Your small business not only makes up a massive part of your livelihood but is a significant investment. You have put time, money, and effort into getting the business started, opening its doors and following your dream.
This is why it’s essential to protect your investment from adverse situations that have the potential to financially ruin your business.
Many types of business insurance can help you and your small business – each designed to safeguard you against specific types of risk.
This article will explain some of the critical types of business insurance and will hopefully show you why business insurance is important for your business’ success.
1. Business insurance helps to minimise financial losses
Insurance can financially protect your business in many ways. Firstly, it can help cover your business for unexpected events, such as repairing or replacing property damaged by a covered loss.
There are also many situations where a claim could be brought against you by a disgruntled supplier or customer.
The claims process can involve costly legal fees that can run on for months. Without business insurance, you will likely have to pay your own bill, which can put your business in a difficult position. You may also have to schedule a time to physically be in court, which could affect your business.
But if you have protection in the form of business insurance, the insurer will cover the cost, leaving you to continue trading as usual.
2. Business insurance can increase the credibility of your business
Here is something you and your customer have in common: neither of you wants the hassle of dealing with a claim. Business insurance gives your clients and customers peace of mind in understanding that you are financially protected if something goes wrong.
Business relationships are built on trust, and showing that you have insurance that covers the risks involved adds legitimacy to your business and improves your reputation.
Some contracts may even require proof of insurance depending on your industry, so it is best to get protected before you negotiate with a potential client.
What are some of the key types of small business insurance?
Here is a snapshot of some key types of business insurance and what they are designed to protect you from. While you may not need every kind of insurance under the sun, it’s important to consider what risks you face and whether it makes sense to protect yourself from them with insurance.
Public Liability insurance
Public Liability insurance* is an essential form of cover for many types of small businesses. If your business involves interacting with clients, you may risk accidentally injuring them or damaging their property.
This form of business liability insurance protects you and your business in the event a customer, supplier or a member of the public is injured or sustains property damage as a result of your negligent business activities.
Professional Indemnity insurance
Does your business give advice or provide a service? If so, then Professional Indemnity insurance might be better suited for your small business. Imagine if your service or advice results in your client losing out financially. These situations could lead to them claiming against you, which could be both financially and reputationally damaging.
Professional Indemnity insurance* is designed to respond to such claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your professional service or advice.
This form of cover could also help with the legal costs of responding to or managing claims covered by the policy.
Some examples of what may result in a Professional Indemnity insurance claim include:
- Providing the wrong advice
- Incorrect diagnosis or treatment
- A miscalculation
Business Insurance
Many businesses will have a brick-and-mortar shop to call home that is filled with stock and tools to get the job done. Even online stores still have items on hand that are essential to the business. What would you do if these valuable possessions were lost, damaged, or stolen?
Business Insurance* is an insurance package designed to provide cover for your business contents, stock, tools and commercial premises when an insured event occurs (such as fire, storm, theft or even accidental damage). There are many advantages to commercial insurance products that fall under Business Insurance packages.
Some important types of Business Insurance products include:
Contents*: Cover for loss of or damage to items such as business equipment, stock, plant and machinery, records and furniture belonging to you at the insured location.
Building*: If you own the building from where you operate your business this Covers you for damage to your building due to fire and other perils listed within the policy wording.
Portable Equipment*: Portable Equipment insurance (also known as General Property insurance) covers you for loss and damage to items of portable equipment associated with your business. These can include tools of trade and items of stock.
Tax Audit*: If your accounts are audited by the Australian Tax Office, you may need to hire external accountants to assist in the process. Tax Audit Insurance covers a business for specified costs in responding to an official tax audit.
From protecting your physical assets to providing assurance to your customers, there are many benefits of insurance. Small businesses face various risks during normal business operations. A claim against you could have financial and reputational consequences for your business. While some risks may seem unlikely, Murphy’s Law suggests it can still happen to you. Hopefully, this article has explained some of the key risks you could get protected from and how insurance can protect from financial loss so you can keep your business thriving for years to come.
* This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
