Depending on what type of business you are in, there are several products available which may be able to protect your exposure to an insurable loss or claimable event.
Business Insurance Packages
The most common type of insurance policy for small and medium enterprises (SME's) is called a Business Insurance Package or “Business Pack”. It covers the typical range of insurance requirements which are needed for most SME's. Insurers offer these packaged products as a cost-effective way of supplying one simple to manage policy, either for business owners/operators who usually are in leased premises, or for commercial property owners, including commercial properties owned by a commercial Body Corporate.
There are several “Sections” which can be included in your Business Pack, based on the risks that you want to have covered by an Insurer. For example, if you had a jewellery business you would probably insure for Theft of your stock. If you had a paper recycling business you probably would not want to pay for Theft cover for stock and decide to carry that risk yourself as self-insurance.
The Insurance Certificate which is provided to you by your Broker, on behalf of the Insurer, shows the Sections included and the insured categories or items, the sums insured and the excesses which apply in your policy.
Below is a brief outline of the typical Sections in an SME Business Pack -
Fire and Defined Events/Accidental Damage (WARNING: Co-insurance applies to this Section)
This Section can cover your Building, Contents and Stock against damage caused by a number of specified events such as Fire, Storm, Impact, Malicious Damage and several other causes. Note: Theft is not covered in this Section.
Business Interruption (WARNING: Co-insurance applies to this Section)
When an accident or other unexpected event occurs at, or, in most cases, close to your business premises, and as a result your business is partly or completely unable to operate, you could make a claim for your loss of rent or for the businesses insurable gross profit, including wages, until you are back to normal trading again, for the duration of your Indemnity Period, which you would usually nominate for 12 to18 months.
The “triggering event” generally would be one that is, or would be, claimable under your or your landlord's policy in the following Sections - Fire and Defined Events, Theft, Money, Glass or Portable/General Property.
This is a VERY IMPORTANT Section and it is highly recommended to include it in your Business Pack policy.
Without the means to keep the business afloat with a replacement cash flow, the business in most cases will fail, and the business owner's blood sweat and tears will all have been wasted. Even a new business should include B I.
Other Options include cover for Tax Investigation, Legal Costs, Employee Dishonesty, Errors and Omissions etc
This Section can cover loss of Stock and Contents (not money) and damage to locks or doors due to a break-in. Note: Theft of Stock when the premises are open for business is often very limited or may be not covered at all.
This Section can cover theft of money from the business premises, and while it is in transit between the business premises and a financial institution, or to and from your home, and while the money is at your home.
This Section can cover the accidental breakage of glass. This could include plate glass external windows and doors and/or glass shelving and/or illuminated signs. Generally Stock contaminated by this broken glass is also claimable.
This Section can provide cover for claims made against you for personal injuries or property damage to third parties due to your negligence in the course of operating your business. Product Liability is usually also included in this Section to respond to claims made against you for injury, loss or damage due to a hazard with the products you make, import, supply, repair or install.
Equipment Breakdown or Machinery Breakdown
This Section can cover loss due to the sudden failure of electrical, mechanical or electronic equipment that is used in your business. Spoilage of perishable stock as a result of the equipment breaking down can be added.
This Section can cover the costs associated with the repair or replacement of electronic business items following an insured event. Laptops, GPS and other electronic equipment used away from your office in the normal course of your business can also be included.
This Section covers damage to your business stock or contents whilst in transit within Australia which is caused by a defined event. Cover is somewhat restricted and is not equivalent to a Marine Transit Insurance policy.
General Property or Portable Property
This Section can cover loss of, or damage to, portable tools and business equipment but not - mobile phones, electronic equipment, video cameras, etc - whilst the items are at, or being transported away from, your business premises.
Industrial Special Risks (ISR)
An ISR policy provides property damage cover and consequential loss of income cover for larger organisations with high insurable values at one location or with a high aggregated value at several locations. The combined Material Damage and Business Interruption insured sum is usually in excess of $5,000,000, but some insurers will allow a value as low as $2,000,000. This policy is designed to protect physical assets, including buildings, stock, plant and machinery and other property. ISR policies contain industry-agreed base wordings (Mark IV & Mark V) that can be tailored to meet a client's needs.
- Cover for property damage by any cause not otherwise excluded under the policy
- Industry-agreed wordings with the ability to include many variations from the standard wordings
- Cover for reinstatement or replacement , including extra costs incurred
- Cover for consequential loss of income, including extra costs incurred
- Cover for theft and money
ISR insurance is commonly used in the processing, manufacturing, resource and construction industries and by larger property owners such as hotels, clubs, office buildings, shopping centres and educational institutions and councils. Generally the excesses, also known as deductibles, on ISR policies are higher than in Business Packs, however, retailers and wholesalers with multiple shops or factories can combine all of their Material Damage and Business Interruption risk insurances on to one ISR policy if they choose.
Commercial Motor Vehicle Insurance
The types of vehicles which can be insured as commercial motor vehicles includes –
Trucks with a licensed carrying capacity of more than two tonnes
Prime movers, commercial trailers and buses
Earthmoving equipment, tractors and harvesters
and many other types of mobile plant and equipment.
These policies cover insurance for Contract Works & Legal Liability for many types of construction projects, and are available in three different subtypes -
1) Annual Contract Works & Legal Liability – for builders who are doing multiple projects throughout the year, where the maximum cover per individual project is specified, together with their estimated annual construction value for all projects.
2) Single Contract Works & Legal Liability – for builders who want cover for one specific project, which may or may not be completed within 12 months.
3) Residential Owner Builder Specified Contract Works & Legal Liability – where a licensed owner-builder is building a new home on their own land, or extending or renovating their existing home.
Marine Transit Insurance
Insurance for commercial goods in transit by ship, air, rail, road or post. The word “marine” is carried over from when all goods were carried on a ship at some stage. Nowadays goods are often transported by several kinds of conveyances during the journey and may never actually be loaded on to a ship.
An importer, for example, could have an annual cover policy where their goods are covered from the time they are loaded on to a ship or a plane overseas right through to when they are received at their warehouse. The goods could also be covered from the time they left the same warehouse in consignments to be delivered by truck, train, plane or ship to their customers' premises either within Australia or even re-exported overseas.
Insurance for a single shipment can be arranged. For example, a business could be shipping some industrial equipment by road from Sydney to Cairns and wants to protect their investment against fire, collision and overturning damage or theft from the truck during the journey.
Public & Products Liability
The cost of paying for a Court awarded settlement and/or the costs to defend a legal action can be a major financial risk for individuals, partnerships, companies, trusts, non profit groups, clubs and other organisations. The manufacture or importation of, the supply of, or work on, a product can leave the provider with an unexpected claim for damage or injury where the product has caused or contributed to an unfortunate incident in some way. For a comparatively small annual payment, several millions of dollars worth of protection can be purchased to provide peace of mind.
The provision of advice by a business such as that given by accountants, architects, counsellors, designers, engineers, real estate agents, surveyors etc. may lead to a claim where that advice was deemed as inappropriate. Professional Indemnity Insurance provides cover from potential threats, such as claims for alleged negligence or breach of duty arising from an act, error or omission in the provision of the professional services.
The full detail of what is available in an Insurance Policy is in the Insurer's Product Disclosure Statement (PDS) or Policy Wording which you should read carefully to understand the cover and the terms and conditions which apply.
Each insurance company has their own unique policy wording. This means that coverage can vary considerably from one insurer to another. It is important that you compare each policy based on the appropriateness of cover for your individual commercial needs.
Very often the cheapest policy leaves out some aspects or options which may ultimately be the ones that could have made the difference between your satisfaction or your frustration with your insurance claim.