Types of Business Insurance

As a business owner, you’re responsible for the well-being and safety of your customers and employees all while ensuring your enterprise stays afloat. Whether you run a small business or something larger, the buck stops with you when it comes to protecting your investment.

One of the most practical ways to do this is with the right insurance policy. Let’s take a look at the different types of business insurance you can take out.

Mandatory insurance policies for businesses

Some types of insurance are compulsory. For example, workers compensation insurance is required for any business with employees. Rules for workers compensation differ by state but are designed to help businesses pay compensation should an employee be injured or suffer a disease related to their job.

Additionally, any business that uses motor vehicles must ensure that compulsory third party car insurance covers their drivers. Some car insurers do provide comprehensive cover for business vehicles but there is also commercial vehicle insurance that can cover anything from business cars to trucks, trailers and forklifts.

Common types of insurance for businesses

a man and a woman working at a computer

In addition to any mandatory cover you’re obligated to take out, there are several other types of business insurance you might want to consider.

Cover your business’s liability

Getting liability cover for your business can help provide a financial safety net against legal action. With the eye of regulators and government watching businesses with greater scrutiny and the potential for members of the public to sue, it can become an invaluable addition to your risk management approach.

Public liability insurance* should a customer, supplier or member of the public lodge a claim against you for any injury or damaged belongings that your business activities cause them, you can be covered with public liability insurance.
Product liability insurance*provides financial protection against claims of personal injury or property damage caused by products your business sold or supplied. Reasonable costs incurred in defending a claim covered by your insurance are also covered. Product liability is generally a part of Public liability policy.
Professional indemnity* offers protection for businesses that deal in specialist services or professional advice. It helps cover lawsuits and financial loss from actual or alleged negligent acts or omissions that occurred when you provided a professional service or advice to a client. Professional indemnity insurance can help with any legal costs associated with a claim that’s covered by the policy. For example, if an estate planner made an error on an important document, their professional indemnity insurance would cover the costs of any lawsuit or damage claims levelled at the business as a result.
Management liability insurance* covers officers, directors, and the insured company itself from the many risks related to managing a company. These include claims of breach of director’s duties, mismanagement, discrimination, certain legislative breaches and more.
Cyber liability insurance* helps to insure you against legal claims and lost profits following a cyber breach or attack. With this type of business insurance, you’ll be protected for the cost of repairing damage to your data, hardware and software from a cyber-attack, the costs of a damaged reputation and legal costs if customer information is accessed.

Protect your revenue, assets and income

Whether you need to cover the building your business operates out of, the website you run or your business’s physical assets, there are various types of business insurance products that cover specific risks. In most cases, insurance companies can combine them together into a specific package.

Business insurance coverage type	What it covers
Building and contents*	Damage or loss to the building, property, contents and stock from accidental damage and events listed on your policy.
Theft and burglary*	Damage and loss from stolen contents and goods, including any damage that occur from theft or attempted theft.
Money*	Theft or loss for money kept at the business, at a private residence or when in transit (separate to theft and burglary in contents cover).
Glass*	The cost of replacing damaged internal and external windows and glass surfaces.
Stock deterioration*	Loss of refrigerated or frozen goods if your refrigerator or freezer breaks down.
Equipment and machinery breakdown*	The cost of replacing or repairing broken down machinery, tools and equipment.
Computers and electronics*	Damage or loss to the business’s electronics computers and digital data.
Employee fraud and dishonesty*	Cover for loss caused by dishonest or fraudulent actions by staff, including money and stock.

Cover for business interruptions

It isn’t just the liabilities, contents and assets of a business which can be covered by business insurance. Other types of cover are designed to safeguard your livelihood from interruptions and hassles that can affect your everyday operation and revenue. These may be additional add-ons to a business insurance package, such as:

Business interruption insurance*. While a natural disaster may not impact the business itself, it can impact operations and cause delays. Business interruption insurance can help alleviate the financial loss caused by such an interruption.
Tax audit insurance*. Even if you do everything right, the Australian Taxation Office (ATO) may decide to randomly audit your business. Tax audit insurance can help cover the cost of hiring an accountant or a registered tax agent to help you respond to an audit.

Business insurance for sole traders

The most well-known type of insurance that covers employees if they get sick or injured is workers compensation cover. However, sole traders (e.g. self-employed individuals) may have no need for such insurance policies and may instead consider insuring themselves with cover like personal accident insurance*, trauma insurance*, income protection* or total and permanent disability (TPD) cover*.

Safeguard your business today!

Providers will package multiple types of policies together into one product so they can comprehensively cover all your needs. Through our comparison service, you can select how you want to cover your business.

Ready to weigh up your options? Compare business insurance for businesses from countless industries for free today.

*As with any insurance, the different types of business cover will be subject to terms, conditions and exclusions specific to your policy wording or Product Disclosure Statement (PDS). This information is general in nature and not intended as professional business advice.

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