Business

Business Insurance Explained: What Cover Do You Need?

Chloe Harwood
Written by Chloe Harwood

At its very essence, business is all about making sound investments. Everybody that has ever found any kind of success will tell you that much. You need to spend money to make money, or so the old saying goes. And there’s certainly a degree of truth to that. As a business owner, however, you are responsible for a number of different things. Some of which you may not be aware of.

Insurance is often overlooked when it comes to business. Many executives simply see it as an unnecessary investment. That’s could be a grave mistake that comes back to haunt you. As a business owner, you need to see insurance for what it really is. It’s a protection. And isn’t it worth paying out to ensure that you are safe should certain situations arise? I would certainly say so.

There is so much insurance available, though, it can be tough to figure out what you really need and what you can do without. As a rule of thumb, you should make sure you have something in place for any kind of incident that could befall you. Even if it seems unlikely. If the possibility is there, you better make well sure that you’re covered.

Being on the wrong end of a lawsuit could mean havoc for you, especially if you’re operating a small business. It could put the halt on your productivity and drain valuable resources. And usually, it comes when you least need the hassle. Do yourself a favour, and make sure you cover your own back. It’s the least you can do for your business.

So, in a world where you can find insurance for just about anything, what are the areas you need to focus on? Let’s quickly run through them, and analyze when, why and how you need cover. By following this guide to the letter, you can make essential preventative measures. And prevention, as they say, is better than cure.

Commercial Auto Insurance

You may start to see a pattern emerging as you read this guide. Most of the insurance that you’ll need to undertake as a business owner is similar to that in your regular life. Property insurance, as we’ll get to later, isn’t all that dissimilar from your home insurance. And your car insurance? That’s not at all unlike commercial auto insurance.

If your business operates with company cars or vehicles of any kind, you absolutely cannot overlook this. It doesn’t matter whether it’s just a representative traveling across the country, or your own distributor. You’ll need to cover their insurance costs. You can’t expect them to pay for it, given that they’re doing the job for you, can you?

The truth is that, while it may sting a little to pay out for it, auto insurance can save you from massive losses. Just imagine for a second that there were an accident. Your driver is no longer able to work. He’s going to need paying somehow, even if you need to hire a temporary replacement. Worse still, what if somebody else were injured in the crash? Even though you weren’t behind the wheel, you’re still responsible. Such is life as the business owner.

That’s without even touching upon the very real risk of damage to your property. Those cars, vans, and lorries don’t come cheap. If they’re written off, they’ll need replacing. If there’s damage, you’ll need to get them repaired. That’s not an inexpensive job, either. In the case of transporting goods, there could be damage to your stock. What are you going to then? Commercial auto insurance covers you for all of the above instances, for the most part.

For examples of times you may need auto insurance, check out http://www.dailysandals.com/road-incidents-where-you-need-a-lawyer/.

Data Breach Insurance

This is becoming more and more common as the internet plays a larger role in business. There have always been measures against data breaches, no matter which country you live in. The law tries its best to make sure that confidential information remains confidential. Giving away this data could lead to prosecution in some instances.

If your business happens to be one of those that stores personal data of your customers, data breach insurance is a very good idea. Accidents happen, right? You can’t totally rely on the integrity of electronics, or even important paperwork. Sometimes there can be a slip of concentration, and you could be facing a potential lawsuit. Data breach insurance will offer you protection in these cases.

Learn about data protection laws in Australia at https://www.efa.org.au/Issues/Privacy/privacy.html.

Errors and Omissions Insurance

While this is fairly similar to general liability insurance, there are certain nuances that make it essential to have them both. Don’t worry, not everybody will need professional liability insurance. Only those that are working as part of a professional firm. Law firms, hairdressers, estate agents, and accountants will all need it.

What does it cover? Well, simply any damage that occurs as a result of professional negligence. Let’s use the hairdresser as an example. It’s safe to assume that they’re pretty good at cutting hair, right? But, it only takes one poorly-timed nervous twitch, and that’s a botched job. The customer, in that case, could seek compensation against the hairdresser. That’s what professional liability insurance covers.

Obviously, that’s a fairly basic example, but the premise remains the same. Professional liability insurance covers instances that damages occur as a result of a failure to do your job correctly. And hey, everyone has bad days, right?

Find out how malpractice affects the medical industry at http://www.abpla.org/what-is-malpractice.

General Liability Insurance

There is simply no excuse for any business to overlook this area. No matter how small your business may be, or where you’re located, this should be the first thing on your checklist. Why? Because you can’t plan for every event in business. You can be sure that there’s always something around the corner that you didn’t plan for.

For the most part, general liability insurance will cover you in events where you could be at fault for damages. That is a pretty broad definition, I’ll admit. To put it simply, if you, your staff, or your products cause harm to anyone, intentional or not, you’re at fault. Like it or not, that opens you up to a world of legal issues. You may also find this to be called third party cover.

You can read more about how accidents could affect your business at http://www.brownandcrouppen.com/premises-liability/.

Life Insurance

It may seem odd to think about this as a business insurance, but it certainly has its place. I’m going to assume that you already know what life insurance means, so we’ll skip over the explanation. How does it affect business, though? Well, simply, in the instance of your death (and touch wood that is a long way off yet), what would happen to your assets?

Would your family be the beneficiaries or perhaps somebody else? It’s better to be safe than sorry. Inheritance laws vary from country to country, so it’s worth the additional reading to find out the regulations in your area. Still, life insurance affords you peace of mind that your family won’t be burdened, in a financial sense, at least, by your passing. You can also make sure that your business is entrusted to the right person.

Inheritance law can be complex and contradictory. Get your head around them http://www.abc.net.au/radionational/programs/lawreport/australias-complex-and-conflicting-inheritance-laws/.

Property Insurance

No doubt you’ve already got insurance for your home, correct? This is essentially the business equivalent. The difference? It’s that there’s a lot more worth stealing (or losing) inside your premises. Especially so if you own and operate a warehouse. Following basic security measures is only half the battle. While setting up security cameras and hiring security guards is a sensible first step, it’s not invulnerable.

Thieves can always find a way around your preventative measures. And guess what? If you don’t have adequate property insurance, they can just as easily make off with all your goods. What will you have to show for it? Nothing. Zilch. Nada. Just like that, a sizeable chunk of your stock is gone and there’s nothing you can do about it. Say goodbye to those sweet profit margins, and hello to being in the red.

But crime isn’t the only thing you need to worry about. Just like at home, your property could also be susceptible to freak accidents. Think about things like fire and flood damage. If you happened to suffer through either of them, would you be able to afford the repairs? Not without taking a considerable bite out of your business account, no. Property insurance is the only way to guarantee that you will be covered in both of the above instances.

For tips on protecting your premises, read https://www.business.qld.gov.au/business/starting/business-premises-utilities/premises-security-and-crime-prevention/premises-security-measures.

It might seem like paying out for so much insurance stings a little, but it’s definitely worth your time. Any of the above instances could lead to you facing lawsuits, or losing vital assets to your business. Doesn’t it make sense to pay a little each month to ensure that everything is recovered if something were to go wrong? The fact is that running a business doesn’t always go as smoothly as you’d hope. If the worst were to happen, you need to be protected. The above insurance types will apply to most businesses, and should be at least seriously considered.

About the author

Chloe Harwood

Chloe Harwood