All businesses face a variety of risks, and many risks can be mitigated through insurance.…
Business Insurance in Australia: Getting the Basics Right
Whether you have just started your business or have been doing it for years, there’s no denying you have put a lot of time and effort in growing your company. That last thing you want to do is waste all these efforts by not securing your assets from unexpected circumstances.
Having the right business insurance in Australia will give you financial cover for your company, including the contents and premises, against damage, loss or theft. It is also essential to evaluate your coverage needs before you purchase your insurance. To do this, you need to examine each policy and see if it’s the one your organisation needs. Some insurers offer coverage package policies specially designed to cover specific businesses. In this article, we’ll list the different insurance packages needed for most businesses in Australia along with some common ones.
Every organisation will require a slightly different insurance policy depending on the company’s size, place, and the industry. With so many options available, it can be quite overwhelming, which is why it is crucial to determine which one meets your business requirements.
Which are the Business Insurances that I must have?
As long as you are operating a company in Australia, these are the two forms of insurance you must get:
Every state requires most businesses to have worker’s compensation coverage, which protects your employees in case of sickness or injury. Failure to purchase this mandatory policy will result in fines, or in some rare cases, criminal penalties. Each jurisdiction has its own workers’ compensation schemes and different requirements. Also, the cost of benefits and policies they provide varies by location. Since every state has different requirements, please check with your state’s workers’ compensation authority or insurance broker to learn more.
Compulsory Third Party (CTP):
This coverage is mandatory if your business owns a vehicle. The insurance protects you from any personal injury claims that arise from using your company vehicle. This form of coverage is necessary for operating and registering a car. You should also consider other forms of vehicle insurance policies to cover other liabilities and risks. Like Worker’s Compensation cover, every state jurisdiction has its own CTP scheme. Visit your state’s CTP authority for more information.
What other Business Insurances that are good to have?
Although the following insurance policies aren’t mandatory for Australian businesses, they can be highly beneficial to your organisation – whether it’s managing risks during any unforeseen events; or to providing comprehensive protection to your employees.
When it comes to income based insurance, there are numerous categories to choose from. Some of the more prevalent insurance include investment-type schemes where you invest over a specific period and get back your money along with interest earnings once you reach your maturity date. There are also other forms of income insurance which covers:
- Employee Dishonesty: Protects against any losses arising out of employee fraud or theft.
- Management Liability: Protects you from losing your assets in the event of any unethical management or illegal practices caused by a Director or Manager.
- Business Interruption: Covers your Company losses in case of any damage to property caused by fire or any other insured risks. It can also help in maintaining your profits and fund your ongoing expenses.
- Trauma Insurance: Offers a lump sum when you suffer from any life-threatening illness.
- Disability Insurance: Provides financial support only if you’re permanently disabled before your retirement.
- Life Insurance: Provides financial support or series of funding if you expire, or suffer from a permanent injury.
- Income Protection: Covers a certain amount of your salary in case you suffer from an injury or illness.
Property or Assets Coverage
If your company owns assets, property, or products that you can’t risk losing them, you should consider protecting them with additional business insurance that offers the following protection:
- Property in transit: Covers items that you use in your Company against damage or theft while travelling.
- Tax audit: Covers your fees when tax agents investigate your tax liability.
- Machinery breakdown: Protects your Company from losses arising from the failure of electrical and mechanical plant, or machinery.
- Goods in transit: Covers any loss of products you purchase, sell, or use for your Company during their transportation.
- Farm insurance: Covers things like machinery, buildings, livestock, and crops.
- Electronic equipment: Protects your electronic assets against damage and theft.
- Deterioration of stock: Protects you from losses arising from the worsening of chilled or frozen stock in case of a freezer breakdown.
- Burglary: Protects your Company’s assets against theft or burglary. It can also be useful for retailers and businesses with properties that aren’t always attended by employees.
- Building and contents: Covers your contents, building, or assets in the event of a fire, explosion, or any natural calamities.
Checking your Business Insurance
- During the EOFY, you need to understand your Company requirements and insurance policies. Follow this checklist and consult your broker or insurer to ensure that your business is EOFY ready.
- Review all your insurance schemes and check your exclusions and inclusions. If you can’t interpret any aspect of your insurance policy, consult your broker or insurer.
- The directory and valuations of your Company should be up to date and must reflect existing costs.
- Check with your insurer about extending your coverage if you have purchased new equipment or vehicles, signed any lease, hired subcontractors, or expanded your establishment.
- Determine if your business is prone to any perils or risks, such as living in a flood-prone area, cyber risks, and any impact private laws will have on your business.
- Are you prepared for any consequences your Company, employees, customers, and suppliers will face if you can’t trade due to unexpected circumstances? Did you purchase a Business Interruption insurance?
As a business owner, you have a lot to deal with, and that is why it is important for you to carry some form of business insurance. It can serve as the last line of defence in managing any catastrophic events, which can make or break your business. Lastly, it would help if you also enlisted a trusted insurance broker who can offer you sound advice on any business insurance matters.
The Fullstack team can help with advice on business insurance in Australia should you need a reliable insurance broker. This article may also be helpful in thinking about insurance:
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, crypto and entrepreneurs.