Types of Insurance for Small Business

Insurance cover may be arranged through either an insurance company, an agent of an insurance company, or an insurance broker.When starting or buying a business, assess your insurance needs and include accurate costings in your budgets and forecasts.

As with buying any product or service, you should shop around and compare price, service, reputation, cover offered and other features of the policies available. Compare what is covered and what is excluded, and what needs to be done for the policy to remain valid, for example, locks on windows. Check on the pay out performance of the insurance companies under consideration.
In evaluating policies, consider the excess on the policy. An excess is set by insurance companies to reduce the number of minor claims that may be made. This allows for a lower premium to be charged.
You have a duty to let your insurer know all matters relevant to insuring your business. If you do not comply with your duty of disclosure, the payout in respect to a claim may be reduced, or the contract may be cancelled. Notify your insurer immediately of any change.
Property should be adequately covered. If you under insure property and the policy contains an average clause, any settlement payout will be reduced by the percentage under insured. For example, if a fire causes $50,000 damage to a property worth $100,000 and insured for $50,000, the payout will be $25,000 as only half the risk was insured. Always obtain a cover note if there is a risk of trading without a policy being issued in time. Insurance is a complex area. Make sure that you understand all the terms and conditions of the insurance contract before you sign.

Risk management strategy
Businesses should establish a risk management strategy. This involves developing policies, procedures and practices to identify, analyse, assess, treat and monitor the risks inherent in operating the business. This should minimise costly and stressful problems and reduce insurance claims and premiums. Insurance should not be a substitute for proactive loss prevention.

Insurance reviews
Insurances should be reviewed at least annually, before renewal, and when assets are acquired or disposed of, and when important changes occur in the business.


• Export creditRunning a business is risky, and often involves putting your own finances at risk. Trying to work out what insurance you need when starting out or even afterwards is difficult. However, running a business with basic insurance is a smart way to manage the risks and reduce uncertainty.

▌What to insure and for how much? If you’re starting out, working out what to insure against before you’ve even made a profit is hard. Will you insure for every possible risk, or just the most likely? Which are more likely in your business? How much cover do you need? If you over-insure you waste money, and if you under-insure and then make a claim, the insurance company can reduce what they will pay you. This information sheet lists the common risks you can insure for and suggests how to get the best deal.
▌What is ‘under-insurance’? When you take out a policy for a certain amount of cover, and it’s less than the value of what’s being insured, the insurance company can (legally) reduce what it pays you for any claim, including small claims. Insurance companies use different ways to work out how much they’ll reduce a claim by if you’re under-insured. Check your policy for details.
▌What insurance do I need by law? If you employ staff, by law your business needs WorkSafe Injury Insurance in case they’re injured. If you’re an employee of your own incorporated company, you’ll need WorkSafe Injury Insurance to cover yourself. If you’re a sole trader or in a partnership, you’re not eligible for WorkSafe Injury Insurance, so a wise move is to get sickness and accident insurance. Sole traders and partnerships should also consider income-protection insurance. Even though not legally required, operating without a public liability policy for the business is not recommended.

You can tailor a policy to suit your business Insurance policies can be changed to suit your needs. If a policy doesn’t cover a particular risk in your business, you can ask to have a separate clause added to the policy. To save money and avoid buying policies you don’t need, consult with an insurance broker or get quotes from several insurance companies.
▌Packaging several policies together is generally cheaper Try to buy your insurance from a company normally offering business insurance instead of one selling mainly domestic insurance. Combined types of insurance (small business ‘packs’) are available. Some examples of these are commercial, shop, retail, industrial, office, trades, and business vehicle insurance.
▌Payments (premiums) can be paid in instalments Insurance companies often let you pay premiums in monthly instalments, but some will charge extra.


Types of insurance
There are many types of insurance to consider for your
business, including:
• Workers’ compensation
• Public liability
• Product liability/faulty workmanship
• Professional indemnity
• Directors and office bearers
• Fidelity guarantee
• Life insurance (including keyman, partnership and
permanent disability)
• Sickness and accident; trauma
• Motor vehicle
• Burglary and theft; money
• Fire and perils; storm and tempest
• Consequential loss
• Machinery failure
• Marine insurance
• Business interruption


references
1. http://www.business.vic.gov.au/busvicwr/_assets/main/lib60208/sbv_infosheet_basic_business_insurance.pdf
2. http://www.smallbusiness.wa.gov.au/assets/Small-Business-Briefs/small-business-brief-insurance.pdf