When we start our business we get all the basics covered and then store them in the business memory bank (AKA an unknown folder somewhere) and continue on with the fun stuff like marketing, customer interactions etc. But we need to make sure that we revisit the important stuff at least once a year to make sure that we are covered for any difficulties that our business might face, and we also want to make sure that we are not paying a premium for a service that we no longer need. Firstly, what are the things to consider before you buy business insurance?

1. What potential risks could my business be exposed to?

Take a moment to reflect on the kind of business activities that your business undertakes and consider the following aspects:

• Does your business provide professional services or give specialist advice?

• Where you do you operate your business from? Do you have a physical premises, is your business online, or both?

• How do you interact with your customers? Do they come to you, or do you visit them?

• How many staff do you employ? Do you rely on contractors or suppliers?

• What utilities, equipment, machinery and technology do you need to successfully run your business?

2. What types of business insurance do I need to consider?

When you have a solid understanding of the types of risks and scenario’s that pose a threat to the livelihood of your business, it makes it easier to know what kind of business insurance policies are going to provide the protection your business needs.

Not only is there the risk-protection side of things, but for some professions, business insurance may be a legislative requirement, especially if you belong to an industry body or membership. It may also be a requirement by your landlord if you are renting your business’ premises.

This a quick overview of some of the types of business insurances that are available to protect your business:

• Public Liability insurance

• Product Liability insurance

• Professional Indemnity insurance

• Business Insurance ( ie Contents & Stock, Building, Glass, Money, Business Interruption, Cyber Liability, Tax Audit etc)

3. How much insurance will I need to consider?

There’s no one size fits all solution when it comes to the amount of coverage your business will need, with every business having its own unique business risks.

4. What are some of the terms I need to be familiar with?

To help navigate your way through things like the Product Disclosure Statement, we’ve created quick summary of some of the key terms:

• Exclusions: is a provision in the insurance policy which describes circumstances, events or items for which the policy will not provide cover. This is outlined in your Product Disclosure Statement (PDS)

• Excess: also referred to as a ‘deductible’, is the amount the insured to be born by the insured prior to the a claim being made. For example, if you were to lodge a claim for $3000 and your excess is $500, the amount you would receive from claim would be $2500 as the excess is deducted from the payout.

• Extension: optional cover for losses that fall outside of the normal conditions of the policy which comes at an additional cost.

• Limits’ or sub-limits: refer to the maximum amount that is payable under a policy for an insured event or item..

Find out more details on business insurance via the Australian Govt website here.

Regularly reviewing and updating your policy can be critical to your business’s survival. Neglecting to do so could lead to underinsurance, of which there are three common forms. One is where your business contents are insured for less than 80% of their true value.

Another is when you have the wrong type of insurance—what if you need more than one type of insurance to cover vehicles, products and the public?

Then there are policy exclusions. For example, the landscape architect who, due to a miscommunication, accidentally started work on a design project before getting the necessary council approval. When changes were required to the completed project, the landscape architect tried to claim these costs against their Professional Indemnity insurance. But their policy excluded payouts for “Noncompliant or Non-conforming Building Products”—in other words, work that isn’t up to code.

3 Signs that you need an insurance review:

1. You haven’t updated your insurance in a long time. Businesses change regularly and your business should stay on top of it’s current operating client.

2. Your company has undergone significant changes. If you business has grown, created new offerings, invested in new equipment, has increased turnover, staff changes then it might be time for a policy update.

3. Broader economic changes, ie inflation

Reviewing your policy can seem like a hassle, but remember that insurers need to fully understand your businesses risk to adequately insure it, and in the long run protect you from unforeseen events.