Compare Business Insurance

Running a business comes with a lot of risk. Business insurance is designed to minimise your exposure to that risk¹. This could mean insuring not only your business, but your income and your commercial risk as well, which means you, your employees, and members of the public you interact with have protection. Business insurance works in the same manner as other types of insurance, such as car or home and contents. You pay your insurance provider a premium, and if you need to make a claim they’ll cover you, subject to the terms and conditions of the policy, up to the agreed insured amount. Depending on the type of insurance, there may also be an excess you are required to pay. There are several types of business insurance products. You may opt for different types depending on the type of business you run. Some are compulsory for all Australian businesses. Insurance requirements often vary depending on your business type and state licensing requirements. Compulsory business insurance policies include¹:

• Workers’ compensation: Mandatory if you have employees
• Compulsory third party: If you use a car for work, you must pay for third party personal injury insurance at minimum. This is often part of your vehicle registration fee

There are many professions that are required to hold a minimum level of professional indemnity cover for the purpose of being registered (such as medical professionals). Additionally, there are also many other types of insurance that are worth considering to help protect you from risk. Examples include¹:

• Public Liability
• Professional Indemnity (even if not required to be registered)
• Cyber Liability
• Management Liability
• Personal Accident

Sources: 1. https://www.business.gov.au/risk-management/insurance

Before you start comparing business insurance policies, it’s important that you understand the needs of your individual business. What works for another business may not work for yours – even if you’re in the same industry. The Australian Government provides an Industry Factsheet, which can help clarify the types of insurance your business may require. For example, a company in the accommodation and food services industry will require workers’ compensation, but it may also need insurance for public liability, equipment and machinery, property and buildings, business interruption, and deterioration of stock. When you start comparing options, questions to consider include:

• Are you being compensated with an agreed amount, market value or a percentage of market value?
• Is there an annual payout limit or lifetime limits?
• Are there limits per claim?
• What factors can void your claim?
• What specifically are you covered for?

Knowing the answers to these questions can help you to determine which business insurance policy and provider is suitable for you. It’s always very important to read your chosen insurance provider’s Product Disclosure Statement (PDS) or policy wording, so you know exactly where you stand before deciding to purchase the insurance. For additional assistance, iSelect has partnered with BizCover to allow you to compare policies from a range of insurers online.

There are many other types that are worthwhile considering to help protect you from risk. Below are some examples (each of which will be subject to the terms and conditions of the particular policy)¹:

• Public liability insurance: Is designed to provide protection for you and your business in the event a customer, supplier, or a member of the public make a claim because they are injured or sustain property damage as a result of your negligent business activities
• Professional indemnity: Can protect your business against claims for damages resulting from your negligent act, error, or omission while you're working for a client
• Cyber liability: Can provide cover for your business’s exposure due to data breaches or theft or loss of client information that result from cybercrime, including the costs of recovering data, fines and penalties, extortion costs and expenses from any disruptions caused by cybercrime
• Management liability: Covers both the business and its directors and officers for claims arising from any actual or alleged mismanagement of the business
• Personal Accident & Illness: provides income support in the event you are prevented from working due to an injury or illness
• Business insurance pack: Covers your business, including its premises and contents, against loss, damage or theft. There are a number of options that you can choose to include in a business insurance pack, including:
  • Contents: cover for your contents and stock against perils such as fire
  • Building: covers the cost of repairing or rebuilding your business premises (that you own) as a result of perils such as fire
  • Business interruption: Covers lost income and increased costs of operating your business that result from an interruption from specified events and can help to pay ongoing expenses and maintain profits
  • Employee dishonesty: Covers losses resulting from employee theft or fraud
  • Property in transit: Covers theft or damage of your property, such as tools and equipment, in transit by road vehicle owned or operated by you anywhere in Australia
  • Glass: covers accidental breakage to internal and external glass
  • Machinery breakdown: covers damage to machinery caused by breakdown as well as deterioration of stock in some circumstances
  • Portable Equipment: covers loss of tools and equipment
  • Tax audit: covers the fees of external accountants incurred in responding to a tax audit of your business

Sources: 1.https://www.business.gov.au/risk-management/insurance/liability-insurance-and-professional-indemnity

The cost of insurance for your business ultimately depends upon a few factors. You’ll need to consider the nature of your business, the risks involved, as well as its size and turnover. Your industry can also play a huge role in the cost of your business insurance. For example, an administrative and support services company may have fewer insurance needs compared to a company in the building and construction industry. When calculating your premium, your insurer may take into consideration factors such as:

• Business industry: Are you administrative, construction or something else?
• Nature of the business: What kind of work do you carry out in your industry?
• Location: Where you’re located, but also where do you operate?
• Size: This includes number of employees and premises, as well as your overall business income
• Claims history: Have you previously had to make insurance claims regarding your business?
• Nominated sum insured: The amount your insurer will pay in the event of a claim can significantly impact the cost of your insurance premium
• Products produced and/or sold: If your product is expensive, or comes with clear potential risks, this could increase the cost of your premium
• Third party interaction: If you interact with other businesses, either through partnerships, outsourcing or as a supplier, or with the public, this may be seen as a risk to your insurer, depending on the relationship and the company
• Other risk factors: This could range from how saturated your business market is, to how volatile your products and services are

Being aware of these factors is important when you’re looking for a small business insurance provider. To simplify matters, iSelect has partnered with BizCover to allow you to compare policies from different providers online.

Many business owners believe that because they have a home office, they don’t need business insurance – but this isn’t always the case. It ultimately depends on what type of business you run and the nature of your business as to whether you need business insurance. With this in mind, it’s important you consider the overall picture. Take into consideration the following factors¹:

• Your industry
• The nature of your business
• The risks involved in running your business
• Whether you provide products or services
• Whether you travel for work
• Whether you have employees or not
• How much equipment you have and its cost
• Whether you can support yourself should your business be interrupted

Once you’ve considered these factors, you’ll be able to better determine what forms of business insurance you may require. Some insurance providers offer policies that may be particularly relevant for home businesses. These typically include cover for the following things²:

• Product liability: Covers you for claims against you as a result of injury, damage or death from your product. Will typically be combined with Public Liability cover
• Personal Accident: Covers your income (up to certain limits) if you’re unable to work due to illness or injury
• Burglary: Insures your assets against theft
• Computer and electronic equipment: Covers your electronic items from theft, destruction or damage
• Goods/Property in transit: Protects your goods and equipment from loss or damage when in transit in a vehicle owned by you
• Business interruption: Covers ongoing expenses and helps maintain profit if you’re unable to work due to from the occurrence of an insured event
• Public liability insurance: Covers you and your business in the event a customer, supplier or a member of the public are injured or sustain property damage as a result of your negligent business activities

Sources:

1. http://understandinsurance.com.au/types-of-insurance/business-insurance
2. https://www.business.gov.au/risk-management/insurance

If you’re looking to purchase insurance for your small business, your insurer will require a range of information and evidence from you.  Requirements ultimately depend upon the type of insurance you’re applying for. For example, if you’re applying for building and contents insurance, you may be required to have smoke alarms in your building. For machinery breakdown insurance, you may be required to regularly service and maintain your equipment. Before signing up for an insurance policy, you should have a clear understanding of your business requirements. You may want to speak with your financial advisor or accountant to determine how much different risks could cost you, such as public liability, business interruption, equipment failure, or theft. Once you know what you need, your next step is to ensure you maintain detailed and accurate records. It’s important to note that some of the evidence required for obtaining business insurance may not actually need to be provided to your insurer until you need to make a claim. Depending on the circumstances of the claim, the evidence required may include¹:

• Photographs
• Notes and correspondence
• Copies of computer logs
• Receipts or evidence of purchase/servicing

Sources: 1.https://www.business.gov.au/risk-management/insurance/making-an-insurance-claim

Public liability insurance is designed to provide protection for you and your business in the event a customer, supplier, or a member of the public make a claim because they are injured or sustain property damage as a result of your negligent business activities. It covers both compensation payable as a result and legal costs incurred in defending the claim. Negligence is the failure to take proper care of something where you have an obligation to do so, which leads to reasonably foreseeable harm. This can include:

• Injury or death to a person: This could be food or drink making a customer sick, or a product you provide not being made to the appropriate standard levels and causing an injury (bodily or psychiatric) or death.
• Property damage: Causing damage to a third party’s property, such as spilling paint on a car parked underneath where you are redecorating a client’s building.

Ultimately, it’s important for your business to have appropriate risk management processes in place. If you’re a builder, for example, ensuring you follow appropriate safety procedures and Australian Standards will help to minimise your risk. However, accidents do still happen, particularly if you have employees who may potentially make decisions in the heat of the moment that you otherwise might not have. This is why public liability insurance is so valuable to many businesses in a range of industries. It’s also important to note that your public liability insurance requirements may vary depending on your industry. A building and construction company, for example, may have a larger liability requirement than an accounting business.

For some, business insurance can feel like just another expense on an already growing pile, especially if you’re just starting your business. After all, what are the chances you’ll be taken to court? Or if you work from home, surely your home and contents insurance covers you for any mishaps? Unfortunately, this isn’t always the case, and accidents do happen. That’s why business insurance can be a very valuable product. Some of the key benefits of having business insurance include:

• Having your business covered against claims by a third party for injury or death or for claims of loss or damage to property (Public Liability)
• Having your business and personal assets protected against alleged or actual mismanagement, misconduct or legislative breaches (Management Lability)
• Being covered for claims relating to breaches of a professional duty owed to a client, including, incorrect advice or other mistakes relating to a customer’s account (Professional Indemnity)
• Responding to claims if your products are found to have caused death, injury, or economic loss (Product Liability)
• Having cover if any equipment, stock or cash is stolen by an employee (Employee Dishonesty)
• Being covered if business equipment or goods in transit are stolen (Property/Goods in Transit)
• Having your business assets protected against theft in general (Theft)
• Depending on your policy, you may choose to be covered for natural disasters. You can select insurance that covers not only your building and contents, but also your stock, against fire, earthquake, lightning, storms, and other specified natural disasters. Some policies also cover malicious damage and explosions.

One of the common questions business owners have is: how much does business insurance cost? Most people want to find the cheapest insurance option there is, after all, what’s the likelihood of an earthquake occurring, really? Your business insurance premiums will depend upon your company’s individual requirements and the insurer’s assessment of the risk associated with your business. For example, a retail business will probably have different insurance needs compared to a construction company or an administrative company. It’s also important to note that while the cheapest insurance might seem like the ideal option at first, it may not be when it comes time to make a claim. By opting for the cheapest insurance premium, you may find that your excess payment is significantly higher than average. What you’re covered for may also be severely limited. Some questions to ask yourself when deciding on the business insurance are:

• Do you have employees, and do many of them handle cash or have access to stock unsupervised?
• Can you afford to cover expenses if your business was interrupted?
• Do you work from a home office or elsewhere?
• How much do your products or services cost?

Consideration of these types of questions, should help you to work out how much risk your business has. Once you understand your risk, you’ll be able to better assess what type of business insurance you need – and the amount you need your business insurance to cover.

Starting and running a business always comes with risk, but not having insurance is one risk you shouldn’t take. Not only does having suitable business insurance help to mitigate some common risks many businesses face, certain types of insurance are also mandatory in Australia and often vary depending on your business type and state licensing requirements. These include:

• Workers’ compensation: Mandatory if you have employees
• Compulsory third party: to pay for third party personal injury from you driving a car

Aside from the mandatory requirements, there are many other factors business insurance can cover you for. These include:

• Theft: Whether from customers or employees, theft can cost you a lot of money
• Negligence: This could relate to poor practices, incorrect advice, or faulty products
• Business interruptions: Ranging from power outages, repairs, or natural disasters

The impact of these risks can place significant financial strain on your business, which could ultimately lead to reduced profits, a loss of income, going out of business, and even a legal case against you. No business owner wants to be taken to court, but it’s even worse if you don’t have the financial security of insurance to protect you from compensation claims. Ultimately, when you run a business, you should always do your due diligence and part of that means seeking out suitable types of insurance to protect your assets, income, and employees. iSelect has partnered with BizCover to help you compare policies from a range of insurers. Please note that all insurance is subject to the terms and conditions set out in the policy wording or PDS. The information set out above is general only and should not be relied upon as advice.