Business contents insurance isn't legally required in Australia, but most commercial leases make it mandatory before you can occupy a premises.
Underinsuring your contents can trigger an 'average clause', meaning the insurer pays out a reduced amount even on small claims.
Most policies cover customer items in your care, custody or control, plus glass cover for shopfronts is usually included or available as an add-on.
Adding security features like back-to-base alarms, CCTV and deadlocks can lower your premium by reducing theft and vandalism risk.
What are business contents?
Business contents are everything you use in the office or wherever you operate your business. This can include computers, office equipment, furniture and equipment, as well as the personal belongings of customers for which you are responsible.
If you add portable contents cover to your policy (sometimes known as portable equipment insurance) business contents can also include the items you take out and about with you, like your laptop, mobile, camera and tablet.
What's covered by business contents insurance?
Business contents insurance is designed to protect the possessions and equipment kept at your business's premises. It can cover you for loss or damage caused by:
Covered
Storms
Lightning
Earthquakes
Theft
Explosions
Breakage of glass
Not Covered
General wear and tear
Theft if doors or windows were left unlocked
Loss or damage to electronic data
Loss or damage due to intentional acts
Unoccupancy (unless they agree otherwise with you)
Known defects
Optional add-ons
Cover for items at a different location. You can also take out cover for contents that have been temporarily moved to a different location away from your business premises.
Breakdown of machinery. Breakdown of machinery and electronic equipment can be added on with some policies.
Make sure you read the general exclusions section of the insurer's PDS
2022 Finder research shows that 23% of Australians can't be bothered reading the PDS. It may be boring but it's worth it in the long run.
How much does business contents insurance cost?
If you're looking to take out insurance cover for your business contents, keep in mind that there are a wide range of factors that can influence just how much your policy will cost. Of course, the amount of insurance you wish to take out is obviously going to have a bearing on how much you have to pay for premiums, so it's important to work out exactly what level of cover you need and can afford.
Size of Business
The nature and size of your business will also play a big role in determining your premiums. Some businesses, for example a firm that specialises in earthmoving services, will most likely need cover for a range of heavy machinery that is much more expensive than the cover needed for a small office supplies business. Some industries obviously attract larger sums insured, while it also stands to reason that larger businesses will have more to insure.
Claims History
Insurers will take your business's claims history into account when assessing your application. If storm damage or burglary have caused problems for you in the past, this could affect the cost of your future insurance premiums. In addition, your business contents insurance could cost more depending on where your business is located. As an example of this, storm damage can pose much more of a regular threat in some areas of Australia than it can in others.
Other types of insurance to be aware of
If you run a business, there are a few other important types of insurance you need to consider:
Workers compensation insurance. If you have employees, you're required to have this to protect them in case they're in an accident or get ill.
Public liability insurance. This is often compulsory for certain types of businesses and if you're self-employed. It also covers you for third-party death or injury.
Business interruption. Business interruption can cover you for losses if an insured event stops your business from operating.
Third-party personal injury insurance. If your business uses vehicles as part of your business, you need to have compulsory third party (CTP) insurance to cover you against personal injury claims.
Talk to a broker about business contents insurance
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Business contents insurance has specific exclusions that are important to understand. It typically does not cover general wear and tear, loss or damage to electronic data, or damage resulting from intentional acts. Theft is usually excluded if doors or windows were left unlocked. Most policies also do not cover known defects or unoccupancy unless you have a specific agreement with your insurer. Always refer to your policy's PDS for a full list of exclusions.
Standard business contents insurance generally protects items only when they are located at your specified business premises. However, many insurers offer an optional add-on called "portable contents cover" or "portable equipment insurance". This extension provides protection for items you regularly take away from your business location such as laptops, mobile phones, cameras and tools.
Yes, business contents insurance typically covers your business's stock or inventory. This includes merchandise, raw materials and finished goods held for sale or used in your business operations. It provides financial protection against loss or damage to these items due to insured events like fire, theft or storms. It is crucial to accurately value your stock to ensure adequate coverage.
Business contents insurance protects the movable items inside your business premises, such as equipment, furniture, stock and supplies. Commercial property insurance on the other hand covers the actual physical structure of the building itself including fixtures fittings and permanent installations. If you own your business premises you would typically need both types of cover. If you lease your premises you would generally only need business contents insurance.
To determine the appropriate sum insured for your business contents, you should create a detailed inventory of all your business assets. Estimate the current replacement value of each item including equipment, furniture, fixtures and stock. It is often advisable to consider 'new for old' replacement costs to ensure you can replace items with new ones if they are lost or damaged. Review your sum insured regularly especially if you acquire new assets or your stock levels change.
Many business contents insurance policies offer 'new for old' replacement for eligible items. This means that if your insured contents are damaged beyond repair or stolen, the insurer will cover the cost of replacing them with new items of similar kind and quality without deducting for depreciation. However, some policies may offer 'indemnity value' which accounts for depreciation. Always check your policy's PDS to confirm the type of cover provided for replacement.
Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards.
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