Working out what insurance cover you need for your small business can be challenging. It can be difficult to anticipate what risks might apply to your operation before they happen and all too easy to overlook something you're unaware of. This checklist of questions is designed to help small business owners identify the policies they may need — with some tips about how to approach getting them.
Some insurers offer bundled packages that include the types of cover commonly required by SMEs. These may have the flexibility to add or subtract policies to customise the package to your business needs. The checklist below can help you compare your requirements to what the package offers and decide if a bundled package works for you.
Whether simply conducting business online (exposing you to cyber threats), working with dangerous materials or in a building open to the public, your business will carry risk.
For insurance purposes it's vital that you and your insurer understand what these are, so full and complete disclosure is important. Otherwise if something goes wrong and it isn't covered by your business insurance, you may be left with the responsibility for paying for damages yourself.
Some industries and professions require you to hold specific insurance cover before you can operate your business or enter into legal contracts, and this may vary according to state or territory.
Be sure to check regulatory requirements for your business and location(s).
For example, if you employ workers on any basis — including voluntary — in your business you must take out workers compensation insurance in case they are harmed in any way while performing work duties.
In some states and territories this must be purchased from a mandated insurance provider, in others you may be free to choose the insurer.
If you use your own car for business activities such as client meetings, deliveries or site inspections, or have a fleet of any size you should consider commercial vehicle insurance, which can provide broader cover than standard personal vehicle insurance. At a minimum, remember that it is compulsory to hold third-party liability insurance for each of your company vehicles.
Even if you don't own the premises you operate from everything that you do use in your business activities can be considered an asset, from plant and equipment, electronics and office furnishings to outbuildings and tools of the trade, and can be protected by property insurance.
Doing a walk-through can help with making an inventory for insurance purposes, and it's a good idea to keep purchase and maintenance work receipts to assist with assigning replacement values.
In all cases it is recommended that you need to insure for the replacement value, not the purchase price.
For some business activities this type of insurance which protects you against damages claims is compulsory. But while event organisers and construction businesses, for example, have clear cut risk exposures, for others the risks might not be so obvious.
Basically, if members of the public have access to your premises or work being conducted then they may injure themselves or their property could be damaged. Public liability insurance is designed to cover the legal costs involved if the injured person or owner of the damaged property brings a case against your business, including incident investigation, legal representation and settlements or penalties.
Having this type of cover can save you hundreds of thousands of dollars!
Any business that provides a service to clients — and this includes a huge range of occupations from accountants to personal trainers and tattooists — can run the risk of the customer being dissatisfied for any number of reasons. You may have overlooked something that turned out to be important, one of your staff may have made a mistake or you could have simply misunderstood the requirement.
In any case the client may feel strongly enough to bring a legal action and if that happens it pays to consider holding professional indemnity insurance to cover your costs.
The past few years have demonstrated that business owners have no control over enforced closures and how long it might take to resume trading. While some may have enough cash in reserve to continue covering expenses such as rent, electricity and wages for a limited period of time, small businesses typically can't lose turnover for long.
Business interruption insurance covers your business costs and helps compensate for lost revenue for the specified term of liability. Not underestimating this period is critical to riding out the disruption to reopen your doors.
If your business risks are straightforward and you have an understanding of the types of cover you need you may be able to buy direct through an online facility, but there are many advantages to using an insurance broker. This is especially true if you have complex business risks or are in a hard to insure industry.
Resources: an insurance broker has access to a greater choice of insurers than you can find by yourself through online options.
Terms: as a professional an insurance broker may be able to negotiate for more advantageous terms or scope of cover by leveraging existing relationships with insurers.
Comprehensive coverage: a broker may be aware of risks in your operations that you don't realise or have overlooked.
Industry knowledge: a broker who specialises in your industry sector can often bring greater depth of knowledge of the potential risks involved — and the most appropriate insurer for your business.
Working with a broker to understand your business risks can help you to identify the right insurances to mitigate your risks. Our Gallagher small business specialists can put together a program of insurance cover for your business that protects you when you need it, at claims time.
We have Gallagher brokers nationally across small to large businesses, in all industries, to provide professional expertise.
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