Insurance policies: Differences & similarities for SMEs

Insurance policies: Differences & similarities for SMEs

You might think that business insurance policies for SMEs are all the same. You would be partly right, because some of the policies are suitable for all SMEs, however, others are more specific to particular types of businesses. These differences make it vital that you ask the advice of an insurance specialist before deciding which policies are best for your business.

For example, a butcher or a restaurant owner might need insurance that provides food spoilage cover, just in case their freezer breaks down. With a basic insurance policy they could be out of pocket if all the frozen meat thawed over the weekend, and they didn’t have the right type of policy. Hairdressers or nail salons need Products Liability, whereas an accountant or adviser will need Professional Indemnity.

So let’s take a quick look at some of the policies that are the similar amongst all SMEs, and then at some of the policies that are geared towards SMEs with common industry. Each type of insurance policy can be tailored to meet the requirements of specific sectors.

Insurance policies required by all SMEs

These are some of the types of policies that are similar amongst all SMEs.

Public Liability: This covers you if you or your employees actions result in physical injury or property damage to a third party, during the course of conducting business. This type of insurance is often compulsory for many businesses.

Property Damage: This covers your business building, stock and contents from various insured perils such as loss due to fire, vandalism, theft.

Business Interruption: If your business is unable to trade due to a disaster, this insurance policy covers the ongoing expenses that still need to be paid, even though your revenue has temporarily ceased.

Insurance policies specific to certain sectors

These are some of the types of policies that are tailored to specific SMEs.

Contract Works: This is designed for builders and other tradesman to reduce the financial risks occurred for project delays, theft of on-site equipment, accidental damage to structural buildings, arson, and so on.

Products Liability: Does your business resell products from a third party or manufacture and sell your own products from your premises? If so, this policy protects you against claims of personal injury or property damage cause by products sold by your business.

Professional Indemnity: This is the type of insurance needed by lawyers, accountants, doctors, hairdressers, beauticians, nail technicians and engineers. In fact, anyone who provides a professional service or advice, needs Professional Indemnity Insurance against claims of a breach in duty.

Plant & Equipment: For SMEs that rely on mobile plant and equipment to carry out their business, this insurance policy is vital. It covers you for loss of this equipment, as well as injuries or property damage resulting from its use in the field.

There are many other types of insurance policies that you may or may not need, depending on your SME’s core business. These include insurances for commercial vehicles, cyber-crime, theft of money, general property, marine & hull and builders warranty to name just a few. To decide what type of insurance policies are suitable for your business, talk to an insurance specialist today.

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

SME Business Insurance

What is SME Business Insurance?

Any business in Australia, including small to medium-sized businesses, will benefit from an added layer of financial security in the form of an SME Business Insurance cover. This provides owners and businesses with protection against financial risks and the loss of key assets. It also protects customers, employees, suppliers, and contractors.

Some types of insurance are mandatory, like Workers' Compensation, Professional Indemnity, or CTP Insurance for motor vehicles – these are called statutory insurance covers. Other types of insurance are optional, but they are important ways of reducing business risk and protecting your finances and assets.

What does SME Business Insurance cover?

Property Damage – cover ranges from fire, storm, lightning and other perils to any type of accidental loss or damage. The property insured includes damage to buildings, contents, stock, plant and equipment, raw materials, and consumer goods.
Business Interruption – covers weekly amounts or net profit loss and ongoing fixed costs following property loss or damage. Also referred to as Loss of Profits or Consequential Loss Insurance.
Burglary/Theft - covers break-in at the business premises and the damage is done, as well as theft of goods or stock;
Money - covers theft of money in various locations (during transit, in a locked safe, or in a private residence) at any time (within and outside business hours).
Liability - covers a variety of statutory and civil legal liability, including personal injury and property damage, environmental liability, management liability, statutory liability, professional liability, aviation, marine and motor vehicle-related liability;
General Property - covers specified portable property against accidental loss or damage once it is taken off the premises, within Australia or overseas;
Equipment - covers sudden internal derangement and accidental loss or damage to plant, equipment and machinery, as well as computer and other electronic equipment. Loss of stock and business interruption cover can also be part of this insurance.
Motor vehicle & mobile plant – covers registered and unregistered motor vehicles, mobile plant & equipment, farm equipment, construction plant, as well as attachments and trailers. This insurance can also cover loss of income, downtime and hire costs of replacement equipment.

Speak to an insurance expert

It is our business to understand your objectives, needs, financial situation and risk profile and provide you and your business with tailored risk and insurance advice.
This is how we work with your business:

1.   We analyse your objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions.
2.   With your input, we undertake risk assessments and conduct market research to determine the most suitable insurance product(s) for your key risk exposure.
3.   Your insurance adviser will present appropriate strategies and solutions and also negotiate and place insurance covers agreed.

Frequently Asked Questions

How can insurance help small businesses in Australia?
- In Australia, small businesses are encouraged to invest in business insurance to help protect their business from costly eventualities like damage to property and liability claims. Investing in a comprehensive yet affordable insurance policy promotes the continuity of the business in times of losses or great financial trouble.
What does SME stand for?
Small-to-medium enterprises (SMEs) are businesses whose revenue, number of employees and assets do not exceed a certain threshold. Each country or industry defines a set of criteria to determine whether an organisation falls under the SME category.
How can insurance help small entrepreneurs or SMEs, or how it relates to risk management?
Risk transfer is one of the treatment approaches in managing risks in business, and insurance is an example of risk transfer. It’s a strategy that SMEs employ to shift a risk or a liability from one party to another when that party specialises in managing a specific kind of risk/liability.
Why is insurance important for business owners?
Getting an insurance policy for your business is important, as it cushions or completely shields you from the hefty costs of certain unforeseen issues (accidents, damages to properties, effects of force), legal claims, and other liabilities. Without insurance, business owners might be forced to foot the bill out of their own pocket.