Running a business is a risky endeavour that can lead to financial and legal troubles in case of fraud, theft, lawsuit, environmental catastrophe, etc. Getting business insurance becomes imperative to protect the business from damage and disputes that can cost the company dearly. Some of the insurances are mandatory for businesses by law, while others are optional.
Most veterans consider getting insurance a prerequisite for individuals who plan to purchase a business for sale in Australia to keep the income safe in case of a crisis. However, budding entrepreneurs are not aware of the different types of insurance that can protect their ventures from the myriad internal and external risks.
Insurance is necessary because it reduces uncertainty and helps the business owner to feel confident and assured about the safety of the entity, its employees and customers. So, here is a list of all the different types of business insurance coverages in Australia that can be utilised by entrepreneurs for complete peace of mind.
1. Mandatory Business Insurances in Australia
There are three insurance types that are required by law in the country, these include:
- Worker’s Compensation Insurance – Every business that has employees needs to get this insurance. The business owner needs to provide the staff with worker’s compensation insurance that allows them to get compensation, treatment and rehabilitation if they fall sick or meet with an accident due to the nature of their work assignment.
- Public Liability Insurance – It offers cover for third-party injury or deaths and is mandatory for businesses that provide services like plumbing, electrician, etc.
- Third-Party Personal Injury Insurance - It is needed by those businesses which own a vehicle that is used for business-related work. The mandatory insurance provides coverage in case of injury while using the vehicle.
2. Personal or Loss of Income Insurance
Business owners can choose from a variety of personal insurances that require paying instalments over a defined timeframe and getting the amount back at the end of the term. These include:
- Life Insurance – It is offered to your nominee when you die or is given to you if you become permanently incapacitated.
- Disability Insurance – This insurance provides cover for a part for your income if you have become incapable of performing your duties due to an accident or illness.
- Business Interruption Insurance – This insurance provides cover if the business property is affected by fire or any other external damage that is mentioned in the insurance documents.
- Trauma Insurance – If the business owner has been diagnosed with a potentially fatal disease, he will get a lump sum amount through this insurance cover.
- Employee Dishonesty Insurance – It provides cover in case one of the employees commits theft or a fraud.
- Management Liability Insurance – Business owners can protect their personal assets if one of the directors of the company is involved in a fraudulent activity that leads to a financial loss.
3. Insurance for Stock and Assets
Entrepreneurs need to secure their income as well as the source of their income, which includes products, stock and assets. They can get them insured to bounce back from a setback in business through the following options:
- Burglary Insurance – It protects the contents of your business, such as the stock in a retail store that can get robbed at night.
- Stock Deterioration Insurance – It can be utilised when perishable stock stored in a refrigerator or freezer becomes putrid because of the breaking down of the machine.
- Building and Contents Insurance – It provides coverage for the building in which the business is operating and business contents against disasters like earthquakes, floods, fire, lightning, explosions, etc.
- Electronic Equipment Insurance – The insurance provides a cover for electronics present on the business premises against damage or theft.
- Farm Insurance – This provides cover to entrepreneurs selling farm produce to run a business and protects their crops, building, equipment and livestock.
- Tax Audit Insurance – It helps to cover the fee of a tax audit or an investigation carried out by the Australia Taxation Office.
- Property in Transit Insurance – It is applicable in case of damage or theft of the tools and equipment that are transported for business purposes.
4. Accident and Liability Insurance
Liability insurance offers protection in case you are considered responsible for damage or injuries to an individual or a property. It is mandatory for some industries in Australia and includes the following:
- Management Liability Insurance – It covers the assets of the entrepreneur if any of the management members causes losses to individuals or the business.
- Professional Indemnity Insurance – It covers the cost of a lawsuit against a business for breach of contract, careless advice, medical malpractice, or flawed legal counsel.
- Product Liability Insurance – It covers you if the products being sold or supplied by your business cause property damage, injury, illness, shock, or emotional distress to individuals.
- Public Liability Insurance – It provides cover if the business owner is considered responsible for causing injury or death of a customer, offering careless advice, causing property damage, shock or emotional distress.
5. Technology and Cybercrime Insurance
Cybersecurity has become imperative for businesses that rely on various software for their operations and save classified information on the cloud. With cybercrime growing at a fast pace and hackers targeting small businesses, cybercrime insurance should be utilised by business owners for maximum safety and protection. Some of these include:
- Cyber Liability Insurance – It safeguards the business from cybercrime by offering cover for the cost of securing the data and the challenges created by the theft or breach by hackers.
- Electronic Equipment Insurance - It provides cover for the damage or theft of electronic gadgets in the office in case of cybercrime.
6. State of Territory Based Insurance
There are several business insurances that are offered at the state and territory level, which can be used by the entrepreneur. The state-wise list is given below.
- ACT – Worker’s Compensation
- NSW – Employer and Work Health and Safety Obligations
- VIC - Business Insurance and WorkCover Insurance
- QLD – Business Insurance and WorkCover Insurance
- WA – Small Business Insurance and Worker’s Compensation
- NT - Worker’s Compensation
- SA – Business Insurance and Return to Work SA Insurance
- TAS - Business Insurance and Worker’s Compensation
Conclusion
Unforeseen circumstances and calamities can affect any business, such as the COVID-19 pandemic. Thus, if you intend to purchase a business for sale in Australia, you must identify the right insurance cover for your entity to keep your income safe.
