It takes a lot of courage to go into business on your own. You must be prepared to take chances but taking unnecessary risks should not be an option.

The right insurance policies can deliver peace of mind that your business is protected from all sorts of unexpected (and expected) problems.

But what are the types of insurance for business available to you? Which are compulsory? And which are advisable as a small business owner?

8 types of insurance for business

The right insurance for your business reduces exposure to risks and secures its ongoing operation.

As accountants, we’re certainly not experts in insurance.

However, it’s such an important consideration for every business that we asked our friends at Brookvale Insurance Brokers to provide a summary of the main types of general insurance applicable to small business owners.

They responded with these eight types of insurance policies:

  1. Workers compensation insurance

    • Insures employees against injury or death caused whilst at work.
    • Rates for workers compensation are set by workcover and calculated by multiplying annual wages with the relevant occupation code.
    • Compulsory for all employers in NSW with a wage bill in excess of $7,500 per annum.

  1. Personal accident & illness insurance

    • Sole traders & partnerships are unable to purchase workers compensation for the principals, as they are not employees.
    • May be required if sub-contracting to others.
    • Provides a weekly benefit following an injury.

  1. Business/office/trade package insurance

Most insurance companies will provide a range of covers bundled together under a package policy. The various sections of this type of business insurance are:

Fire & other perils:

      • Sometimes referred to as material damage.
      • Designed to cover the building, contents & stock of the business against perils such as fire, earthquake, lightning, storms, impact, and malicious damage.
      • Better policies also include cover for accidental damage.
      • You must insure for the replacement value at today’s costs or a partial claim may be subject to the average provision.

Business interruption:

      • Loss of profits insurance.
      • Pays business outgoings like wages and additional working expenses to re-establish the business, if unable to trade due to a fire & perils event.

Burglary:

      • Covers theft of stock & contents and damage to premise following a break-in.

Money:

      • If your business handles money, this must be insured separately.
      • Policy can extend to include cover while at the insured home or in transit to be banked.

Public/Products liability:

      • Public liability covers your legal liability for compensation if someone who is not an employee or family member (third party) suffers injury/death.
      • Also covers damage to other people’s property as a result of negligence.
      • Product liability covers injury/death or damage as a result of failure of your products.
      • Note: if you import products, you’re deemed to be the manufacturer. Most commercial leases will require you to carry this type of business insurance.

Glass:

      • Covers breakage of internal (bathroom) glass and external glass (doors and windows).
      • Most commercial leases will require you to carry this type of business insurance.

  1. Professional indemnity insurance

    • Covers the financial loss incurred by your clients as a result of your errors & omissions in your advice.
    • Critical for businesses providing advice.
    • If you charge a fee for design/advice, consider this type of business insurance.

  1. Management liability insurance

    • Protects individuals and the company in relation to the exposures associated with managing a company.
    • Includes directors & officers liability and employment practices liability

  1. Marine transit insurance

    • Covers your stock/goods while being imported, exported or shipped around Australia by air, sea, road or train.

  1. Contract works insurance

    • All builders who are the principal contractor should carry this type of business insurance.
    • Covers material damage to the job whilst under construction and public liability.

  1. Cyber insurance

    • As businesses rely more on technology, the number of cyber-attacks grows.
    • Around three in five Australian companies experience a cyber security breach every month.
    • This type of insurance helps protect small business owners against online risks, such as computer hacking, ransomware or data theft.

That’s a quick guide to the eight main types of business insurance available to help you protect your business.

If you have any questions, please seek professional advice from your current insurance broker; or reach out to Brookvale Insurances Brokers on 02 9934 9700 or at www.bib.com.au. They’ll be more than happy to assist you.