There are many different types of insurance depending on your needs. Here are some of the more popular types of business insurance – note that some insurance companies also offer these as a ‘package’:

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Where guessing that if you’re reading this you’re also running your own business. We’re also guessing that you’re passionate about what you do, now that your dream is a reality. You’ve put a lot of hard work in to your business, made sacrifices, taken risks to get where you are. So why risk throwing it all away?

In essence insurance helps you ‘shift’ this risk on to somebody else – an insurance company. The insurance company takes your premiums and puts it into a pool along with people that have similar risks – in theory, the bigger this pool is, the larger the number of losses that can be covered.

So for example, you have an ice-cream truck. You drive for miles and miles and in turn, the repetitive music drives you miles and miles! You’ve spent about $85,000 getting your truck kitted out with stainless steel on the inside and hot pink on the outside (if anyone can tell us why hot pink is popular please email!). You probably don’t have another $85,000 in spare cash lying around so you decide to get insured. You ring “Mythical Insurance Company Pty Ltd” about getting motor insurance for your business and as it happens, Mythical is a specialist in ice-cream trucks and insurers over 5,000 ice-cream trucks. So they quote you a standard premium of $2,500.

You then call “Realistic Insurance Company” and they hang-up the phone thinking it was a hoax. You try again and this time they quote you a premium of $15,000. Of course, because Mythical is collecting $2,500 from 5,000 customers and because not every customer will make a claim then they can probably absorb a greater number of losses and therefore not charge you as much premium as say Realistic. Sure, this is a very simple and made-up example but we’re just trying to illustrate the general principle.

So, in this example you end up buying motor insurance for your business’s most important asset. If you are unfortunate and cause an accident, well it won’t be money out of your pocket and you will be able to breathe a sigh of relief because the insurance company will take care of it.

Of course, protecting the things that you own and use isn’t the only reason for insurance. The law or indeed, your customers might also require you to buy a certain type of insurance, for example workers compensation, public liability or professional liability (indemnity) in order to conduct business. In most instances, they will also tell you what level of cover you need. If you’re unsure of whether you need insurance, you should seek professional advice from an insurance broker for example or an insurance company. The government or your industry association may also be able to assist you.

Next: What to insure

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In our previous post on public liability for business, we talked about some of the reasons for having public liability: the types that get more media attention – the guy at the pub surfing on the meat raffle he won, the spilt (burning hot) coffee cups, the four legged chair that became three-legged.
Of course, these are all fine examples of public liability claims arising from bodily injury to third parties (maybe even a former customer). The other side of the coin is the property damage aspects whereby you become liable for the damage caused to property, whether in your care, custody or control or not.

For example, one of your staff members accidentally scratches your customer’s car whilst loading some goods, or a vendor left their laptop in your boardroom and you inadvertently split water all over it as you were tidying up!

Damage to property is generally defined as:

- physical damage or destruction of property
- the loss of use of property following physical damage or destruction

Which seems fairly straight forward except that property may be defined as:
- tangible property not in your possession
- the premises that your business occupies

Which is where it can get a little tricky…Yes, it would seem that accidentally scratching your customer’s car would be covered: it was property damage to tangible property not in your possession. And yes if Terry Tate accidentally rips a giant hole in your office wall that would seem to be covered.
But what about the laptop? Well it seems not..but wait, check those ‘special’ clauses under imaginative headings such as “additional benefits” or “endorsements” in the policy wording – you might find that this may be covered (to a certain extent). For example, conditions such as:

Damage to goods in your possession or control:

- physically damaged or destroyed
- limited to $50,000 during the period of insurance

Of course, if you’re unsure whether you’re covered or not you should seek assistance from a qualified insurance professional – such as an insurance broker or the insurance company itself – if they’ll take your calls!