Getting your own business up and running can be an exciting and deeply rewarding prospect. Being your own boss and pursuing something you’re truly passionate about is the driving force behind many business owners’ decision to take the plunge and branch out on their own.
Yet running a business can also carry elements of risk. Though we like to assume everything will run smoothly, life can sometimes throw us a curveball and it pays to be prepared should things turn pear-shaped. Regardless of your industry, mistakes can be made, accidents can happen and complaints can be filed by angry or spiteful customers.
Therefore, taking out an appropriate form of business insurance is essential. Whether you’re expanding your side hustle into a small business or already managing your own restaurant with a roster of 25 staff, ensuring you have the right sort of cover should sit high on the list of priorities.
There’s a huge range of business insurance options available in Australia, and it can be a bit overwhelming trying to determine which cover is most suitable for your needs. A good place to start is by assessing your key business risks. How vulnerable are you to theft? What would happen if one of your employees was injured on the job? Do you offer any products or services that customers might be unhappy with?
Once you’ve determined any issues your business may be likely to face, you can then begin to compare policies. A basic business insurance policy will ensure that in the event of a serious setback – such as fire, theft or injury – you have sufficient cover to pay for any additional costs that arise as a result.
Some business owners will opt for more extensive policies that will also cover their employees. For example, they will get cover for the sudden loss of staff or for workers taking a significant amount of time off due to injury or illness.
Depending on your level of risk, you may only need one type of basic cover or a combination of policies. Some examples include the following:
- Public liability insurance is for businesses that offer the use of a public venue, such as a function centre or performance space. This will cover negligence, such as a customer falling over and injuring themselves in the venue.
- Professional indemnity insurance provides protection for businesses that offer their expertise as a service to clients, such as an accountancy firm or law firm.
- General liability insurance provides general cover for any accidents or illnesses that take place on the business premises.
- Cyber liability insurance is for businesses with large amounts of online data that rely on certain types of software.
Once you’ve selected a policy, it’s important to make sure you’re familiar with what’s actually covered. You don’t want to be caught out by the fine print in your moment of need. Often there are certain situations insurers won’t accept a claim for, such as damage caused by a natural disaster, out-of-date equipment that is no longer in use or buildings that are vacant or unoccupied.
Keep in mind that there are downsides to business insurance as well. Taking out cover can often be quite costly. There’s also no way of predicting whether you’ll ever actually be required to use it. Yet unexpected setbacks can arise out of nowhere, and there’s no certainty that you’ll be able to cover the costs on your own. Business insurance is a small price to pay for peace of mind.
Bessie Hassan is Money Expert at finder.com.au