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A Comprehensive Guide On Business Insurance

What is Business Insurance

Business insurance protects businesses from financial losses resulting from unexpected circumstances that may arise.

It comes in various forms, including protection against risks relating to employees, legal responsibility, and property damages.

Australian business owners evaluate their insurance requirements based on potential hazards, which can change depending on the type of business environment.

Here are some of the general coverages provided by business insurance:

● Property insurance for damage or loss of physical assets
● Liability insurance for claims made against your business by third parties
● Professional indemnity insurance for professional service providers
● Business interruption insurance for lost income and expenses because of      unforeseen events
● Cyber insurance for losses because of cyberattacks.

What are the Different Types of Business Insurance?

If you are a business owner in Australia, there are different types of business insurance designed to address your specific needs. Here are the various business insurance and what they cover.

▸ Building & Contents Insurance Insurance
You can use building and contents insurance to repair or replace your building and contents in case of damage or loss caused by covered events. This includes break-ins, fires, storms, impact damage from falling trees, and broken glass.

Contents and Building Insurance also often has an option to include general liability coverage. This policy can protect you from paying compensation if you accidentally cause someone harm or damage to their property.

▸ Business Interruption Insurance
Business interruption insurance is a type of insurance that provides coverage for lost income and expenses if your business cannot operate due to unforeseen circumstances. It helps businesses recover from natural disasters, fires, and other disruptions that may affect their ability to perform. 

Also, it can cover expenses such as rent, utilities, payroll, taxes, and other operating expenses your business may incur during the period of interruption.

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Purchase up to six products under one Business Insurance Package. 

Also, it can cover expenses such as rent, utilities, payroll, taxes, and other operating expenses your business may incur during the period of interruption.

▸ Electronic Equipment Insurance
Electronic equipment insurance is a type of insurance that provides coverage for electrical devices and equipment used in a business, such as computers, servers, printers, copiers, and other electronic equipment. 

This insurance protects your business from financial losses if your electronic equipment is damaged, lost, or stolen. It also covers the cost of repairing or replacing equipment, as well as the cost of data recovery and business interruption.

▸ Employee Dishonesty Insurance
The Employee Dishonesty Insurance policy, also known as a “fidelity insurance,” protects employers against loss of income caused by dishonest employees. As a result, business owners are compensated for financial loss caused by the fraudulent or dishonest actions of their employees.

▸ Employment Practices Liability
Employment Practices Liability (EPL) insurance provides businesses coverage in case of claims on employment practices, such as discrimination, wrongful termination, sexual harassment, and other employment-related issues. 

It protects businesses against legal costs required to defend actions brought by employees or former employees. EPL coverage can include legal liabilities, settlements, judgments, and other expenses related to defending against claims of employment practice violations.

▸ Glass Insurance
Glass Insurance is a type of insurance that provides coverage for damage to glass windows or other glass fixtures on a business property. It typically covers the cost of repairing or replacing damaged glass because of various causes, such as accidental breakage, vandalism, or severe weather events. 

Glass insurance can be especially relevant for businesses with large storefront windows, or other glass features that could be costly to repair or replace.

▸ Goods in Transit
Goods in Transit insurance cover loss or damage to goods or cargo while being shipped from one location to another in Australia or whilst being imported or exported. This type of insurance protects businesses, such as wholesalers, retailers, or manufacturers, against the financial impact of damage or loss of goods transported by road, air, or sea. 

Also, it can provide coverage for theft, accidental damage, or weather-related incidents.

▸ Machinery Breakdown Insurance
Machinery breakdown insurance helps small business owners protect against losses resulting from mechanical or electrical failures. This coverage can help cover costs associated with repairing and replacing expensive equipment that may arise due to equipment malfunction.

As well as covering the loss of business income, it can even reimburse fees associated with hiring outside contractors to fix the problem.

▸ Money Insurance
Money Insurance covers money carried in transit by yourself or authorized individuals and in safes. Depending upon the policy cash, cheques, currency notes, treasury totes, and current postage stamps may all be considered money under this policy.

▸ Portable Equipment Insurance / General Property
Portable equipment insurance, also know as General Property Cover, is a type of coverage that helps protect valuable items you own and take with you from place to place. This includes laptops, cameras, phones, tablets, or other expensive electronics. 

▸ Professional Indemnity Insurance
Professional indemnity insurance, or PI insurance, covers you if a customer or client alleges that you provided poor professional advice, service, or design that resulted in financial loss for them.

This insurance would cover your legal costs, other expenses, and any damages awarded to your client.

▸ Product Liability Insurance
Product liability insurance covers property damage or personal injury claims arising from using a business’s product that fails, causing third-party property damage. In addition, it also covers personal injury claims where a person is injured due to using a defective product.

▸ Public Liability Insurance
Public liability insurance is a type of insurance policy that provides coverage for businesses against claims made by third parties for bodily injury, property damage, or other losses arising from their business activities.

Specifically, public liability insurance covers the following:

  1. Bodily injury: Public liability insurance covers claims made by third parties for bodily injury resulting from your business activities. This can include injuries caused by slips, trips, and falls on your business premises, or injuries resulting from products or services you provide.

  2. Property damage: Public liability insurance covers claims made by third parties for damage to their property resulting from your business activities. This can include damage caused by faulty products, or damage caused by work you perform on their property.

  3. Legal costs: Public liability insurance covers the legal costs of defending against a claim made by a third party. This can include the costs of hiring a lawyer, court fees, and other associated costs.

▸ Statutory Liability Insurance
Statutory Liability Insurance is a type of insurance that protects you in the event you are found legally liable for something. It covers your legal fees, related expenses, and any judgments or settlements that may be ordered against you. 

This type of cover also provides coverage if you are accused of breaching a statute, ordinance, or regulation; for example, if you are charged with violating a health and safety statute.

▸ Tax Audit Insurance Insurance
Tax audit insurance is a type of coverage that helps protect businesses and individuals from the costs associated with a tax audit. It covers expenses related to hiring a professional to assist with the audit, legal fees, and other expenses related to defending your position during an audit.

▸ Theft Insurance
Theft insurance, also known as burglary and theft insurance, is a type of coverage included in many business pack insurance policies that provides protection against financial loss resulting from theft or attempted theft. 

Specifically, theft insurance covers the following:

  1. Theft of business property: Theft insurance covers the loss of business property resulting from theft or attempted theft, such as stolen merchandise, office equipment, or tools and equipment used for business purposes.

  2. Damage to property during theft: Theft insurance also covers damage to property caused during a theft or attempted theft, such as broken windows or doors.

Is Business Insurance Necessary?

Business insurance provides critical protection for your business in the event of unforeseen circumstances. Here are some reasons why you should get business insurance:
  • Protect your business from potential lawsuits and claims.
  • Provides coverage for property damage or loss.
  • Helps cover lost income and expenses due to business interruption.

 Meets legal and contractual requirements, such as having Public & Products Liability coverage.

Risks and Claims that Could Happen to Your Business

As a business owner, it’s your responsibility to know the risks and potential claims that could happen to your business. Here are some of the most common risks and claims that companies face:
  •  Property damage: Your business property can be damaged due to natural disasters, fires, vandalism, or other events.
  •  Bodily injury: Customers, employees, or vendors can suffer injuries while on your business premises, which could cause costly legal claims.
  •  Product liability: If your business produces or sells products, there is a risk that those products could cause harm to consumers, resulting in legal claims.
  •  Professional liability: If your business provides professional services, mistakes or errors in those services could cause legal claims.
  • Cybersecurity breaches: In the age of digital business, data breaches and cyberattacks are becoming increasingly common. A violation of your business’s data could cause legal claims and loss of business.
  •  Business interruption: Unexpected events, such as natural disasters, equipment failures, or other disruptions, can cause your business to shut down temporarily. This can result in lost income and expenses.
  •  Employee dishonesty: Unfortunately, some employees may engage in dishonest behavior, such as theft or fraud, which can cause financial hardships for your business.

Investing in the right insurance coverage and implementing preventative measures can protect your business from these risks and claims. You should work with a reputable insurance provider who can assess your business’s specific needs and tailor your coverage accordingly.

How To Find the Right Insurance Broker?

Finding the right insurance broker can be an important step in ensuring that your business has the appropriate insurance coverage to protect against potential risks. Here are some steps you can take to find the right insurance broker:

  1. Identify your specific insurance needs: Before you start searching for an insurance broker, it’s important to identify your specific insurance needs. Determine what type of coverage you need, what risks you want to protect against, and what your budget is for insurance premiums.
  2. Research potential insurance brokers: Look for insurance brokers that specialize in the type of insurance you need. You can ask for recommendations from colleagues, search online, or contact industry associations for referrals.
  3. Check their credentials: Ensure that the insurance broker you are considering is licensed to sell insurance in Australia and has the appropriate Australian Financial Services Licence (AFSL).
  4. Online Reviews: Check potential insurance brokers online reviews, such as Google Reviews. Choose an insurance broker who is responsive and has good communication skills. Make sure they are easy to contact and are willing to take the time to understand your specific needs and concerns.

By following these steps, you can find an insurance broker who can help you navigate the complex world of insurance and ensure that your business has the right coverage in place to protect against potential risks.

Frequently Asked Questions

To help you evaluate plans and select the best insurance for your small business, we’ve listed the most frequently asked questions.

Can I combine different business insurance coverages in one policy?
Yes, you can combine different business insurance coverages into one policy by way of a Business Pack. This is an effective way to protect your business from any potential risks that could arise. Combining other coverages into a single policy can save you time and money by reducing your premiums.
It also means that all your business’s needs are handled in one place. Talk to an insurance provider today to learn more about combining different business insurance into one policy.

How much does business insurance cost?
The cost of business insurance can vary depending on the type of coverage you need, the size of your business, and the level of risk associated with your business activities.

How much public liability insurance do I need?
The amount of public liability insurance you need depends on the type of business you run and the level of risk associated with your business activities. Speak to an insurance broker to determine the appropriate amount of coverage for your business.

Do I need workers’ compensation insurance?
If you have employees, you are generally required by law to have workers’ compensation insurance. This insurance provides coverage for employees who are injured or become ill as a result of their work.

How do I make a claim on my business insurance policy?
If you need to make a claim on your business insurance policy, contact your insurance provider or broker as soon as possible. They will provide you with the necessary forms and information to begin the claims process. It’s important to keep all documentation related to the claim, including receipts and invoices.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

FD Beck Insurance Brokers, ABN 68 004 455 038, AFSL 233784

This article originally appeared on FD Beck Insurance Brokers Blog and has been published here with permission.

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