One of the classic reasons for TV advertising is that it gives consumers the notion of quality and credibility – if the product is on TV then there must be some inherent value given the company’s (supposedly) massive spend on TV advertising. When it comes to your business, insurance can have a similar affect: providing a signal to your customers that your products or services must be credible/of decent quality.

Consider a structural engineer. Yes, you would want to make sure that they have had plenty of experience and that their designs have stood the test of time but wouldn’t you also like the comfort of knowing that if something does go wrong you can get your damages paid more easily? Would you consider a different engineer if you found out that your first choice didn’t have professional indemnity (covering liability for any faulty design)?

Indeed, many government and business organisations will require you to have some minimum form of insurance before engaging your business or allowing you to trade. For example, body corporates have minimum levels of public liability and property whereas doctors require medical indemnity insurance to be able to practice.

Or, you have a business development manager who is bidding for a major government contract and you are a front runner. They suffer an accident outside working hours windsurfing and are physically unable to attend negotiations with the government agency. They have all that knowledge stored in their head and you know that it will be almost impossible to get up to speed in time for negotiations. You now need to recruit a temporary manager and you will be unable to transact business until they are trained up. Your competitor’s also suffers the same fate but they are able to get back on their feet more quickly than you because they had Key Man Insurance…

Of course, these are just a few examples and they don’t consider your businesses needs or condition but it does help in thinking about insurance as an asset rather than a liability. Using your insurance to demonstrate your credentials can only help put your customer’s mind at ease whilst protecting your assets and ultimately, profit. Making your customers aware that your business is insured is just another plus that can be compared against your competitors.

When you first buy insurance for your business the terms and conditions (including premiums) are determined by your business’ risk profile. The risk profile takes into account factors such as your occupation, number of staff and level of turnover. Needless to say however, things do change. Hopefully, your business goes on to attract more customers and you take on more staff or incur costs to keep things moving along. So if you’re considering buying insurance for the following year, make sure that your cover reflects your businesses current risk profile.

1. Take stock

Have you bought any big-ticket items during the year, like commercial fridges or machinery, electronic equipment or stock? Or have you renovated your business premises during the year, increasing your revenue?

Depending on what level of insurance you purchased, some of your purchases may already be covered where as others may need to be declared to the insurer in order for them to be covered – check your policy wording or “PDS”. Also, if you happen to have purchased business interruption insurance, those increases in revenue may not be protected for example if you suffer a fire and are unable to conduct business for the next 3-4 months.

2. Consider your business needs and growth

Will you be purchasing a greater level of stock during the year or take on different types of clients? For example, will your new clients require you to purchase $20 million in public liability cover rather than your current $10 million? In providing services to new clients will this change the nature of your operations? Will you move from wholesale to retail or wholesale to manufacturing for example?

Changing the type of business that you are engaged in will almost certainly change the type of insurance you need as well as the terms and conditions that you are offered. In fact most insurers will provide a business services description on your insurance certificate meaning that if they find that you were providing legal services and not accounting you might end up with nil cover. Indeed, insurers will quite often refer to your “duty to disclose” any information that may change or affect their decision to insure you when you first apply for insurance. This means that if there is something that you fail to declare and that a claim results because of that something, your claim may well be denied.

3. Talk to someone

So you’ve taken stock of your business assets and inventory and you’ve considered your business needs and growth aspirations. What next? Well, talk to someone about it. If you buy your own business insurance direct online or through a call centre then your best bet is to speak to your insurance company. It may be unlikely that they will give you advice so in that event you should speak to a qualified insurance professional such as an insurance broker.

Your broker will be able to suggest alternative insurance companies which may work in your favour – but just be mindful of the cost of this advice: for example commissions that they will receive from the insurance company for selling their business insurance products to you or the ‘risk management’ fee that they may charge you in addition to the premium (which includes their commission).

Of course, if you don’t know where to start, check out one of our quick guides on business insurance!

You’ve spent your life savings on building up your business. You’ve mortgaged your house. You’ve convinced your parents to back you and you seriously don’t want to let them down. But the last thing you want to do is spend more money – even if it can save you money in the long run. Most people see insurance as a grudge-buy: the government or landlord requires you to have it no matter how good or bad your business runs. But the reality is that (if purchased correctly) it is actually a financial product that can save you money.

A simple example: you spent most of the money on an apple mac, Adobe Illustrator and a slick website. The last thing you want to do is fork out another couple of thousand dollars on a new mac if it gets stolen during a break-in or damaged in a fire? Think of it this way: the $150 dollars or so to insure your laptop simply adds value to your machine – it will always be worth the purchase price if it is the victim of certain unfortunate events.

The way an insurance company works is that they are willing to take on this risk in exchange for a fee – i.e. premium. Why not let someone else pay? In addition, you may even be able to can claim your premiums as a tax expense, for example if you have an appropriate ABN or require it for work for example (check with your accountant).

So you can save money in the event of damage to your property after buying insurance, but you can save even more money before you buy insurance:

- Does the insurance company deal directly with the public? In Australia, direct insurance companies include AAMI, NRMA and Allianz

- If the insurance company deals directly with the public, is their quote cheaper than going through an insurance broker? Generally, insurance brokers can get paid commissions in excess of 20% of your premium so in theory the direct company should be cheaper

- Is your insurance quote available online? Irrespective of whether you’re dealing with an insurance company or insurance broker, if a quote is available online for you to purchase it means that there are less ‘customer acquisition’ costs for them and that therefore your insurance quote should be cheaper

- Have you compared your insurance quote between different business insurance companies? Some insurers may be happy to match terms and conditions (just make sure that you read the fine print)

- Have you compared your insurance quote between different insurance brokers? Sometimes, depending on the size of the broker’s business with the same insurance company, they can extract a better outcome for you.

Of course, perhaps you’ve heard of other ways to save? We’d love to hear more about them!