Business Insurance - Protecting Against the Unexpected

Workers Compensation Insurance

Compulsory

Injury at work can be a very stressful time for both employers and employees. Workers compensation insurance is a compulsory form of insurance for employers in every state and territory in Australia. This insurance covers your employees in the event of a work-related injury or illness. The purpose of the policy is to cover the following benefits to the employee who is injured:

• Compensation for wages
• Medical and hospital expenses
• Rehabilitation treatment
• Return to work assistance
• Lump sum payment for death or permanent impairment

There are very limited exemptions for employers in NSW where they are not required to have a workers compensation policy. These exemptions are:

• You pay $7,500 or less in annual wages
• You do not employ an apprentice or trainee
• You are not a member of a group of employers

If you are a sole trader, you are not considered an employee, and therefore cannot take out a workers compensation policy for yourself. Sole traders would need to consider other types of insurances to cover themselves in the event of injury or inability to work.

Public Liability Insurance

Compulsory

As a business owner, you are responsible for all third parties that come into contact with your business. A public liability insurance policy is compulsory in some industries and can be put in place to protect against claims due to accidents, injuries or death that have occurred as a result of the products or services of that business.

A public liability insurance policy may cover you for:

• Personal injury (e.g. bodily harm such as slips, falls and injuries) on your business premises or off-premises due to something your business has done
• Legal and court costs – involved to defend or settle a claim
• Loss or damage of a third party’s property whilst performing business services

Professional Indemnity Insurance

Qualified professionals have expertise that their clients do not have and therefore it is expected that any service or advice provided is accurate, complete and appropriate. Professional indemnity insurance is important if you are a business that charges a fee to provide a professional service or advice. It aims to protect against claims that are made against your business concerning professional negligence, a breach of duty, or misconduct as a result of providing advice or services.

A professional indemnity insurance policy potentially covers claims related to:

• Professional negligence
• Breach of professional duty or contract
• Inaccurate advice or information
• Lost or damaged documents
• Breach of privacy and confidentiality
• Defamation
• Reputation repair
• Legal costs

As with all types of insurances, it is important to understand the exclusions that may apply.

Professional indemnity insurance is applicable to many professions, such as doctors, consultants, accountants, engineers, physiotherapists, real estate agents and architects, just to name a few.

Business Interruption

Have you ever thought about how your business would continue to run if you had to temporarily close down due to an unexpected interruption? For most businesses, there are ongoing expenses that need to be paid even if you are not producing any income. Business interruption insurance provides cover for events such as:

• Fires
• Natural disasters (e.g. floods & earthquakes)
• Theft and vandalism

If any of the above events occur and your business needs to temporarily close down, business interruption insurance will potentially cover the loss of income and any extra expenses incurred.

Management Liability Insurance

There is a lot of responsibility and decision making involved in running a business, especially in a highly regulated environment like Australia where compliance standards are increasing. If you are a company director or officer, in some cases you can be held personally liable for any act in your capacity as a leader. That is where management liability insurance comes in. The insurance is designed to protect Directors, their company and individuals against financials losses if it is found that the Director has not met their duties.

There are different policies that have various levels of cover which potentially includes covering liability for financial losses caused by:

• Wrongful act from management (Directors and Officers)
• Employment practices liability (e.g. workplace harassment or wrongful dismissal claims)
• Government fines or professional fees incurred if there is a tax audit
• Theft from employees or third parties

Business Insurance Specific to Your Needs

The specific insurance needs of your business will depend on factors such as the industry you operate in, the size of your business and your location. Business insurance is very broad and therefore each policy is tailored to the insurance holder’s needs. The most common inclusions in a business insurance policy are:

• Commercial vehicle insurance
• Building
• Contents
• Glass
• General property
• Theft

You can also include some of the already mentioned coverages to your business insurance policy (e.g. public liability insurance, business interruption insurance, and management liability insurance).

Regardless of the size of your business, taking out a business insurance policy will ensure that you are covered in the case of an unexpected event having a negative effect on your operations and cash flow.

To determine the insurance policies that are crucial for the specific needs of your business, it is recommended you consult with an insurance broker who can tailor a policy for you.

If you would like some guidance for your business, our team at BLG Business Advisers will be able to assist you and potentially refer you to a suitably qualified broker. Please don't hesitate to talk with us for more details.

*Please note that the above information is general advice only. We recommend you seek advice from a specialist relevant to your personal situation. This information is relevant at the time of publishing and is subject to change*