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It would seem pretty simple right? Getting your name right on your insurance.
But a lot or people and businesses still need a little help in getting the insured name correct on their business insurance documents.
It’s not your fault though. It actually has a lot to do with the many different entity types available to businesses.
In this guide we’ll look at some of the different ways a business can be ‘named’ and how they should be shown on a business insurance policy.
Why is it important?
Getting it right is very important, as the incorrect name could mean that you are not properly insured.
For example if you took out a policy in your personal name, then a claim was made in relation to a contract you were completing under your company name, there is a possibility that the claim would not be paid, or at the very least could be complicated.
So getting the name right on your insurance is very important to ensure you are properly covered.
How to correctly list your name
How your name is listed on the policy depends on the business structure you (or your accountant) has chosen.
Let’s take a look at most of the common ones:
If you are operating as a sole trader, your insurance should be in your own personal name:
If you have a trading name (also known as a registered business name) you should include it as follows:
Robert Smith trading as Smith Plumbing
Or in abbreviated form which is commonly accepted:
Robert Smith t/as Smith Plumbing
The naming conventions for a partnership are very similar to that of a sole trader, however both names must be listed:
Robert Smith & John Brown
If the partnership has a trading name it should be shown as follows:
Robert Smith & John Brown t/as Smith & Brown Plumbing
If you have a proprietary limited company (Pty Ltd) your business insurance policy should show your full company name:
Smith Plumbing Pty Ltd
It’s important to note that the ‘Pty Ltd’ suffix should only be used where you have registered an actual company and received an Australian Company Number (ACN).
You cannot simply add ‘Pty Ltd’ onto the end of a trading name.
Some companies operate under the company name, whilst others have a separate trading name. In this case it should be shows as this:
Smith Plumbing Pty Ltd t/as Smith 24hr Plumbing Service
Where things can really get complicated is once a trust is involved.
These can include family trusts, unit trusts and discretionary trusts.
There can be up to three elements when noting the name on a policy which involves a trust:
- Name of the trustee (can be a person or company)
- Name of the trust
- Trading name of the business
The abbreviation ‘ATF’ is commonly used in this situation as a substitute for ‘As trustee for’.
Here’s an example of how it may look on the business insurance documents. In this example the trustee is a person:
Robert Smith AFT The Smith Family Trust t/as Smith Plumbing
In the above case Robert Smith is the trustee of the trust, the trust name is The Smith Family Trust and the trading name is Smith Plumbing.
If the trustee was a company (which is not uncommon) the name could look like this:
Smith Plumbing Pty Ltd ATF The Smith Family Trust t/as Smith Plumbing
The only change is to the name of the trustee.
If you are still unsure exactly how your name should appear on your insurance documents you can seek assistance from your accountant or insurance broker.
In most cases your insurance broker will be able to work it out with you, but if you are using a complicated structure and don’t have the relevant paperwork handy, your accountant should be able to chase it up for you.
Getting your business name right exactly may seem a little trivial, but it’s much better to get it right at the start rather than letting it complicate matters at claim time.