While the specifications will vary depending on the nature of your brand, insurance for business is a non-negotiable when it comes to protecting your assets.
One of the more common mistakes that Australian business owners make is taking out a generalised insurance policy for their brand, product or service without actually reading the fine print. While some forms of insurance are compulsory in Australia, such as workers compensation, public liability and third party for motor vehicles, others are industry specific and much more tailored depending on what it is that you do at work - so where do you start?
Eight Types Of Insurance For Business In Australia
Any business faces a broad range of risks every time it opens its doors or even sells a product - think from fire, theft, damage and loss to being sued for injuries by a member of the public. The types of insurance for business available varies, and usually protect things like:
Business assets
Customers
Employees
Business owners
Business earnings
While insurance for business is obviously important, determining exactly which type you need is where many owners come unstuck.
Workers Compensation Insurance - If an employee has a work-related injury, workers' compensation will cover their medical costs and lost wages. As an employer, workers' compensation will cover business owners for these costs too, as well as costs from possible common law claims. The Workers' Compensation and Rehabilitation and Other Legislation Amendment Act 2003 requires all Queensland businesses which employ workers to hold and maintain an accident insurance policy to cover their workers. A business must take out an accident insurance policy within five business days after employing people in Queensland. If business owners don’t take out a policy within this time frame, penalties may apply.
Public Liability Insurance - Public liability is really the core of any small business insurance policy, especially if the nature of a business involves any form of direct contact with the general public - even stall holders at weekend markets legally require it. If a business causes property damage or personal injury to another person via negligence or faulty workmanship, that person has every right to take action against the business via the court system in Australia. In the event that the court finds that the business is responsible, the owners could be ordered to pay compensation which can stretch into the thousands of dollars - or even millions in some cases. It’s for this reason that public liability insurance is considered to be one of the “essentials”.
Business Interruption Insurance - In the event that some or all of your brand’s cash flow was interrupted, how long would you be able to survive? Business interruption insurance is designed to safeguard owners in the event that they are suddenly forced to cease trading. While providers each have different terms and conditions, this form of insurance for business generally offers protection against significant events that stop cash flow, such as fire or theft, product recalls or contamination, equipment breakdowns, and even cyber events such as ransomware and denial of service attacks. However, if businesses don’t insure for 100% of their insurable gross profit, they will be penalised by the amount they have under-insured.
Cyber Insurance - Now more than ever, we live and work in an online world. With the arrival of Covid-19 and forced lockdowns, many small businesses are now engaging customers around the world to sell products and services at the click of a button. However, with this form of trading comes a whole new myriad of potential issues that require insuring against. Just a handful of these include protection against data breaches, theft or loss of client information, business interruption costs, forensic investigation, extortion, data recovery, potential fines or penalties, crisis management costs and even legal costs from civil action that may ensue from any of the above cyber incidents.
Professional Indemnity Insurance - This form of insurance is generally designed for professionals who provide advice or service to their customers or clients. Professional indemnity insurance protects professionals, consultants, contractors and businesses against legal costs and claims for any personal loss or damage. The claim may be for unprofessional advice, failure by the professional or professional firm to exercise the required level of skill, and/or breach of professional duty. Ultimately, professional indemnity insurance may protect your assets and your reputation should a claim arise, and provides protection from legal action for client losses incurred as a result of claims for professional negligence, errors or omissions.
Tax Audit Insurance - Tax audit insurance protects business owners from the unexpected costs incurred in responding to a compliance audit or an audit of a return you have previously lodged such as a tax return, reimbursing them for related professional fees and associated costs. Should the Australian Tax Office or other government revenue agency conduct an audit, enquiry, investigation or review, this form of insurance usually covers income, land and payroll tax, BAS or GST compliance, Work Cover, superannuation compliance, self managed superannuation funds, FBT, record keeping related costs, and any query of any lodged return in which business owners are compelled to respond or act.
Industry Specific Insurance - When it comes to insurance for business, going with a “one size fits all” approach is a risky choice. To avoid perilous gaps in your insurance policy, it’s a good idea to conduct in depth research as to what risks a company in your industry is potentially likely to face. Some of the most common types of industry-specific insurance policies apply to: aviation, agriculture, community care, construction, hospitality, entertainment, manufacturing, marine, property, retail, trades, transport, logistics, wholesale, and professional services (e.g. accountants, architects, solicitors, marketing agencies, and finance brokers) - all of which have tailor made policies designed to match the needs specific to your industry or sector.
Where To Source Further Advice On Insurance For Business
Starting or purchasing an existing business in any industry can require significant upfront investment, but both require asset protection. Most potential buyers will need to take a good hard look at their financial situation to see if the purchase is viable for them or not, and in turn will need to take out an insurance policy that best fits their own individual situation, circumstances or industry.
However, if understanding the legalities that surround your finances isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses (big and small) enlist the services of an accountant in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.
Ultimately, the team at Muro believe that every business owner is an entrepreneur. However, accounting does not discriminate - finances break down barriers and are not territorial. If you would like to take a deeper look into your finances, please get in touch with us at Muro today to ensure that you’re on the right path for success.