Business Insurance: Which Insurances Must You Have?

Business Insurance: Which Insurances Must You Have?

05 February 2019

There are many types of business insurance. Here we look at the business insurance that most businesses need to consider.

 Some insurance types are a requirement by law. Without them you shouldn’t be operating your business.In Western Australia, these are:

Worker’s Compensation:

If you have employees, you’ll need Workers’ Compensation insurance to protect your staff in the event of an accident or illness. This can amount to around half of your business’s annual business insurance premium.

Fleet or Vehicle Insurance:

Your business vehicles need third party personal injury insurance at a minimum. You’d probably want to keep your vehicles on the road so we’d recommend full vehicle insurance but for the bare minimum, you need third party.

Every business has risk

After these mandatory insurances have been covered, there is a huge range of business insurance options to help you deal with the risks of running a business. You need to decide which ones you need to keep you protected. This is dependent on your risk exposure.

 Understanding those risks is key to managing the risks and getting the right business insurance in place so your business is protected properly.

The approach our risk management advisors and business insurance brokers use is the same no matter what size the business.

First you need to understand all your business risks and exposures. Secondly you need to decide which business risks you are prepared to accept, manage, reduce or eliminate. And lastly, you need to decide which business insurance is required to protect you against risks that you have decided cannot be managed AND that you cannot afford to happen. 

The majority of businesses can’t insure or don’t want to insure against everything. They take a measured view of how they want to manage their risks. This is called understanding their risk appetite. Which risks will they insure against? Which risks will they manage? Which risks will they ignore? Depending on the size and complexity of the business at hand, this can be a simple or complex risk assessment process.

Some Common Business Insurances

Property / Asset Protection:

When we think of business insurance, we often think of how we protect our business assets from fire, flood, theft and any other damage. These are things such as buildings, plant, equipment, vehicles and contents.

Product and Public Liability:

This covers your business’s legal liability to pay compensation to a third party or parties in the event of the business causing injury, death or loss of or damage to property arising out of the business providing its products or services.

Business Interruption:

This insurance covers your business for the loss of revenue that occurs when the business is ‘interrupted’. For example, a uncontrollable plant failure that closes production for weeks or a fire that closes the business.

Cyber Risk Insurance:

This now has it’s own category as cyber threats increase in our online and increasingly connected world. Loss of data, breach of privacy laws, spamming – there is a raft of issues. Unfortunately no business is immune to this threat and there are options now for all different sizes of business.

Key Person Insurance:

Could the business run without its key people? How would it cope if the owner or key manager was taken ill or died? Can the business afford a replacement? This is what key person insurance can assist with.

There are many, many more options and getting the right advice to put the right insurance in place for your business can save you now and in the longer term, if things go wrong.

Austral Risk Services are risk advisors and insurance brokers for Australian businesses. We're here to help you understand your business risk and make the right decisions about your business insurance needs.