The True Cost of Keeping Your Business Insured in Australia
Business insurance can often be complex, with costs varying significantly across industries and company sizes. The first notable point about business insurance is that there’s no one-size-fits-all approach. Two similar companies might have a few policies in common, but overall, their insurance portfolios can be distinctly different. It’s likely that your company only needs a few strategic policies, providing coverage that’s specific to your industry and operations.
However, the challenge lies not only in identifying the appropriate policies but also in understanding their cost. So, let’s look at Australia's most common business insurance policies, the factors influencing their premiums, and how to ensure you're making informed decisions about your company’s insurance needs.
Common Business Insurance Policies
From general liability to professional indemnity, each policy addresses specific risks, ensuring your business remains resilient against unforeseen events. Here are some of the most common business insurance policies in Australia.
- General Liability Insurance: Covers claims of third-party bodily injuries, damages, and various general liabilities. It’s an essential policy for most businesses, safeguarding against the financial burdens that can arise from accidents involving customers or the public.
- Commercial Property Insurance: Provides coverage for damage to your business property and assets, including buildings, equipment, and inventory. It protects against losses from fire, theft, vandalism, and other covered disasters, ensuring your business can recover and continue operations after unforeseen events.
- Business Interruption Insurance: Provides compensation for lost income when business operations are temporarily halted due to covered events, such as natural disasters or major repairs. This policy ensures financial stability by covering ongoing expenses and lost profits, helping businesses maintain their financial footing during challenging times.
- Workers’ Compensation Insurance: A mandatory policy that provides vital coverage, compensating employees for work-related injuries or illnesses. This insurance ensures that employees receive medical care, rehabilitation, and a portion of their income during their recovery period, thereby protecting both the employee's welfare and the employer's legal responsibilities.
- Cyber Liability Insurance: Essential in today's digital landscape, cyber liability insurance protects against data breaches, cyberattacks, and other cybersecurity threats. This policy covers the costs of responding to and recovering from such incidents, including legal fees, notification expenses, and monitoring services, safeguarding your business's reputation and financial health.
- Professional Indemnity Insurance: Provides critical coverage for businesses and professionals against claims of negligence, errors, or omissions in providing professional services. It covers legal costs and damages awarded to clients, ensuring that professionals can defend their work and reputation without bearing the full financial burden of legal disputes.
Factors Influencing Insurance Costs
Various factors influence insurance coverage costs, ranging from industry risks to the size and location of your business, each playing a significant role in determining your premiums. Let’s explore the typical determinants of insurance costs, providing insights to help you manage your business's insurance expenses wisely.
- Industry and Business Type: Insurers consider the nature of your business and the industry you operate in when you apply for coverage. High-risk industries like construction or hospitality might face higher premiums due to the increased likelihood of claims.
- Location: Businesses in areas prone to natural disasters or those in bustling city centres may incur higher insurance costs than those in more stable, less crime-prone or remote areas.
- Claims History: A history of frequent claims can indicate a higher risk to insurers, potentially leading to increased premiums.
- Business Size and Scale of Operations: The size of your business and the scale of its operations, including the number of employees and the value of your property, significantly impact your insurance costs.
- Specialised Policy Requirements: Specific policies tailored to unique risks associated with your business operations can also affect the overall cost.
Making Informed Insurance Decisions
Understanding the factors influencing business insurance costs is the first step towards making informed decisions about your coverage. It's essential to assess your business's specific needs and risks to determine which policies are necessary and how to optimise your premiums.
That’s why partnering with Morgan Insurance Brokers is essential because we provide tailored advice and help you navigate the complexities of business insurance. Our guidance and expertise ensure you receive the best possible protection at the most cost-effective price.
Finding the Right Balance
Securing the right type of business insurance for your company, staying informed and seeking professional guidance from specialist brokers ensures you strike the perfect balance between comprehensive protection and cost efficiency. Remember, the goal is not just to minimise your premiums but to ensure your business is resilient against the myriad of risks it faces in today's dynamic environment.
What Insurance Do I Need For My Small Business?
Starting a small business in Australia brings many responsibilities, not least of which is ensuring that your company is adequately covered against a host of eventualities.
That’s why insurance is so important because it protects your business from unforeseen events and provides a safety net for your employees, customers, and assets. With a variety of policies available (two of which are compulsory), understanding which insurance products are necessary can be daunting.
Starting with the two mandatory insurances, let’s look at a broad selection of insurances that can be suitable for your business, depending on your location, industry and operations.
Compulsory Insurance for Australian Small Businesses
Small businesses in Australia are required to have two compulsory insurance coverages. The first is Worker’s Compensation, which is required if you’re an employer, and the second is third-party injury motor insurance, which is automatically included when a vehicle is registered.
Workers Compensation Insurance: Mandatory for businesses with employees, this insurance covers medical costs and lost wages for workers who suffer job-related injuries or illnesses.
Third-Party Injury Motor Insurance: This insurance is mandatory for small businesses that own vehicles. It covers liability for personal injuries inflicted on others in a motor vehicle accident.
Optional Insurance for Australian Small Businesses
While certain insurance policies are mandatory for Australian small businesses, a portfolio of optional insurance can provide additional protection. Tailoring these optional policies to your specific business needs can further safeguard against unforeseen risks and enhance your overall security strategy.
Public Liability Insurance: An indispensable cover for any business, public liability insurance protects against claims for bodily injury or property damage caused to third parties due to your business activities.
Professional Indemnity Insurance: Critical for businesses that offer advice or services, this insurance covers legal costs and claims for damages arising from alleged negligence or breach of professional duty.
Business Contents Insurance: This policy covers the replacement or repair of business equipment and assets in the case of theft, damage, or loss, ensuring your operation continues with minimal disruption.
Cyber Liability Insurance: As cyber threats increase, this insurance is essential for protecting against data breaches, hacking, and other cyber-related risks, covering recovery costs and potential legal fees.
Business Interruption Insurance: This insurance compensates for lost income and fixed expenses when your business cannot operate due to an insured event, such as natural disasters.
Product Liability Insurance: If your business manufactures, wholesales, distributes, or retails a product, this insurance can protect against claims related to product defects that cause injury or damage.
Management Liability Insurance: This coverage protects against management actions that could lead to claims against directors, officers, or the company itself, covering legal costs and damages.
Commercial Vehicle Insurance: If your business uses vehicles, this insurance covers damage or loss of business vehicles and liability for damage or injury caused by your business vehicles to others.
Trade Credit Insurance: Protects your business against losses from non-payment of commercial trade debts, ensuring your cash flow remains stable even if a debtor defaults.
Marine Transit Insurance: Crucial for businesses involved in importing or exporting goods, this insurance covers the loss or damage of cargo during transit.
Glass Cover Insurance: This policy covers replacing broken glass and signage, which can be particularly important for retail businesses.
Building Insurance: If you own the premises from which you operate, this insurance covers the building against disasters like fire, storm, and even vandalism.
Intellectual Property Insurance: This policy protects against the costs of defending or pursuing legal action over infringement of intellectual property rights.
Tailoring Your Insurance to Your Business Needs
Choosing the right insurance involves more than ticking off a checklist. It requires a deep understanding of your business's specific risks and operations because not every small business will need the full spectrum of insurance coverage listed above.
We suggest you conduct a risk assessment and prioritise the policies that address the most significant threats to your business. However, as your business evolves, you should regularly review and adjust your insurance portfolio to ensure your company’s coverage continues to cover all your business risks. No one wants to be under or over-insured!
For tailored advice from industry specialists, consider consulting one of our professional insurance brokers. Their expertise can be invaluable when navigating the complex landscape of business insurance, helping you secure the right protection at competitive rates.
Securing Your Business's Future
Investing in comprehensive insurance coverage is more than a regulatory or contractual requirement—it's a strategic business decision that protects your company's future. Adequate insurance mitigates financial risks and enhances your business's credibility with customers, suppliers, and partners. As you focus on growing your small business, let your insurance solutions provide the peace of mind needed to pursue success, knowing that if the worst should happen – you’re covered.
Care, Custody and Control Insurance
What does property in your physical and legal control/ care custody and control insurance cover?
re, Custody, and Control insurance or property in your physical or legal control insurance is usually an automatic sublimit under a public liability insurance policy.
It is designed to protect businesses that have temporary possession of someone else's property with the intent to be worked upon/part of your insured business activities.
Examples could include
- Phones that are left overnight at phone repair stores
- Jewellery or watch repair stores
- Bicycle repair stores
- Computer repair stores
- Storage Facilities
This extension can offer cover to your customers goods if they have been damaged accidently whilst in the possession and under the care of your business.
Standard exclusions under a public liability insurance policy will still apply to this additional benefit.
Exclusions such as damages to motor vehicles, faulty workmanship, and damage to your own goods are a few examples.
The automatic sublimit is standardly $250,000 but can fluctuate between different insurers and occupations
Some insurers depending on your occupation will exclude this completely.
For example, a removalist, courier or transport operator as standard would have this exclusion applied. It would then be in the best interest of transport operators to take out a transit policy to cover their customers goods whilst in their custody, and whilst in transit.
Another example is a storage facility. It is quite difficult to obtain this extension for storage facilities given the high values of items insured at one address.
Contact Morgan Insurance Brokers today to discuss your public liability insurance policy.
What is a retroactive date?
What is a retroactive date?
A retroactive date in insurance, standardly when used within a Professional indemnity insurance policy refers to the date and time that your policy will respond to events that could arise in a claim.
Retroactive dates are also commonly used in Management Liability Insurance policies as well.
For example, if your retroactive date was today, then your Professional Indemnity Insurance policy would not cover you for claims made against you for actions or events that happened prior to today's date.
If a notification, or incident that could arise which would trigger your Professional Indemnity insurance policy, the policy would only respond to events that occured on or after the retroactive date.
Standardly, you have the option to choose an unlimited retroactive date or specify a specific date.
Is an unlimited retroactive date more expensive?
If you opt for an unlimited retroactive date to cover for any events in the past, the premium could be more expensive as it offers a greater level of protection for your business.
It is important to note that when you are transferring to a different insurer at any point in time, some insurers will request to see proof of your previous retroactive date before they will match your previous date - whether it be unlimited, or a specific date. A specific date could be the date where you first took out insurance.
Morgan Insurance Brokers can assess your cover requirements, along with your budget to provide you with comprehensive quotes that will protect your business from the risks they face. Contact us today.
Why it’s important that your subcontractors have their own insurances before working with you
Using subcontractors as part of your business is a very common occurrence. It is a good business strategy of outsourcing your work without the commitment and overheads of employing staff. However, did you know that although you engage subcontractors, you could be responsible for their actions?
In some instances, a business may be involved in a public liability claim and incur legal and defence costs even if they weren't directly responsible for the incident.
There are a few scenarios in which a business might be involved in a public liability claim without being directly responsible:
• Vicarious liability: vicarious liability occurs if an incident involves one of your subcontractors the youve engaged as part of your work, job or contract, where your business might be vicariously liable for the actions or negligence of their subcontractors while they were acting within the scope of their contract with you.
• Negligent supervision or inadequate induction processes: if your business has failed to provide adequate training or supervision to your contractors, you might be held partially responsible for the incident. If negligent supervision is proven, your business may be held financially responsible for the damages caused by your subcontractors.
What are the financial implications of being vicariously liable for the actions of my subcontractors?
There could be legal and defence costs incurred to understand and determine the facts of your the incident that has occurred and your level of involvement, and your potential contribution to the compensation claim brought against your company.
How can Public Liability insurance protect my business?
Public liability insurance is an insurance cover that protects businesses and individuals from claims brought against them for actual and alleged negligence to third parties that can result in bodily injury, or property damage.
 Who does Public liability insurance cover?
Public liability insurance will cover the named Insured on the policy. For example, a business could be an insured under the policy, but their employees could also be covered.
Are my subcontractors covered for their negligence under my public liability insurance policy?
If a subcontractor was found negligent and deemed responsible for damages, it is important that they have their own Public liability policy as your policy will not extend to cover their negligence.
Do I need to note subcontractors on my public liability insurance policy?
Ensuring that you disclose the use of subcontractors on your policy is an important part of your insurance cover. The use of subcontractors could increase the perceived risk for the insurance companies. They can also impose higher excess and different policy conditions as a result. Failure to disclose the subcontractors could limit your coverage when you come time to claim.
It is important to review your subcontractors' insurance coverage before they start working with you to ensure that the insurance coverage policies are adequate to protect your business, and theirs. It is recommended that you site their Certificates of Currency prior to them starting work.
Contact us to discuss your Public Liability Insurance in more detail to ensure you're adeqduately covered.
What Insurances do I need when entering a Commercial Lease?
Depending on the requirements of your landlord and real estate, there a few different Insurances that your business may be required to insure as part of your lease and Contractual Requirements. Bear in mind, that all leases are different and may not require all of those. The below mentioned Insurances fall part of a comprehensive Business Package Insurance Policy and can be tailored to meet your needs.
Public Liability Insurance
Public liability insurance protects your business from third party property or bodily injury claims where you're found liable for. It can pay the legal, defence and compensation costs in the event a claim is brought against your business.
The lease may require that you need $20,000,000 as a minimum. Some leases do not specify an amount.
Property Insurance
As you're occupying a physical office, retail space, warehouse or the likes, insuring your contents and stock against events such as fire or natural perils like storm is the obvious choice to protect your assets from the unknown.
Business Interruption Insurance
This insurance covers financial losses that may occur if your business is unable to trade because of a fire or natural peril. It will replace your lost business income until your business is back to pre-event turnover levels.
Plate Glass Insurance
Glass Insurance covers your internal or external, or both for Breakage.
Engaging Morgan Insurance Brokers means that we can review your lease and provide you with an insurance solution that will align with your lease requirements whilst also protecting your business.
Do I need Professional Indemnity Insurance?
What is professional indemnity insurance?
Professional indemnity insurance is a type of insurance coverage designed to protect professionals from claims that arise from errors, omissions, or negligence in their professional services that they've provided.
What industries need professional indemnity insurance?
Occupations and industries that provide professional services, and or give advice such as consultants, accountants, lawyers, architects, engineers. This is not an exhaustive list.
Do I need Professional Indemnity Insurance?
When professionals provide advice or services, there could be a risk that their work may result in financial losses. Professional indemnity insurance helps by protecting you and your business by providing coverage for legal costs and amounts claimed in compensation.
Examples of Professional indemnity claims
- Professional negligence Breach of professional duty
- Misrepresentation Defamation
- Infringement of intellectual property rights.
These are a few examples that could be covered under a professional indemnity insurance.
How using Morgan Insurance Brokers can help your business
Morgan Insurance Brokers can help guide you through obtaining a Professional Indemnity insurance policy that is going to best protect your business. Professional indemnity insurance policies can have quite a few conditions and exclusions that are difficult to interpret. We also have access to a large panel of providers that you may not have access to directly.
Contact us today.
Does a demolition business need asbestos insurance?Â
If your business involves demolition, you have exposure to asbestos. Your exposure could be limited if you contract out 100% of the asbestos removal, however you could still face an exposure that could result in hefty legal fees to your business as a result of asbestos disturbance, or removal.
What is vicarious liability?
Vicarious liability is a legal concept that could find you responsible for the wrongdoing of your contractors (in this instance; asbestos removal contractor you've engaged) regardless if you were involved in the actual wrongdoing. In simple terms, if a client has engaged your services, the claim for damages will be first brought against you, rather than your subcontractor. Legal costs and penalties could be incurred as a result.
In conclusion, regardless if you contract out 100% of your asbestos work, you still have exposure. This financial exposure can be mitigated by ensuring that your public liability insurance has an asbestos extension.
Morgan Insurance Brokers can assist your business find the most affordable and comprehensive cover for your demolition business. We have access to a large panel of insurers that exclusively deal with brokers only, and that you don't have access to as a consumer.
Reach out today.
