Business insurance is a financial protection product designed to support a business when it is put at financial risk. Businesses in Australia can suffer losses in a variety of ways, and the right business insurance policy will protect a business from all potential issues relevant to its operation.
Some types of business insurance in Australia are compulsory:
The incidents and expenses covered under business insurance will depend on your specific insurance policy. These can range from minor incidents and losses, to severe business interruptions and legal proceedings. When you apply for business insurance, it is vital to ensure your policy includes the cover you require.
Some of the general events covered by insurance policies include:
There are many different types of business insurance, and the first step to finding a suitable policy is to evaluate the needs of your business. Ensuring you include the required optional insurance cover can be just as crucial as meeting your requirements for compulsory cover.
All employers in Australia are required to obtain workers' compensation insurance. This type of business insurance protects your business and workers from financial hardship as the result of an accident or illness. As workers’ compensation is the core compulsory form of insurance in Australia, it is often a requirement to obtain this cover through an authorised insurer.
In the event of an work-related accident or illness, this cover will provide your employees with:
If you operate a business - regardless of whether you employ workers - there are two types of insurance you will generally consider:
Below are some common examples of these types of insurance, and brief explanations on how they can work to protect your business from incurring unforeseen losses.
|Type of Personal Insurance||How it protects your business|
Income protection or disability insurance
Covers part of your normal income if you are unable to work due to sickness or involvement in an accident.
Provides a lump sum or series of payments if you die or, in some cases, become permanently injured.
Total and permanent disability insurance
Provides a lump sum payment if you are permanently disabled before retirement.
Provides a lump sum payment if you develop a specified medical condition.
Business interruption or loss of profits
Covers your business in the event of damage to property by fire or other insured dangers which leads to loss of profits.
Covers your personal assets if a director or manager of the business acts in an illegal or unethical way which results in losses to either individuals or other businesses.
Covers losses incurred due to employee theft or fraud.
Where personal insurance covers incidents which directly relate to and affect individuals or companies, general types of business insurance are used to protect business assets, property and stock.
|Type of Asset Insurance||How it protects your business|
Building and contents
Covers your building, contents and stock against events like fire, earthquake, lightning, storms, floods, impact, malicious damage and explosion.
Insures your business assets against burglary. Commonly used by retailers.
Deterioration of stock
Covers your business when perishable stock is destroyed and deemed unusable following the breakdown of a refrigerator or freezer.
Covers specific business electronic items from theft, destruction or damage.
Covers farm-related assets and stock, including crop destruction, death of livestock, vital farm buildings and machinery.
Goods in transit
Covers the theft or damage of goods you buy, sell or use as part of your business operations during transport.
Covers accidental machinery or equipment breakdowns including costs incurred through storing, dismantling or demolishing the damaged machinery.
Covers the cost of fees incurred as part of a tax audit or investigation into your business finances.
Property in transit
Covers theft or damage of specific items transported for your business, such as tools and equipment.
More than two million small businesses operate in Australia, and all of them require business insurance of some form. Small business insurance will vary substantially between industries, types of business, and the amount of risk each business-owner and their employees may be exposed to.
Some common types of small businesses using specialised insurance policies can be found in the table below.
|Trades & Services||Retail & Hospitality||Professional Occupations|
Arts and Craft
Gardens And Lawns
If you operate your business from your home, you will still need to consider separate business insurance relative to how your business operates. Existing home and contents insurance will not automatically cover business losses, however many insurers may allow you to combine your existing policy with specified business insurance cover to maintain a streamlined policy.
If you employ others as part of your home business, you will still be required to obtain compulsory workers’ compensation insurance.
If you are self-employed or work as a contractor, you are generally responsible for organising your own income protection insurance. If you are unable to work due to illness or injury, this means you will not be entitled to paid sick leave, and you may also not be entitled to workers' compensation payments if you are involved in a work-related accident.
To help manage expenses if you’re unable to work and earn income, you can consider taking out your own income protection insurance, which is available through most major insurers.
Other insurance you may wish to consider includes:
The cost of business insurance is called a premium, and varies between policies and insurers. To reduce the cost of premiums, business-owners can often combine several types of business insurance into a single policy which is tailored for their specific needs and cover requirements.
However, premiums are not solely determined by the types of cover included in a policy, and may be determined by a number of other factors unique to your business operations.
These factors may include:
It’s possible to secure a discount on your insurance policy, perhaps if you take out multiple policies through the same insurer or have a history of not claiming. You won’t know the true cost of your cover until you begin comparing your options.
Business insurance in Australia is available through authorised insurance companies. The Australian Prudential Regulation Authority (APRA) is an independent statutory authority which supervises and approves various financial institutions in offering insurance to individuals and businesses. The APRA provides a list of all authorised insurance companies in Australia.
You can apply for business insurance with any of these approved insurance companies online, and alternatively, you may wish to speak to a licensed insurance broker to find you a suitable policy at the most competitive rate. You can authenticate your insurance broker’s license on the Australian Securities & Investments Commission's professional register.
You can compare business insurance deals and policies by understanding the type of business you operate and the risks presented by your day-to-day operations. Understanding the amount of cover required by your business will allow you to compare various offers by insurers in Australia.
Once you understand the various types of cover you will need, you can follow four simple steps to find a policy which suits your requirements:
When you start comparing quotes and insurers, consider some of the following:
Once you have found a number of suitable policies, you’ll want to review the premiums for each insurer, and carefully examine the policy to identify any possible exceptions to your coverage. All insurers will place certain conditions on business insurance which can prevent a claim being processed, and understanding these will help eliminate unsuitable options.
An insurance broker specialises in finance and risk management, and uses their expertise to identify the potential risks posed by a business and its operations, then match these with an appropriate insurance policy from a range of insurers.
Brokers will charge a fee for their services, however working with a broker can greatly reduce the time spent comparing insurance options, while ensuring all appropriate cover for a business is included in its selected policy.
Knowing what isn’t covered in your business insurance policy is just as crucial as knowing what is covered. Some types of business insurance may be void under certain conditions such as negligence or malicious intent, while others may be ineligible for claims if the cause is a specific event or incident.
You can review your policy with your insurer at any time to see exactly what is and isn’t covered by your insurer, however most policies will not provide cover for losses associated with:
Your insurance provider will supply a number and instructions about how to make a claim. In most cases, you will need to provide:
Business insurance in Australia is a crucial - and often compulsory - part of maintaining consistent business operation. The right type of insurance policy for your business will depend on a number of unique factors, and understanding these will not only help in comparing insurers and policies, but ensuring both your business and your employees are protected in the future.
Business insurance provides financial protection when a business is put at risk. Business insurance may cover the costs of property damage, lawsuits, lost business income, stolen goods, and many other events which can financially affect a business.
The cost of business insurance will vary, depending on what you are covered for in your policy, and the nominated sum you have insured. The cost of your premiums will also depend on your specific business, including how and where it operates, and the level of risk it is exposed to.
Small businesses may benefit from various types of insurance, however it’s always worth checking whether you are required to obtain compulsory insurance, such as workers’ compensation cover, third party personal injury insurance, or public liability insurance.
Most business insurance policies will cover Accidental Damage (general incidents), and Defined Events (specific events). Floods, fires, lightning damage and other forces of nature will be listed in your business insurance policy as defined events. It’s important to check which specific events you are covered for in your policy.
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