If you want to run a successful business then a solid insurance plan that protects you against the ups and downs of working for yourself is essential.
At some point in your business career it's safe to assume that the unexpected will happen, whether in the form of damage to assets or a claim of professional negligence, or interruption to your ability to run your business.
Having the right types of insurance in place will ensure that your business dramatically reduces its vulnerability to risk.
Investing in business insurance is about layering your protection so that it safeguards against loss of the physical assets of the business and also against financial loss sustained by the business if it experiences an insurable event (more on this later).
Here’s some of the most important types of business insurance to keep your organisation up and running:
Professional Indemnity Insurance
In the business of providing advice or a service to clients?
Then a professional indemnity insurance plan is a must to protect against legal costs and financial loss when a third party files a claim for damages due to perceived negligence, an omission, or a breach of professional duty.
Whether the claim is found to be justified or not isn’t the issue, you’ll still have to bear the legal fees to defend your business.
It's estimated that over the past 20 years, settlements from class action lawsuits in Australia against lawyers, financial advisors, accountants and other professionals, cost businesses a whopping $1 billion!
Product and Public Liability Insurance
From March 2014 to March of the following year, public and product liability claims in Australia totalled $1.2 billion.
Product liability protects a policy holder from claims made by a third party for loss or damage due to a faulty or poor quality product.
This type of business insurance is essential for any organisation that sells any kind of product, whether your business is skin cream or power tools.
Public liability cover, is also essential for businesses and safeguards against financial loss when a member of the public is injured or their property is damaged while on a business’ premises.
It doesn’t have to be a customer that files a claim against your business it could also be a passerby who slips on a wet surface in front of your business, or someone’s vehicle being damaged while in the parking lot of an smash repair shop.
The responsibility of these mishaps may or may not fall on the shoulders of your business. It depends on the circumstances.
Did the business have ample time to dry the wet surface? Was it one of the smash repair mechanics who damaged the car?
Either way, there will be legal expenses and potentially financial loss as your business has to direct energy to a legal claim and cope with reputation issues.
This is why adequate business insurance is so important – no matter how careful, meticulous, and experienced you are, accidents still happen – and accidents can be very expensive!
Worker’s compensation is generally compulsory in Australia in order to protect the interests of employees should anything happen to them while working for you.
For example, in South Australia the government requires employers to provide worker’s comp through their approved insurer, guaranteeing access to health care, claims management, and financial support in the case of a workplace injury.
Business Interruption Insurance
Business Interruption insurance is designed to protect business against any financial loss sustained due to an insurable event.
This includes things like fire, flood and theft.
It ensures that the business can insure any lost profits and additional expenses during the length of the claim, so for example, while a roof is being fixed.
Depending on what type of capital your business has invested in, adding some form of asset insurance to your policy, or purchasing a standalone plan, may be a wise business move.
Asset insurance can cover things like company vehicles, computers, machinery, and even cash.
Business insurance is a necessity, and in some cases it is a mandatory expense of running a business.
This is because insurance reduces risk, and enough risk can literally put you out of business.
Insurance also protects your employees and the public.
Investing in business insurance is definitely the right decision.
Be business savvy, get adequate cover to protect against the specific vulnerabilities that your company faces.
Take a look at NRMA’s Business Insurance categories to see what you should include in your plan depending on your business needs.