Business insurance Frequently Asked Questions (FAQs)

Professional indemnity insurance covers you on what’s known as a ‘claims made basis’. This means that you need to have a current policy on the date that a claim is made against you, regardless of when your services were provided.

Both of these insurances provide protection for your business against legal action and compensation awards to third parties, but they offer different forms of protection for your business.

Public liability insurance protects your business against claims (from your customers or members of the public) for any personal injury or property damage that they suffer from (or claim to have suffered from) due to your negligence (either at your work place or another location). An example of a claim would be if someone injured themselves after slipping on some water that was on the floor of your place of business, and there was no ‘wet floor’ sign to warn people of the potential hazard.

Professional indemnity insurance protects your business against losses or damage from claims taken against you arising from any professional services or advice that you provide. Examples of claims could be:

• Giving unprofessional, incorrect, inadequate, or inappropriate advice
• Breaching your professional duty of care by accidental omission, or making an error
• Acting against your customer’s instructions

Business insurance covers you for material damage losses that occur from an unexpected event like theft, a storm, fire, or accidental damage. You can typically get cover for damage or theft of office contents, stock, damage to buildings, cover for portable values, glass, money and machinery breakdown. If your business can’t operate due to an unexpected event, you can also get cover for financial loss—this is generally called ‘business interruption insurance’.

All insurance policies have exclusions to help keep premiums affordable and minimise risk for the insurer.

For business insurance, you’re generally not covered for material damage or financial loss from:

• Deliberate acts
• Floods unless specifically included in your policy
• The use of a vehicle
• Known circumstances prior to your policy starting
• Giving negligent professional advice or services

For professional indemnity insurance, you’re generally not covered for damage or loss from:

• Known circumstances prior to your policy starting
• Disputes about contracts or your service fees
• Fraud or illegal activities
• Deliberate acts
• Personal injury or damage unless caused by your breach of professional duty

For public liability insurance, you’re generally not covered for damage or loss:

• To your premises
• From injuries suffered by your employees
• From insured events that occurred before or after your policy period
• From giving negligent professional advice or services

The above are just some general exclusion examples and are by no means the full list of what’s not covered. It’s important that you’re aware of everything your policy doesn’t cover. Make sure you read the policy’s wording or Product Disclosure Statement first for all the details.

All businesses regardless of industry, size, or location face many risks on a daily basis, so it’s important that you understand your particular risks and whether you’re prepared for these risks. Being prepared means you’re able to minimise any loss or damage from exposure to these risks as much as possible, so that your business can continue to operate with little disruption. Usually, this means having some form of business insurance in place to protect your assets, customers, and your earnings.

When it comes to business insurance, the type you need will largely depend on what type of business you operate, its size, where it is, and how risk averse you are. For example, if you’re a café operator, your business insurance needs would be different to a sole tradesperson, or a business that operates from home.

There are various types of business insurance, with each type protecting different aspects of your business operations. The type you need will depends on the type of business you have:

• Business interruption insurance – covers your business for income loss if there’s material damage that prevents you from doing business
• Building insurance – covers your premises in the event of fire and other disasters
• Glass insurance – coverage for internal or external glass fixed to your premises
• General property insurance – coverage for your equipment such as computers, phones, and tools against theft or accidental damage
• Tax audit insurance – protects you against any fees incurred from accountants in case you get audited by the Australian Taxation Office
• Office contents insurance – covers your office equipment such as chairs, desks, and computers from theft or accidental damage
• Public liability insurance – protects your business against the legal costs and claims for any personal injury or damage to the property of others due to your negligence, that occurs as a result of your business activities, either at your premises or another location
• Product liability insurance – protects your business from claims of damage, injuries or deaths caused by your products being faulty or failing to perform
• Professional indemnity insurance – protects your business against losses or damage from claims taken against you for alleged breaches of professional duty of care in the provision of any professional services or advice that you provide
• Money insurance – protects you in the event of money being stolen from your business, including while in transit
• Theft/burglary insurance – protects your business in the event of theft of stock or contents
• Commercial vehicle insurance – same as personal car insurance, but for any vehicles you use for your business
• Deterioration of stock insurance – protects you for losses due to stock spoilage or damage in case your refrigerator or freezer stops working
• Employee fraud insurance – protects your business for losses it sustains due to your employees’ dishonest or illegal behaviour
• Online liability insurance – protects your business in the event of online risks like data breaches or hacking
• Machine/equipment breakdown insurance – protects your business against the cost of repairing or replacing equipment and/or machines that have broken down
• Goods in transit insurance – protects your business against loss of or damage to goods or stock that get transported
• Electronic equipment insurance – protects you in the event that your electronic equipment is damaged or lost due to an accident

Generally, you’ll be required to have at least the following:

• Worker’s compensation insurance – covers your employees/contractors from a work-related injury or illness
• Third party personal injury insurance – required if you use a business vehicle and protects your business from the costs of any personal injuries incurred from an accident when you use the vehicle

Your business will hopefully grow over time and with it comes the added risk of things going wrong. You should continually review any business policy you have to ensure it’s always up to date. If you don’t, there’s a chance you may be under-insured for the value of any assets, the number of employees, or other aspects of your business operation that needs insuring. Conversely, if you’re looking to downsize your business, then it’s equally important to review your policies to avoid being over-insured, as you could potentially be paying for unnecessary policies or paying for insurance that’s too comprehensive for the reduced business size.

Exclusions will differ depending on the type of business insurance you have. Some common examples of general exclusions on policies are:

• damage or loss from events that aren’t accidental, unforeseen, or generally insurable (like war)
• damage or loss arising from engaging in illegal activities
• damage or loss arising from events you have reasonable control over (e.g. theft due to not having a lock on your door)

You may be able to deduct your insurance premiums for revenue expenses, as long as you can show that the purpose of the insurance relates to your ability to earn your assessable income or is required for carrying on a business for the purpose of earning assessable income. You should seek advice from your accountant on this.

Most insurers offer flexible payment options to suit your business. You can choose to pay annually upfront or you can choose to pay in monthly instalments (this option usually incurs an additional small monthly fee).

As soon as your payment has been successfully made, your insurance documentation will be issued, including your Certificate of Currency and tax invoice.