Small Business Insurance — Can Your Business Survive the Unexpected?

Research conducted by the Insurance Council of Australia shows that 70 per cent of businesses fail after a major loss such as a fire, storm or flood. So it’s a good idea to ask yourself, ‘Is my business protected against the all the risks?’ One of the main reasons that businesses are underinsured and not insured is that owners and managers lack information on the risks their business face and how to protect against these. The first step is to look at the risk areas covered by small business insurance.

Buildings, content and stock are crucial to most businesses. Is all your property covered? If so, are your levels of small business insurance coverage sufficient to cover the true costs of replacing what’s lost?

Business operations can be disrupted for many reasons — natural disaster, fire, broken or damaged equipment. Could your business survive if your income suddenly stopped?

From manufacturing to restaurants, machinery is at the core of many businesses. But it can be easy to overlook the effects that loss of equipment — such as a production line in a factory, refrigeration in a warehouse, and an espresso machine in a café — can have on a business. Depending on the business, it might take days or weeks to get the operations back to normal. What would happen if your essential equipment suddenly went down?

This covers a broad range of risks involving people and entities. These include personal injury if customers are injured on your property or from using your products. Other areas include advertising liability and damage to (or loss of use) of the property of others. Technically, broadform liability is public liability insurance that includes product liability. Have you thought about the risks that arise from interacting with your customers and other businesses?

This small business insurance covers people who provide advice in a professional capacity, such as lawyers, accountants, bookkeepers, architects, engineers and marketing consultants. Professionals such as these can be at risk is a client believes the advice given was not correct and caused harm. If you offer professional services, professional indemnity is one of the insurance products to consider.

General property insurance covers your tools and equipment (not stock) which are moved around as part of your business. Are your portable tools and equipment covered for loss or damage?

In addition to the risks outlined above, several other important areas should be considered, including:

• Theft and money
• Employee dishonesty
• Computers and electronic equipment
• Glass
• Tax investigations.

Key person insurance protects a business in situations where a key person, necessary for the ongoing operation of the business passes away or can no longer work.

Income protection insurance is for individuals, including business owners, who would lose their income if they became ill or were injured. The coverage amount is usually based on the average annual income over a few years.

Every business is different, so the risks you face will be different. When choosing insurances you will want to consider your objectives and financial situation. Select your insurance covers to suit your requirements. For example, if insuring property, you want to ensure that you get the right amount that covers the value of what you are insuring. It’s also recommended that you read the relevant product disclosure statement and get advice from an insurance professional before taking any small business insurance coverage.

Visit www.business.gov.au for an overview of the types of business insurance available.