Business insurance isn’t a ‘nice-to-have’, it should be one of the first things you arrange for your start-up.
Outside of your competition, what are the major threats to your business on a day-to-day basis? Fire? Flood? Theft? Machine breakdown? Data crime? Then why aren’t you insured for it?
In a country where natural disasters have loomed large and in a technological environment in which cyber crime is a growing threat, it is surprising to discover the insurance industry’s estimate that over 70 per cent of businesses are uninsured or underinsured.
A business represents the lifeblood not only of its owners, but also of its staff. If that business stops trading for a period of time, it can cause irreparable damage.
“Unfortunately, underinsurance and not selecting the most appropriate insurance products can have catastrophic results for business owners,” says Natasha Burr, Senior Account Manager at Parmia Insurance, a leading insurance broker for professionals, professional associations and organisations.
“Many business owners have been affected by closure and severe financial distress due to not adequately protecting their business. We have found that countless business owners are underinsuring, whether this is by financial constraint or due to being unaware of their policy conditions, resulting in heavy penalties should a claim be made.”
Incomplete business cover
Most clients that Parmia Insurance speaks with for the first time, Burr says, are unaware of many of the various exposures they are facing due to their business activities.
“It is all too often that a business owner is asking to only purchase insurance products based on the requirement of a lease, to meet contractual obligations or in order to put forth a tender.
“This approach to insurance only partially addresses their exposures,” Burr says. “This can also be a reflection of a business owner being unaware of their insurable risk exposures.”
A conversation with an insurance broker can introduce the business owner or manager to insurance packages, new innovations and changes in insurance products that are better suited to their business requirements.
“Threats can change with the evolution of business and activities that may be integrated into the everyday operation of the business,” Burr says.
“An example would be the collection of clients’ personal data electronically and the threats presented by the storage of this sensitive information.
“Other threats that may present possible loss to the business include natural disasters such as flood, fire, etc. As the threats become apparent, the insurance industry evolves to address these exposures.”
What business insurance do you need?
Popular types of business insurance include:
– Professional indemnity insurance: covers you and your business in the case that advice you give causes financial loss to a client
– Public liability insurance: protects you and your business from financial risk should your negligence be found to have caused death, injury, damage of property or economic loss
– Product liability insurance: protects you and your business in the case that goods you sell cause injury, death or damage
– Business interruption insurance: protects your business from damage caused by lack of income and the inability to satisfy the needs of customers following an event such as a flood or fire
– Business insurance package: contains a mix of the above, and more types of insurance cover for a business
– Industrial special risks policy: offers broader and more customisable protection (compared to a business package) for businesses with asset values over $5 million to $10 million.
Assessing your business insurance needs
“The suitability of packaged products can only be determined after carrying out a comprehensive risk analysis,” Burr says. “What may be a comprehensive solution for one business will not necessarily be the same for another, even if operating in the same industry. This is due to the hidden risks and varying activities between businesses.
“Customising your insurance solution with the help of an insurance expert will give you the peace of mind that all liabilities have been reviewed and the most appropriate insurance products are selected.”