As the owner of a small business, you are no stranger to long lists of things you must address. Unfortunately, as you strive to manage your to-do-list, it is easy to overlook crucial tasks. While this is never a good occurrence, overlooking your small business insurance can be devastating.
According to surveys, roughly 87 per cent of Australian small business owners believe that a single business liability claim can ruin them. One-third of the respondents said they had no idea how they could cover the costs associated with a business liability claim.
It is troubling to note that despite their awareness of how crucial the right insurance cover is for their livelihood, 62 per cent of small business owners are underinsured. Additionally, an estimated 12.8 per cent of small businesses carry no insurance.
Why is Underinsurance a Problem for Australia’s Small Businesses?
As with most significant problems, there is no simple answer. Several factors can lead to an underinsured business.
Undervaluing Business Assets
Some business people do not know the value or the replacement costs of their equipment, stock, or other necessary tools of their trade.
For example, it is easy for a baker to look at ovens used for years and only see aging equipment. However, when adequately appraised and the value stacked up against the cost of replacement, the ovens are worth more than the baker believed. It is important to consider the replacement value of your equipment when discussing a policy’s finer points.
No Policy Updates
A lack of business insurance policy updates is another reason some businesses are underinsured. Small expansions, new or higher grade equipment and other upgrades may not seem noteworthy to an entrepreneur, but losing and replacing the items could be exceptionally costly. For this reason, schedule regular check-ups with your insurance professional so you are sure your cover is correct.
Ill-Advised Self-Serve Insurance
You are likely familiar with the adage that time is money as it applies to business. Expediting routine tasks can make a difference in what you accomplish in a day but be careful which tasks you call routine.
Self- service can be a wonderful thing. You know you need cash for a weekend excursion, so you go to the ATM, get what you need and be on your way in a few moments. However, more complicated endeavours have better results when you work with an expert.
Business insurance is an excellent example of a product that should not be self-service. By its nature, insurance is complex, and experts have the training to understand the nuances of the business. It stands to reason that a hurried professional with no insurance experience may not be the best choice to decide the details of a policy designed to keep business afloat.
How Do I Know if I Have Enough Business Insurance?
Before you make any decisions regarding your business insurance, remember that insurance is best when based upon an individual businesses’ needs. Cookie-cutter policies may sound good on paper, but there is a strong likelihood that they will not meet all of your needs.
- Consider employing an outside company that specialises in the valuation of assets.
- Map out your businesses’ risks
Your floral shop risks may be different from those of the shop your cousin runs across town. Things like location, equipment, and physical attributes can factor into your risks and change your coverage.
- List everything that has a crucial part in operating your company
Some things come to mind faster than others when you begin to write essential items down on a list, so take your time with this.
Be sure to include:
- Items used day to day
- Maintenance equipment
- The premises
- Special use items
What Kinds of Business Insurance Should I Consider?
While there are numerous types of insurance cover available, here are five of the most prevalent types of insurance you should think about to protect your company.
- Workers Compensation Insurance – Protects workers who sustain injuries on the job. If you have employees, you need this cover as Workers Comp is mandatory in all Australian states and territories
- Public Liability Insurance – This cover protects you from third-party claimants. The policy pays for the expenses should a third-party experience a loss because of you or your employees. Proper Public Liability cover can also cover any legal defence costs if the injured party seeks legal action
- Small Business Insurance – A general small business insurance policy is generally a collection of several coverage options.
- Business Interruption Insurance – This cover is essential to provide income and pay your business’s fixed costs should you be unable to open for an extended period.
- Professional Indemnity Insurance – If your company gives advice or provides services, you should consider Professional Indemnity cover. The insurance protects professionals against liability for damages if a third party incurs a loss that your action, omission, or breach of duty caused.
It is important to remember this list is not comprehensive, nor does it take into account any specifics regarding your company.
If you are not sure that your business insurance can meet all of your needs, contact Connect Business Insurance. Our team of insurance experts can give you the peace of mind that comes from knowing your insurance will protect you and your business.
*Please Note* The material in this blog post is for informational use only. It is not legally binding insurance advice and does not replace a consultation with an insurance professional.