Insurance is nothing new. It has been protecting property owners and individuals for hundreds of years.
Although some choose to go without the additional expense of insurance, when you’re in business, you might want to ask, why risk it? This is particularly true if you have large investments like business premises and key people. It can be definitely worth the peace of mind that insurance brings.
Insurance should not be viewed as just an extra cost to add to the running of your organisation. Insurance is a vital part of maintaining and running a successful business.
Owners and executives need to understand the inherent risks associated with operating a business and mitigating risk is often a large part of that role. Truth be told, the right business insurance might just save you when times get really tough.
Cover what’s yours
The most common form of insurance people think about is protecting physical property. Depending on the industry in which you work, you may be prone to theft or loss.
Retail shops require extra precautions to protect merchandise. Other businesses need to consider covering physical property. Theft, glass, vandalism, fire, natural disasters and cyber-attacks can pose a threat to stock, equipment, physical location and stored data. It’s good to know that if tough times hit, there are policies to cover these incidents.
Understanding liability issues
If a customer is injured at your place of business, there’s a chance you may be held responsible, which means you could be held liable for their injuries, including cost of treatment and recovery.
If you sell tangible goods, you may also be liable for illness or injury the customer incurs after purchase.
Some risks are unavoidable although they can be lessened with due care and attention. However, understanding liability in a variety of situations can ensure you take out right coverage to protect yourself financially and legally in unfortunate circumstances. An insurance broker can tell you more about what is appropriate in your situation.
Protect your people
If you have staff, you’ll want to provide them with protection. In some Australian states, it is the law. You are likely required to have a workers’ compensation insurance policy if you operate a business.
Many businesses have key people and the business would be hard pressed to run without them. Most business depends on a few people to produce the profits, provide the capital or manage the business. If someone inherently important to your business were to suffer a critical health condition, or pass away, do you have mechanisms in place to deal with these eventualities?
Types of business insurance
Key Person Insurance, Loan Repayment Protection, Buy-Sell Agreements and Business Succession planning are often the subject of detailed discussions between lawyers, accountants and financial advisers. The death, disablement or traumatic illness of an executive, owner or vital team member can have a dramatic impact on a business, and even cause winding up if proper arrangements have not been made.
Business succession plans are triggered on particular conditions and provide certainty, stability, avoid additional borrowings, reduce delays and preserve the value of the business.
Correct ownership structures, professional advice, funding and tax are all vital considerations in this complex area of risk mitigation.
Taking stock of possible risks during the good times, means you can more successfully navigate your way through the troubled times with the right business insurance mechanisms in place.
