Risk, and even our perceptions of each risk, is a very individual thing. What is important to one business, may not be as important to another. Which means every business will have will have different needs when it comes to insurance.
However there are common types of covers a business owner should consider to protect not only the business, but also their own personal finances.
If you already have a business insurance policy for your business you may find you already insure against some or many of these common covers. But it is still vitally important to regularly review and update your insurance program so that accurately reflect the risks that your business is exposed to. When renewing your policy, it is important to remember that the covers which you selected for your business last year, may not be sufficient any longer. Even changes in inventory / valuations need to be considered when reviewing your insurances.
We have compiled a list of what we consider to be the most common types of covers for any business, not all covers will be applicable to all businesses, and often times many businesses require additional specific covers. We invite you to read through the list below and consider which are important in protecting your business against the risks it is exposed to.
Compulsory Types of Business Insurance
A legal requirement if your business engages any workers. Every state and territory operates its own Workers’ Compensation scheme, with its own definitions of “worker”. It is important to refer to the scheme in your state. Workers Compensation protects employees against loss of wages and medical costs in the event of an accident or sickness resulting from their work with your business.
Compulsory Third Party
Every state has different legislation and requirements when it comes to Compulsory Third Party insurance. Compulsory Third Party covers you for claims made against you for personal injuries arising from the use of your car.
Common Types of Business Insurance
Public and Product Liability
Covers the business against legal costs and compensation costs resulting from legal action by a third party due to an injury to themselves or damage to their property that has arisen either from your business activities or your product/s.
Covers the business against legal costs and compensation costs resulting from legal action by a third party following from your professional service, including your advice.
Management Liability combines a number of different covers that focus on the act of the running the business, including:
- Employment issues such as claims for unfair dismissal, bullying, harassment
- Fraud and embezzlement of business funds by staff, directors or a third party
- Statutory Liability including OH&S and Workers’ Compensation related fines
- Directors and Officers protection due to mismanagement of the business.
Covers the business for costs incurred due to a cyber event including costs associated with the retrieval and restoration of your data and legal costs and compensation costs resulting from legal action by a third party. Cyber event examples include viruses, ransomware and denial of service attacks. This type of cover has only recently become more common and it is a direct result of the increase of cyber events across all industries.
Covers loss or damage to buildings, contents and stock whilst at the business premises. Cover can be either Defined Events or Accidental Damage.
Theft and Burglary
Covers loss or damage to contents and stock following physical or violent force onto your premises. Loss of money is not included.
Covers theft of money from the business premises following physical or violent force onto the premises. Cover can be extended to include theft or money whilst in transit and at your private residence.
Covers replacement of glass, often only if broken through entire thickness of the glass, and can be selected to cover internal and / or external glass. Glass cover is often a requirement under lease agreements.
Covering business owned vehicles for either comprehensive or third party only cover.
Tools of Trade / General Property
Covering specific items of contents that are taken outside of the business premises. This could include tools of trade, but also could include laptops and mobiles owned by the business. Often items will need to be listed and specified on the policy in order to be covered, especially common in the case of electronic items and items over a specified dollar value.
Covers unforeseen loss or damage to machinery items due to breakdown. It does not cover wear and tear or maintenance issues. Cover can also be extended to include loss of stock that may be as a result of a breakdown.
Goods in Transit
Covers loss or damage to your goods whilst they are in transit either by road, rail, air or sea. There are various types of transit cover including imports, exports, and transits within Australia.
Covers for loss of damage to your property that you take on a business related journey. Also covers medical costs if the insured person is injured or falls ill whilst on their journey, repatriation costs if an insured person dies whilst on their journey and financial loss resulting from a trip cancellation due to various factors. Corporate Travel policies can be done on an annual or single trip basis and some annual policies can be extended to include personal journeys of an insured person.
Covers financial loss of the business due to an interruption of the business services and an inability to trade that has resulted due to damage to the property.
Tax Audit Expenses
Covers the business (and directors if selected) against costs associated with the preparation of documents required if the business is audited by the ATO.
Covers the business against financial loss due to fraudulent or dishonest actions committed by an employee.
Personal Accident & Sickness or Income Protection
Both policies are designed to cover loss of income due to an inability to work following an accident and / or sickness (if selected). There are various differences in the cover that can be provided by both product types – read here for further information.