Photo: Graeme Churchard
Australia has one of the best business climates in the world, and new businesses in Australia stand a much better chance of becoming successful than they do almost anyplace else. The operative word in that sentence nonetheless is “chance” because starting a small business is always a risky proposition. The gamble varies according to the business model. The sole proprietor of a fledgling retail operation does not face the same set of stumbling blocks as a dentist who’s setting up his or her own practice: The former faces inconsistent cash flow, difficult customers and a markup over wholesale that makes profit elusive, while the latter faces lawsuits from clients dissatisfied with his or her services.
One of the most important ways that business owners manage risk is through insurance, which transfers the monetary consequences of loss from their small business to an insurance company according to the terms of a contract called an insurance policy. Standard small business covers include Fire and Other Damage, Public and Product Liability and Business Interruption among other policies. But every small business has insurance needs that are germane to itself. What specific types of protection does your small business need to focus on?
Insurance Essentials For Retailers
• Product liability insurance: Any business that distributes or sells goods assumes liability for the safety of those products. Product liability insurance covers your business against allegations of damage or injury associated with either a defective product or one that functions differently from manufacturer claims.
In Australia, product liability insurance is often categorised under a more general insurance protection called public liability insurance that protects businesses from the financial risk of being found liable through negligence for either physical or economic damage.
• Employee-related insurance: Retail businesses typically require large numbers of employees in sales and management positions. All Australian employers are required by law to protect their employees against the effects of work-related accidents through workers compensation insurance. Specific policy requirements vary from state to state.
Another popular insurance option for businesses that employ over ten people is group salary continuance insurance which provides an employee who is unable to work with up to 75 per cent of his or her salary after statutory entitlements expire following a waiting period. While not compulsory, group salary continuance insurance is an excellent morale builder and team-spirited employees help ensure the success of any retail operation.
Insurance Essentials For Professionals
A professional needs special insurance protections in the event that a client, dissatisfied with the services provided, brings that professional to court. Professional indemnity insurance, or PI, covers legal costs and payable damages associated with claims that services rendered did not meet professional standards and therefore resulted in harm. Professional indemnity insurance is written on a claims-made basis, which means that it can cover alleged professional breaches made before the policy was signed so long as a retroactive date is specified in the policy schedule.
Once professional indemnity insurance customers were restricted to solicitors, medical workers, accountants and engineers. But in recent years, the definition of “professional” has expanded to include experts paid for giving advice as well as services. Today’s professionals include architects, designers, educational specialists, real estate agents and all types of consultants.
Professional indemnity insurance is compulsory for certain professionals like doctors, legal professionals, insurance brokers and certain accountants and contractors.
Insurance Essentials For Commercial Drivers
• Heavy motor insurance: Heavy motor insurance policies are designed for commercial vehicle drivers who own either a single truck or a fleet. Typical features include dangerous goods liability, replacement costs of a new vehicle under specified circumstances, costs of a substitute hire vehicle under specified circumstances and accidental death benefits.
• Taxi insurance: Several Australian companies have put together insurance products tailored to the taxi business, sold as Taxi Insurance. Typical features of this cover include liability and comprehensive coverage, personal accident protection for drivers and optional covers for damage to third party property and network communication equipment.
Insurance Essentials For the Hospitality Industry
Things seldom go exactly the way you plan in the fast-paced world of hospitality. Though standard business covers apply, they often apply in unanticipated ways. Some examples:
• If a customer slips and falls in your hotel on a freshly washed patch of floor, your business is protected through its personal injury and property damage cover.
• If your restaurant’s freezer malfunctions and its contents spoil, your business is protected through its machinery breakdown cover.
• If your bar’s neon sign goes on the fritz, your business can recover the cost of a new sign through its glass breakage cover.
Insurance Essentials for the Construction Industry
Construction sites are some of the most hazardous work areas in Australia and require specialised types of insurance to cover the builders who work there.
Specialised construction insurance provides asset protection for construction materials, covering them in the event of physical loss or damage from some aspect of the construction process. The legal liability cover contained in specialised construction insurance packages is a customised form of public and products liability insurance, and protects against third party property damage and associated financial loss as well as third party bodily injury.
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