business-insurance (1)

July 2018 Guide to Business Expenses Insurance

What is business expenses insurance?

Business expenses insurance is gaining popularity among business owners these days. This is because it gives entrepreneurs solutions to help support their financial ability to maintain their business operations in case of an illness, tragic event or misfortune happening to them.

How it works

If you find yourself unable to work for an extended period of time because of illness or injury, this insurance can help cover the expenses your business requires in order to keep running.

Can I get cover straight away?

Plans vary, but you generally need to be unable to work for at least 14 days before you can claim benefits.

Make an enquiry for Business Expenses Insurance

What's covered by business expenses insurance cover?

Business expenses insurance is distinct from the insurance you take out on the physical assets of your business such as equipment, inventory or premises. For example, AIA’s business expenses plan covers:

  • Accounting and audit fees
  • Regular advertising costs, postage, printing and stationery
  • Electricity, gas, heating, water, telephone and cleaning costs
  • Security costs
  • Rent, property rates and taxes
  • Membership fees, publications and subscriptions to professional bodies
  • Leasing costs of plant and equipment
  • Bank charges and interest on business loans
  • Business-related insurance premiums
  • Salaries and other related costs (e.g. payroll tax, super contributions) for non-income generating employees of your business
  • Net costs associated with employing a locum (replacement worker to cover your duties)

What does business expenses insurance provide?

Business expenses insurance generally provide the following (taken from Asteron Life Insurance PDS):

  • Monthly benefit. For a business owner, business expenses insurance will cover monthly expenses of running your business, up to a maximum monthly total benefit determined at policy commencement.
  • Death or disablement payment. If you become terminally ill or permanently disabled in the course of work, the insurer will cover you for a predetermined benefit period.
  • Variable waiting period. Most policies require a minimum of 14 days unable to work before you can claim benefits, but you can nominate a longer waiting period up to 90 days to lower your premiums.
  • Premium waiver. Premiums will be halted during benefit payment, and any premiums paid during the waiting period will be withheld or refunded.
  • Benefit indexation. Payments will automatically increase each anniversary period by an amount related to the Consumer Price Index (CPI).
  • Cosmetic and elective surgery. Business expenses insurance will cover disabilities arising from cosmetic surgery, elective surgery or surgery involving organ transplant.

How does it compare to income protection insurance?

Business expenses insurance and income protection insurance cover different things.

If you become disabled or otherwise unable to work, income protection insurance will usually cover 75% of your monthly income for the claim period, up to $10,000 a month. This can cover costs like rent, credit card repayments, childcare costs or basic needs. This type of insurance covers you personally as a worker.

If you become disabled or otherwise unable to run your business, business expenses insurance provides the benefits listed above. This type of insurance covers you as a business owner.

Becoming disabled while having both income protection and business expenses insurance could result in benefits that cover both your business and your personal expenses.

An example of how cover works

An architect for 12 years, Rebecca dislocated her shoulder while helping a friend move heavy furniture to a new apartment. Despite suffering no permanent harm, she was forced to take time off from her practice to allow her shoulder to heal and for the pain to go away.

Fortunately, Rebecca had invested in a Business Protection Expenses Insurance policy from AIA. Her insured monthly benefit equated to about $22,000 a month, which meant she could hire another architect to manage her architecture firm and pay for its rent and expenses.

After three months recuperating at home without any concerns for her practice, Rebecca was able to return to work.

Product details Maximum cover Maximum Entry Age Cooling-off
(days)
NobleOak Business Expenses
NobleOak Business Expenses
Monthly benefit of up to $25,000 payable in the event that the Life Insured is disabled due to injury or sickness and unable to work. Benefit is the lesser of monthly benefit and 1/12 of the Allowable Business Expenses incurred during preceding 12 months. $25,000 59 30 Get quoteMore info

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Maurice Thach

An insurance researcher and writer for finder.com.au who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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