Growth Customer Experience Productivity Business IQ Trends Success Stories Tech Solutions Awards Business Tools Subscribe Tech Enquiry
Alexandra Cain
Business Journalist

Alexandra Cain writes regularly for the small business sections of The Age, Sydney Morning Herald and Australian Financial Review

Alexandra Cain
Business Journalist

Alexandra Cain writes regularly for the small business sections of The Age, Sydney Morning Herald and Australian Financial Review

The right insurance is essential for every small business, but understanding what you need can be difficult. Alexandra Cain speaks to Advisor Director at Weath Planning Partners, Amanda Carrar and Principal at LegalVision, James Douglas to get informed.

There is a huge range of different insurances small business owners can buy. Some are compulsory, while others protect the business from adverse events such as natural disasters, the death of a key person or an important customer’s bankruptcy.

So what’s the best way to get a handle on the right combination of insurances for your business? 

Cracked wall with splashes of black paint

Must-have insurance

Public liability and workers’ compensation insurance are some of the most important covers for small businesses. Although the laws vary from state to state, in Amanda’s view, any business that employs staff, has contractors, uses suppliers and has clients must have these insurances.

Amanda Carrar, Adviser Director with financial advice business Wealth Planning Partners explains that although workers compensation insurance / WorkCover is compulsory if you have employees, it doesn't cover company directors.  Instead, Amanda recommends that directors get personal income protection insurance.

Amanda also adds that property insurances aren't always compulsory, but lease or bank conditions may require it. Ensure that you seek advice from a qualified financial advisor to ensure you get the required insurances. 

Additional insurance

James Douglas, Principal of law firm LegalVision explains a number of other forms of insurance are important to have in place to properly protect a business.

“There are many circumstances in which goods or services a small business creates or sells could cause injury, death or damage,” he says.

James suggests that it is important to have product liability insurance if a business is supplying or producing services and products.

He says small business owners should also consider professional indemnity insurance if the business provides professional services. This includes lawyers, accountants, doctors and architects.

James also suggests that you check with your relevant professional organisation as to what insurances may be needed as some professional bodies may require the business and its employees to have indemnity insurance.

More than the basics

While these are the basics when it comes to insurance, James says there is a range of other insurances many small businesses need to consider such as:

  • Revenue and assets insurance. This protects against stock deterioration, property damage including fire and flood damage and loss of profits, employee theft or destruction to electronic equipment and business loss or loss of profits
  • Personal accident and sickness insurance. An insurance that provides protection for business owners if the business has no employees and the owner isn’t covered by workers compensation
  • Death and permanent disability insurance. This provides a cash lump sum if the policy is triggered

Many insurers package up a range of different insurance policies under a business package tailored for the entity’s unique circumstances. It’s worth talking to an insurance broker who can provide advice on the right insurance for the business’ needs and also negotiate the best price for policies.

Seeking advice

To ensure the business has the right cover for its individual needs, James says in the first instance it’s an idea to examine the cover being offered and the insurance company.

Then find out three main things:

  1. How much the insurer will pay out in the event of an insurance claim
  2. Excesses that are payable and what exclusions apply to the insurance and the business
  3. Formulas used to calculate premiums and how the business can reduce premiums

“Compare a number of different written quotes before making your choice,” he advises.

It’s also an idea to undertake a risk assessment to ensure insurance properly addresses the business’s financial situation. This includes identifying potential risks, investigating strategies to manage and minimise those risks and implementing systems to prevent and reduce accidents.

“Properly training and providing guidance to employees to reduce risks and making sure equipment and technology is maintained are other ways to help reduce business risk,” says James.

Keep your business efficiency in check.

Check out our top six small business apps.

Find Out MoreKeep your business efficiency in check.

Person typing on wireless keyboard
Trends
Explainer: Decode the latest business tech jargon

Here’s your go-to resource to understand tricky tech jargon. With new technology comes new terminology. So many acronyms and jargon words are created on the internet all the ti...

Data back-up animation
Business IQ
Business IQ
Quick 5: Data back-ups explained

For all businesses, failing to back-up data can have drastic consequences. Here are five back-up essentials you need to know about. Backing up your data may seem a mundane tas...

Woman working on laptop in dark room
Productivity
Productivity
A closer look: Technology solutions for working flexibly

Today’s tech makes working from home not just possible but also efficient and effective. Technology has radically transformed the way we work. We work from home or the office, ...

Top-down view of laptop and stationary
Growth
Growth
How-to: Get the most out of your content strategy

Build an effective content marketing strategy with these digital techniques. In the war for attention, the challenge for a small business is to create content that engages the ...