What is Business Insurance in Australia and its Types?

Starting a business is a big decision in your life. Most people use the savings of their entire life to start a business. It is evident that the first thought that comes to mind is “how to protect your business?” You must have heard about business insurance at least once. Business insurance is the simplest way to keep your business safe and protect yourself from potential financial damage.

In this blog, I will explain business insurance and the types of business insurance in Australia. Furthermore, I will provide a list of businesses that might need business insurance. This will be the best read for you if you are running a business or thinking about starting one.

What is Business Insurance in Australia?

According to a report, insurance costs comprise 5.74 percent of businesses’ overall operating costs. Business insurance covers contents and premises, damage or theft, against loss, and any financial loss. The sort of company insurance and the level of coverage you choose will be determined by the nature of your business and the areas you believe are most risky for you.

Business insurance refers to the legal process that will protect your business from the risk of financial damage and shield you from the hefty cost of litigation. For example, your costly equipment is stolen or destroyed, your employee gets ill or injured, or your customer has an accident in your workspace. In that case, the right insurance policy will cover the cost of these incidents. Normally, you wouldn’t be able to pay these high costs, and if you manage to pay the cost somehow, your business will be severely affected.

Types of Business Insurances

Business Insurances vary depending on the type of your business. Each business has its ow requirements, and therefore, the benefits of business insurance must align with the requirements of the business. Here are various types of business insurance that you need to know:

1. Liability

When you run a business, it is expected to encounter several legal risks. Liability cover shields you from such legal risks. Depending on the type of your business, you can get liability coverage with the types of insurance given below:

• Professional Indemnity

Professional indemnity protects firms that offer specialised services or professional advice by insuring them against litigation and financial damages. Typically, these damages result from a client following your advice or using your service. For example, if you are a doctor with severe flaws in your work, you may face a lawsuit. Professional indemnity insurance coverage covers the legal fees and protects you financially.

• Public Liability 

Suppose an individual or a business claims that your business activities have caused them an injury or damage. In that case, public liability will come in handy to cover the cost involved in the damage. For example, if a client/customer slips and falls on your property, this would cover you.

• Product Liability

This protects you against loss or damage claims filed against you due to items sold or supplied by your business. It is frequently included in public liability coverage and might also cover the associated legal fees.

• Management Liability

Management liability is tailored to directors and managers. It can cover the claims of mismanagement, discrimination, and other risks related to managing the company made against you.

• Cyber Liability Insurance 

Most businesses in today’s world operate on technology. If your business is one of them, you need cyber liability insurance to protect you against claims due to cyber attacks. It can cover you for legal costs, damaged reputation, damaged hardware, and more.

2. Assets and income

Another important entity you must protect while running a business is the assets you possess and the money you make from these assets. Assets and income further include the following insurance:

• Building and Contents

This insurance covers the damage or loss to the building where you operate your business and its contents. This insurance will protect you from financial damages.

• Theft

It covers you for any damage or loss to your business or stocks caused by theft, deception, or burglary.

• Money

It covers you for the claim of theft of your money from the building where you operate your business, during transit, and, in rare cases, at your home. Loss of money is generally separate from theft cover.

• Stock Destruction 

It covers the deterioration of goods if your refrigerator or freezer machine breaks down.

• Employee Fraud

It covers all the losses you suffered as a result of the dishonest actions of your employees.

• Equipment Breakdown

It covers the replacement or repair expenses of broken machinery and equipment.

3. Business Interruption

Your business might face interruptions that will impact the income and reputation of your business. Insurance for business interruption will cover you for such intrusions. This kind of business interruption insurance includes:

• Business Disruptions

If a natural catastrophe, such as a hurricane, negatively impacts your business operations, business interruption can help you recover and minimise your financial losses.

• Tax audit

This covers the cost of any ATO-initiated inquiry or audit into your tax liabilities. It can pay for you to hire an accountant or tax agent.

Hiring a business lawyer before choosing any insurance will be very helpful. Aussie Legal Partners has the best business lawyers to handle your insurance, as they will elaborate on the terms and conditions of the insurance and handle any lawsuits that you might face.

List of Industries That Might Need Business Insurance

Before starting a business you must know if your business needs insurance or not. Here is a list of businesses that might need insurance.

Accountants	Handyman	Pet Professionals
Allied Health Professionals	Finance & Mortgage Brokers	Pizza Shops
Architects	Gift Shops	Plasterers
Bakers	Furniture manufacturer	Plumbers
Bookkeepers & BAS Agents	Hair & Beauty Services	Plumbers – VIC
Butcher Shops	IT Professionals	Professionals
Cabinet Makers	Land Surveyors	Project Managers
Cafes	Landscapers	Psychologists
Carpenters	Lawn Mowing Services	Real Estate Agents
Car Wash and Auto Detailers	Makeup Artists	Recruitment Consultants
Civil Engineers	Manufacturing	Restaurants
Cleaners	Marketing	Retailers
Consultants	Martial Arts Teachers	Social Workers
Convenience Stores	Massage & Alternative Therapies	Tax Agents
Disability Workers	Migration Agents	Tradesmen
Dog Grooming	Mobile Food Vans	Tutors
Dog Walking	Nurses	Yoga Teachers
Engineers	Painters
Electricians	Personal Trainers

You should confirm whether your business qualifies for insurance or not. Once you are sure that it needs insurance, contact a business lawyer to check the legalities of your insurance so you can proceed with it.

Closing Insights

Establishing a business is a difficult task, so you must use all the methods to protect your business from damage. The Australian government has always made policies that benefit businesses, as they contribute highly to the economy. Business Insurance is also one of the benefits that the government provides to businesses. The question here is, “Is your business covered under insurance?”

If you still need to cover your business, do it right now. Contact an expert business lawyer to help you out with the process. Aussie Legal Partners has the best business lawyers to advise whether your claim is valid.

They will find and explain the losses your insurance policy covers, the benefits it provides, and exclusions that might apply. Moreover, they will ensure you follow the strict claim requirements of the insurer and meet any time limits. Book your free initial consultation with us today and get the right direction.

FAQs

What are the three insurances a business requires to have by law in Australia?

Following are the three insurances a business is required to have by law in Australia:

• A Worker’s compensation insurance that is compulsory if you have staff.
• If you own a motor vehicle, third party personal injury insurance is compulsory.
• Public liability insurance is compulsory for certain types of companies as it covers you for third party death or injury.

Does a sole trader need insurance?

If you are a sole trader and something goes wrong in your business, there is nothing to protect your assets, for example a family home. So, arguably it is more important for a sole trader to have the insurance in place, especially a public liability insurance.