Top 6 insurance considerations for small businesses
The right insurance is a critical component of managing the risks involved in operating a business. The combination of insurance that is ideal to your situation will depend on many different factors including the nature of the business and the size and location of the business.
It is important to note that some types of insurance are compulsory for certain businesses. Below are 6 of the most common types of insurance taken out by businesses, but there are many more that should be considered. Consult your insurance adviser on which insurance may be best for your circumstances.
1. Workers compensation insurance
If you employ people in your business, workers compensation insurance is compulsory. Workers compensation will protect your employees from financial hardship that may arise as a result of an accident or injury at work.
2. Third party personal injury insurance
If your business uses a motor vehicle, third party personal injury insurance is also compulsory. It may either be included in the registration fee, or proof of purchase will be required before the vehicle can be registered or re-registered.
3. Public liability insurance
Protects both you and your business against claims of injury or property damage made by a third party. Public liability is compulsory for certain types of businesses and there are circumstances where you may not be able to operate without proof of insurance – for example market organisers often require proof of public liability insurance (and sometimes product insurance) from stall operators before allowing them to participate in the event.
4. Professional indemnity
If your business provides professional services, then professional indemnity insurance will provide you with protection against claims for financial loss, bodily/personal injury or property damage arising from an act, error or omission that occurs while providing professional services on behalf of your business.
5. Product liability insurance
If you sell, supply or deliver goods you may be liable for damage or injury that occurs as a result of those products. Product liability insurance protects against claims of injury or property damage that have resulted from the failure of the product you are selling.
6. Personal accident and illness
If you are a self-employed, workers compensation will not cover you in the event of an accident or injury at work - you should consider protecting yourself in the same way you would protect your employees.
What is the minimum insurance I should have for my business?
First and foremost, you must comply with all legal requirements for insurance in your state / territory when operating a business. It is wise then to consider the other insurance types available and depending on your risk appetite and budget, invest in them accordingly. As with any other purchase, doing your homework is the best way to ensure you are protected when it really counts. An insurance adviser can make doing your homework a breeze - speak to your adviser about your specific requirements and get an insurance solution tailored to your circumstances.
For further information on business insurance please visit www.business.gov.au/insurance.