Business insurance: key areas and essentials

Businesses without adequate insurance can go under - no matter what the industry. A major fire, business interruption or long court case can be blows big enough to cripple businesses. That said, you don't want to pay for cover you don't need. So what do you need and where do you get started?

There are three main areas of insurance that most business are careful to cover:

• Assets and revenue - assets are stock, items and property the business owns; revenue includes the revenue generating capabilities of the business and may also mean cash held on the premises but check with your insurer as definitions can vary
• Liability - these are your legal obligations and compulsory costs you may incur arising in relation to injury to others or damage to their property and assets
• Personnel - protection against loss arising from personal accident or illness involving yourself or your employees. It may be easy to think of this as your occupational health and safety obligations

Type of business insurance coverage

There are many different kinds of policies used by small businesses, depending on the particular industry. You will need advice about the specific needs of your type of business, but most small businesses seek cover for the following:

• Business interruption by damage
• Burglary
• Employment practices liability (sexual harassment, wrongful dismissal)
• Engineering equipment (breakdowns and explosions)
• Fire & perils – covering destruction/damage to buildings & contents
• Goods in transit
• Keyman insurance (or “key employee life insurance”: cover on the life of the business owner or an essential employee)
• Loss of money
• Cars and other vehicles
• Personal accident, illness or disability (protecting against inability to work and the resulting loss of income)
• Products liability
• Professional indemnity
• Public liability
• Workers’ compensation
• Perishable food or other stock deterioration
• Computers and computer records
• Business machines and equipment
• Legal expenses/tax audit
• Fidelity guarantee
• Product recall
• Credit or bad debts.

Ask your insurance broker about appropriate business insurance to suit your circumstances. Discussing the matter with a specialist will help you to make an appropriate selection of cover and ensure you are adequately prepared in the event of a claim against your business. The Insurance Council of Australia can provide further information and advice as can the National Insurance Brokers Association.