Insurance is complicated, we'll be the first to admit it. It can be overwhelming trying to figure out exactly what insurance cover you need for your small business, so getting professional advice is key to making the right decision. Just like an accountant for financial and tax matters or a lawyer for legal advice, a professional insurance broker can provide advice and assist business owners to obtain insurance suitable to their needs.
We've gathered some of the most common mistakes small businesses make when purchasing insurance, so you don't do the same.
Assuming your business is too small for insurance
You may have only started your business and feel like you have nothing to insure, or you may have a very small business with a small turnover and low overheads. When trying to get a small business up and running, every dollar counts and insurance may seem like an unnecessary cost. We're here to tell you, your business isn't too small for insurance. What you end up paying to replace stock, fix damaged premises or handle a lawsuit could be more expensive than the cost of your premiums.
Only insuring things and not income
Businesses generally think about covering their physical assets, but many forget to ensure they have coverage to help them survive a reduction or loss of income if they had to shutdown unexpectedly. According to a report by the Insurance Council of Australia, 15% of small businesses don't have business interruption insurance. Imagine if your business was to suddenly to close due to damage to the property or complete loss of stock. Without business interruption insurance, you wouldn't receive any income to keep your business afloat before reopening.
Purchasing insurance based on cost, not coverage
Yes, insurance premiums can be expensive. Do you know what can be even more expensive? Having to pay to replace something out of pocket because you're not properly covered. If you're picking your insurance policies solely on price, there's a chance that you'll be underinsured or inadequately insured. The policy may not suit your business' needs, which may affect you come claim time, so how can you afford not to be properly covered?
Withholding important information
Whatever the reason, not giving your insurer all the information they need to know about your business can be detrimental. It may lead to your business not being covered in the event of a claim, so it is critical that you understand your obligations and fill out application forms completely and correctly. If you become aware that your insurer doesn't have a piece of vital information, give it to them ASAP.
Not reassessing your policy as your business changes
Life is busy, we know. Reviewing your business insurance can seem like a monumental task when you're also trying to balance running a business, family, friends and life in general - it's fine to let your insurance renew without reviewing, right? Wrong.
By just letting your insurance roll over, you're doing yourself a disservice. Your business will change year on year - it may grow or get smaller, you may change premises or you may introduce new products or services. These factors can all affect your coverage. After reassessing, it may end up that you're paying for insurance you don't need anymore or alternatively, you may not have enough coverage. It pays to reassess and review your insurance regularly.
Ignoring cyber insurance
We're increasingly dependent on technology in our lives and our businesses, which leaves us open to risks such as phishing emails and cyber attacks. According to the United Nations, there has been a 600% rise in malicious emails since the COVID-19 outbreak and there's approximately one cyber attack every 39 seconds. In addition to this, Australians collectively have lost over $176 million to scams throughout 2020 (Scamwatch). No technology system is 100% secure, but taking out cyber liability insurance can help mitigate your risk by providing expert advice to manage a cyber event, as well as covering the additional costs incurred.
So what's the answer to these mistakes? Engage a professional insurance broker to become your trusted advisor. They'll take the time to get to know your business and do a thorough assessment of your current cover before recommending an insurance plan to meet your business needs. They'll step you through the process, avoiding these common mistakes and giving you confidence in your insurance coverage.
Speak to one of our Relationship Managers about your business and insurances today. If they find you're not appropriately covered, they'll work with you to come up with a plan to suit your business. Call us on 1300 305 834 or email us at firstname.lastname@example.org.
Our advice is general in nature. To read the full General Advice Warning click here.