Be prepared for anything
In business, anything can happen at any time. Someone can become injured, a disgruntled ex-employee might sue, your database may be compromised… and unfortunately, not everything will be covered by your basic business insurance policies.
Before you’re faced with skyrocketing expenses, major headaches and unplanned threats, find out what kind of insurance you may need that you have perhaps overlooked in the past.
1. Management Liability insurance
Becoming more and more necessary, Management Liability insurance protects the company and the people who manage the company, such as the director/s and officers, against the risks and exposures of running the business – the intangible risks that you perhaps do not see.
The policy provides cover against allegations and acts of misconduct & legislative breaches; statutory fines & penalties; breach of duty; OH&S issues; unfair dismissal; sexual harassment and the like. It also protects a business against losses arising from dishonest acts of employees and third parties, including theft of money & stock and the costs of responding to an audit from the ATO, office of state revenue or other Government departments.
Management Liability is commonly overlooked because of a lack of understanding. It’s assumed that cover is provided in existing policies held by the company, such as a Business Package, Public Liability or Professional Indemnity policy and as the regulatory environment changes, directors are often unaware of their full responsibilities at law. Without sufficient protection, you could potentially risk losing not only your business, but your personal assets too. What does Management Liability Insurance cover you for?
Directors & Officers Liability
Covering the Directors and Officers (including where the company can reimburse the directors) for any claim alleging a Wrongful Act (negligence, breach of duty, misrepresentations, etc.) by a Director or Officer.
Employment Practices Liability
Covering the Company for claims alleging employment breaches including wrongful dismissal, discrimination, harassment, deprivation of career opportunity, breach of contract, etc.
Covering fines & penalties imposed under an Act of Parliament, i.e. WHS fine.
Crime / Fidelity
Covering the company for theft by its employees (and sometimes) third parties, including money, stock and other property.
Covering the external costs in responding to a taxation audit and often payroll tax audits, workers comp audits and the like.
OH&S Defence Costs
Covering the costs incurred to defend an OH&S claim or attendance at an investigation into your workplace health & safety.
And many other risks
2. Cyber Insurance
If you have a website for your business (especially an e-commerce website) or you store sensitive customer information on your computers or laptops (think personally identifiable information like names, addresses, dates of birth, ID documents, TFN, medical records, etc.), or your network is fundamental to your ability to trade, you should think about holding a Cyber policy.
Cyber Insurance protects your business in the event of a cyber-attack. Whether your website or network is hijacked & defaced, or held to ransom, or your sensitive data & client information is stolen, the costs of repairing the damage and the legal costs associated with a data breach can be devastating including penalties of up to $360,000 for individuals and $1.7 million for organisations for breaches of privacy legislation.
Effective 22 February 2018, the Privacy Act 1988 includes mandatory data breach notification requirements. In summary, the Privacy Amendment (Notifiable Data Breaches) Act 2017 requires all relevant organisations to:
1. Report the data breach to the Government’s Privacy Commission; and
2. Notify all affected customers
Cyber Liability insurance protects your business from the impact of cyber threats and data breaches, specifically dealing with the costs & expenses associated with a data breach and any insurable fines that may be imposed for breaches of privacy legislation.
In addition to cyber-attacks, the policy will also respond to your legal liability for damage caused to third parties, i.e. you inadvertently send a virus, plus loss of your business income die to a cyber event occurring. Also, cover for cyber crime is available, i.e. social engineering and phishing scams which are becoming more and more common (think of an email sent to your accounts person pretending to be from you requesting the transfer of money to a third party account).
Cybercrime is a growing threat to many businesses in Australia, making it important to ensure your business is taking the right steps to safeguard it from potential attacks.
3. Business Interruption
Most small business owners like to prepare for unexpected events by insuring their physical assets, such as their premises, contents, stock, machinery and equipment. But have you thought about what would happen if you had to shut your doors for a few days, weeks or even months due to an insurable event, like fire, storm or theft?
Would your business survive? How would you continue to pay for things like rent, utilities, staff wages and other business expenses?
Business interruption insurance is designed to provide compensation for the financial impact of these events and help place your business in the same financial position it was before the chaos.
It is an important form of cover for small business owners, as the slightest hiccup can send your business into turmoil and cause chaos to your finances. It should definitely be considered by any business that relies on their premises to earn revenue, for instance: manufacturers, retailers, hospitality establishments and the like.
What’s typically covered?
Loss of turnover or gross profits due to damage to your own premises (or a suppliers’ premises) to help pay for ongoing operating expenses
Additional increased costs of working
Business relocation costs
Training costs for operators of replacement machinery
Claims preparation costs
4. Trade Credit Insurance
Trade credit insurance protects your business from bad debts, including unpaid invoices caused by customer insolvency or default. If you trade or sell goods on credit terms, you’re at risk of bad debt or non-payment by customers. This can disrupt your cashflow and leave you greatly out of pocket.
Trade credit insurance works by insuring you against your buyer failing to pay, so every invoice with that customer is covered for the insurance year. It’s used by businesses of all sizes to protect both international and domestic trade. Businesses also use credit insurance to help them secure finance and working capital with banks, explore new markets with confidence and attract new customers with favourable credit terms.
Depending on the policy, trade credit insurance cover can be either:
Comprehensive cover: Protecting your entire credit portfolio, including domestic and export customers
Excess of loss: Suitable for businesses with strong internal credit management processes who want cover for exceptional loss across their entire portfolio.
5. Corporate Travel
If you &/or your employees will be travelling for work, be it intrastate, interstate or internationally, you should consider an annual Corporate Travel policy. You will pay one annual premium and be covered for all trips taken during the year. Further, directors (and accompanying family) and quite often senior management’s private leisure travel will also be included.
The benefits of a Corporate Travel policy will usually be far greater than an individual travel policy you may obtain for each trip and you will find it more cost effective.
Cover will include cover for:
Weekly personal accident & sickness benefits in the event of accident or sickness whilst travelling
Medical expenses including hospital stays and evacuation costs
Lost baggage, personal property, money, documents, credit cards, etc.
Loss of deposits and cancellation costs
Kidnap, detention, extortion & ransom
Hire car excess expenses (no need to buy a cheaper excess)
Travel & Emergency Assistance
By having the right insurance in place, a business can avoid a major financial loss due to a lawsuit or catastrophic event.
Call with us to find out what forms of insurance are advised for your type of business and put those plans in place as soon as possible.