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The basics
- What does Business Insurance actually cover?
- Not sure if it's worth having? Consider the following circumstances.
How it works in Australia
- What types of business insurance are there and what do they cover?
- What types of business insurance are compulsory to have?
Business insurance for specific cases
How much will business insurance actually cost?
More information
Basics of business insurance
What does Business Insurance actually cover?
Business insurance protects your business in the event of a serious setback that could involve you paying money (out of your business or your own pocket) to cover unexpected costs. Such setbacks could include:
- Fire
- Explosions
- Flood and storm damage
- Theft or loss of property
- Legal claims for injury to a third party on your premises
- Legal claims from third parties for damages that have arisen through the course of you providing your service
- Serious injury or illness that leaves you unable to work for an extended period
- Loss of a key employee
If one of these events takes place then your business will not only have to pay for the financial burden of the event but the insurer will pay the bill. It gives you peace of mind as you are protected for unexpected events that could bring about financial ruin to your business. There are a number of different types of business insurance that can protect you from the losses listed above that this guide will explore.
Will I be covered for business performance?
Some risks such as an economic recession where demand for your product or services may fall, or a close competitor infiltrating your market are not covered by business insurance but other risks can be.
Not sure if it's worth having? Consider the following circumstances.
Here are some situations where your business could be affected (and protected by the right type of insurance).
- Liability and third party claims. Would you be able to afford a liability lawsuit if someone slipped and injured themselves on your business premises? What if someone injured themselves using your product.
- Natural disasters. Fire, explosions, earthquakes and the like can destroy your business premises and contents. Without any protection in place, how would your business be able to cope with the huge financial impact of these unforeseen events?
- Theft. Thieves can steal your stock or business contents, leaving you significantly out of pocket.
- Losing an owner. How would your business continue to operate successfully if one of the owners died, became totally and permanently disabled or suffered a terminal illness? Would you lose profits? Would you have a plan in place to ensure a smooth business succession?
- Losing a key person. What would happen if a key person suffered a serious illness, a serious injury or even died? Would you be able to manage the resulting loss of profit? How long would it take you (and how much would it cost) to find, recruit and train a suitable replacement?
- Workplace compensation. What if a voluntary worker suffered an injury while performing duties for your business and you had no insurance cover in place to help them out?
How business insurance in Australia works
What types of Business Insurance are there and what do they cover?
There are a number of different types of cover available on the Australian market. Most can be either purchased separately or bundled together for both convenience and savings. The main types of business insurance include:
Professional Indemnity
When trained workers or businesses provide a specialised service, those clients rely on the advice they receive being accurate and correct. In some cases a client may launch legal action against you if they believe that a negligent act or a breach of professional duty on your behalf has caused them to suffer a loss.
| What type of business is it for? | How does it work? |
|---|---|
| Professional Indemnity Insurance is a special form of cover for professionals who offer their expert advice or services to clients. | Professional indemnity insurance is designed to protect you against legal claims for incorrect advice or negligence (which are not covered under other general insurance policies). |
Public liability
Accident can occur on a business premise e.g. a liquid spill on a floor and a person unexpectedly slipping and falling. This when public liability insurance is useful.
| What type of business is it for? | How does it work? |
|---|---|
| Public Liability Insurance is designed for businesses that have a physical premise. | If anyone is injured on your property and you are found to be negligent, then the injured person has the right to claim for the financial hardship that their injury has caused them. Public liability insurance helps cover you for any compensation to a victim e.g. for an injury. |
Management Liability
It's designed to protect a company’s directors and officers from any legal liability they may incur in the process of running a business.
| What type of business is it for? | How does it work? |
|---|---|
| Management liability insurance is for businesses who have key stakeholders. | Though it is sometimes confused with professional indemnity insurance, management liability insurance protects directors and officers against legal claims that they have mismanaged a company. This could include:
|
Voluntary workers cover
Voluntary workers perform crucial roles for many organisations. Sometimes-voluntary workers can suffer injuries while performing duties for your business, and as they are not employees, they are not covered by workers’ compensation. Despite this, only a small percentage of businesses actually have insurance cover in place to help out volunteers in these situations
| What type of business is it for? | How does it work? |
|---|---|
| Voluntary Workers cover is for businesses that rely on volunteers to function. | Voluntary Workers Insurance is designed to ensure that such workers do not suffer any financial loss as a result of their injury. This insurance offers either lump sum or ongoing payments to provide financial protection for your voluntary worker |
Construction Insurance
Sometimes referred to as Construction Risk Insurance, this type of cover is designed to protect your business against a range of issues and events that may arise during construction, alterations, testing and defects liability periods after construction has been completed. This type of insurance is unusually required as standard public and products liability products generally exclude construction activities.
| What type of business is it for? | How does it work? |
|---|---|
| Construction Insurance is designed for businesses that are involved with building and construction. | Construction insurance provides cover for a range of losses including:
|
Business Expenses Insurance
| What type of business is it for? | How does it work? |
|---|---|
| This is applicable to most types of businesses who rely on a main business owner to function. | This is insurance available specifically to protect the business owner if he or she becomes sick or is subject to an injury. If covered by this type of insurance then an amount will be paid on a monthly basis over a 12 month period to cover ongoing expenses faced by business owners including:
Business expenses cover can either be purchased separately or bundled with Income Protection Insurance |
Cyber liability insurance
As many businesses now conducted electronically, many companies face significant risks if their computer systems were to be hacked in any way..Private and confidential information about clients could be accessed or even destroyed, all of which could potentially be very damaging for any business
| What type of business is it for? | How does it work? |
|---|---|
| Cyber Liability Insurance can be an ideal form of cover for any business that relies on technology and software systems. | Cyber Liability Insurance provides financial protection if your business is ever a victim of cyber crime. This form of insurance cover has been developed in response to advances in modern technology and the increasingly connected nature of the global business world. |
General liability insurance
If a serious accident takes place and the victim has the right to make a claim against your business for any financial hardship that they have suffered as a result of the accident. This could include loss of wages while recovering which could involve a long recovery period. Such an expense without general liability insurance could run into hundreds of thousands of dollars.
| What type of business is it for? | How does it work? |
|---|---|
| General liability insurance is designed for businesses with a physical premise | General liability insurance is similar to public liability insurance but this covers for accidents and injuries to anyone on your premises, not just visitors. |
Income protection
| What type of business is it for? | How does it work? |
|---|---|
| Income protection is for any business who wants to cover employees against the loss of income in the event of an accident. | Income Protection Insurance will provide an ongoing monthly benefit of up to 75% of your income if you are unable to work due to serious illness or injury.Key Features of Income Protection Insurance
|
What types of business insurance are compulsory to have in Australia?
Some types of insurance are mandatory for Australian business to have in place. These include:
Workers Compensation Insurance
All employers are required to have Workers Compensation Insurance in place. Conditions can vary state to state but this cover will usually have to be taken out within 5 business days of employing people. Failure to do so will result in a penalty.
Workers compensation insurance covers medical costs and lost wages if a worker suffers a work-related injury. It can also cover you for legal costs made against you by the employee if they claim that you failed to provide a safe working environment.
Compulsory Third Party Insurance
If you own a motor vehicle, you must pay for third party personal injury insurance. This is generally included in your vehicle registration fee and covers personal injury suffered by third parties in an accident. You will not be covered for damage to the vehicle or any vehicles that are damaged in the event of an accident.
Public Liability Insurance
Certain types of business are required to take out public liability insurance. This type of insurance covers your for damages or injuries to other people and property if it is found that you acted negligently. This could include:
- Injury or death due to use of faulty product
- Negligent advice
- Nervous shock
- Property damage
- Pure economic loss
There may be other types of cover that are compulsory to have depending on the nature of your business. For example, some states will require construction companies to organise home warranty insurance prior to home construction.
Important guides to help you understand cover
Is Business Insurance Tax Deductible?
Find out if you can claim tax on your premium
Business Insurance for Your Small Business
Still need business insurance if working from home?
Steps to compare Business Insurance Quotes
How to get the best bang for your buck
How business insurance works in specific cases
I run a small business...what business insurance should I have?
It will really come down to the nature of your business and the actual service you provide. An insurance consultant can help you evaluate your own situation to determine an appropriate policy for your situation. A number of insurance companies now offer small business insurance packs so you can get cover for a whole range of different losses under the one policy. This means you can select cover options that are suited to your industry, occupation and budget and tailor the cover closely to your needs.
Types of losses you can be covered for with these business insurance packs include:
- Fire and perils. Covers business premises and equipment from storm, fire and malicious damage.
- Business interruption losses. Covers ongoing business expenses that you still need to cover while you can't work following a serious illness or injury.
- Theft. Covers your property against loss or damaged due to defined events that relate to theft. This might be theft following forcible entry or assault or violence.
- Money. Covers loss of money in transit or money on your business premises. Cover will only be provided for a specified amount located in secure locations of your business or on your person.
- General property. Receive cover for loss or damage of general property of your business.
- Public and product liability cover. Provides cover for legal claims from third parties that are either injured on your business premises or away from your business as a result of your product.
- Glass. Covers accidental breakage of glass at your business premises.
- Personal accident insurance. Covers you the business owner and employees in the event of serious illness or injury.
- Employee dishonesty. Covers the loss of business property (including money) as a result of the fraudulent behaviour of a current employee.
- Machinery breakdown. Covers damage to business machinery caused by breakdown and the cost of hiring temporary machinery. This option can also cover the loss of stock as a result of machinery breakdown.
- Computer/electronic equipment. Covers accidental loss of and breakdown of cassomputers and/or electronic equipment.
- Transit. Covers damage to stock or goods following defined events including fire, vehicle breakdown while goods are in transit.
- Tax audit. Covers professional fees incurred in connection with an audit of the business.
Case Study: Fire Cover at Play
A local florist in Bundaberg Queensland sustained substantial damage after a fire in an industrial bin in the rear car park spread into the back store room. The fire was extinguished before spreading through the entire shop but not before causing $90,000 worth of damage
The florist had only been opened eight months but the owners had taken out a Small Business Pack with Allianz shortly after they started trading.
Under the business interruption cover of the policy, the couple were eligible to claim for the damage caused and receive a full benefit amount to cover the repair costs.
So does business insurance cover loss of income?
Yes. Under business interruption insurance, a business will be covered for loss of income that it suffers following an unforeseen event. This means that while the business is being repaired, a replacement income will be provided to account for the loss of revenue.
This typically includes:
- Profits that would of been earned based on the previous financial statements
- Rent of a temporary location while repairs are being made. This may include advertising costs to let customers know of new location
- Staff wages while the business is temporarily closed
- Additional expenses that ensure the business id able to continue to operate while repairs are made
- Fixed costs that still have to be covered on previous property that is under repair
The benefit will be paid until the end of the business interruption period that is determined at time of application. This is known as the indemnity period.
How long should my indemnity period be?
This will differ from business to business so you will need to take the time to assess the risks that face your business and how long they could take to recover from. As an example, insurer CGU reportedly had a customer that was only able to recommence operating after a period of 18 months after the business was consumed by a fire.
How much will business insurance actually cost?
Factors that affect cost
Unfortunately there is no one-size-fits-all solution when it comes to business insurance. The premium you pay for cover will depend on a number of factors including:
- The nature and scope of your business i.e. what your business actually does: The higher the level of risk of the industry your business operates in, the higher the cost of cover. As an example, tradesmen typically present a higher level of risk to insure than say a librarian or office worker and hence will face higher premiums.
- The size of your business including number of staff and annual turnover: A digital marketing company with 50 employees will obviously cost more to insure than a sole trader carpenter, even though the carpenters occupation may be considered higher risk.
- The types of business cover your business requires: The nature of your industry may require you to have a additional protection in place for specific risks i.e. cyber liability risks or goods in transit cover.
What can I do to reduce how much I pay for cover?
There are some key steps you can take to avoid overpaying for cover you don't actually need. These include:
- Consult with an insurance broker. A broker can help you assess the risks facing your business and tailor your policy with the features you actually need. They can use their knowledge of the market to compare options for you.
- Increase the excess you pay. If you are comfortable paying a higher excess in the event of a claim, increasing it at application time will reduce your premium.
- Bundle and save further. A number of companies now offer insurance packages that combine a number of cover types for a reduced rate.
- Skip the expensive extras if you don't need them. You may find the additional options available on your policy aren't actually relevant to your business. Strip your policy back to only include the features relevant to your business.
Can I claim tax on my business insurance?
According to the ATO, you can claim tax deductions for most costs that are incurred in running of your business. There are however exceptions to this. You are not able to claim for private or domestic expenses.
Insurance premiums are deductible if they have a necessary connection with earning an assessable income. Premiums are deductible for the following types of insurance:
- Workers Compensation Insurance
- Professional Indemnity Insurance
- Income Protection Insurance
- Public liability insurance
- Fire and theft cover
The expenses that you are eligible to claim will depend on the structure of your business, whether you hold and sell trading stock and the nature of your income and expenses. If you are unsure whether or not you are eligible to claim, it's making an enquiry with a tax professional.
Can I claim tax on key person insurance?
Premiums for key person insurance may be tax deductible if the policy was taken out for revenue purposes i.e. to protect revenue generated by the business.
Premiums for key person insurance taken out to cover capital losses are not tax deductible. This includes a benefit payment to the workers estate following his or/ her death.
I've already got insurance but I think it's in need of a review...what can I do?
Got cover in place but not sure if there may be something more suitable out there? Here are some steps to review existing cover:
- Assess how your business has changed in the last 12 months. Has your number of staff grown or decreased? Have you obtained new assets?
- Cut cover you don't need. Do you have cover in place that is no longer relevant to the risks your business has? Can these be trimmed back?
- Add cover for any new risks your business is now facing. Do you face new risk events that could be cause a loss of revenue?
When won't I be covered?
While the exact level of cover offered differs from one business insurance policy to the next, every policy will contain a list of general exclusions which specify conditions when claims will not be paid. These typically include:
- If your claim relates to an act of war, terrorism, rebellion, revolution or insurrection.
- If your claim arises from the confiscation, requisition or destruction of property by any government or other local authority.
- If your claim relates to radioactivity or the use of nuclear materials.
- If your claim relates to a company you acquire during the period of insurance, or any property or legal liability associated with that company.
- If your claim relates to unoccupied buildings or premises, except for loss or damage to insured property by things like;
- Lightning, earthquake, impact by road vehicle, impact by trees or branches, or impact by falling buildings or structures which do not belong to you.
- If your claim arises from any software or electronic device not being Electronic Date Compliant.
- If your claim relates to aggravated, punitive or exemplary damages, fines or penalties.
- If your claim is for obsolete plant and equipment that is no longer used in the business.
Is it worth using a broker to help me find cover?
- Business insurance can be complex. There is a wealth of business insurance policies available on the market, each of which has been designed to meet a specific need. Determining the right type and level of cover for your business can be quite a difficult task, so it pays to have help.
- Brokers are experts. Business insurance brokers have a wealth of experience and an in-depth understanding of the business insurance market. They know which policies are available and which ones will be right for you.
- Brokers work for you. Just like your accountant works in your best financial interests, it’s the job of a broker to do everything they can to get you a suitable insurance deal.
- Brokers know your business. A good business insurance broker will take the time to understand the ins and outs of your business. This will give them the information they need to formulate a reliable insurance strategy that matches all your needs.
- Brokers know the market. A business insurance broker knows exactly what policies are available on the Australian market. They can hook you up with policies and insurers that you would be unaware of if you were simply trying to arrange cover yourself.
- There are specialist brokers available. You may be able to find an insurance broker who specialises in finding cover for businesses in your industry. This ensures that they will have an even greater knowledge and understanding of the risks facing your company.
Still not sure? Some final questions you might have
Who offers business insurance?
Insurers in Australia include AAMI, Allianz, NRMA, CGU, GIO and QBE.
Where can I get business insurance?
You can purchase cover direct from the insurance brand or with the help of an insurance adviser. A business insurance adviser will help you compare the different options available and assess your business risks to find an option that's suitable for you.
What insurance do I need?
This depends on how your business is set up. If you employ people you must take out workers compensation insurance to protect your employees. If you own a vehicle, you need to pay for third party personal injury insurance which insures your vehicle.
How do I make a claim?
Your insurance provider would have supplied a number and instructions about how to make a claim. In most cases you will need to supply proof of ownership or legal responsibility and as many details as you can about your claim.
How do I know if I need business insurance?
Nearly every business can benefit from having some form of insurance cover in place. It offers financial protection against a large amount of common risks, giving you peace of mind that your business will be able to survive if something goes wrong.
What is the difference between public liability insurance and professional indemnity insurance?
Public liability insurance provides cover for breaches of your general responsibility to the public, such as when a customer slips and injures themselves in your store. Professional indemnity insurance covers breaches of your professional duty and acts of negligence, such as an architect’s error when designing a house.
How do I know if I need public liability insurance?
If you regularly deal with the general public or have customers and clients visit your business premises, you may need public liability protection.
What factors will affect my business insurance premium?
Factors such as the type of cover you apply for, the size of your business, where it is located, the type of business you run and your claims history can all have an influence on your insurance premiums.
How can I find the right policy for my business?
The most important thing to do is enlist the services of a qualified insurance broker. A broker has experience and knowledge of the insurance market, and can match your business with a policy that meets all your insurance needs.
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Hi i am a snake handler and remove snakes from private residence’s . Would you be able to give me some prices on public liability insurance.
Hi Jaime,
Thank you for your inquiry.
The cost or premium of a public liability insurance would depend on some factors including but not limited to the nature, size, and location of your business. Insurers would also assess any potential risks associated with outsiders who use the premises when considering the cost. So if you’d like to get and compare the quotes for public liability insurance from different brands, you can fill out the form found on this page. From that page, you can also get more details on what are and aren’t covered by public liability insurance and more.
Hope this helps.
Cheers,
May
Who has the cheapest public liability insurance for market store insurance of $20,000,000
Hi Kev,
Thanks for getting in touch. finder.com.au is a comparison service and we do not currently have the facilities in place to be able to provide online quotes at this time. If you would like to get a quote from an adviser, you can do so by entering your contact details into the form above.
All the best,
Richard
Hi, I have few q’s on public liability can some one get back to me please. Thank you.
Hi Jaymz,
Thanks for getting in touch. If you would like to speak with and adviser and receive a quote for public liability insurance, please complete the contact form above.
Cheers,
Richard
Please advise what insurer cover Market stall insurance, Public liability insurance, regarding Childrens temporary airbrush tattoos (non-invasive)
Hi Peter,
Thanks for getting in touch. finder.com.au is a comparison service and can’t provide personalised financial advice. If you like to speak with an adviser, please complete the form above and someone will be in touch.
All the best,
Richard
I would like to obtain a quote for workers compensation insurance for a personal training business that employs 1 staff member with an annual turnover of $50,000 located in Canberra.
Hi Kristie,
You’ve come to the comparison service finder.com.au – we are not an insurer.
If you’d like to obtain a quote with an adviser simply fill out the form at the top of the page. For industry, you can select personal and other services.
I hope this helps,
Maurice