Insurance cover for growing businesses - what do you actually need?

Insurance cover for growing businesses - what do you actually need?

When you first launched your business, it’s fair to say that your goal was to be a success. Continued growth, however, brings with it a set of challenges and a new environment where insurance plays a big part in reducing and managing your exposure to financial risk or risk of injuring other people or their property.

Insurances that were fine when you were just starting out in business may no longer be sufficient to reduce or manage your risks. In fact, not having the correct insurance, or indeed being underinsured, can leave your business open to litigation or worse, being financially crippled.

That’s not to take away from the success that you have well and truly earned over the years, and the correct insurance will provide you with financial security and protect your business. So, what type of insurance do you need for your growing business?

Professional Indemnity Insurance

With the growth of your business, you might find that you are gradually providing more and more advice to your customers including about the products you sell. For some businesses, however, their mainstay is actually providing professional advice, for example accountants, lawyers and engineers, and they would already have Professional Indemnity Insurance. For others, who provide casual advice to customers, insufficient insurance cover can leave them wide open to litigation and substantial legal costs. This is particularly relevant as your business grows because you might not be aware that providing advice to customers can create the need for additional insurance cover or your existing policy to be upgraded.

Business Interruption Insurance

As your business grows you should consider buying this policy, if you don’t already have the cover. This insurance is important as it will pay ongoing wages of key staff, overheads including finance costs and fixed overheads. Many insurers pay these claims monthly, so you can pay bills and keep the business open, while you get back on your feet. This is a policy that many business owners overlook when buying insurance cover for the start of the business. So as you update the insurances that cover the replacement cost of stock and equipment (i.e. in the case of a fire), you should relook at Business Interruption insurance.

Without business interruption insurance many businesses fail to reopen after a large fire or storm claim.

Cyber Insurance

As your business grows, so does your reliance on emails, databases, websites and so on. Unfortunately, this reliance plays into the hands of cyber criminals who increasingly target businesses using viruses, ransomware and DoS (Denial of Service) attacks. Many growing businesses (including your key service providers) are extremely vulnerable to these attacks. Whilst you can put internal measures in place to reduce losses or minimise their occurrence, cyber hackers are often one step ahead. Cyber Insurance will help you to recover from these attacks, including rebuilding databases and removing infected software, as well as replacing lost income and minimising the impact to your reputation.

Property Insurance

You might purchase additional assets for your company as your business grows. This could include machinery, plant & equipment or an office/ warehouse. This is a sound business strategy, however, when you become the owner of a property, you also need the right type of insurances to meet the requirements of your bank and reduce your financial risks. For example, as a property owner you will likely be responsible for the roof, as well as damage to the building caused by storms, floods or vandals. The costs of repairs for this type of damage can be substantial and Property Insurance can help to reduce your risks.

We applaud your efforts in building a successful business and recommend that you take the time to add insurance as part of your regular business strategy reviews. For help deciding what type of insurance policies are suitable for your growing business, talk to an insurance specialist today and find your local adviser.

General Advice Warning

The information provided is to be regarded as general advice. This type of insurance product is designed for small and large businesses, who want to be covered against financial loss of income to the business, following a fire, storm or other type of insured loss. 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 relevant product disclosure statement(s) before making any decision to purchase this type of financial product.

Cyber Insurance

Technology has never been so deeply entwined in our businesses. While it delivers significant efficiencies and convenience, it also comes with significant cyber risks.

Cyber Insurance

What is Cyber Insurance?

During the 2020-21 financial year, the Australian Cyber Security Centre (ACSC) observed self-reported losses from cybercrime in Australia totalling a staggering $33 billion. Most businesses rely on technology to some extent, which means they’re exposed to increasingly sophisticated cybercriminals. According to the ACSC, an average of 164 cybercrime reports are made by Australians every day – that's about one report every 10 minutes.

Cyber Insurance covers the physical loss or damage to information, IT systems and networks. It can also cover loss of profits to be business, caused by the introduction of malware, extortion or hacking, as well as management of the incident itself.

Why is Cyber Insurance important?

Businesses must have guards against hackers and other types of cyber breaches. What’s more, because of stricter data privacy laws, they’re increasingly required to ensure personal information is secure. A breach will be investigated and require costly actions, including contacting hundreds or thousands of customers. There’s also the potential for hefty fines and penalties.

It’s easier to buy an insurance cover that protects your main cyber-related risks of damage to your systems and recovery, rather than trying to find specialist consultants to rebuild systems and keep the business operating. Cyber Insurance policies also generally include significant support with managing the incident, which can be essential when faced with reputational damage or regulatory enforcement.

What does Cyber Insurance cover?

There is a wide range of Cyber Insurance available. While all policies cover liability to third parties for passing on viruses, some also cover damage to your own networks.

Additional sections that we recommend considering include:

incident response – specialists to identify the issue and repair
lost income and additional costs related to the incident
data recovery and restoration
consumer notification costs and ongoing monitoring costs
legal defence costs
cyber extortion management and fees
crisis and PR management of the incident
management of communications with regulators.

Managing cyber risks to your business

Cyber Insurance is a key part of your management of cyber incidents and attacks. Many resources are available to help minimise the likelihood of a successful attack, including the Australian Cyber Security Centre.

The top 3 things that you can do easily are:

Update your devices to protect information.
Set up multi-factor authentication for logging on.
Back up your data real-time of at least daily.

Explore your insurance options today. Talk to your professional insurance and risk adviser and get the best cover for you and your risks.

Frequently Asked Questions

What is not covered by Cyber Insurance?

Like any insurance, not everything is covered by your policy. Some common exclusions include:

personal injury
consumer redress funds, unless specifically covered
loss of money or securities, unless specifically covered
your intentional conduct or wrongful use of personal information
failure to take reasonable care in securing your IT systems

Is Cyber Insurance required in Australia?

Cyber Insurance can help you to manage your business's financial risks. While it isn’t mandatory in Australia, it is expected that certain businesses have some level of cover in place – including critical industries, care, finances and utilities. Without insurance, you would be forced to pay out of your own pocket for repair, recovery, and remediation costs from a cyber incident or attack.

What are the main areas covered under Cyber Insurance?

Cyber Insurance typically helps you with expenses spent on five main areas:

Third-party liability
Emergency response and business continuity assistance
Recovery of your data and IT systems
Business interruption due to interference to your systems
Loss to you from crime or fraud.

Does Cyber Insurance cover data loss?

Yes, Cyber Insurance covers your lost information and data, as well as any loss caused to your customers or suppliers if a virus is transferred. It also covers:

notifying potentially affected customers of a data breach
employing computer forensic experts to identify and restore data
repairing damaged computer systems, both hardware and software, to enable the data and systems to operate.

What are the benefits of Cyber Insurance?

Cyber insurance is a specialist insurance policy that provides cover against cyber incidents or attacks that aren’t covered by other insurance policies, such as professional indemnity, management liability, or business packs. This could potentially leave a gap in cover. A Cyber Insurance policy will pay for legal costs, crisis managers, and payment of credits and refunds to customers.

Technology has never been so deeply entwined in our businesses. While it delivers significant efficiencies and convenience, it also comes with significant cyber risks.

Property Insurance

Cover for loss or damage to your physical business assets in the event of an incident occurring.

Property Insurance

What is Property Insurance?

Property Insurance covers the loss or damage to physical property after an insured event or peril, such as storm damage, fire, or impact from a truck. It’s often sold as part of a package – for example, together with Farm, Home, or Business Insurance.

This type of insurance provides property owners with financial security and peace of mind – knowing that if the worst happens, like a fire or tree falling on your home, your financial loss will be minimised.

What does Property Insurance cover?

Most properties can be insured – as long as you fully disclose your occupancy situation and the purpose of the property. Property Insurance covers personal property (such as your home), the household contents, and valuables like jewellery or sports equipment.

This can be a:

residential property
farm
unit
strata building
commercial strata
retail store
factory
warehouse
manufacturing facility.

Loss or damage insured

All property policies cover specified perils, such as:

fire
theft
storm
rain
wind-related events
impacts by vehicles and trees
vandalism

You can also add a cover at an additional cost for other accidents, like shelves falling or stock being damaged by a pipe leaking.

As with any type of insurance cover, Property Insurance policies have limits and exclusions. The limits may relate to the total amount payable in the event of a claim, the location where the property is insured, or how your claim will be paid out. Typical exclusions include damage by insects, pre-existing damage, intentional damage, lack of maintenance, and flood.

Choosing your insurance policy

Choosing the right Property Insurance can be challenging as there are a few different packages:

Home Insurance – includes cover for the house, contents and personal items taken outside the home.
Farm Insurance – covers farm property. This can include the homestead, contents and personal items, also stables, barns, out-buildings, fencing, plant & equipment and grain in silos or livestock.
Business Insurance – covers buildings, stock, contents, plant & equipment, and work in progress.

It’s essential to read and understand your insurance cover. Talk to your insurance adviser if you have any questions or don’t understand your insurance arrangements. We can provide you with advice on the best cover to suit your financial situation, needs and objectives.

Frequently Asked Questions

What insurance is best for a property?

Choosing the right property insurance can be challenging, as there are lots of different types, including Personal Property, Home, Farm, Business, and Stock. The cover also varies between insurers – some will only offer specified perils, while others will also cover accidental loss or damage. Other factors to consider include the use of the property, whether it will be renovated, value, and key risks in your area.

Why do I need property insurance?
Property Insurance is an easy way to manage your financial risk. When you buy insurance, you have protection against unexpected events damaging your property, such as fire, storm, or burglary. In exchange for an annual insurance premium, the insurance company promises to pay you in the event of loss or damage occurring. If you have no insurance, then you’ll have to pay for any loss, damage, or repairs from your own pocket. This is difficult to budget for, and may be outside your ability to pay.

What's the difference between homeowners insurance and other types of property insurance?

All Property Insurance covers buildings, contents, and specified types of property. The use of the property usually tells you what type of property package you need:

Home Package – covers a number of sections, like public liability, glass and property (such as the home), contents, and personal valuables like jewellery.
Farm Package – covers public liability and motor vehicles, with the property section covering the homestead, farm buildings, fencing and farm machinery.
Commercial Package – usually covers theft, machinery breakdown, legal liability and property. Property for a business includes stock in process, finished stock, buildings, plant and equipment, and office contents.

What isn'tcovered by property insurance?

Property Insurance cover differs from one insurer to another, so it’s best to review your policy and make sure it covers most of your risk exposures. In many cases, Property Insurance has limits on the amount per accident or per item. Certain types of damage may also be excluded – for example, flood damage in certain areas, leaving the home unoccupied for a long time, or bushfire damage in fire-prone areas.

It’s worth taking time to read and understand what your insurance policy does and doesn’t cover. Your insurance adviser will make the whole process easier to understand.

What are the basic types of cover needed?

Property insurance covers a wide range of events. The seven key ones are:

Fire
Storm
Impact By Falling Trees Or Vehicles
Wind
Vandalism
Explosion
Burglary

Other types of cover can be added – so speak to your insurance adviser to ensure you have the right cover in place.

Cover for loss or damage to your physical business assets in the event of an incident occurring.

Business Interruption Insurance

From your family and employees to customers and suppliers, there are a lot of people who depend on your business opening its doors each day.

Business Interruption Insurance

What is Business Interruption Insurance?

Business interruption, also known as Loss of Profits or Consequential Loss Insurance, is a special insurance cover. It pays the business owner any fixed overheads and similar business costs following a fire, storm damage or other major events that prevent a business from trading. This insurance starts from the time of the fire until the business is back up and running to where it was before the damage occurred.

Why is Business Interruption Insurance important?

Starting and running a business always carries risks. The key financial risks can be managed by buying insurance cover like Property Damage, Public and Product Liability, and Burglary.

For businesses of any size, Business Interruption Insurance is essential to ensure that money continues to be received (from the insurer) to pay fixed expenses – such as lighting, power, bank loans, wages, transport, plus net profit related to a reduction in turnover.

What does Business Interruption Insurance cover?

Business Interruption Insurance compensates business owners for:

net profit expected to be earned during the time the business takes to get back up and operating to its pre-loss output
any fixed expenses (interest on loans, wages etc.), that keep on being incurred, regardless of whether the business is operational or not.

Variable expenses, like input purchases and delivery costs, would not be covered, as they won’t continue if the business isn’t operational and making goods or products.

The time period for getting the business back up and running to pre-loss levels (plus any expected growth) may take a few weeks or many months, depending on how badly damaged the business was, the loss of customers, and other factors. Working out the maximum time you need insurance for is important – but 12 months is a good place to start.

Choosing your insurance policy

Key factors to consider when choosing the basis of cover, which will impact your premium, include:

Indemnity period. How long do you need the cover for? Depending on the situation, how long will it take your business to return to pre-loss trading?
Payroll. How much of your payroll do you need to insure and for how long? Insurance companies won’t pay employees to sit at home for six months while the business is being rebuilt, but redundancy payments can be insured.
Growth. Consider the trends in your business: is it growing rapidly, or is it a mature business?
Economic cycles. Are there any major seasonal fluctuations or economic cycles?
Suppliers and customers. Do you need to cover specific customers or suppliers that you rely on. If they couldn’t operate, would it impact your business?
Additional or increased costs of working. Most businesses spend a lot more money in the short term to try and minimise the impact on their business. For outsourcing a valued customer's work to another business for a short while, or if you own a building that’s fire damaged when your business is located, and you need to rent premises for manufacturing, this will be a new additional cost of the rent.

Frequently Asked Questions

● How Is It Calculated?

There are two main ways to purchase this type of insurance:

Weekly income or Sales
Annual gross profit (being 12 months turnover less variable expenses, also insuring net profit).

Does it cover loss of profits for services firms?

For example, solicitors, investment consultants, and medical or dental practices. As many of these businesses can continue to operate from home or serviced offices, gross profits are generally not insured, only additional or increased working costs.

However, businesses that depend on their specific location, such as dentists or allied health, that have their customers in a specific area may consider Gross Profits Insurance.

In Summary

Storms, natural disasters, and fires are regular occurrences in Australia. Major interruption to business, where there is no income for an extended time, is one of the most significant risks a business will face, regardless of its size or industry. A large percentage of businesses that don’t have Business Interruption Insurance never reopen. It’s difficult to pay employees or mortgage costs, suppliers or even the power bill if there is no sales or revenue.

In addition, trying to get your business back on its feet can be overwhelming – taking management’s focus away from day-to-day business, as well as placing significant financial strain on you and the business.

We can help you find the best cover to keep your business running as smoothly as possible.

From your family and employees to customers and suppliers, there are a lot of people who depend on your business opening its doors each day.

Professional Indemnity Insurance

Professional Indemnity (PI) Insurance isn’t just limited to typical ‘professions’ such as accountants, engineers, lawyers, doctors and architects. Essentially, anybody providing advice or consultancy services for a fee has an exposure that needs to be considered.

Professional Indemnity Insurance

What is Professional Indemnity Insurance?

If you or your business provide professional advice or services, then you’re likely to need Professional Indemnity (PI) Insurance.

This insurance provides and pays your legal defence costs in the event that a customer complains that they followed negligent advice and suffered a financial loss – even if there’s no real basis for the complaint. If there was negligence, PI Insurance will also pay any damages awarded by the court.

Without Professional Indemnity Insurance, you or your business could be faced with having to organise your own legal defence, and pay potentially large legal bills as well as damages awarded by the court. The average claim amount is over $100,000 for legal costs, expert reports, and damages, so it can be a large amount to have to find quickly.

Typical professionals that purchase PI Insurance include:

real estate agents
construction consultants
healthcare or allied health
IT consultants
lawyers
doctors.

Why is Professional Indemnity Insurance important?

Professional Indemnity Insurance is mandatory for many professions and must be in place before starting a business. It’s recommended that you check with your association or insurance adviser to find out if PI cover is compulsory, and the sum insured required.

For other professionals, although this insurance cover may not be compulsory, it’s an easy way to protect yourself and your business from large financial losses. Even with the best training or risk management, people still make mistakes, contractors can provide incorrect specifications, and advice can be misunderstood.

It’s worth noting that the cover provided by Professional Indemnity is different from Public Liability Insurance which covers defence costs and any damages relating to personal injury caused to people or damage to their property. This is not the same as financial loss caused by an architect placing walls in the wrong location on plans or an IT professional recommending the wrong software.

What does Professional Indemnity Insurance cover?

The exact cover will depend on your occupation and scope of activities. Broadly speaking, Professional Indemnity Insurance covers any negligent act, error or omission relating to:

misleading, inaccurate or negligent advice; breach of confidentiality or privacy
breach of consumer, competition, and fair trading laws
loss of documents
infringement of intellectual property rights
malpractice, misdiagnosis, failing to order the appropriate tests, failure to treat
defamation, libel or slander, including costs of disciplinary proceeding costs, claim investigation and expert reports
public relations costs
legal defence costs
payment of damages.

As you can see, Professional Indemnity is a complex insurance with a wide range of cover options. We’ll work with you to understand your business, provide options to manage your professional risks, and recommend insurance cover.

Frequently Asked Questions

Who needs professional indemnity insurance?

Anyone who is specially trained, provides advice or service, and is a member of an association or profession can purchase this type of cover. Real estate agents, construction consultants, engineers, healthcare or allied health professionals, designers, lawyers, IT consultants and doctors all need Professional Indemnity Insurance.

In some workplaces or industries, it is mandatory to have this cover. Even if not compulsory, this insurance is important to protect you and the business from having to pay significant legal costs, as well as damages, if found to be at fault.

How much does professional indemnity insurance cost?

Professional Indemnity covers you or your business for legal costs and any damages if there is an actual or alleged act, error or omission that causes a financial loss to a client or customer.

Premiums are typically based on:

Your industry – for example, construction, IT, or medical, some are at higher risk than others.
The scope of your business activities – for example, whether you’re a fire engineer or an IT engineer, the turnover/ revenue and number of employees or contractors.
Prior claims experience – the more claims or lawsuits, the higher your premium (and excess) are likely to be.

● What is the minimum professional indemnity insurance?

The amount of Professional Indemnity cover you need depends on:

your occupation and potential for financial loss to the customer if there was negligent advice
any mandatory requirements of your association
the level of cover you choose, based on your level of risk, as well as the cost of the insurance.

Because different professions present varying levels of complexity and risk, we recommend talking with your insurance adviser – they are professionals who can work to understand your business and provide you with options to choose from.

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