As a business owner, you’re responsible for the wellbeing and safety of your customers and employees – all while ensuring your enterprise is successful. Whether you run a small business or something larger; the buck stops with you when it comes to protecting your investment.
One of the most practical ways to do this is with the right insurance policy. Let’s take a look at the different types of business insurance you can take out, and which may be suited to you.
Common types of insurance for businesses
Some types of insurance are compulsory, depending on your business’ size and type. For example, workers’ compensation insurance is required for any business with employees. Additionally, any business that uses motor vehicles must ensure that compulsory third party insurance covers their drivers.
In addition to any mandatory cover you’re obligated to take out, there are several other types of business insurance you should consider.
Cover your business’s liability
An indoor rock climbing centre must go to great lengths to ensure its customers can climb safely, and pay a steep price if someone has an accident. Similarly, a busy cafe is in deep water if a customer slips and falls while getting their morning coffee. While both businesses provide different services, each should still consider an insurance policy that covers their liability for injuries suffered by another person, as well as damage caused to someone else’s property.
- Public liability insurance. If someone is injured, or their property is damaged, because of your business’s activity, your business could be held liable for the event. With the right insurance, you can be assured your business (a) continues to run unimpeded and (b) will not need to pay for any legal fees or compensation in the event of litigation.
- Product liability insurance. If your products cause harm, loss or damage to customers, this type of insurance can also cover your legal costs and any compensation awarded.
- Professional indemnity. Professional indemnity covers a business if it has been found negligent, or ‘in breach of its professional duty’ due to any service or advice they have provided. For example, if an estate planner made an error on an important document, their professional indemnity insurance would cover the costs of any lawsuit levelled at the business as a result, as well as any claims investigation costs and damages awarded against them.
- Management liability insurance. This type of insurance provides cover if someone takes legal action against your business due to a breach of director’s duties, mismanagement, discrimination, legislative breaches and more.
The most well-known type of insurance that covers employees if they get sick or injured is workers’ compensation cover. However, sole traders (e.g. self-employed individuals) have no need for such insurance policies, and may instead consider insuring themselves with something like personal accident insurance, trauma insurance, income protection, or total & permanent disability cover.
Protect your revenue, assets, and income
Whether you need to cover the building your business operates out of, the trucks your business uses, or the website you run; it’s essential to protect your business’s ability to generate income and any assets you’ve acquired. With this in mind, you should first consider (where necessary) typical insurance policies like compulsory third party car cover, building, and contents insurance for your business.
However, there are several other policies you can look at; for example, cyber insurance. The security of information technology systems is crucial to many businesses these days, since many of us either take our products online or utilise digital services to enhance our offerings. This brings with it a level of risk: if an online attack compromises yours (or your client’s) information, your business could suffer a loss it cannot recover from. Cyber liability can insure your business against breaches, loss of data, hacking, and more.
Let’s consider another example: key person insurance. One dedicated, smart employee can mean the difference between the success and failure of your business. What would you do if this integral team member could no longer work? An insurance policy that covers a ‘key person’ in your business pays a benefit if they’re unable to work for a significant period of time.
Finally, ask yourself if your business could survive if it had to shut down for days, weeks, even months at a time due to an event, like a fire or storm. Insurance that covers business interruptions – a period where your business cannot operate or earn an income – is highly sought after by many Australians. For anyone whose business…
- is financed by debt,
- would suffer if they couldn’t operate during peak season, or
- is unable to operate in alternate premises; consider business interruption cover.
What type of business insurance is right for you?
Providers will package multiple types of policies together into one product, so they can comprehensively cover all your needs. That being said, it’s important to understand each facet of the product, so you know exactly what is covered by your policy.
Ready to compare? Compare business insurance options for businesses from countless industries, at no cost to compare.