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Starting a new business is an exciting time, but alongside all of the exciting tasks are a few less interesting ones. Insurance is one of them.
There is so much to think about when you are starting a new business. You’ve come up with a great product or service, found some staff and office space, had your logo and website designed and you’re ready to jump in.
But have you thought about how you are going to protect all of this?
When setting up a new business it is important not to overlook the insurance requirements of your new start-up. Failure to do so can have disastrous consequences for a young business.
The types of insurance you require will vary depending on the type of business you are starting, and in this guide we will take a look at some of the main forms of insurance which need to be considered.
Property Insurance
Almost every type of business will own property of some kind, and it important to protect this property with insurance.
For a tradesman this means insuring your ute and your tools, and for an office based business it means insuring your office furniture, computer equipment and any other property owned by your business.
If you own your own business premises you will need adequate property insurance, and even if you are renting you will most likely need to have glass and public liability cover in place.
Business Interruption Insurance
All new ventures should have a comprehensive business plan in place, but even the best plan cannot stop unforeseen events from affecting your business.
There are many events which can happen to a business which are completely out of your control, but can still have major affects on your business.
If your business cannot operate for a period of time due to an unforeseen event, such as fire or storm damage, or even a car smashing through your shop front (a real example from Perth!) a business interruption policy can cover your monthly revenue until you are back up and running.
These types of events can have devastating effects on a young business which doesn’t have the bank balance to get through, but with the right insurance in place it is possible to survive and prosper.
Public Liability Insurance
This is arguably one of the most important forms of insurance for a new business, and for any business for that matter.
One of the biggest risks for any business is causing property damage or personal injury to a customer or other member of the general public.
A public liability policy can cover you for these types of events, specifically where another person has suffered a financial loss due to negligence within your own business.
For many businesses public liability is a mandatory form of insurance. This is commonly the case for tradesmen, retail businesses operating from shopping centres and other businesses operating from certain office buildings.
Income Protection
Whilst income protection is not technically a form of business insurance, it should still be considered by anyone starting a new business.
If this will be your first time working for yourself you will need to get used to the idea of having no access to sick leave, and potentially no access to worker’s compensation.
If you are unable to work for a period of time, you will have to pay your bills out of your own savings. If you have put all of your savings into your new business (which is often the case) you could find yourself in trouble.
You can easily protect yourself against this risk with income protection insurance, which can replace up to 75% of your insurance if you are unable to work for a period of time.
Business Expense Insurance
Business expense insurance is very similar to income protection, however it is designed to protect your business rather than protecting you personally.
In many cases you as the business owner will be responsible for most of the revenue in your new business. This means that if you cannot work for a period of time, your revenue will decrease significantly and your business may not be able to pay its bills.
Business interruption insurance can cover the fixed costs within your business for a period of time whilst you are unable to work, which can help to ensure that your business is still in good financial health when you are well enough to return.
Other Types of Cover
There are many other forms of business insurance which should be considered by anyone starting a new business, and the easiest way to assess your insurance needs is via an insurance broker.
When starting your business you will likely be engaging the services of an accountant and a lawyer, and you should certainly consider adding an insurance broker to that list.
A good broker will be able to work with you during the start-up phase to ensure you have the right cover in place to start with, and they can then assist you with updating your cover as your new business evolves.
If you are starting a new business and don’t already have a broker please complete our free online quote request or call our office on 1300 542 245 to speak with one of our insurance experts.