Business insurance provides you with cover for unexpected events that affect your business such as your equipment, stock as well as assets. It can also provide cover for your legal liability in case a third party sues your business and you are found negligent.
When you set up your business, your focus is on registering a business name, getting an ABN and other essential licenses, opening a business bank account and finding premises. You may know or have been advised to also take out public liability insurance in the event that something associated with your business causes injury to someone else. However, we know that many business owners are often so preoccupied with servicing their new customers or clients and running the business, that other insurances are put on the back-burner to be addressed at a later date.
Unfortunately, insurance by its very nature is something that only becomes necessary after a major incident has occurred, and of course, then it’s too late.
Regardless of the size or industry type, you will have to deal with risk on a daily basis and business insurance should form part of managing these risks. For small business owners it is essential as being uninsured at the time of an accident can result in costs that could lead to the closure of your business.
What business insurance do I need?
Your business insurance requirements will vary according to the type of business you are operating, your business structure and size as well as the industry you are in. Some forms of insurance are compulsory for Australian businesses, including:
- Workers Compensation Insurance to protect your employees in the event of an accident or sickness.
- Motor Vehicle Insurance if you use a car for your business
- Some businesses will be required to take out Public Liability Insurance.
Other business insurance policies you should consider:
- Income Protection Insurance which is designed to replace the income of the business operator if that person is unable to work.
- Life Insurance for similar reasons you should hold income protection insurance. Life insurance is only payable on the death of the insured.
- Business Protection Insurance is designed to protect the equity the business owner has in the business. It can cover situations such as being in a partnership and having one partner die or become too ill to work the business. This will provide funds to buy out the interests of the deceased or departing partner while at the same time, protecting the interests of that partner.
These are just some of the scenarios and threats that can cripple a business that is not prepared. It’s important to consider insuring your assets, income as well as liabilities to protect your business against potential risks.
Where to start
Along with tax and accounting advice, many accountants also have qualified advisors who will consider your business needs and provide relevant information about insurance policies to suite your business.
So take the time to reduce your risk and review your business needs today. By finding the right insurance, you can focus on your business activities and protect your future.