What does it take to start your own business? Contrary to popular belief, it takes a lot more than just a good idea – especially today, where it’s becoming increasingly commonplace for businesses to compete against brands on a global scale rather than just locally. Add ongoing delays with shipping and materials production to the mix, and there are a fair few contingencies that business owners of today need to keep in mind when developing a winning business plan.
So how do you give your budding enterprise the strongest possible chance of standing the test of time? Alongside being fiscally conservative and understanding the ins and outs of business budgeting, entrepreneurs of today must also familiarise themselves with business insurance.
To help, we’ll be outlining the different kinds of business insurance in Australia that you may benefit from securing for your own company, as well as answering some common questions you may have about business insurance as a concept.
The different types of business insurance
Let’s kick off with an exploration of the different types of business insurance and which industries may benefit most from securing these insurance types.
Public liability insurance
It’s no secret that Australian workplaces can have their fair share of hazards. That’s what makes public liability insurance a quintessential investment for a wide range of businesses today. As its name suggests, public liability insurance is designed to provide cover for your business in the event that your company is subjected to any personal injury or property damage claims made by a member of the public.
Public liability insurance is designed to offer protection from unexpected damage to property, the unexpected loss of goods in your care, personal injuries caused by your business operations and the costs of first aid care resulting from these injuries, or any legal costs resulting from these insured events.
This type of insurance is valuable for any businesses who interact face-to-face with its customers (i.e. retail, construction, hospitality, etc.). But any business can take on public liability insurance as well, so it’s up to you to decide if this particular business insurance type is the right match for your enterprise.
Professional indemnity insurance
If you run a consulting firm, an accounting firm, or any other business where you’re routinely providing professional advice, you’ll want to ensure that your business is protected in the event that a client or other individual makes a claim against your business due to negligence, a breach of duty, confidentiality breaches, or other legal concerns. Thankfully, professional indemnity insurance policies are designed to do just that, alongside providing cover in the event that you lose or damage client documents or are accused of intellectual property infringement.
Some professional indemnity insurance policies also provide reputation repair cover, which covers the costs of public relations consultants in the event that your business experiences some bad press following claims made against you.
In short, this particular business insurance cover can help ensure your company won’t be disrupted by defamatory forces that are outside of your control.
Workers’ compensation insurance
Perhaps one of the more well-known insurance types on this list, workers’ compensation insurance is designed to provide business owners with financial cover in the event that an employee needs to make a WorkCover claim. Your employees may make a WorkCover claim if they become ill or injured at work. Employees also have the right to make a WorkCover claim if they’ve experienced workplace bullying and are subsequently looking to take time away from work to focus on their mental health.
As WorkCover claims are a contingency that all Australian business owners must prepare for, workers’ compensation insurance is actually mandatory for all businesses, as per Safe Work Australia. You can find more information about workers’ compensation insurance at the Safe Work Australia website or the website for the relevant workers’ compensation authority for your state (for Victoria, this would be WorkSafe Victoria, and for NSW it’ll be the State Insurance Regulatory Authority NSW).
Management liability insurance
Just as professional indemnity and public liability insurance is there to protect your business in the event that a member of your staff is accused of negligence or a breach of duty, management liability insurance is designed to provide cover in the event that the company representative being accused happens to be a member of your management team. In a nutshell, management liability insurance is designed to provide protection against any legal action that’s taken as a direct result of the actions of your company director or any supervising officers.
Securing management liability insurance can provide a more targeted level of cover for businesses with complex organisational hierarchies, making this particular insurance cover an ideal investment for medium to larger-sized corporations.
Cyber liability insurance
As the number of online scams recorded increases across Australia, all business owners are advised to invest in their company’s cybersecurity. One crucial aspect of doing so is securing cyber liability insurance. As its name suggests, cyber liability insurance is designed to protect businesses in the event that they (or their clients) fall victim to a cyber attack or digital scam.
Securing cyber insurance can help protect your business in the event that it loses revenue as a direct result of cyber attacks or scams, and if any legal action is taken against your business as a result of these attacks or scams.
Cyber liability insurance is essential for businesses operating within the technology, finance, and healthcare sectors – basically for any company that keeps sensitive staff, client, or patient information in digital records.
Reinsurance
If you’ve ever wondered what type of insurance policy is taken out by insurance providers, then wonder no further. Reinsurance is a unique insurance product that tailors solely to insurance providers. Simply put, insurance companies can secure reinsurance from another insurance provider in order to ensure that their enterprise has a financial safety net in the event that they’re required to process a larger insurance payout.
Given the unique nature of this particular type of business insurance cover, reinsurance is only relevant to other insurance providers.
What’s the right type of business insurance for your company?
Using all the information we’ve provided above, you should be able to determine which insurance types are most suitable for your own business. If you’re still uncertain about which insurance cover you’ll need, then consider doing a little more research on the insurance requirements for your industry – just to ensure that you will be securing all mandatory insurance cover in order to maintain industry compliance.
Consulting with trusted business insurance providers can also give some much-needed direction here, so don’t hesitate to ask questions if any come to mind.
How often should you renew your business insurance?
It’s a good rule of thumb to revisit your business insurance policies whenever they’re up for renewal, which is typically once a year. Part of revisiting or reevaluating your business insurance policies is simply making sure that you’re receiving the same cover every year, or that any add-ons or extras are added to your policy.
You should also shop around and compare policies maintained by other insurance providers. You may be able to snag yourself a good deal in the process, allowing your company to potentially shave hundreds of dollars off its insurance costs every year. Although these costs are largely tax deductible, it still won’t hurt your bottom line to try and secure yourself the best deal possible on your policy every year.
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The age-old adage that nothing worth doing is easy rings especially true when starting your own business. But rest assured, taking the necessary steps to ensure that your budding enterprise is built on a solid financial foundation will help improve your chances of experiencing commercial success, regardless of which industry you’re operating within.
So be sure to do plenty of preliminary research before you finalise your business insurance policy. In doing so, you’ll help ensure that your company can maintain clear-cut contingency plans as well as solid risk management and mitigation strategies.
