Rose Stanton Arrange Insurances to Transfer Your Risks
THIS IS AN OVERVIEW FOR INSURING & PROTECTING YOUR BUSINESS OR ASSETS
Please note this is a general overview only, for more detailed information or explanation on the content of this guide please refer to specific types of insurances shown on the left or contact us after you have read this guide.
This guide is to assist people or business owners, particularly startup businesses understand what type of risks effect them and what insurance products can be purchased to protect them or their businesses.
Our aim is provide you with easy to understand information about the risks associated with operating a business and the different types of insurance that can assist in the protection of the business.
Insurance was first introduced after the Great Fire of London in 1666. This fire burned for four days and created such devastation that a man named Nicholas Barbon decided to create a business to insure buildings against damage by fire. This business later became known as The Fire Office, it was soon followed by a marine insurance company founded by Samuel Lloyd in 1688.Lloyd’s of London is now among the world’s best known insurance underwriters. Insurance has been continuously developing to accommodate the changing risk environment ever since.
The best starting point for a person or business contemplating insurance is to assess the risks that may effect you or the business you operate and then implement a risk management programme of which insurance is generally a major component.
We can assist in the identification and transfer of some these risks, by sourcing suitable insurance products to cover them. We can also refer you to specialists including Risk Management Consultants, Fire Protection Consultants and Security Protection Consultants and other organisations or professionals who can assist you with the preparation and implementation of a risk management programme to manage risks that cannot be covered by insurance products.
Risks are essentially any factors or occurrences, which could interfere with the smooth operation of your business. These can range from Fire Damage, Injury or Property Damage, Liability claims or to equipment breakdown and more.
Most small business owners are inclined to assess their level of risk intuitively. However, a more scientific approach is recommended, commencing with a risk management analysis. It is crucial that an appropriate risk management strategy be implemented to ensure the survival of the business after a loss occurs. Insurers are now refusing to take on businesses who cannot demostrate they have implemented what are considered to be basic risk management processes.They do not want to be the first port of call for claims arising from poor basic risk management.
Generally, you will find that insurers now place certain conditions under insurance policies that certain basic risk management processes be implemented, otherwise they will void the insurance policy for non-compliance.Some basic risk management processes include compliance with all government regulations, making sure all equipment is properly maintained and serviced regularly, keeping premises clean and tidy and having contingency plans to help cope after a loss occurs.
Insurance products should be viewed as a component, not as the totality of a risk a management strategy or plan.
Insurance affects nearly every business and household in Australia. Since 1993, insurance claims have amounted to more than $2.75 billion for natural disasters alone.
A hailstorm in Sydney on 14 April 1999 cost insurers more than $1.7 billion. Claims for general insurance come to approximately $12 million on an annual basis.
Statistics released by the Insurance Council of Australia and also reported in the Sydney Morning Herald, revealed that there is an alarmingly high level of underinsurance of businesses assets, income and liabilities.
This particularly applies to the type of insurance taken out to protect businesses from loss of income due to some sort of interruption. Here is some factual information:
- Approximately 20 percent of all businesses do not have any insurance
- More than 90 percent of businesses do not have plans to cope with disruptions to their operations or have not tested their contingency plans
- An emergency such as a fire or flood or similar disaster, or a major interruption to gas, water or electricity supply can close a business down for weeks. However, most business cannot afford to stop operating for more than 24 hours
- Nearly 70 percent of businesses with building and contents insurance do not have business interruption income insurance
Many business owners do not have sufficient insurance to cover their potential liabilities. This is very important as Australians have a growing tendency to launch legal proceedings to recover their losses and the compensation amounts awarded are high. Australia is the second most litigious society in the world. Even if you are innocent, the cost of defending a legal action can be extremely expensive.
If you are an existing business owner who has been operating for some time, you probably already have some insurance cover, but is it sufficient for your business needs? Many people base their decisions purely on price when purchasing insurance, however the most economical products do not also always provide adequate cover for the type of business being operated. Further, the maze of insurance products offered makes it even more confusing to assess which type of product is required for your type of business.
Many people are not aware of the extent of coverage provided by their policies and often read their insurance policy for the first time when they have a claim rejected. They either do not actually hold the specific coverage required to cover the claim or the level of coverage is not sufficient to cover the claim adequately.
This can be disastrous for small business owners who usually cannot afford to continue trading for longer than a few weeks or even days without an income. The aim of insurance is to protect the business against catastrophic situations that can place the future operation of the business in jeopardy.
There are a number of associated benefits or reasons why a small business needs to accurately consider their insurance requirements some of these include:
- Banks and other financial institutions require you to have certain minimum types of insurances as a condition of their loans or leases
- Insurance will assist your business to survive after fires, storms or other types of destructive events
- Trauma and accident insurance protects you and your business against loss of income should you be unable to work
- Liability insurance protects you and your businesses capital against compensation claims, as claims for damages have been known to reach millions of dollars
Business insurances can be divided into four categories according to how they affect the business, these categories are:
- Assets
- Liability
- Revenue
- Personnel
Assets insurance
This category of insurance is for the assets owned. As a general rule these products cover the physical loss or damage aspects of your or your business assets, such as stock, contents, machinery, glass, signs, buildings, motor vehicles and money. You will generally find that assets type insurance covers are as follows:
- Fire and Perils or Accidental Damage to Buildings,Contents and Stock
- Theft of contents or stock
- Money lost by hold up or break and enter
- Glass breakage
- Goods lost or damaged in transit
- General Property loss or damage for portable items such as notebooks
- Breakdown or Fusion of Machinery or Plant
- Boiler or pressure vessels damage or explosion
- Deterioration of stock
- Money or negotiable instruments fraud
- Motor vehicle own damage
Liability Insurance
This category of insurance covers you and your business for legal claims against you arising from accidents that cause injury to others or damage to their property, or financial losses arising from professional advice or services.Insurance can protect your business and employees against claims brought against them as a result of negligence.
It is essential to carefully consider your liability cover requirements as damages awarded can sometimes amount to hundreds of thousands, if not millions of dollars.
Liability insurance covers include:
- Public Liability
- Product Liability
- Pollution Liability
- Motor Vehicle Compulsory Third Party Liability
- Workers Compensation
- Professional Indemnity
- Directors and Officers Liability
- Employment Practices Liability
Revenue Insurance
This category of insurance generally applies to the policies covering the revenue generated by your business. When something happens that damages the physical assets of your business or even your suppliers premises , the loss to your business is not just the cost of replacing these damaged assets, your revenue could be effected.
An unforeseen event, such as fire, may lead to a reduction in the turnover or profits of your business and have a direct impact on your livelihood.
This is why revenue insurance is important for your business. It includes:
- Business Interruption
- Accounts Receivable
- Trade Risk or Credit
- Tax Audit insurance and or Legal Expenses for Professional Fees
Personnel Insurance
At different stages of your life as a business owner you will experience different requirements for business insurance relating to personnel.Whether this is for you or for other members of your business, it is common that as your business grows, so does your need for this category of insurance. This includes:
- Life insurance Income Protection
- Key Person/s
- Compulsory Superannuation
NB the above products are not provided by Rose Stanton Insurance Brokers, however a referral to professional licenced advisors can be arranged, if required or refer the section "Other Related Services" in this website.
How Combined or Packaged insurance policies can be effective
It usually is more cost effective to pay for a group or package of policies than it is to pay for separate insurance policies for each type of cover your business requires.
Insurers combine different policies into one Business, Commercial, Office or Trade package insurance policy which can include many of the above mentioned types of insurance covers.You can also choose which sections of cover best suits your particular needs.
Here is a Checklist on the types of insurance available for businesses
The main types of insurance that the business owner should consider are:
- property damage caused by fire, smoke, accident, storm and tempest also known as fire and extraneous perils or industrial special risks
- loss from theft, burglary, fraud and loss of cash
- business interruption or consequential loss
- liability for products or services
- damage to customers and their property (public liability)
- workers compensation (compulsory)
- electronic equipment and or loss of data and additional increased cost of working
- machinery breakdown, fusion and deterioration of stock
- professional risks covers including professional indemnity,management liability, directors and officers liability and employment practices liability
- motor vehicle third party (compulsory)
- motor vehicle third party, comprehensive cover for individual or a fleet
- construction works and liability
- marine risks, transit risks, aviation insurance
- corporate travel or individual travel
- trade credit insurance
- fidelity employee embezzlement and fraud insurance
- tax and other types of government related audit, legal expenses insurance for professionals fees
- personal sickness, accident or permanent disability
- life or key person insurance
This is not an exhaustive list and there are more detailed specific industry, trade, profession and occupation checklists are contained on this website.
Risk Management - What is it and why you should implement a plan
Running a small business can be tough. There’s the financial concerns, family sacrifices, long hours, paperwork, staff relying on you for an income, creditor demands, banks to deal with etc, etc. It is often a special breed of person who has the level of commitment needed to succeed. Most devote a good portion of their lives to building a business. With so much passion and dedication driving Australian business owners, it is hard to believe many leave their businesses susceptible to financial devastation by often disregarding what should be one of the building blocks of managing known business risks.
Understanding business risks and risk management should be a primary concern of all businesses, regardless of the size. In essence, business protection, insurance and risk management go hand in hand. Risk management is as much about the identification of opportunities as avoiding or mitigating losses.
While it is not possible to prevent all hazards, the objective of risk management is to reduce risks to an acceptable level, reject unacceptable risks and transfer other risks through insurance products and other risk management practices. A proven track record in controlling risks may also result in reduced insurance premiums over time and contribute to the long term success of your business.
How to go about assessing risks that effect you
Before you can properly protect your business through a risk management process or plan and appropriate insurance products, you need to know exactly what your business needs protection against. To do this you should assess the potential risks specific to your business. If you fail to assess those risks, you could find certain elements of your business are not protected. You could also find you have insurance protection against risks of less importance in comparison to other potential areas of loss affecting your business. Different businesses or persons face different risks and as a result, you need to tailor your insurance protection and risk management approach to cater for those events or accidents that are more likely to have the greatest impact on your business.
Business owners should consider the following ways to practice risk management:
- Identify potential risks associated with your business
- Determine measures to reduce these risks
- Develop loss prevention strategies
- Have contingency and disaster recovery plans
- Insure your assets correctly by seeking professional valuations
Make sure that you maintain good records as this is not only good business practice, records are required for any claims made on insurance. It will also demonstrate your concern for maintaining safety procedures or equipment and this can reduce potential losses.
What should you do next?
Now that you know a little more about what insurance products can do for you or your business, you can get more detailed information from this website by going to the menu on the left of this page and by clicking on the industry sector or type of insurance you are interested in.There are overviews on the insurance and checklists to help you identify what you want to insure.
If you require a quotation for any of these insurances, you can either complete the quotation request or complete a full application which will expedite the process of obtaining quotation terms from our panel of insurers. One of our qualified brokers looks forward to being of assistance.