Small Business Insurance
Small Business Insurance
There’s no doubt about it, running a small business is tough. Not only do you need to manage the business, but you need to think about the inherent risks and how you might manage those should the worst happen. A simple way to ensure you are prepared is to take out business insurance.
Broadly speaking, when insuring a business you need to consider your assets, liabilities, and revenue. Here are some tips on taking out the right small business insurance.
Business Risk Analysis
Insurance is very much a horses for courses product. The kind of insurance you will need for your business depends on the type of business you are in, the business structure and where your vulnerabilities as well as risks might be.
In order to get the right mix of insurance you should first undertake a Business Risk Analysis. A good Financial Advisor who specialises in Insurance can help you with this.
If you are thinking of starting a small business, you should be aware there may be insurances you are required by law to hold:
- Workers Compensation – if you have employees, you must obtain workers compensation cover for them, so they are protected in case of accident or illness. Something to note is that you cannot take out workers compensation insurance on yourself, so you will need to take out personal insurance. Our article on Insurance can help you when considering what type of insurance you might need.
- Public Liability Insurance – If you are likely to have the public visit your place of work, for instance if you are running a shop or even a market stall, or if you visit your clients to undertake work, you will require Public Liability Insurance to protect your business against accidents. This insurance not only covers you for the cost of compensation, but for any professional fees, like lawyers, that might be incurred.
Small Business Insurance Cover
In addition to the legally required insurance, there are many designed to suit the particular needs of different businesses. Generally, you will need a mix of insurance to ensure your business is protected in all eventualities.
A few key insurances you might consider are:
Property & Assets Insurance
If your business owns any physical assets, even if it’s only a couple of computers and desks, you will require property and asset insurance to protect you against fire, flood and theft.
This cover will help support your business experiencing loss of revenue or profits in the event of computer failure or business interruption. Cover is in the form of compensation to help keep the business operating during hard times.
Key Person Insurance
We have talked in our articles on Family Business Succession Planning and Estate Planning for Small Business Owners about the importance of key person insurance. This cover provides financial support, enabling the business to engage suitably qualified people and systems to minimise the impact of key person loss on your business and clients.
Professional Indemnity Insurance
Professional Indemnity Insurance provides you and your business with protection against liability for damages that might occur in the course of your business, and the costs associated with defending legal claims that may be brought against you by clients. It is particularly important when your business is advice or service based.
Management Liability Insurance
This cover protects owners, directors, and senior decision makers in a business against the risks and exposures of running a business. While Professional Indemnity Insurance protects against claims from clients, Management Liability Insurance protects against legal breaches in the running of the business, such as OH&S, sexual harassment claims and misconduct.
This type of cover is particularly important if there are a number of shareholders in the business. If something happens to one of the shareholders, it provides a lump sum payment enabling surviving shareholders to purchase the shares at a previously agreed price. For this reason, it is important this insurance is kept up to date, based on the performance of the business.
This is a key insurance to include in your Business Succession Plan.
Income Protection Insurance
This is personal insurance; however, it is definitely worth considering as part of your overall Small Business Insurance Plan. If you are a director, key person or even a senior manager, having insurance on your income means you will not need to take income from the business while you are unable to work, freeing up funds to employ a suitable replacement until you are back on deck.
With more and more business being conducted online, and information being stored ‘in the cloud’, the risk of a security breach in your data is only increasing.
This insurance provides cover for your liability should there be a data breach involving sensitive customer information, like names, addresses, credit card details and more.
Tax Audit Insurance
Being audited by the Tax Man is not only stressful, but it’s incredibly time-consuming, and can be expensive. This insurance cover provides financial assistance to cover the cost of professional advice from accountants, lawyers, bookkeepers and any other professionals you may need to engage.
Whatever type of small business you own or operate, having the right insurance is essential. The Financial Advisors at Manly Financial Services have a wealth of experience in choosing the right type and level of cover for a wide range of businesses. If you would like to chat, give us a call on (02) 9976 3388 or contact us via the below link.