation or legal costs incurred as a result of your own error or negligence. However, there are nuances to this type of insurance you may need to be aware of. As such, it may be helpful to talk to an insurer or broker to understand what you need. 

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Some other common business insurance types include:

  • Building and contents insurance: This covers damages to your place of business and its contents, but make sure to understand policy limits. Depending on your policy, only certain events and damages may be covered.
  • Professional indemnity insurance: This one focuses on legal costs and compensation resulting from inadequate service or arguably harmful advice provided by your business. There are different kinds of indemnity protection insurance, too, so be sure to do your research.
  • Equipment insurance: As the name suggests, this type of insurance typically covers equipment essential to your business. There are various types, such as those covering machinery breakdowns or electronics, but as always, it pays to read the fine print. For example, if you insure electronic devices through electronic equipment insurance, they might replace them when damaged, but might not cover losses incurred from hacking. Here, a cyber insurance policy could be a good complementary choice.
  • Directors and officers (D&O) insurance: This type of insurance is designed to protect the assets of corporate directors and officers if they’re sued by employees, customers, vendors, competitors, shareholders or other relevant parties.

Business insurance can be complicated. But with a little time and research, you will gain a better understanding of what insurance you might need for your business. An insurance broker might also be able to help take the stress out of finding the right insurance for your business.

Just remember to constantly review your insurance policies as your business grows – and always read the fine print.

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Disclaimer: The guidance provided is general in nature. The guidance is factual information only and is not intended to be financial product advice, legal advice or tax advice and should not be relied upon as such. The guidance has been prepared without taking into account your personal objectives, financial situation or specific needs. Before acting on any guidance you should consider the appropriateness of the guidance having regard to your objectives, financial situation and needs. Before making any decisions, it is important for you to consider these matters and to seek appropriate financial, legal, tax, accounting and other professional advice. 

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