Running a small business is challenging in the best of times, so it is not surprising that many small business owners put risk protection in the ‘too hard and too expensive’ basket. But they do so at their peril!
A survey by the Insurance Council of Australia found that almost 13% of small businesses – and 24% of sole traders – are not insured. Of those who were insured, 10% admitted they did not have enough insurance for the value of their business assets. The most common reason for this was the perception that they could not afford more insurance. However, if an unexpected event would threaten your livelihood, can you afford not to be covered?
For many Australian SME’s, the answer is invariably no. Mitigate the risk by making sure you’ve got suitable insurance cover in place, and set aside some time to consider three important questions;
These will depend on the type of business you run. For example, fire is a potential hazard for a coffee or takeaway shop whereas a motor vehicle accident or theft of tools would be a major setback for an electrician and for a services professional such as an architect, negligence could do financial and reputational damage.
The main types of business risks fall into three broad categories:
Planned Cover can tailor an insurance solution based on your business activities. The first concern is typically asset protection.
Common types of asset protection cover your business for theft and loss or damage to property, motor vehicles, machinery and stock.
While most businesses have some level of asset protection, risks to income are often overlooked. A worrying number of small to medium businesses overlook business interruption insurance, which can cover you for loss of income and increased expenses if your premises or fixed assets are damaged.
Business interruption insurance policies typically cover profits you would have earned, operating expenses, relocation costs, closure of your business premises due to government-ordered street closures and damage to your premises.
Say you are a local vet and your premises is destroyed by a fire. Business interruption insurance can cover the cost associated with temporary relocation and loss of income.
Online businesses may need to consider insuring against loss of income due to computer breakdown, or cybercrime.
Public and product liability insurance are also important to consider, particularly if you run the risk of injury or property damage for people entering your premises or from products you supply. Meanwhile, professional indemnity is important for pharmacists, accountants, architects and anyone who gives professional advice.
The amount you pay for insurance will vary depending on the type of business you run, the risks the business is exposed to and the insurance policy’s benefits, exclusions and limits.
Planned Cover can advise you on the type of insurance policies that you have in place for your particular business, and work with you to customise a policy so you are not paying for cover that you do not need.
While price is often an important issue for small business owners, ignoring risk is likely to cost far more. Getting the right advice and the right cover is the most cost effective way to guard your business success. This is where a Planned Cover general insurance broker on your team can help you and your business.
Article brought to you by Steadfast. (https://www.steadfast.com.au/well-covered)