No matter what line of business you’re involved in, you need to protect it against potential risks. With such a wide range of different business insurance policies available, choosing the options that are most relevant to you can be a daunting prospect. Here are some tips on how to select the right type of cover for your business.

Assess your circumstances

Workers insurance is a mandatory requirement for Australian businesses. Beyond that, it will often be the nature of your business which determines the type of insurance cover that you need. For example, public liability insurance is a must if customers and clients will be visiting your business premises or vice versa to protect against third party claims if an accident or damage occurs. If you’re manufacturing, supplying or selling products, you’ll want to have product liability insurance in place in case a customer starts a lawsuit relating to one of your products.

Some of the other important types of business insurance that you may want to look into include:

• Business interruption insurance – If your business premises are out of action, this type of insurance will help you to cover the loss of income while you get back on your feet.
• Key person insurance – This type of insurance is designed to cover the potential financial loss if an indispensable member of staff is unable to work due to long-term sickness/injury or death.
• Personal accident and sickness cover – If you’re self-employed and unable to access employee sick pay, this type of insurance cover will pay a certain proportion of your bills if you’re unable to work following an accident or illness.
• Professional indemnity insurance – If you’re in the business of delivering services, this type of insurance will protect you against third party claims if your work has a negative impact on a client.
• Property damage insurance – This type of insurance protects you against the impact of damage to your business premises.

Things to look for

Once you’ve decided which types of business insurance are most vital for your business, there are certain things to look out for when you’re examining your coverage options.

• Check for exclusions and restrictions. Check the small print carefully before you commit yourself to a particular policy as there will often be things that aren’t covered or that are only covered on a restricted basis. Income protection insurance is a key item to take into consideration when checking for exclusions.

• Make sure you’re not going to be underinsured. Not taking out enough coverage for your needs is a common scenario in Australia but you might not realise until you come to make a claim. By this time, it’s far too late so you need to make sure that your policy is giving you adequate coverage before you sign up. If you’re looking to insure your business premises and its contents, find out how much it will really cost to start from scratch if disaster strikes. Don’t just use a rough estimate that you think will cover everything as you could easily guess too low and find yourself without enough protection if an incident like a fire forces you to start again.

• Check how easy it is to make a claim. You pay the premiums every month for the privilege of protecting your business interests and if you need to access the benefits, you want it to happen as quickly as possible. Unfortunately, this isn’t always the case and there have been horror stories of business owners going round in circles with their insurance provider with no prospect of a payout in the immediate future. To minimise the chances of this happening to you, ask around and read reviews to get a feel for how claims are handled before you commit yourself.

Compare the options

It’s tempting to go with the cheapest option but this could be a big mistake that leaves you underinsured. Spend some time collecting quotes from various insurance providers. It’s often recommended that you get at least three quotes before you make a decision but the more homework you can do, the better your chances of finding a policy that fully covers your needs without breaking the bank. If you jump in with the first option that looks feasible, you risk missing out on finding a policy that would be more beneficial for your business.

Disclose relevant information

Once you’ve started to discuss your situation with insurance providers to see what quotes they come up with, don’t be tempted to withhold information. If you need to make a claim, the policy could be invalidated if you’ve not been entirely honest with the details when signing up. Being upfront from the start will make things a whole lot easier.

Choosing the right type(s) of business insurance may seem like a tedious task but it’s vital for the success of your business. Even a short interruption to your normal business operation could be extremely costly and a lawsuit against you could wipe you out altogether. Assess what you think your business needs to be protected against and speak to an insurance broker if needs be, and then spend some time comparing the various options that are available to you. Don’t just opt for the cheapest quote or the first one that you come across as this could leave you with a policy that doesn’t offer the right coverage for your needs.

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