When you’re running a business it’s important to insure against events that could severely impact it financially. Not insuring means the business could actually fail under the burden of financial pressure if one of the insurable events occurred. Even if you already have insurances for your business, you might want to have a look through the list below to see if there’s anything you might have missed.
Before you dive in thought, I believe it’s important to research all of the options carefully using the services of a good insurance broker and financial planner. Here is a list of the types of insurance that are essential to many businesses.
Assets & Revenue Insurance
To protect your assets and your livelihood, you should consider these insurance types.
It is compulsory to insure all company or business vehicles for third party injury liability. Many different types of policies are available, so make sure you understand the options before making a decision.
- Compulsory third party (injury)
- Third party property damage
- Third party, fire and theft
These insurance options are not compulsory but some or many of these insurances could be important for your business.
- Building and contents
- Business interruption or loss of profits
- Deterioration of stock
- Electronic equipment
- Employee dishonesty (Covers losses resulting from employee theft or embezzlement.)
- Farm insurance
- Goods in transit
- Machinery breakdown
- Tax Audit
- Property in transit
Insuring yourself and your employees in the event of a workplace accident or illness is essential for protecting your business against costly compensation claims. Some of these insurances are compulsory to most businesses.
You must provide accident and sickness insurance for your employees – workers compensation – through an approved insurer. Workers compensation is covered by separate state and territory legislation.
Personal accident and illness
If you are self employed you won’t be covered by workers compensation, so it’s recommended by law that you cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for loss of revenue while you or your employee(s) recover.
As a business owner, you may also wish to consider personal life insurance. There are several types of life insurance available. Some are investment-type funds where you contribute over a certain time and get back your investment plus interest earnings at the maturity date. Others are designed to cover things that could happen to you, such as:
- Income protection or disability insurance – covers part of your normal income if you are prevented from working through sickness or accident.
- Trauma insurance – provides a lump sum when you are diagnosed with one of several specified life threatening illnesses.
- Term life insurance or whole of life cover – provides your dependents with a lump sum if you die.
- Total and permanent disability insurance – provides a lump sum only if you are totally and permanently disabled before retirement.
If you own a business, you may be liable for damages or injuries to another person or property. Though liability insurance is optional in most cases, it is strongly recommended for businesses in all industries as the likelihood of being sued for negligence is unpredictable and potentially very costly. Types of liability insurance you may need to consider include:
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.
Professional indemnity insurance protects advice-based businesses from legal action taken for losses incurred as a result of professional negligence. It provides indemnity cover if your client suffers a loss – material, financial or physical – directly attributed to negligent acts, errors or omissions.
If you sell, supply or deliver goods, even in the form of repair or service, you may need cover against claims of goods causing injury, death or damage. Product liability insurance covers you if any of these events happen to another business or person by the failure of your product or the product you are selling
As you can see, the options are many and varied. Some will apply to all businesses, whilst others will only apply to some. Make sure you do your homework and cover all of the bases.
(Much of the content of this article was gained directly from the business.gov.au website)
- Related articles:
- Help for Businesses After a Natural Disaster
- How to Protect Against the Death or Illness of an Owner
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.