Business Insurance at a glance?

What is business insurance?

A business takes years to build – but an accident or disaster could destroy it all in minutes. That’s why businesses should help protect themselves with a quality business insurance pack. With the right cover in place, owners can run their business with confidence, knowing that their premises, stock and equipment are protected by insurance.

"Business insurance can protect the equipment and machinery you need to stay in business. It can ensure that you, your employees and any members of the public with whom you interact in your business are protected from the risk you face as a business owner."

Understanding Insurance, Insurance Council of Australia

Who should consider it?

Business owners can benefit from taking out an affordable and comprehensive business insurance pack to help protect them against the main risks involved in running a business.

Are You Underinsured?

Make sure you have the level of protection you need
Your business is probably one of the most valuable assets you have – so it makes sense to protect it in good times and bad. The major reason why small businesses in Australia fail is inadequate cash flow1. That’s where having the right level of insurance can make all the difference by helping to ensure your business continues to operate smoothly if the unexpected happens.
“1 in 10 Australian small businesses with insurance don’t have enough cover to protect themselves.”

The risk of underinsurance
Unfortunately, 1 in 10 Australian businesses with insurance don’t have enough cover to protect themselves against business disruption, legal liabilities or loss or damage to their assets2.

This is referred to as ‘underinsurance’ and it can greatly increase the risk of a business having to close down if something goes wrong. So why are so many businesses underinsured?

Some business owners are driven by low premiums and don’t take the time to make sure they are adequately protected after an insurable event. As a result, the sum insured may not be enough to cover losses – or the terms of their policy may limit the amount that can be recovered.

It’s also common for business owners to underestimate either the reinstatement or replacement costs of their business assets after a damaging event such as a fire or storm. If the sum insured doesn’t reflect an up to date reinstatement or replacement cost, the owners will be underinsured and may face substantial out-of-pocket expenses if they need to make a claim.

1ASIC, Insolvency statistics: External administrators’ reports (July 2017 to June 2018). 2Insurance Council of Australia, Non insurance in the small to medium sized enterprise sector, July 2015.

What are the key risks in the building and construction industry?

Construction projects involve multiple stakeholders and are often undertaken on challenging sites. Construction businesses must often manage changes to scope or orders, poorly written contracts and specifications and complex project management issues. They may need to deal with labour and materials shortages, or theft of tools and materials.

Subcontractors and suppliers can provide extra stress for construction firms, as can the rising number of extreme weather events. What’s more, cybercrime is an emerging threat to construction businesses, which often use insecure connections from mobile workplaces, and share files and data with stakeholders outside the business.

“The construction industry generates over $350 billion in revenue, producing around 8% of Australia’s Gross Domestic Product, and has a projected annual growth rate of 2.5% in the next five years.”

Australian Industry and Skills Committee, Construction, 2020

Who should consider insurance? Whether you’re an owner builder, a contractor or a large construction company, you’ll need a range of insurance covers to safeguard your workers, building and equipment.