What is small business insurance?
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How your business is classed impacts your insurance cover. Definitions may differ between insurers, but a small business is classed as one that has no more than 20 employees. This definition can include sole traders and partnerships that don’t have any employees, as well as a range of businesses up to the 20 employee limit. Hallmarks of small businesses include independent ownership, as well as close control by the business owner who often make a significant financial investment in the company.
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 storeroom. The fire was extinguished before spreading through the entire shop but not before causing $90,000 worth of damage The florist had only been open for eight months but the owners had taken out a Small Business Pack with Allianz shortly after they opened the business. Under the business interruption cover of the policy, the couple were eligible to claim for the damage and receive the full benefit amount to cover the repair costs.
Case study: Cover fora small business in action
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 storeroom. The fire was extinguished before spreading through the entire shop but not before causing $90,000 worth of damage
The florist had only been open for eight months but the owners had taken out a Small Business Pack with Allianz shortly after they opened the business.
Under the business interruption cover of the policy, the couple were eligible to claim for the damage and receive the full benefit amount to cover the repair costs.
Small Business Insurance Policy
The list of risks that small business owners need to protect themselves from is, unfortunately, a long one. The first covers to focus on are the compulsory types of insurance such as workers’ compensation cover or compulsory third party cover for business vehicles.
In addition to these, taking out a small business insurance policy can provide cover for a range of risks. Fire and other damage cover protects you against fire, storms, earthquakes and lightning strikes, while business interruption insurance covers your financial loss if unforeseen circumstances render your business unable to trade.
Public and products liability provides cover for personal injury or property damage suffered by a third party in relation to your business activities, while cover is also available for burglary of stock and the theft of money. Glass breakage, equipment breakdown, employee fraud and dishonesty, general property and professional indemnity cover are also offered.
Small Business Public Liability Insurance
For many small business owners, public liability insurance is an important form of cover to consider. This insurance will provide you with cover in the event that you are found at fault and are liable for damages. As a small business owner, you have a responsibility to protect a range of third parties, including customers, employees and the community.
As an example, a customer visiting your place of business could slip over and suffer a nasty injury. If that customer decided to sue you for their injury, you could find yourself having to pay for a costly lawsuit and possibly damages.
Public liability cover lets you insure yourself for a certain amount. This kind of insurance can then help cover the cost of your legal representation, as well as take care of any damages or compensation you are legally liable to pay.
The amount of damage that one disgruntled third party can do to your business’ finances and reputation is quite significant, so this type of small business insurance needs to be carefully considered.
Small business Product Liability Insurance
Product liability cover is a different form of cover that is usually included as part of a small business public liability policy. If your business sells products you want to consider this type of cover.
Product liability cover works very similarly to public liability cover, except it covers you for third party personal injury or property damage caused by products sold by your business. No matter the type of products you sell, even if they would generally be considered to be completely safe, accidents do happen.
The last thing any small business owner wants is to have to face the expensive and time-consuming drain of a protracted legal battle, not to mention the cost of forking out a hefty settlement. As with public liability cover, product liability policies cover your legal defence costs and also any compensation you may be legally liable to pay.
Compare Small Business Insurance
When comparing small business insurance policies there are a number of factors you ought to consider. While it all may be initially overwhelming, having a plan in place before you begin shopping will ensure you end up with the right level of cover. The first step is to be patient and to work out the appropriate covers for your particular situation. Some typical questions to ask before taking out cover include:
- Is public liability cover a must for you?
- What other potential risks does your business face on a regular basis?
Once you know what cover you need, you can start comparing policies.
Get numerous quotes from providers and look beyond cost when you pit each policy against each other. Read the PDS closely to make sure you’re aware of exactly what is and isn’t covered under each policy option—doing this will help you work out how much a policy is really worth.
The most important step, when looking for small business insurance cover, is to determine what cover suits your business. The last thing you want to do is pay for cover you don’t need. So, if you examine the risks your business faces, how likely they are of occurring and what the total amount of damage would be if the event did occur, you can work out the type of policy you need.
It’s also a good idea to look for insurers who specialise in insuring small businesses and to ask others in your industry to give their insurance recommendations. Additionally, there is an abundance of information online that can help you compare policies. Seeking help from an insurance broker can also help smooth out the process.
As with any other type of insurance, be upfront and honest about everything when applying for cover in order to avoid any nasty surprises in the future.
How to Make a Small Business Insurance Claim
The best way to make a small business insurance claim will depend on your provider. Many insurers will allow you to lodge a claim online, while you may also be able to do so over the phone, via fax or via email. You’ll be asked to provide information such as your policy number and contact details, as well as what type of claim you're making and any details relating to the claim.
As is always the case when dealing with an insurance provider, be upfront and honest throughout the application process and provide all the relevant information you can. Depending on the claim you're making, you may be required to provide supporting evidence and documentation. This can include anything from photographs to police reports.
When an incident occurs that may give rise to a claim, notify your insurer as soon as possible. Once you’ve made a claim, your insurer will keep you up to date with the progress of the processing of that claim.
When won't I be covered?
Like any insurance policy, it’s equally important to know when you won’t be covered. You can avoid losing out by checking the exact details of your policy, but there are a few that most policies won’t cover. You’ll probably lose out if your claim involves the following:
- War, rebellion or insurrection
- Government-approved confiscation, requisition or destruction of your property
- A company you acquired after taking out business insurance or any assets related to that company
- Unoccupied buildings or premises
- Damage to buildings by lightning, earthquakes or impact by road vehicles or falling buildings
- An electronic device or software that isn’t Electronic Date Compliant
- Aggravated or punitive damages or fines
- Obsolete equipment that is no longer used in the business
Small Business Insurance FAQs
Q. What cover do I need and how much?
- A. There is no definitive answer to this question because there is a range of factors that will influence what a suitable level of cover is for your situation. These include:
- Your business type
- How many employees you have
- How you deal/interact with customers
- Where you are located and what unique business risks you face.
Assessing these factors will help you determine how much cover is required.
Q. What business insurance is compulsory?
- A. If you have employees, you’ll need to take out workers’ compensation cover. You’ll also be required to take out compulsory third party coverage for any work vehicles. Public liability insurance is a requirement for certain occupations. You can check with your insurance provider to see if it is applicable for you.
Q. How can I get a small business insurance quote?
- A. Many insurance providers make it possible to obtain quotes quickly and easily online or over the phone. Make sure to compare a number of quotes and if you need help, speak to an insurance broker for expert advice.
Small businesses face a range of risks every day, so taking out small business insurance is vital to guarantee the success and survival of the business you’ve worked hard to build and grow. Compare a range of small business insurance policies at finder.com.au and seek help from an insurance consultant to find suitable cover for your needs.