Prior to the COVID-19 pandemic, general insurers were faced with a significant rise in claims because of the early 2020 hailstorms across Victoria, Canberra, and NSW, as well as the devastating 2019-20 bushfires (source: IBIS World June 2021).
Post-COVID, businesses are now faced with the fallout from lockdowns, social distancing, staff sickness, and changes in consumer habits – making it more important than ever to plan for an appropriate business interruption policy and key person insurance. Let’s take a look at what are the 5 most important factors to consider before buying business insurance for your company.
Risks Faced By The Company
Business insurance advisors will want to know the key potential risks your company could face in order to sign post you to the right business insurance in Melbourne. You need to set down everything you need to keep the business going and then pose the question “what if?” For example, think about the buildings, technology, machinery, and equipment that keeps the company productive. Then ask the question “What if there was a fire, a theft, a breakdown, or consumer data stolen due to someone hacking your software?”
Do you provide specialist advice or treatments and if so what if someone was injured or given the wrong information by a member of your staff or you? Do you employ specialist staff and if so what if one of these key people had an accident and injury? Not only would you have to replace them with costly supply staff but depending on their role to avoid business interruption you should consider key person insurance.
Different Types Of Business Insurance
Once you have drawn up a list of potential risks, then you need to know which type of policy you should purchase to cover these risk factors. In some professions it is also mandatory to have certain types of insurance in place. This is known as professional indemnity insurance, which aims to cover costs of compensation (this can include associated legal costs) if a customer takes you to court due to alleged or actual negligent acts as a result of your professional advice or service.
Public liability insurance is there for when a member of the public, a consumer, or supplier submits a claim against your business in the event of damage to their property or injury to themselves due to your negligent business activity. A number of public liability insurance policies also have product liability cover in case of damage or injury from products you sell or have supplied.
Business insurance policies have options to cover loss of stock and content and buildings insurance in case of damage due to insured events such as storm or fire damage. This type of policy can cover loss of money either through theft, being lost or damaged while on the premises, or in transit (if you use a security firm) or even when in your own home.
If your business is all online, then you may want to consider cyber liability insurance to protect the company from hackers or a data breach. Business interruption insurance could help with financial losses if the company had to stop trading due to an insured event such as a fire. If you or your business partners die or are disabled permanently due to injury this is where key person insurance helps cover the loss of wages to the individual or their family.
Insurance Terminology
A policy will have a Product Disclosure Statement and you need to ensure you read and fully understand the terms before signing up to a policy. Common terminology used are as follows:
- Excess: the amount you have to pay if making a claim, so a claim of $1000 with an excess of $250 means you pay the $250 and the insurance company pays out $750.
- Exclusions: these are the events or items or circumstances which are not covered by the policy.
- Extensions: these are the add-ons which you take as an option to the main policy for an additional charge.
- Limits: the maximum amount that the policy will pay out.
Amount Of Cover Needed
Look at current business assets and work out the cost to replace them all, including stock as well as equipment and buildings. This will help identify what cover you need to insure them for. Check if you are a member of a professional body to see what minimum levels of insurance are required and the same goes if you work with contracts. Your business insurance broker can help with looking at the amount of cover needed.
Where To Buy Business Insurance
There are comparison websites available but to ensure you get the right insurance for your business, speak to the business insurance experts who will offer you advice as well as safeguard your business needs.