What should I insure in my business?

What would happen to your business if the premises from which it operates burnt down?

It depends on the type of business.

If it’s an IT company with great off-site backups, it could be up and running again with days, or even hours. If it’s a pizza restaurant or a manufacturing business, it could take many months to return to normal.

Fire is just one threat to your business, and no doubt you have your equipment comprehensively insured in case of fire and similar threats.

But what about the software that your business relies on? And have you identified all the insurable risks your business is exposed to?

We’ve included a list of different types of business insurance – they may not all apply to your business, but you need to understand the role they play so you can assess their relevance to you.

Business recovery/business interruption insurance

This can cover many of the additional expenses that a business may face after events such as fire, flood, loss of profit, and ongoing fixed costs, such as loan repayments, wages or costs of moving to a temporary location.

Workers’ compensation insurance

This type of insurance is mandatory if your business employs anyone.

It doesn’t apply if you are a sole trader but may apply if you are a contractor. Sole traders should consider income protection insurance as an alternative.

Professional indemnity insurance

This is particularly important if you provide professional services that could cause loss to a client if the work you deliver is not up to scratch.

Public liability insurance

This provides cover against claims for personal injury or property damage to third parties that occur as a result of your business activities.

Product liability insurance

Usually included with public liability cover, it protects you against third-party injury or property damage caused by products you supply.

Business succession insurance

Not so much a specific type of policy, business succession insurance refers to the use of life and disability insurances to facilitate the orderly transfer of business ownership if one of the owners dies or is incapacitated.

It is often used to provide the funding for ‘buy/sell’ agreements.

Key person insurance

If your business relies on the special abilities, knowledge or financial backing of one or a small number of people, key person insurance can help protect you from the financial consequences if they die or are disabled.

Again, this is an example of using regular death and disability insurances for a specific purpose.

For equipment, indemnity and liability insurances, it can pay to engage an insurance broker. They can advise on the risks that are relevant to you and track down the best cover.

Need help navigating business insurance options?

For succession and key person insurances, talk to the experts at LDB.

We can help you identify your key people and assist in designing business succession strategies. We can recommend an appropriate mix of insurance.

No one knows when disaster may strike so if you feel your business is under-insured don’t delay.

Call us on (03) 9875 2900 or fill in the contact form below and we’ll be in touch.