What Is Not Covered in Business Insurance?
All businesses, large and small, need liability insurance. Smart business owners know that investing in adequate and appropriate insurance for their organisation reduces their risk. The feeling of confidence and security business owners get when they know their insurance company has their back is priceless. Business insurance not only protects you; it covers your workers (with workers compensation insurance) and your business assets from costly compensation claims, court action and accidents.
Not only that, the right insurance for your business can recoup your losses due to theft, damage to your premises, and your company or inventory. Also for business interruption, equipment loss, product recalls, and more. Whether you operate a supermarket, a hardware store, provide professional services and advice or run an online shop, insurance is there to protect your business in case something unfortunate happens.
What is Not Covered By My Policy?
Every business is different, and each separate business, even in the same industry or sector, needs different types of insurance covers tailored for their different needs and risks. Therefore, your insurance policy will hopefully cover you for things other businesses don’t need and vice versa.
To ensure your business is adequately protected, we nominate a Risk Adviser to work as your advocate and partner, tailoring an insurance solution to suit your business.
Professional Liability Insurance
Doctors, accountants, lawyers, and those in any other profession that provides professional services or advice should also buy business insurance coverage to protect them from professional liability claims. A general business policy may not cover such claims or lawsuits. Professional liability insurance (or professional indemnity) may pay a claim arising from advice or workmanship that leads to a client’s injury, damage or financial losses. But it won’t pay for storm damage or theft, for instance.
The kind of business insurance you will need depends on the profession in which you work. Doctors should have malpractice insurance, but a financial adviser may only need cover for omissions and errors. Their practice would need other insurances to cover theft, damage to premises, workers’ compensation, etc.
Insurance For Replacement Costs
Be aware that the property damage section of your business insurance policy may only pay for the actual current value of any damaged items. Owning older equipment may cause a problem since its value would have dropped. If your policy is for true value, it means you wouldn’t be paid enough to replace the item or items with new versions as replacements.
Adroit brokers will explain replacement costs and advise you on when to update your equipment and insurance. By opting for full replacement cost in your policy, the gap closes between your equipment’s present value and the actual cost of replacing it.
Business Interruption Insurance
Suppose your property is damaged or surrounding areas are in such a state that customers cannot enter your shop due to a council water main breakage, for instance. In that case, business interruption insurance may cover your losses.
If a large part of your inventory is damaged or destroyed, this insurance may compensate your business for failing to fill orders. A general business liability insurance policy would cover only the cost of the inventory damage.
Workers’ Compensation Insurance
All Australian states require businesses and organisations to have in place workers’ compensation to cover those they employ. Workers’ compensation insurance benefits include payment of medical and hospital bills, rehabilitation, lost wages, and compensation payouts for workers hurt on the job or who suffer a work-related illness or injury.
In Victoria, the workers’ compensation scheme is run by WorkSafe. You won’t need to register for workers’ compensation insurance if you or your business has hired no apprentices and pays remuneration of less than $7,500 per financial year. If you are a sole trader, are in a partnership or trust, you do not need to register, provided you do not employ any workers.
Your business liability insurance will not cover damage or injuries caused by your workers driving company vehicles outside your facilities. You will need to buy separate comprehensive business vehicle cover to protect your business from claims arising from vehicle accidents.
Your policy may cover vandalism to your business fleet, but you will undoubtedly have to provide a list of drivers so the insurance company can check their driving records. A history of fines and accidents may mean that an employee is disqualified from driving your vehicles, and if they do, the insurer will not pay out a claim.
All registered vehicles in Australia must have Compulsory Third Party insurance (a Green slip or CTP insurance), and company cars are no exception.
Is Business Insurance Worth the Risk?
Some businesses baulk at the recurring cost of their insurance premiums, especially if they have never made a claim. But it is not “money down the drain” since adequate and appropriate insurance, rather than buying cover you don’t need, is a Godsend in the event of an unforeseen disaster that could mean the end of your beautiful business dream.
At Adroit, we design the business insurance you need and not the insurance you don’t so your business can weather the storm of an unexpected event so you can recover quickly.
Don’t Neglect Your Business Insurance Policies
When valuing your business assets annually, it’s crucial to know their correct worth. Your business could be underinsured unless you keep things up to date. Our Adroit brokers can manage all these things for you, so call us today to prevent receiving a lesser amount for any claims you may need to make.
Some Business Insurance May Be Compulsory
Some business types need mandatory insurance coverage. Suppose your business operates in a specific industry such as medicine, law or construction. In this case, as mentioned above, it is compulsory if you have employees that you have workers compensation as part of your liability insurance.
Doctors and lawyers need malpractice cover and, no doubt, professional indemnity. Your business might be contractually required to have public liability coverage.
Make Sure Your Business Policy is Up to Date
Circumstances constantly change, so your liability insurance cover must be kept up to date at all times. Let your broker or insurance company know if some change might affect your business insurance policy. You may be moving your business to another location, buying new assets or equipment, computers or increasing your stock.
Premiums change each year, so considering these things, make sure you don’t buy the insurance and forget it until you need it.
For all your liability insurance needs, contact one of our experienced and trusted brokers at Adroit Insurance & Risk in Geelong where our insurance policies are designed and tailored to suit your particular business needs. Phone 03 5221 6644 or message Adroit Geelong so we can help you choose the type of policy and insurance covers for your business today.
This article originally appeared on Adroit Insurance & Risk Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Adroit Insurance & Risk.