Insurance

Evaluating the Policy

Disclose to the insurer everything about your business that may be relevant and keep this information up to date.  Otherwise your policy may not be valid.

Before you enter into an insurance policy, make sure you:

• Compare policies  Get at least three quotes.  Compare insurance premiums as well as any no-claim bonuses or discounts available.
• Check what is and what is not covered  Look at the wording and definitions.
• Are you under-insured?  It is very important that you insure your assets for their replacement value in today's prices.  If you are not sure of the replacement cost, you may need the services of a qualified valuer to establish what your assets are worth.
• Do you understand the term co-insurance?  You are deemed to be co-insured to the extent that the risk is under-insured, ie you will only be compensated for a proportion of the total loss.
• When does your protection commence?  That is, immediate cover or otherwise.
• Conditions of insurance  Note particular activities relating to the nature of your business.  Are these activities excluded from the policy?
• Check the claims procedures  Can you rely on straightforward and prompt service?  Ask other similar businesses what their experience has been.
• Do you understand the terms of a replacement policy?  A replacement policy aims to replace or restore property as new.  These policies often have an upper limit on the amount payable.
• Renewal conditions  Are increases in value built in the policy or do you have to declare any appreciation in asset value?
• Reputation  Look at the insurance company's track record and whether it is well established.  Are they prepared to discuss with you your insurance needs without undue pressure to buy?

Insurance Policies

Business insurance can be divided into three categories according to how they affect the business:  assets and revenue, liability, and personnel.  There are many different insurance policies for small businesses, though few businesses will need all the policy types available.  Some common types of insurance policies are:

Fire and Other Perils  Designed to cover the building, contents and stock of the business against perils such as fire, earthquake, lightning, storms, impact, malicious damage and explosion.

Business Interruption or Loss of Profits  Provides cover if the business is interrupted through damage to property by fire or other insured perils.  It ensures that anticipated net profit is maintained, pays employee wages and pays additional working costs if alternative facilities have to be used.

Burglary  Covers theft of property and damage from burglars breaking in.

Workers Compensation  Compulsory for all businesses employing staff.  Workers Compensation insures employees against injury or death caused in the workplace.  The Workers Compensation system in NSW is administered by WorkCover.

Personal Accident or Sickness  If you are self-employed or a subcontractor you are not covered by Workers Compensation insurance.  It is particularly important for you to provide yourself with funds to compensate for loss of income because of illness or accident.

Money  Covers loss of money being taken to and from the bank and whilst on your premises.  It can be extended to cover money taken home overnight or deposited in a bank night safe.

Public Liability  Covers your legal liability for compensation if someone who is not an employee or a family member (third party) suffers injury, damage to property or death as a result of your business operations, should you be negligent.

Electronic Equipment Insurance for Computers  Designed to cover sudden and unforeseen loss or damage.  It does not cover the cost of preventative mechanical maintenance or general wear and tear.

Machinery Breakdown  Designed to cover breakdown of all mechanical and electrical plant and machinery at the work site.  The policy can usually be extended to cover spoilage of foodstuffs consequent of such a breakdown.

Professional Indemnity  Protects you from legal action taken for losses incurred as a result of following your advice.  This insurance is not cheap, but it could be critical for business people who work as consultants, provide professional advice or who set themselves up as experts.

Product Liability  Covers the damage/injury caused to another business and/or person by the failure of your product or a product you are selling.  You may also be held responsible for products that are either modified by you, form part of another product or are imported by you.  It is advisable to seek advice about this insurance policy as you may, in some cases, be able to have your public liability policy endorsed to also cover product liability.

Damage to Goods  Various policies cover damage to goods, eg "Customer Goods Not Otherwise Insured" covers goods you are holding on behalf of customers.  "Goods in Physical and Legal Control" covers goods in your possession that are damaged through your own negligence.  "Goods in Transit" covers goods damaged during inland transportation.

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List of insurance companies
List of insurance brokers*

* Note:  there are additional brokers listed in the Yellow Pages.