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As someone who has run their own micro business, I understand completely that insurance is rarely at the top of your to-do list.
Not only is business insurance seen as something that is time consuming to arrange, but it’s also another unwanted cost.
And anyway, your business is so small that it doesn’t need insurance, right…?
Wrong! In my opinion, insurance is arguably more important for a micro business than it is for any other business type, especially if you operate as a sole trader.
What is a micro business?
Before we get into the insurance side of things, let’s first get a refresher on what a micro business is.
According to Small Biz Connect, a website run by the NSW Government, a micro business is one that operates with less than five employees.
In reality most people think of a micro business as being a one or two-person business, with anything above that being a small business.
Either way, one thing they all have in common is that the business will be personally owned by someone who is involved fulltime in the business, as opposed to having a corporate owner.
Does my micro business need to be insured?
Whatever type of micro business you run, or business of any size for that matter, there are various risks involved.
You might think that the only risk your micro business faces is whether or not it can survive and be successful, but there is much more to it than that.
As a micro business owner you are joined at the hip with your business, and this leaves you very exposed financially if things go wrong, especially if you operate as a sole trader.
In the event that something goes seriously wrong, you don’t just run the risk of losing your business, you run the risk of losing everything from your personal savings to your family home.
So to answer the original question, yes, your micro business most probably should be insured.
What types of cover do I need?
There are many different forms of business insurance available, and rather than looking at every one of them we’ll just run through some of the most common types.
INSURANCE TYPE 1: Public Liability
WHAT IT COVERS: Property damage or personal injury suffered by others as a result of your business activities.
WHAT IT COSTS: From $400 per annum for a typical micro business
INSURANCE TYPE 2: Product Liability
WHAT IT COVERS: Losses suffered as a result of the products you have supplied.
WHAT IT COSTS: Included in your public liability
INSURANCE TYPE 3: Professional Indemnity
WHAT IT COVERS: Losses suffered by your clients as a result of your advice or services.
WHAT IT COSTS: From $500 per annum
INSURANCE TYPE 4: General Property
WHAT IT COVERS: Loss or damage to your ‘tools of trade’. From tradies tools to laptops and smart phones.
WHAT IT COSTS: From $200 per annum for basic cover
INSURANCE TYPE 5: Income Protection
WHAT IT COVERS: Loss of income due to injury or illness.
WHAT IT COSTS: From $40 per month for basic cover
If your micro business is in the retail sector you may also want to consider insurance for your stock, both whilst in your possession and whilst in transit.
For those businesses which operate from rented premises your lease will most likely require that you hold additional forms of insurance such as glass cover.
There are plenty of other forms of cover to consider such as business interruption, employee dishonesty and tax audit. These are best spoken about with a qualified insurance adviser.
Micro business insurance examples
If having read this far you still think that your micro business probably doesn’t need insurance, let’s take a look at a few examples of micro businesses, the risks they face and the insurance types that can help.
BUSINESS TYPE 1: Consultant
RISK: Your advice results in a client suffering a loss
CONSEQUENCES: You can be sued for your client’s losses
SOLUTION: Professional Indemnity
BUSINESS TYPE 2: Online Store
RISK: One of your products results in property damage or personal injury
CONSEQUENCES: You can be sued for damages including injury and other financial losses
SOLUTION: Product Liability
BUSINESS TYPE 3: Tradesperson
RISK: Your actions cause property damage or personal injury to another person
CONSEQUENCES: You can be sued for damages
SOLUTION: Public Liability
BUSINESS TYPE 4: Any Business
RISK: Your electronic devices or tools are stolen or damaged
CONSEQUENCES: You have to pay to replace your equipment
SOLUTION: General Property
These are very basic examples, and in truth many of them can crossover into each other.
Let’s say you’re a business consultant working on your own from home. You visit all of your clients at their premises and have no clients visiting you at home.
Surely you have no need for public liability insurance?
It’s true that your chances of having to claim are much lower than say, a tradesperson, but a risk still exists.
What if you’re visiting a client’s office and you knock over a valuable antique or damage their computer equipment? What if you leave a pile of documents on the floor and someone trips over them and breaks their wrist?
Yes the chances of these things may be low, but the good news is that this low level of risk is reflected in the low cost of public liability insurance for a business of this type.
Is it worth just taking the risk?
As a micro business owner you have a million things to manage every day.
It can seem far more important to find new clients, improve your marketing efforts, manage your cash flow, manage your staff, chase up debtors, etc.
On top that, the chances of something going wrong is probably quite low. You may well go through your entire business life never needing to claim on your insurance.
And you know what? Even now with my experience in business insurance I would find it hard to argue with all of that.
What if something did go wrong?
All of your hard work, all of your blood, sweat and tears (of which there is plenty in a micro business) could be wiped out in an instant.
Not only that, but you could also lose all of your personal savings, your home and in some cases even your relationship, just because you thought you didn’t need to bother within insurance.
Just do it…
Insuring your micro business does not have to be expensive and it certainly does not need to take a lot of time.
By using an insurance adviser who knows small business (such as the ones we give you access to) you can get your business covered in a very cost effective and time effective way.
Once you have your business insurance package in place, you can push on knowing that if something does go wrong, your insurance policy (and your insurance broker) will be there to help you all the way.
For more information about micro business insurance please contact us, or if you’re ready to get a quote on your cover please visit our online quote page and select your business type.